The idea that America can defeat Russia by deregulating its own energy industries is frankly ridiculous
By M.S.
RAND PAUL has a plan to punish Vladimir Putin for invading Crimea. Mr Paul, the libertarian senator from Kentucky who won the straw poll at last week's Conservative Political Action Conference to be the next Republican presidential candidate, lays out his plan in an op-ed in Time. Nobody on the political spectrum is calling for a military response, and as America's most prominent opponent of intervention abroad, Mr Paul doesn't do so either. Rather, he wants to "lift restrictions on new oil and gas development in order to ensure a steady energy supply at home and so we can supply Europe with oil if it is interrupted from Ukraine." He also calls for America to do a number of things (imposing economic sanctions, ending participation in the upcoming G-8 summit) which Barack Obama is already doing, though Mr Paul neglects to mention this. He recommends that America suspend loans and aid to Ukraine, lest they be used to pay the country's debts to Russia. Finally, he calls for reinstating the cancelled project to build American missile-defence emplacements in Poland and the Czech Republic, but promises to "make sure the Europeans pay for it."
As Jonathan Chait explains, Mr Paul is in a difficult position. As the figurehead of the GOP's rising libertarian, anti-interventionist wing, he can't call for America to respond to events in Ukraine with a cold war-style commitment to prop up friendly governments with military and economic assistance. But the aesthetic predilections of Republican audiences require that his response sound tough and forceful, and he needs above all to somehow distinguish himself from Mr Obama. This explains his op-ed's weird logic. Of the measures Mr Paul recommends that differ from those Mr Obama is taking, one, forcing European governments to pay for an American missile-shield project, is absurd. A second, cutting Ukraine's government off from loans and aid, is perverse; by threatening to push the country into default, it could force Kiev to capitulate to Mr Putin. The last, deregulating American oil and gas development (including granting immediate approval for the controversial Keystone XL oil pipeline) sounds more reasonable, which is why it's actually the worst of the lot.
Mr Paul is right that dependance on Russian gas plays a major role in Europe's hesitation to impose sanctions against Mr Putin. There's nothing we can do about this, as Steven Mufson explained a few days ago. Terminals to liquefy and export natural gas cost billions of dollars and take years to construct. The reason there aren't very many of them right now is not because of some red-tape holdup; it's because America's shale-gas bonanza only started to come online in 2008-9. Companies began applying to build export terminals in 2011. The Department of Energy carried out an impact study, and since the study gave the go-ahead in early 2012, the government has already approved six new terminals.
But liquefying and shipping natural gas is expensive, and the total number of new terminals will be limited not by regulatory issues, but by the economics of whether or not it is profitable. There is, indeed, a barrier to the export of American gas to Europe; it is called the Atlantic Ocean. If Europe needs to buy non-Russian gas, it can do so right now, from Qatar or Nigeria—European liquid natural-gas (LNG) import terminals are currently running at just 20% of capacity. But it will cost more than Russian gas does. As American export terminals come online, they will make it easier for American supplies to cushion the blow of any Russian embargo, but they won't remove the effect entirely. None of this will happen quickly enough to affect events in Ukraine over the next year, and if the terminals are built, it should be for economic reasons, not political ones. Mr Paul, as a libertarian, ought to agree with that.
Building the Keystone XL pipeline, meanwhile, has exactly nothing to do with Ukraine. I say this as someone who, despite all the environmental concerns, thinks the pipeline probably ought to be built. (It's safer than moving the oil by rail; the tar-sands oil it transports shouldn't be extracted at all, but stopping the pipeline won't stop the oil; the real fight is for broad climate-change legislation. This is too complicated an issue to deal with here.) Europe is not terribly dependent on Russian oil, which is already a thoroughly globalised commodity that is much cheaper to ship than gas. If approved, Keystone XL will not be finished for years, and when it is, its entire effect will be to slightly decrease the global price of oil. New oil-reserve discoveries have the same effect. Approving the pipeline will do no more to deter Mr Putin from interfering in Ukraine than last month's announcement by Total that it will invest in new drilling in South Africa.
The idea that America can defeat Russian irredentism in Eastern Europe by deregulating its own energy industries is frankly ridiculous. Deregulation can make airline tickets cheaper. It cannot stop the Russian army. Energy-industry deregulation has become part of the standard Republican line on Crimea largely because of the relentless self-congratulatory process by which political actors cement their followers' ideological convictions. Leaders apply such flattery like a soothing unguent, assuring their backers that the things they already believe in would have solved every imaginable problem in advance, if only the foolish opposition had gone along. This helps fuse ideological blocs into coherent, hard-to-dent juggernauts.
But such claims have the opposite effect on anyone who doesn't belong to the ideological base. Deregulating the fossil-fuels industry can be expected, broadly speaking, to benefit oil and gas companies and to hurt the environment. Liberals already suspect that people who argue for deregulation are doing so mostly as a favour to their preferred business interests. When Republican politicians make transparently absurd arguments for deregulation, it confirms the scepticism of anyone who isn't already on their side. It's all the more offensive when the issue at hand is Russian nationalist expansion, which deploys a similar sort of cynical ideological play-acting in the interests of Russia's energy companies. Even many young libertarians in Mr Paul's own base may be inclined to view the conflict in Ukraine as a matter of Russians whipping up nationalist sentiment for the benefit of Gazprom, while Americans whip up nationalist sentiment for the benefit of ExxonMobil. If Mr Paul wants to convince the rest of America that his economic libertarian vision is sincere and coherent, rather than a shell for the advancement of favoured business interests, he ought to stay away from absurd arguments that reinforce those suspicions.
