How Europe got hooked on Russian gas despite Reagan's warnings

Former US president Ronald Reagan tried to sanction Russian gas in 1981, when it was part of the Soviet Union. PHOTOS: REUTERS

NEW YORK (NYTIMES) - The language in the CIA memo was unequivocal: The 3,500-mile (5,600km) gas pipeline from Siberia to Germany is a direct threat to the future of Western Europe, it said, creating "serious repercussions" from a dangerous reliance on Russian fuel.

The agency wasn't briefing President Joe Biden today. It was advising President Ronald Reagan more than four decades ago.

The memo was prescient. That Soviet-era pipeline, the subject of a bitter fight during the Reagan administration, marked the start of Europe's heavy dependence on Russian natural gas to heat homes and fuel industry.

However, those gas purchases now help fund Vladimir Putin's war machine in Ukraine, despite worldwide condemnation of the attacks and global efforts to punish Russia financially.

In 1981, Reagan imposed sanctions to try to block the pipeline, a major Soviet initiative designed to carry huge amounts of fuel to America's critical allies in Europe.

But he swiftly faced stiff opposition - not just from the Kremlin and European nations eager for a cheap source of gas, but also from a powerful lobby close to home: oil and gas companies that stood to profit from access to Russia's gargantuan gas reserves.

In a public-relations and lobbying blitz that played out across newspaper opinion pages, congressional committees and a direct appeal to the White House, industry executives and lobbyists fought the sanctions.

"Reagan has absolutely no reason to forbid this business," Wolfgang Oehme, chairman of an Exxon subsidiary with a stake in the pipeline, said at the time.

Those efforts, nearly a half-century ago, show how some of the world's largest oil and gas companies played a critical role in opening up Russia's reserves by opposing sanctions and advocating for business interests over national security, human rights or environmental concerns.

Mr Reagan was opposed by not only the Kremlin and Europe, but also powerful US oil and gas companies. PHOTO: REUTERS

Today, Europe's reliance on Russia's gas has put European nations in a compromised position: They continue to purchase Russian energy, transferring enormous sums of money to Moscow, which fund a Russian invasion that they denounce.

Reagan's effort to block the pipeline decades ago, which ultimately failed, also laid the foundations for a huge build-out of natural gas, which is now hindering Europe's attempts to tackle climate change.

Even as natural gas has helped to replace dirtier coal, the pipelines and other gas infrastructure that followed have effectively committed Europe to a reliance on gas that not only continues today, but remains difficult to unravel even in a moment of global unity against Russian aggression.

"The Soviet Union is a superpower that really emerged on the back of its oil and gas exports," said Agnia Grigas, a senior fellow at the Atlantic Council and an expert on the security and energy issues of Russia and the former Soviet states. "Nothing has changed."

In the face of opposition both at home and abroad, Reagan in 1982 reversed the sanctions, which had stopped US companies from supplying or participating in the project. The pipeline from Siberia to West Germany opened two years later.

The industry lobbying has continued to this day.

In 2014, when the Obama administration imposed sanctions against Russia following its military seizure of the Crimean peninsula from Ukraine, Exxon fought the measures, meeting with White House officials.

As Russia this year massed troops on the Ukrainian border, the American Petroleum Institute, the powerful industry group, lobbied against tougher sanctions, saying that any measures needed to be "as targeted as possible in order to limit potential harm to the competitiveness of US companies."

In the wake of Russia's brutal invasion of Ukraine, Shell, BP and Exxon have said they will end their Russian operations.

The lobbying against Russian energy sanctions continued until the country's attack on Ukraine. PHOTO: REUTERS

Casey Norton, a spokesperson for Exxon, said the company "does not advocate for or against sanctions" but had communicated with the US government "to provide information about the potential impacts on energy markets and investments." He said that Exxon was complying with all sanctions, had discontinued its flagship project in Russia and was withholding new investment there.

Bethany Williams, an American Petroleum Institute spokesperson, said that any interactions by its members with policymakers on sanctions had been limited to "ensuring retaliatory measures are clearly written to reduce any room for uncertainty and ensure maximum compliance."

John Murphy, senior vice-president for international policy at the US Chamber of Commerce, said his organisation had a long-standing belief that sanctions would very likely fail if they were unilateral.

Exxon, the American Petroleum Institute and the Chamber of Commerce all condemned Russia's invasion. Shell and BP had no comment.

The concerns raised during the Reagan administration four decades ago have been borne out. Before Russia's attack on Ukraine last month, Germany relied on Russia for 55 per cent of its gas, for example, complicating Europe's response to Russian aggression in Ukraine.

For Ukraine, the consequences have been devastating.

"The companies that have been working with the Russian regime were driven only by pure financial interest," said Oleg Ustenko, a top adviser to Ukrainian President Volodymyr Zelensky. "They closed their eyes to the morality of it, and now we are paying the consequences."

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