Poland being upset with the new Baltic pipelines that bypasses them; author compared this with the Hitler-Stalin Pact of 1939, and gives cost justifications that the decision was politically driven, not economically driven.

An attempt to change the direction is obvious then: create a cartel of buyers which would negotiate with an implicit cartel of sellers (Gazprom+Norway). If successful, this strategy still might result in a completely liberalized European energy market. However, another problem appears: a market with, essentailly, one buyer and one or two sellers is not competitive in any sense of the word. This is a "matching problem": there is "match surplus" which has to be split between the two negotiating sides in proportion to their bargaining power. It is very understandable, then, that the EU Commission is mad at Germans who reduce EU's bargaining power by striking unilateral contracts.

Poland's position is less obvious (of course, they love to hit at Russia at the slightest opportunity, but I'm talking economics here): instead of being one of the few transit countries capable of extracting a lot of rents, they will become one of 25 cartel participants and probably will get less goodies in the internal EU distribution of its share of the surplus. They are losing in any case, but they are losing with NEGP more. I guess they have their own Russophobic rethorics and politics of the last decade to blame for this self-inflicting wound, though.

Coming down to the double cartel situation: EU looks to be the losing side, as more cartel members (25) on the buyer's side means more incentive to cheat. There are technical ways to avoid cheating, of course, especially with gas which has few entry points, but expect a huge political battle before anything becomes an official policy. It will definitely be more loud and nasty than the last year's EU bickering over the budget.

And the last parting thought: Ukraine was paing $50 per thousand cubic meters of gas. Population, actually, was paying just $39. It also initially proposed re-negotiating the 50 dollar contract itself (I remember reading professionals' articles in Ukrainian press last August which warned about the sheer stupidity of this step), and resorted to complains to all the high powers on Earth only after looking at the real prices. The last time I checked, end users in Germany and UK are paying real prices for their gas. Therefore, trying to interpolate the Russia-Ukraine gas spat into Russia-UK relations, as FT and others tried to do recently, is completely unwarranted. Of course, it helps to whip up population's histerics, which might be used in any future cartel-to-cartel negotiations in order to increase EU's relative bargaining power.

Everybody in Europe (yes, another generalization, but one most Europeans consider absolutely obvious) puts their own interests first. But since we live in a world of other people, shared interests are the cost of doing business.

In terms of the Baltic pipeline, my opinion is that it is mainly being done to ensure that no one else gets a cut in terms of transit fees/bleeding off gas, and to ensure that all the contracts for construction are German/Russian. (I might add, ignoring Poland has always been something Germany and Russia share completely.) Further, since there are plans to hook this pipeline up into the Norwegian/Dutch/French gas network, Germany may also being planning on putting itself into a middleman position, in terms of raking in the fees itself - for example, selling North Sea/North African gas to Poland.

But cutting the Poles out, especially after the Poles pretty much said that as EU members, they would do what America thought best, is a multi-level game. The Poles were pretty stupid in how they handled the Iraq invasion, and the pay off never materialized - like all of America's current allies, they were simply used without any consideration of anything interests but America's. (Of course, if you are Polish, America still looks a hell of a lot better than Germany or Russia in historical terms.)

The question is not to what extent the Russians/Gazprom can split Europe into squabbling nation states, the question is to what extent are the Russians returning to old Soviet Cold War ambitions. At that time, the goal was essentially to split NATO - so in a sense, that is not real likely today.

I do think this is all a touch overblown in the American/English press - the world has been held hostage to Saudi Arabia and its fairly destructive form of Islam for a generation, and now the Russians are simply stepping back into their old role of tempting Western Europe into becoming an appendage of Russia's ambitions.

Except Russia seems to be a giant kleptocracy, not an ideological monster.

And though the Soviet plans of the mid-80s might have been successful enough if carried through, there is an EU today, and quite honestly, they will probably settle it out as well as possible. Most Europeans realize that scale matters, and most Europeans have lost their faith in the U.S. as a sort of kindly big brother.

How it will play out is murky - I expect a good number of Russian officials to end up driving Mercedes, and that the EU will continue to plan for the future, balancing a number of things while trying to ensure as much comfort for themselves as possible. Europe tends to be pretty post-ideology, something most Americans don't quite grasp.

