Winning in Ukraine: a French perspective - More nations expected to sign up for Pentagon’s Ukraine aid group
Europe’s gas prices soften as rate of storage build is unsustainable: Kemp - Reuters News
by John Kemp / Reuters - 20-May-2022 16:38:53
Chartbook: Europe gas storage and prices
LONDON, May 20 (Reuters) - Europe’s gas storage is filling at the fastest rate on record as the region attempts to buy as much as possible as quickly as possible before next winter to reduce its vulnerability to any disruption of supplies from Russia.?
But the rate of inventory accumulation has become unsustainable, which is putting downward pressure on nearby futures prices, a signal to slow the rate of stock additions.?
With Europe on course for very full storage before the end of September, the region’s buyers are likely to become less aggressive, leaving more LNG to be sent to Asia in the next few months.?
Since the end of March, European Union and United Kingdom (EU28) gas storage has risen by 164 terawatt-hours (TWh) compared with a ten-year average increase of just 107 TWh.?
By May 18, the volume of gas in storage was slightly above the ten-year average (+2 TWh) up from a large deficit at the end of January (-134 TWh).?
But with storage already above average, inventories cannot continue accumulating at such a rate without threatening to overwhelm available capacity.?
Futures prices for deliveries this summer are already softening to slow storage additions and encourage more consumption by industrial users and power producers.?
Benchmark futures for deliveries scheduled in July 2022 have fallen close to their lowest since Russia’s invasion of Ukraine in late February.?
The summer-winter spread between July 2022 and January 2023 has slumped into a contango of almost €2 per megawatt-hour down from a record backwardation of €72 in early March.?
Prices for deliveries to Northwest Europe are still significantly above those for Northeast Asia, drawing more LNG cargoes, but the regional premium has started to narrow as well.?
Exceptionally high prices for the last six months have rebalanced Europe’s gas market and if they continue will leave it with a very large surplus within the next two months.?
Plentiful storage will ensure Europe is comfortably supplied through next winter, even if temperatures are unusually cold ― provided deliveries from Russia continue.?
Unlike the strategic petroleum reserves held by the United States and its allies, seasonal gas storage is not designed to cope with a significant and sustained disruption of pipeline deliveries.
? Even if storage is filled to maximum capacity, it will not be enough to protect Europe from extremely high gas prices and massive economic disruption if deliveries from Russia are halted next winter.?
Provided pipeline flows continue, however, the volume of gas now being put into storage should ensure inventories are far more comfortable next winter than they were last winter and prices will continue to fall.
? Related columns:
- Europe fills gas storage at record rate as Asia's buyers step aside (Reuters, May 17)
- U.S. gas prices soar as Europe and Asia scramble for LNG (Reuters, May 6)
- Europe makes rapid start on refilling gas storage (Reuters, May 4)
- Europe’s gas stocks finish winter at comfortable level (Reuters, April 5)
? (Editing by Elaine Hardcastle)
John Kemp - Senior Market Analyst
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DefenseNews: Winning in Ukraine: a French perspective
By?Pierre?Morcos
As Russia’s war in Ukraine is about to enter its fourth month, a question has been at the center of a passionate?debate : Are France and Germany trying to pressure Ukraine into negotiations with Russia? Declarations from the German chancellor?asking ?President Vladimir Putin to accept a ceasefire “as quickly as possible” or from the French president?warning ?against “humiliating” Russia have raised fears across Europe that Paris and Berlin are making overtures to Moscow.
While legitimate given the gravity of the situation, these concerns are nonetheless based on a twisted understanding of the French and German positions. Current criticisms often underestimate how far France and Germany have shifted in their approach to Russia. Since the beginning of the war, their strategy has been very clear: the West has to keep pressuring Moscow and supporting Kyiv “until Ukraine’s victory .”
Both countries have played a driving role in the adoption of robust sanctions at the EU level and are now?supporting ?an oil embargo on Russia. As explained by French officials, the goal is to “suffocate” the Russian economy and to “punish” the Russian oligarchs. Far from trying to accommodate Russia, Paris and Berlin are leading the international effort to investigate and prosecute possible war crimes committed by the Russian military. France has notably?increased ?its financial support to the International Criminal Court and?sent ?a team of forensic experts in Bucha.
