Deutsche Welle (English edition)
NATO-Russia talks: Starting point or standoff?
Stakes are high and expectations low as the 30 allies sit down for the first talks with Russia in more than two years. Teri Schultz reports that neither side initially sees room for compromise on Ukraine's future status.
US Secretary of State Antony Blinken tempered hopes for progress in this week's spate of meetings with Russia by describing the situation as "talking in an atmosphere of escalation with a gun to Ukraine's head."
NATO expert Jim Townsend adds a stark detail: "And the hammer's cocked."
Russian diplomats have arrived for their first talks with NATO allies since July 2019 in a position of relative strength, having succeeded in catalyzing the Biden administration, NATO and the Organization for Security and Cooperation in Europe to fill a week with meetings focused on little else but how to convince the Kremlin to back away from the border with Ukraine.
Rejecting Russia's demands
Russia's starting demand for "ironclad" guarantees that the alliance won't expand to Ukraine or other nearby countries — already rejected by NATO and by the US again in Monday's
talks in Geneva — makes a stalemate seem like a foregone conclusion, whether or not both sides are willing to engage in somewhat-less-controversial discussions about arms control and conventional armed forces. It raises concerns that the Kremlin just wants an excuse to proclaim any possible diplomatic solution stillborn.
Townsend, who was a highranking Pentagon official when Russia invaded Ukraine in 2014 and is now a senior fellow at the Center for a New American Security, said the most urgent task for the US and NATO diplomacy in the nearest term was to "make sure the gun doesn't go off and to slowly get that gun away from [Ukraine's] head."
After that, he said, a system must be put in place to ensure another such attack "can't be put together quietly, secretly without being seen," referring to the way in which Russia amassed troops ahead of its 2014 actions without raising adequate alarm bells in Brussels and Washington.
Townsend believes that the Obama administration, in which he was then serving as deputy assistant secretary of defense for Europe and NATO, should have responded in a more robust way to Russia's aggression. Today's situation, he explains, stems in large part from that failure to imagine that Russian President Vladimir Putin would go so far as to invest in positioning tens of thousands of troops and military resources in the west of his country on an open-ended timeline.
He said the same mistake must not be repeated, recommending an increase in the amount of training done with Ukraine in case it should have to go to war with Russia, and even that the US and other allies preposition war-fighting equipment on Ukrainian territory as a "trip wire" in case of any future incursion.
Europe on edge
While Russian Deputy Foreign Minister Sergei Ryabkov has threatened to cut off talks even before they got to NATO if he didn't feel his side's concerns were being sufficiently addressed, Michal Baranowski, senior fellow with the German Marshall Fund in Warsaw, was relieved the talks didn't end early for another reason: fears that the US may be willing to negotiate about troops stationed in Europe. "It's good news we don't have some kind of quick and dirty agreement," Baranowski told DW.
Baranowski is also pleased with the US and NATO's categorical rejections of any restrictions on membership. "That would be incredibly detrimental," he said, "so I choose to think that this is inconceivable. The worst scenario would be to give up on principles to appease [Moscow] and then to have conflict anyways — because that's what would happen if we back down."
He complimented the American team, led by Deputy Secretary of State Wendy Sherman, for making good on its pledges to keep European partners wellinformed about bilateral discussions.
But, at the same time, Baranowski said, the very fact there are US-Russia talks in addition to NATO-Russia talks gives Putin a good deal of what he demanded in wanting to speak only with Washington. "For Putin, the only thing that is important is the seat at the high table with the US and not with some pesky Europeans, as the Russians see us," he said. "And he's getting that."
Too much about us without
us
Kadri Liik, a senior policy fellow at the European Council on Foreign Relations, is less impressed by the volume of US communication. "Of course everyone is worried," she said, "because our security is discussed without us. I do not think the US is really consulting partners in or out of NATO," she added. "They might be informing the allies, but probably also selectively and not about all details."
Liik said the NATO-Russia Council is an "opportunity for Europeans to get involved," but its effectiveness in presenting a unified front against Moscow is far from guaranteed. "It could be that the US' and Europeans' positions are so wide apart that the NATO meeting ends up just a reiteration of very heterogenous talking points," she said, "rather than a continuation of serious discussion."
Jim Townsend said the series of meetings this week was critical to answering the outstanding question of what Putin really plans to do with all those soldiers, equipment and installations, which are difficult to maintain at scale. "His timeline is a very short one, and ours is a very long one," Townsend said. "If he can't get on our timeline because he really actually wants to go into Ukraine, he will blow these talks up and go into Ukraine. We'll know this week."
Consumers not feeling it — yet
Unlike the recent hikes in gasoline and diesel prices, which have been met with public anger, analysts have warned that it may take time for higher natural gas prices to be fully visible to consumers. But they are already impacting manufacturing and transportation costs across many US economic sectors.
"Natural gas influences the price of electricity, the price of plastics and various chemical products," Pavel Molchanov, director and equity research analyst, Energy Group at the US financial services giant Raymond James & Associates, told DW. "Consumers only see the effects of natural gas as a derivative in other types of products or services that they are buying."
A number of factors have been blamed for the price spike, including wider post-pandemic shocks to the global energy sector, exacerbated by Russia's invasion of Ukraine. As European countries have scrambled to secure alternative supplies and wean themselves off Russian fossil fuels, demand for US gas has skyrocketed.
This includes liquefied natural gas (LNG), of which the US is now the biggest exporter. US LNG producers are struggling to increase capacity to meet Europe's energy needs, which is also fueling expectations of a higher demand for US natural gas.
The EIA said US gas storage was left at its lowest level in three years at the end of winter due to the particularly high demand for heating. Now, in a complete reversal, unusually warm weather in many parts of the US is also contributing to higher prices through the increased use of cooling systems in commercial and residential buildings.
Supply remains weak after COVID
While natural gas demand has mostly recovered from the impact of COVID-19, the supply of the key fossil fuel has not. Supply growth is reportedly stalling in two mainstays of US natural gas production — the Appalachian region of 13 states from southern New York to northern Mississippi, and West Texas, where companies have blamed a lack of adequate pipeline infrastructure.
Reuters news agency said this week that in Appalachia, which supplied more than a third of US gas last year, energy firms were having trouble building new pipes. Production growth in the Permian Shale — which supplied about 19% of US gas in 2021 — could slow significantly next year unless new pipelines were built soon, Reuters reported.
High costs and lawsuits have slowed the construction of new pipes, along with pressure on energy producers from US states and investors to be more environmentally friendly and cut carbon emissions.
Energy firms return to profit
Molchanov insisted the lack of supply was less about regulatory hurdles and more about an aggressive drive for profits after COVID left US energy producers nursing tens of billions of dollars in losses.
"The reason companies are drilling less is because ... their shareholders demanded more dividends, more share buybacks instead of more investment in new drilling," Molchanov added.
"The amount of decline during the pandemic was so severe and so unprecedented that even with the recovery, the industry is spending less today than it did in 2019," he said.
Molchanov noted how COVID had forced the US oil industry to become "much more disciplined" and "sensitive" with its allocation of capital, forcing three consecutive years of contraction.
Investment stepped up, but not enough
As the economic impact of COVID wanes, US energy firms are investing again with capital spending up by 20% to 30% this year, but still not enough to meet demand.
"There is definitely a need for more capital spending, but the recovery is happening quite slowly because of the pressure from investors," which Molchanov said "remains very powerful."
Despite the demand side drivers, Molchanov believes US natural gas prices may have already peaked.
"Prices have already begun to trickle down and in the next 12 months, we should see prices come down to more normalized levels of $4 to $5," he said.