What isn't often noted here is how energetically Spain, Denmark, etc. are developing renewable energy and renewable energy industries, or France's dealing with North Africa for gas - the Europeans are hesitant to become too dependent on Russia, since no one trusts the Russians anyways. And Europeans are not lazy in the sense of expecting some miracle - they live very much in the real world.

What is so typical is that now that the Russians are starting to act like good capitalists to earn as much as the traffic will bear, those who used to fear 'Soviet domination' seem deeply worried about the Russians playing by the West's rules - and winning.

The only correct strategy for Poland would have been to say, Der Russians and Germans, you can build your pipelines wherever you want as long as you follow international regulations in place that regulate development in the Baltic Sea. However please consider how much cheaper it would be and how much easier to maintain if you build it through our country, hey we will even help with a little subsidy. Here is our offer that is too good to turn down.

With the policy that Poland has followed, Germany especially has no other realistic choice than to go through with the undersea route. Not to mention that Poland has consistently tried to punch over its weight in a manner that has been destructive to both European integration and Polish interests themselves (one may remember the ridiculous, anachronsitic attempt to forge a "Catholic axis" and the pivotal Polish part in destroying the momentum for a European constitution)

The reliable services was meant in regards to such utilities as electricity - it has been quite a while since the electricity in this region had any problems at all. Various German systems are nowhere near the state of decay that major parts of American infrastructure are - basically, Americans stopped investing in such unprofitable areas decades ago. This is not a major debate however - I am sure that parts of Germany are in worse shape than this region, and parts of America are in comparable condition to the best in Germany. But Germans are much more aware of the costs and benefits of having reliable systems, which is one reason German infrastructure companies do so well in the world market. And Germans certainly pay a very high price for this reliability, which is one reason the energy companies play it up so much in public debate - without discussing their profits.

You are absolutely correct about the fear of failure being a problem. And yes, it does hinder the development of new ideas or new companies - except for the new ideas or new companies it doesn't. (I also know one of the original founders of the world's largest ERP software company.) But yes, the barriers are much higher than in America, and it is a real problem. It is certainly a German economic weakness. As I am American, I can assure you that failing in one business is considered a learning experience, and not something which ruins your future in business.

At least in Baden-Württemberg, part of the strikes of government workers related to their simply having to work longer hours without any extra compensation - much like the Beamten (life-long civil servants) were also simply told they now work longer (the Konrektorin / vice principal I know, if I remember correctly, had her work time simply increased 3 hours, and various things like Christmas money simply cut). This is not at all a debate about how effective the government workers are, or whether Verdi is right or wrong, or even if these workers have a realistic view of the world (a lot of them don't). But you can't simply tell your employer you will work 3 hours less because you are time strapped, a principle which works both ways. As for the whole IG Metall strikes - one way of looking at it is that Mercedes workers didn't feel that it was their fault that Schrempp and friends lost billions of euros, while his pay increased. People here do seem to have a much clearer view about how capitalism works, which is why so many workers are union members. And why the various companies/Industrieverbände are so interested in neutralizing the unions. (As a side note - I think unions are just another form of big business - I do not fit well into a right/left definition - but workers collectively demonstrating that the owners are not the only part of the social equation is absolutely necessary in a democracy.) (Another side note - Lidl is a true American style company - shutting down any store where workers organize, or having a newspaper fire a correspondent who reported critically about Lidl and its workers by threatening to withhold advertising - the fact that the BNN admitted this just shows how truly incompetent the BNN is as a news organization - a smarter newspaper would have waited 6 months, then fired her. It was also proof about how the German system works to brake 'capitalism' - in America, such firing is perfectly legal, here it is clearly illegal.)

'Practically all of the social and economic trends that critically-minded Americans are upset about in their country have been adopted in Germany' - to an extent, this is also true, except for the fact that it got started much later, it is still opposed by significant forces (though some are also growing weaker or less relevant), and that as you noted correctly, Germany simply has a different geography and history. But the advantages aren't merely luck. What happened to where I grew up is inconceivable here, as no one would approve of ripping up the forests and the watershed to simply build more houses. But I certainly agree such things as frozen food in Aldi/Lidl, the increasing size of the cars, or the growing number of air conditioners is going in the wrong direction. (Or the stores built with huge parking lots on the fringes of cities.) On the other hand, I can't imagine many people in Germany having a critical problem if the freezers were unplugged and the cars stayed parked and the air conditioners were turned off. And do notice the mandatory recycling of all packaging, the push for renewable energy, the backing of organic farming - you will not find the equivalent in real debate in America, much less in practice.