After a slow start, France and Germany have also ramped up their?military support ?to Ukrainian armed forces, with Berlin?sending ?anti-aircraft tanks and?Paris ?providing long-range artillery systems. Ukrainian troops have already been trained on?French ?and?German ?soil to operate these systems. In a recent call with President Volodymyr Zelenskyy, President Emmanuel Macron?announced ?that French arms delivery will “intensify”. Both countries are also among the largest contributors to the European Peace Facility which now?covers ?€2 billion worth of military assistance to Ukraine.
But France and Germany are also mindful of leaving the door open to a negotiated settlement of the conflict. This is why Macron, and to a lesser extent German Chancellor Olaf Scholz, are maintaining their contacts with President Putin. Often?criticized ?for being vain, this phone diplomacy is actually?demanded ?by the Ukrainian leader himself as Putin refuses any direct communication. Every call from the French or German leaders has always been closely coordinated with Zelenskyy.
Neither France nor Germany are seeking to pressuring Ukrainian authorities to accept concessions or cede territory, as it has been?reported . Macron has been very clear in his recent?speech ?to the European parliament: “As Europeans, we are working for the preservation of Ukraine’s sovereignty and territorial integrity. It is up to Ukraine to define the conditions for negotiations with Russia”. Admittedly, peace talks between Ukraine and Russia are?stalled , but France and Germany stand ready to assist Ukraine when the conditions will be met. France is notably open to provide “security guarantees ” to Ukraine in the “framework of an international agreement.”
Another source of misunderstanding has been French and German position on Ukraine’s membership to the European Union. Both countries are often portrayed as being opposed to any enlargement for having?underlined ?a basic truth: the road to EU membership will be?long . Having said that, Paris and Berlin fully understand the need to send a clear political signal to Kyiv and to move fast to grant a candidate status. They are also in favor of accelerating the European integration of Ukraine in parallel of the accession process. This is the ambition of Macron’s “political community ” which would help foster the cooperation between EU and non-EU countries on security, energy, transport or investment.
Admittedly, these multiple controversies are indicative of a larger problem: France and Germany are?not trusted ?by Central and Eastern European countries to deal with this conflict. The Franco-German tandem is often?perceived ?as an exclusive duopoly with foreign policies stuck in the past. Paris and Berlin should not overlook this structural problem and keep engaging with their European partners to convince them otherwise.
France and Germany have not been unresponsive to these criticisms. They have intensified their political coordination with Central and Eastern European countries, as witnessed with the?rejuvenation ?of the “Weimar Triangle” which gathers France, Germany and Poland. Most importantly,?French ?and?German ?armed forces have substantially increased their commitment to their security with additional deployments as NATO is bolstering its deterrence and defense posture.
Allies must be demanding with one another, especially in such hard times, but critics should move beyond their preconceived ideas on France and Germany. Far from fueling a “spirit of appeasement and surrender ,” Paris and Berlin are working in lockstep with their U.S. and European partners to help Ukraine achieve victory.
Pierre Morcos is a?visiting fellow ?in the Europe, Russia, and Eurasia Program, and a French diplomat in residence, at the Center for Strategic and International Studies in Washington. Views expressed in this article are strictly personal. You can find him on Twitter at?@morcos_pierre .
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More nations expected to sign up for Pentagon’s Ukraine aid group
German Federal Minister of Defence Christine Lambrecht (L), U.S. Chairman of the Joint Chiefs of Staff Gen. Mark Milley (2L), U.S. Secretary of Defence Lloyd Austin (C) and Ukrainian Minister of Defence Oleksii Reznikov (R) attend the Ukraine Security Consultative Group meeting at Ramstein Air Base on April 26, 2022. (Photo by Thomas Lohnes/Getty Images)
WASHINGTON — A group of international defense chiefs convened by U.S. Defense Secretary?Lloyd Austin ?to coordinate military aid for Ukraine is likely to expand when it meets for the second time on Monday.
