An Underwater Pipeline Helps Explain De‑dollarization

What’s the most boring thing ever?

Probably a gas pipeline under the Baltic Sea, right? 

Wrong. Nord Stream 2 (NS2) show us big things about changes to the global currency system, and what is coming next.


I want Superbubble to be useful to people who don’t normally follow international finance or monetary systems. A starting point is to look into the gap between what is reported and what is actually happening. This gap is constantly growing. It is especially large in coverage of economics and geopolitics. 

Here, I pick apart a major news story to find underlying realities. A story about a gas pipeline might seem boring, but it’s a window into some of the most important and interesting things happening on the planet. Namely: Eurasian nations are attempting to escape the US dollar system, without war.

That’s how I see it, let me know if you agree at the end of this article.


A gas pipeline is being built under the Baltic Sea to transport Russian gas to Germany. US President Trump is not happy about it. During a trip across Europe in 2018, he attacked NS2 several times. First, at the NATO summit in Brussels:

I think it is very sad when Germany makes a massive oil and gas deal with Russia … It should never have been allowed to happen … Germany is totally controlled by Russia because they will be getting 60 to 70% of their energy from Russia and a new pipeline … You tell me if that’s appropriate because I think it’s not.

A few days later, In Britain, Trump continued:

You asked about the pipeline. To me, it is a tragedy … I think it’s a horrible thing that you have a pipeline coming from Russia … I think it’s a horrible mistake. I think it’s very bad for Germany, very bad for the German people. And I don’t think its very good for NATO.

It’s hard to believe that the “America First’ guy cares too much about Germany and Germans. We can probably agree that there’s here than meets the eye.

That was last year. A few months back, some of the world’s most powerful leaders gathered at the 2019 Munich Security Conference. US Vice-President Pence made clear that the US government still opposes NS2:

We’ve stood strong against efforts to divide our alliance, through political interference or the use of energy resources. And the United States commends all our European partners who have taken a strong stand against Nord Stream 2. And we commend others to do the same … We cannot ensure the defence of the West if our allies grow dependence on the East.

It’s not just Americans opposing NS2. Members of the German elite have lined up with Trump to oppose it. Manfred Weber is a member of Angela Merkel’s CDU party. He is a leading candidate to be the next EU Commission president, and criticised NS2 for not being “in the European interest and should be reconsidered”.

Here is an overview of the main objections to Germany’s pursuit of NS2. The article argues that a sensible majority across the West agree NS2 is a bad idea.

So why does the German government proceed with NS2, despite so much opposition? The obvious answer is that Germany needs the gas. Western Europe does not have significant natural gas reserves. And what they have is dwindling fast. So Germany imports what it needs, and seeks to secure future supplies.


Another question: why are Russia and Germany putting NS2 under the Sea? Wouldn’t it be easier to go across land. Through Ukraine perhaps?

Before 2014, that was the route most gas from Russia to Europe took. However, Ukraine became politically unstable in 2014, when a series of violent events led to a revolution and the overthrow of the government.

There are ongoing arguments about what happened in Ukraine, and who is to blame.

I am not here to referee that. 

The upshot was that the political and military instability threatened Europe’s gas supplies. So Germany and Russia accelerated work on NS2. 

NS2 means that Ukraine will lose billions of dollars in fees earned for allowing gas to transit across their territory. NS2 also made the political turmoil in Ukraine irrelevant to German energy supplies. 

Richard Grenell, the US Ambassador to Berlin, attacked Nord Stream 2 for creating “an alternative route for transporting Russian gas on its way to Europe that does not pass through Ukraine”. In response, Heiko Maas, Germany’s foreign minister told Grenell, “to stay out of an economic project that would ensure energy security in Europe”.


In 2014 – around the time of the overthrow of Ukraine’s government – Condoleezza Rice encouraged Angela Merkel to buy from the US:

There are drawbacks to this plan: US gas would have to be converted to liquefied natural gas (LNG), then shipped across a large ocean. This also requires LNG terminals and other infrastructure that Europe does not have. This would mean US LNG costing about 20% more than Russian gas.

Condoleezza adds: ”If Putin is not stopped now, we could find ourselves in a real conflict with Russia”. Those supporting or opposing NS2 cite various security, moral, and economic factors.


For some, the question boils down to a cost/benefit decision: is it worth paying extra for US LNG, to avoid a dangerous dependence on Russia? For others, the question is who do you dislike least: Trump or Putin?


Despite the impracticalities and extra expense, President Trump seems to be getting his way. In July 2018), he announced that Europe was to become a “massive” buyer of US LNG. Boatloads. 

By openly attacking the idea of Germany buying Russian gas, Trump exposes an economic and political conflict between US and European that has been in the background for decades. LINK TO TLDR It is not just about energy, but a complicated tangle of geopolitics and economics [that comes back to geopolitics]. The events in Ukraine highlighted a struggle that is increasingly out in the open:

Victoria Nuland 'Fuck the EU'


It is absurd that Europe pays for 80% of its energy import bill – worth 300 billion euro a year – in US dollar when only roughly 2% of our energy imports come from the United States. It is absurd that European companies buy European planes in dollars instead of euro.
— Jean-Claude Juncker, President of the European Commission, Juncker says too much dollar

This remark gets to the heart of the matter. It shows that NS2 is also about energy and currency. Specifically, the  status of the US dollar as world reserve currency. Behind the scenes there is an ongoing battle for control of the world’s currency system, which is rarely reported accurately. Few are paying attention, but I expect that will change in the coming months and years.



Trump made an interesting comment during NATO’s bilateral breakfast in Brussels last year:

I think trade is wonderful. I think energy is a whole different story. I think energy is a much different story than normal trade.

What did he mean? According to Luke Gromen, of macroeconomic research firm FFTT:

IMO there is a reason we are trying to dictate energy policy to the world, and it isn’t because we actually care about the energy itself. We care about the currency it is priced in, & more specifically, what happens to US deficits if its priced in anything but US dollars.

Currency and energy are among the most important technologies on the planet. We should not be surprised that powerful entities want to dominate these technologies. They are also willing to tell any story necessary to serve their interests.

The key term is de-dollarization: efforts by a number of nations to bypass the US dollar – especially in the energy trade. This is making US dollar’s status as world reserve currency increasingly precarious.

That is the story as I see it. I believe the outlines of the world’s next currency system are discernible. I aim to cover the transition as clearly and accurately as possible, as it happens. And if it happens.

End note. 

Economic conflict between the US and Europe is not new.

Here are the minutes taken at a 1972 cabinet meeting with US President Nixon.

They show the tensions playing out between US and the rest of the world have been live for decades

“European leaders want to ‘screw’ us and we want to ‘screw’ them in the economic area.” – US President Nixon, 1972. Worth reading for that, and other quotes.