The Bridge

The Bridge: Natural Gas in a Redivided Europe. Thane Gustafson. Harvard University Press. 2020. 452 pp.

Back Cover

 

A Marginal Revolution Best Book of the Year

Winner of the Shulman Book Prize

A noted expert on Russian energy argues that despite Europe’s geopolitical rivalries, natural gas and deals based on it unite Europe’s nations in mutual self-interest.

Three decades after the fall of the Berlin Wall and the breakup of the Soviet empire, the West faces a new era of East–West tensions. Any vision of a modern Russia integrated into the world economy and aligned in peaceful partnership with a reunited Europe has abruptly vanished.

Two opposing narratives vie to explain the strategic future of Europe, one geopolitical and one economic, and both center on the same resource: natural gas. In The Bridge, Thane Gustafson, an expert on Russian oil and gas, argues that the political rivalries that capture the lion’s share of media attention must be viewed alongside multiple business interests and differences in economic ideologies. With a dense network of pipelines linking Europe and Russia, natural gas serves as a bridge that unites the region through common interests.

Tracking the economic and political role of natural gas through several countries―Russia and Ukraine, the United Kingdom, Germany, the Netherlands, and Norway―The Bridge details both its history and its likely future. As Gustafson suggests, there are reasons for optimism, but whether the “gas bridge” can ultimately survive mounting geopolitical tensions and environmental challenges remains to be seen.

The Author

 

Thane Gustafson (1944), former analyst for RAND Corporation, he is professor of political science at Georgetown University and Senior Director of Russian and Caspian Energy for IHS Cambridge Energy Research Associates.

Gustafson holds degrees in both political science and chemistry from the University of Illinois, and a doctorate from Harvard University. His books include Capitalism Russian Style; Crisis amid Plenty: The Politics of Soviet Energy under Brezhnev and Gorbachev and Wheel of Fortune: The Battle for Oil and Power in Russia. He served as a Peace Corps volunteer in Côte d'Ivoire from 1966 to 1968 with his wife Ruth Gustafson.

 

Summary + Notes

Introduction

By any standard the construction of the Russian and European gas system ranks as one of the most important engineering and commercial achievements of the past half century.

Fundamental changes in the bridge:

1. The fall of the Soviet Union and the Soviet empire.
2. The strengthening of the European Union.
3. The restoration of a strong Russia.
4. The emergence of environmentalism in Europe.

Two narratives:

1. Western narrative. Europe’s perceived unhealthy dependence on Russian gas and Russia’s manipulation of the “gas weapon” for political purposes.
2. Russian narrative. Aggressive eastward spread of EU law and regulation motivated by anti-Russian hostility.

In addition:

1. The rise of shale gas in the United States.
2. The expansion of liquefied natural gas (LNG).
3. China’s booming demand for gas.
4. Russia’s “pivot to the east”.

The stories:

1. The development and evolution of Soviet and Russian gas policy.
• The need to develop the vast discoveries of gas in West Siberia.
• Geopolitical leverage with its soviet satellites, not with the west.
• Russian economy: exports and subsidized domestic distribution.
2. The evolution and expansion of the European Union since the early 1980s.
• From market-oriented competition to security and environmental protection.
3. The axis of crisis: Germany and Ukraine.
• Raising Environmental conscience in Germany.
• Half of Russian gas through Ukraine.

Differences:

Oil:

• Sold into a global market.
• Arm's-length commodity. No need for further relationship between producer and consumer.

Gas:

• Sold into a regional market.
• Relationship commodity. Producer and consumer linked by a pipeline, sometimes with a transit country in between.
• The advent of new technologies (LNG, computerized trading floors for gas) is changing the game.

Roles:

• Gas subsidized in an inefficient domestic economy.
• Gas pumping the Russian economy, although just one fifth of oil's revenue.
• Conservative gas strategies played by Russia in Europe.

• Gas is one of the cleanest hydrocarbons.
• Gas is unpopular with environmentalists, who favor renewables instead.
• Gas as source of dependence for Europe.

 

Gas is ultimately a business and its future will be determined by economics and technology.

Two Worlds of Gas

The Beginnings of the Gas Bridge

From Optimism to Anxiety

Norway and the Rise of the North Sea

Soviet Gas

The Last Hurrah

Crossing the Channel

The Neoliberal Tide Reaches Brussels

Brussels

Marching to Market

The Battle for Germany

Gazprom Survives and Gets Away

Gazprom under Pressure

Russia and Ukraine

Conflict and Collusion

Russian-German Gas Relations

Battle Joined, War Averted

Conclusion

The Future of the Gas Bridge