The?Ukraine Contact Group , which included 40 member countries at the inaugural gathering at Ramstein Air Base in Germany on April 26, has since attracted more interest. U.S. defense officials declined to give a tally as the responses were still rolling in. The meeting will be held by video teleconference.
“There are some countries that have shown an interest in participating that weren’t in the first meeting,” Pentagon Press Secretary John Kirby said Friday. “There’s not a cap on it, and we would love to have as many countries as possible.
“In its first iteration, you had countries from the Middle East, you had countries from the Indo-Pacific,” he said. “It wasn’t just Europe, and it certainly wasn’t just NATO. There was a true global community there of countries that were interested in what’s going on in Ukraine.”
British Defense Secretary Ben Wallace, co-organizer of the push, is expected to make an opening statement along with Austin and a Ukrainian delegate, according to a British official, who spoke on condition of anonymity. As of Friday, 18 countries were preparing announcements on providing new kit, the official said.
The group’s purpose is to address Ukraine’s near- and long-term needs, Austin has said. High on the agenda Monday will be Kyiv’s immediate requirements, as Ukrainian forces prepare for grinding combat in the country’s east.
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“It’s an important new way for nations of goodwill to intensify their efforts to help Ukraine better defend itself, both for today’s urgent needs and for the long haul,” Austin said in May 11 congressional testimony. “Our most urgent goal continues to be sending the Ukrainians the capabilities they need most right now, as the war has shifted to the Donbass and to the south. The coming weeks will be critical.”
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Heather Conley : "We're Facing a Decade of Dramatic Global Instability"
Diplomacy gets you nowhere in the Ukraine war, says transatlanticist Heather Conley. A conversation about Russia's mistakes, China's influence, and the West's sacrifices.
Interview: Marcus Gatzke und Rieke Havertz
Heather A. Conley became the new president of the transatlantic think tank German Marshall Fund in Washington D.C. earlier this year. Previously, she spent 12 years at the Center for Strategic and International Studies in Washington D.C., where her research included "The Kremlin Playbook," which examined the doctrine of Russian economic behavior and its methodology in Europe.
ZEIT ONLINE: Ms. Conley, the war in Ukraine has been going on for almost three months. What looked like a quick victory for Russia has turned into a bitter war of attrition. Do you think Ukraine can win this war?
Heather Conley: I do believe that Ukraine can be successful. This war has shattered so many assumptions: that Ukraine would fall within three days, that the Russian military would have overwhelming power, that European unity would not necessarily be there. So we are now developing new assumptions. It’s truly a transformative moment for European security, for the international system. Just take this historic moment, as Sweden and Finland formally seek to join NATO. Yet these ripple effects are yet to be fully understood.
ZEIT ONLINE: When we say that Ukraine has the chance to win this war, what might such a victory look like??
Conley: That’s the most important policy question that the West hasn't yet figured out. Of course, the Ukrainian people and the Ukrainian government have the largest say in exactly how this concludes. But even they have not yet given us a clear understanding of how they envision what winning means as a basis of negotiation.?
ZEIT ONLINE: What are your thoughts on the issue?
Conley: Alongside Ukraine, the United States and Europe need to discuss a principled framework for restoring Ukraine's territorial integrity and sovereignty. This won't happen overnight, but it could happen in transitional phases. The first phase could be Russia removing its military forces pre-Feb 24th. The second phase could be Russian troop withdrawal from the Donbas. Phase three would obviously be the eventual restoration of Ukraine sovereignty over Crimea.?
ZEIT ONLINE: You believe that even Crimea could once again become part of Ukraine?
Conley: Let me give you an example: The United States never recognized the occupation of the three Baltic states and maintained legation offices in Washington throughout the Cold War. We kept the faith that these "captive nations" would be independent one day. And it took 50 years. That could be the time horizon for Crimea, for the Donbas. But we have to believe in that horizon and we have to work towards that outcome.?
