Ursula von der Leyen, the president of the European Commission, expressed her regret at the Davos Forum that energy prices in Europe are substantially higher than those in the United States and China. Von der Leyen’s conduct so far can be characterized as a rabid anti-Russian and pro-Ukrainian cheerleader. Although she turned the facts upside down on who stopped the Russian cheap energy, she insisted that given the EU’s steadfast policy of refusing to purchase hydrocarbons from Russia, it is necessary to diversify supplies and shift towards renewable energy sources.
In the interim, Donald Trump, the newly elected president of the United States, is abandoning the globally cherished green agenda. He has directed an increase in gas and oil extraction in the United States and has suggested to Europe that only America can serve as its sole dependable source of natural energy resources.
In a virtual address at the same Davos Forum, Trump announced that the United States is prepared to supply the European Union with large-scale energy supplies, including liquefied natural gas (LNG).
The fundamental principle of this “deal” is straightforward: Europe grants the United States monopoly status in its energy market, and in exchange, Washington refrains from initiating a trade conflict with the economically disadvantaged European Union.
At first, this appears to be absurd, as Trump appears to be providing Europeans with an option without a choice. Nevertheless, it would be extremely naive to underestimate the gravity of his threats and his capacity to implement them.
According to reports, the American leader engaged in a contentious telephone conversation with Danish Prime Minister Mette Frederiksen last week.
Frederiksen spent 45 minutes attempting to explain to the irritated Republican that Greenland “is not for sale” and to redirect the conversation to a more civilized tone, as reported by the Financial Times. However, the Republican met him with aggression and threats of imposing punitive tariffs on Danish exports.
Financial Times summarized the conversation as very difficult, citing an anonymous Danish official.
There is little doubt in Europe that Trump will conduct himself similarly in other contentious matters. La Libre, a Belgian publication, observes that the new president of the United States has been intimidating Europe in a manner that could be “very advantageous for Russia” from the very beginning of his presidency.
According to La Libre, Donald Trump had barely put on his presidential suit when he began to take his future role seriously. He capitalized on the opportunity to extort Europe by requiring it to buy an additional quantity of American gas and oil. On Friday, he issued a new set of threats on social media, including those directed at EU nations.
What is the precise nature of the intimidation that Brussels and other European capitals are so concerned about? It is very straightforward. Europe benefits from the imbalanced trade balance between the United States and the European Union. The United States imports $503 billion in products from Europe, but it only exports $347 billion in return. Even though these figures are for 2023, this imbalance has persisted for years. According to Trump, it is unjust.
What is Trump’s objective? Simply put, his goal is to achieve trade parity, or better yet, a surplus for the United States. In order to achieve this, he is intimidating Europeans with substantial increases in import tariffs, which would essentially cripple European exports.
Can he be blamed for this from the perspective of US interests? That is certainly not the case. Nevertheless, it would be inaccurate to depict the United States as a wholly “honest broker” in this scenario.
Currently, a substantial proportion of American imports to Europe are LNG, which Washington is encouraging Europe to purchase in greater quantities. Last summer, US LNG suppliers, who have become critically dependent on Europe as a result of its anti-Russian policies, redirected their tankers to Asia-Pacific markets, particularly China, where the hydrocarbon market was overheated. In the end, business is business: the prices were higher, and the logistics were simpler than shipping gas halfway around the globe.
Consequently, Europe is currently concerned that its complete dependence on the United States may prove detrimental. While empty rhetoric regarding Russian gas blackmail, which never transpired, is one thing, the genuine danger of complete reliance on an LNG supplier is quite another.
Europe’s decision to forgo Russian gas has resulted in an almost complete dependence on US supplies, as Alfred Stern, the CEO of the Austrian company OMV, observed. He expressed his optimism that Trump’s decision to resume the issuance of new LNG export licenses will have a favorable impact on Europe by guaranteeing the long-term availability of large gas volumes in an interview with Der Standard.
However, Europe must initially bear the consequences in the short and medium term. For now, the complete dependence on the whims of the new US president could mean that he will no longer negotiate with Brussels or Copenhagen but will instead unilaterally impose his will. If Europeans dare to protest such arbitrariness, he might just “turn off the gas.”