I am guessing, maybe incorrectly, that your experience of America is more from a distance. 'Only very few of these have anything to do with policy decisions or expressions of the will of the people over the last generations' - this could be debated, but the local farming and regional aspect of much agriculture, the Mittelstand tradition of business, and the fairly high value placed on Natur are all factors which do not support that statement. One of the more interesting 'quotes' I remember (sorry, no reference now) was from the founder of the company which reduces organic material to liquid fuel through tornado like vortexes - he said that his company really couldn't function in Germany, since the agriculture was so organic, there wasn't any real waste from industrial farming to use.

To the best of my knowledge, nobody in America (certainly no one in my experience) has ever had their health insurance pay for glasses. But 1100 euros is way, way too much to pay - mine were about 500 euros, and they were way too expensive too, but they were the best compromise for riding a motorcycle and how my German wife wanted me to look.

There are many measures of social mobility - Germany does really poorly for immigrants, and there is no question that social mobility is fairly well connected to your parents' status. On the other hand, by sopme other measures, Germany has more social mobility than America over the last couple of decades - a scary thought, in its way. (The German school system is appalling, in my eyes - but this has nothing much to do with PISA results, and a lot to do with how it pretty much determines a child's future around 4th grade.)

As for capitalist principles - that was a play on two different ideas. The first is that the world's largest debtor nation seems to feel it has some sort of unique insight into capitalism, where by the objective measures demanded by the market, it is an utter failure - and the world's largest exporting economy is somehow a 'failure' in the eyes of so many. (Most nations would love to have Germany's problems.) The second was the idea that people in Germany realize that perhaps the most basic goal of capitalism is the rich getting richer, which is why so many Germans, who unlike Americans, are quite certain they will never be rich, understand capitalism to be something which is not really to their personal benefit. Of course, this attitude can be carried too far in its turn.

indeed, a business failure used to mean public shame, but this has already changed to quite some extent. Certainly, there is still a lack of Venture Capital, but even that is not as bad as it used to be.

The PISA study has indeed confirmed that your parents' status in many cases determines your own future, however, that seems to be quite natural. It was only a surprise, because after social-democratic reforms in the 70s, most people had the illusion that in Germany everyone had equal chances.

I can't see why last fall's elections were a debacle. Im my point of view, these elections show very well that Germans prefer solutions that are supported by both major political parties, they love consensus. Germans like both the social-democratic idea of social fairness and they know they need the economic competence of the conservatives. After the elections, companies and consumers are in high spirits again. Ms. Merkel has had the highest approval rating of all German chancellors, even though the government has not really done anything significant yet. In the meantime, Germany's major companies report new record profits. They are extremely competetive after ten years of very moderate pay rises, while wages have doubled in other countries.

As regards the health insurance, I have to agree with platsicgolem. Compared to other countries, Germans put enormous amounts of cash into the system and don't get much more out of the system than in other countries. There is a problem on the supply side of the health system, mainly the cartels of doctors (not those working in hospitals) and pharmacists.

Compared to the other larger European countries, Germany seems to be doing ok. The public services are much better than they are in the UK, even though the workers in the public sector are not priviledged as they are in France.

Germany, as an exporting country, even profits to some extent from the high oil price. The oil exporting countries, especially the OPEC countries, love to buy German goods with their petrodollars.

Now about the energy system:
In electricity production both oil and natural gas are not very important. This will remain that way. The phase-out of nuclear will be covered by wind and coal mainly. Currently, investors plan large offshore wind parks in the North sea.
In the transport sector, Germany depends on oil by 90%. The idea to transport goods mainly on rail has failed. That is mainly due to the different safety standards and power systems in the European railway networks. The EU is trying to fix that, so far not very successful. For people, the railway network is in pretty good shape. Most cities also encourage biking, which is very popular among the young.

For heating, natural gas is the dominating resource. However, solar-thermal for hot water, wood pellets and heat pumps are becomming more popular with the rising natural gas prices.

"For the last 20 years, U.S. policy has discouraged production and encouraged consumption. If we dither any more, we will pay a terrible price"

So he is saying that we need to encourage domestic production and discourage consumption (through direct discouragement as well as development in alternatives).

I think the United States is getting into a strange "mode" in its dealings with other countries. It seems that, increasingly the United States is being seen as a "threat" by other nations. One can name Venezuela, Russia, Iran and China, just for starters. Are these countries right to feel threatened? Are they right to view themselves as being slowly, and carefully, encircled?