ZEIT ONLINE: The administration of U.S. President Joe Biden wants to weaken Russia to the point where it can no longer represent a military threat to its neighbors. In Germany, meanwhile, many fear an escalation of the war.
Conley: In some ways, Vladimir Putin 's response to Sweden and Finland's decision to join NATO was a very instructive moment. Despite threatening Sweden and Finland many times if they dared to join NATO, when the Kremlin was presented with overwhelming strength and unity of purpose, Putin acknowledged it and suddenly, it wasn’t that big of a threat; with some caveats about NATO stationing military forces. Russia accepted the strength of NATO.?
The Kremlin has often acted in an extremely provocative and escalatory manner in this conflict. Why? Because it frightens us. It encourages us to back down from our policies and Russia exploits that weakness. So we have to be unified even in the face of possible escalation. But this is why the West is struggling to formulate a policy outcome. It's not that we can't imagine Ukraine winning; our fear is that Russia's defeat would become something far more dangerous.?
ZEIT ONLINE: But isn't that fear justified?
Conley: It is not unjustified, but it should not stop us from doing what is right. The use of weapons of mass destruction would finally make Russia the pariah of the world. This would be a disaster for Russia. The calls that Putin should be receiving from Beijing, from Delhi, from everyone telling him that use of those weapons would mean the total isolation of Russia for a very long time. The Russian military also may not obey his orders which would have severe consequences for his future leadership.??
But honestly, escalation is already there: Look at the catastrophic effects of global food insecurity, the devastation in Ukraine, the 6 million refugees. How much more do you want?
"Putin put his foot down on the accelerator and kept going"
ZEIT ONLINE: Given all that, many have argued that we must build Putin an off-ramp at some point. What is your view?
Conley: I think we have built him a lot of off-ramps. And he has put his foot down on the accelerator and kept on going on the same path. We can only offer suggestions. He must take them. The Ukrainian people have been at war for eight years. It didn’t begin on Feb. 24, 2022. It began in 2014. Therefore, a ceasefire would not bring about an end to the conflict. We can't go back to a frozen conflict. Russia’s full invasion destroyed that possibility. Our instinct in diplomacy is always to offer an off-ramp. I'm not criticizing that instinct, it’s just not applicable to this situation. We can’t go back to the way it was and we are in a near-term situation where diplomacy cannot work, which is so hard – particularly for German foreign policy, which focuses nearly completely on diplomacy.
ZEIT ONLINE: Many believe that this war has actually strengthened Putin. He might be isolated within his security apparatus, but he has tightened his grip on the country. How dangerous is that??
Conley: In many ways, the Cold War had the benefit of imposing checks and balances on the Soviet ruling power. That has long since vanished,and this is truly a one-person rule. Right now, there is no one who can challenge Putin. There has been a process of solidification around him, but there is a high degree of nervousness, because members of his inner circle understand where this story is heading - the economic isolation and hardship. We need to prepare for a potential Russian fragmentation scenario, an instability due to so many strategic miscalculations made by the Kremlin and the uncertainty of who comes after Putin one day. This is a very fraught path.
ZEIT ONLINE: How do you assess China 's role within this conflict? Beijing, after all, has been a strong ally to Russia.?
Conley:Xi Jinping is fully supportive of Vladimir Putin. They share many objectives: Getting the United States out of Europe and the Indo-Pacific, wanting their preferred spheres of influence and regional hegemony, and shifting the international system to accommodate their interests. They fervently believe in the West's decline, particularly American decline, and they believe that they both have a unique historical role in the evolution of their countries.?
ZEIT ONLINE: Biden has repeatedly warned China not to actively support Russia in this war. And it seems to be having an effect: China has so far not supplied weapons or tried to undermine the sanctions.
Conley: Yes, Chinese companies have so far held back in fear of sanctions spillover. Some very nationalistic voices in Beijing see this as an expression of Chinese weakness. Other voices believe that it is time for China to distance itself from Russia. At the end of the day, it will be Xi Jinping's decision alone. The information thus far shows he's fully supportive of Putin. The question is, as we see Russia continuing to struggle: When does the moment come that Xi Jinping decides to actively support him in this war?
ZEIT ONLINE: Do you think he might do that?
Conley: At the very least, we have to prepare ourselves for that. At the moment, U.S. companies, and particularly European companies, are not prepared for a scenario where China either overtly or covertly provides assistance to Russia. That would force U.S. sanctions. European companies would then suffer secondary sanctions, which would be very divisive to the trans-Atlantic relationship, particularly when it comes to German companies that have a very dependent strategy when it comes to exporting goods to China.?
ZEIT ONLINE: What can the West do?
Conley: We must recognize that so-called "Wandel durch Handel" (eds. note: the German idea that increased trade can lead to political reform) has not worked for Russia and for China. On the contrary, it has put Germany in particular in a position of strong economic dependence, and it is now going to be extremely costly and painful to reorient. But we have to learn from these mistakes and strengthen the West and the trans-Atlantic economy, including Japan, Australia and others. That's the challenge we're all wrestling with.
ZEIT ONLINE: Biden has been extremely clear in his rhetoric towards Russia and regarding the strengthening of the trans-Atlantic relationship. How long do you think he can keep this commitment up? The midterm elections are just a few months away.
Conley: It’s actually been extraordinary that the Biden administration has maintained such a laser-like focus on this war and this crisis. But in some ways, you're now beginning to see a return to normal, where other headlines are starting to crowd out this story. We have to be very cautious, because that's exactly what happened in 2014. We all went back to business as usual.?
"Great strategic miscalculations come at great cost"
ZEIT ONLINE: You don't win elections with a far-away war.?
Conley: The governing party is always punished in midterm elections. That's nothing new, and we will see that continue in November. And I continue to hear strong concerns about 2024, and whether Donald Trump will return. It just hovers above every conversation. But that doesn't mean any of the policies that we've put in place will be stopped, because their justification is greater than who comes into the White House.
ZEIT ONLINE: We have experienced the America-first policies of Donald Trump. With him, or someone like him, as U.S. president again, wouldn't Western unity immediately crumble?
Conley: Political polarization is the source of many tragedies in our country. But when it comes tosecurity and foreign policy, it's not that simple. After the invasion of Ukraine, even the extreme voices in the Republican Party have grown quieter. The majority of Republicans understand that there has to be bipartisan support for Ukraine. All largely agree on the value of Nato and the general perceptions of what threats the country faces and how we need to address them. I hope this continues.
Taking out all the irresponsible rhetoric, Trump's points were: Nato member states must really increase their defense spending, NATO should buy weapons, and become more robust defensively. This is a bipartisan point that every American president going back to Eisenhower has always made. And Nato is accomplishing these goals.
ZEIT ONLINE: The economic consequences of this war have been enormous. Inflation is higher than it has been for decades, and the U.S. could slide into recession this summer. How long will U.S. citizens continue to support Biden’s path?
Conley: This is a trans-Atlantic problem, not purely an American one. Some of that, though, is obviously coming from the pandemic. The Covid lockdown in China is exacerbating problems in supply chains that were already struggling. Of course, food and energy prices have also risen rapidly as a result of the war. But great strategic miscalculations come at great cost. And this is going to be an extremely costly event, especially for Europe to reorient its energy dependency.??
ZEIT ONLINE: A tough selling point for voters.?
Conley: There is no alternative. And that’s the honesty that political leaders now have to present to the public. And again, this is a strategic miscalculation that Putin has made. All he has done is dramatically accelerate Europe’s push to eliminate its energy dependence on Russia.?
ZEIT ONLINE: How long will this rebuild you are calling for take?
Conley: I hope I'm wrong, but we're facing a decade of dramatic global instability and economic reorientation. It's going to be painful for all of us, and we have to prepare our public for that and do everything we can to minimize the impact. But after that decade, we will come out in a better place, from a climate perspective, a digital perspective and an economic perspective. And our values will be stronger. People are willing to go through sacrifice, in my view, if they understand why they are sacrificing.?
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