Gosh! I almost forgot the Arab world! How could I do that? I think what worries me most, is the thought of the United States moving towards "conflict" with all these countries and more besides, at the same time as it has no really powerful allies, and realistically has no chance of "winning", or imposing its will on so many rivals and/or enemies.

One can of course argue that the United States will not take on all these nations at once, prefering to pick them off, one by one. This strategy is also fraught with danger and risky. As one risks forcing said nations into an anti-American alliance, out of necessity rather than choice.

I think the project for a new, American century, meaning American world domination, in a world with only one super-power, is a recipe for disaster, not success.

Overall, the ruling elite in the U.S. are within a hair's breadth of having the stomach for this already.  Moreover, it will be possible for them to get the U.S. population to go along with this through a combination of concealing the ugly deed from public view, and taking advantage of increasing desperation among the population in the face of the effects of Peak Oil.  At a certain point, the populace at large will start losing its moral qualms for the inflicting of barbaric violence upon U.S. enemies also.

But I also think that, in the end, global geopolitics does not differ morally from gangsterism, no matter who the historical actors are.  It is possible to conceal this basic reality somewhat in times of relative affluence, such as the West has enjoyed for some generations now.  But, as everyone more or less agrees, those times are coming to an end.

With that in mind, I have a question for you, Totoneila:  What makes you think that ANY geopolitically significant actor will approach the issue of fossil fuel scarcity in a humane way?

But even assuming that the Europeans COULD make up for a complete cut-off of energy supplies from Russia with energy from other sources, notice what has been happening with the oil and gas reserves of West and Central Asia over the past few years:  They are increasingly coming under the geo-political control of the U.S.  (It is true that the U.S. has not yet initiated any serious efforts to exert geopolitical control over the energy reserves of Africa, but I don't think it's entirely unreasonable to surmise that this may be in the cards.  The US is already involved in Darfur in a significant way, and military contingency plans are surely in place to deal with serious disruptions of oil supply in places like Nigeria.)  

So, it seems to me that any way you look at it, the Europeans will find themselves in a completely abject position geopolitically in the long run - due both to a dearth of energy, and to military impotence.

In the meantime, as you say, the U.S. is also finding itself in a position of increasing geopolitical antagonism with Russia.  But this is in accord with my original thesis that, in the long run, it will not be the Europeans who abjectly capitulate to the Russians, but rather the Russians who will abjectly capitulate to the Americans.  (In my mind, the Europeans substantially already have abjectly capitulated to the U.S. in many important respects.  Were this not true, France, Germany, and Britain would have put up much more vigorous fights than they have to block UN approval of U.S. geopolitical ambitions with regard to Iraq and Iran.)

Since the US has butchered its energy policy and its foreign policy (now, they are the same thing), and as I see power accruing to big producers like Russia, I see that as threatening to my life and those of my fellow citizens--some of whom I actually like! My "patriotism" is entirely a practical matter since, like many other citizens of the US, I am against the policies of the government.

As has come up lately, these are "interesting times" historically. I feel like the US is going to be on the losing end of this historical trend, so I and all the other Americans on TOD are caught between a rock and a hard place. Lastly, I should not neglect to mention that it is totally unfair to the rest of the world that we are 4.6% of the world population and use 25% of the energy as well as emitting 25% of the greenhouse gases.

And furthermore ... wait ... I think I've got an incoming phone call from Homeland Security....

gotta run, Dave

Also, it would appear that Condy is not a free agent. So, the projection, as Leanan's post above makes clear, comes at least in some part from Cheney. (Bush is kicking back at the ranch.) Condy is a team player. Which reminds me of group psychology, something I've looked into over the years. Particularly, the fact that people in groups are subject to regression. But if we started listing defense mechanisms we see in our current regime, we'd be here all day so I'll stop here.

Germany's natural gas comes from Norway, the Netherlands, Russia and, much less, from Lybia.

However, the Dutch might not be able to export soon. Norway is just bringing new gas online from the polar sea. Austria would like Germany to particpate in the pipeline from Iran to Europe.

Gazprom could of course go into the end user markets aggressively, but I would not see that as a threat. If they would increase their prices, in a liberated market, you could just go to another supplier. In Germany, when a supplier wants to change the price, you can always cancel the contract. I already did that several times, when my electricity provider thought they wanted more cash from me.