Russia’s great gas game

RUSSIA and the European Union are geopolitical neighbours. Whether or not their relationship is in fact neighbourly, rather than tense and confrontational, is of critical importance to both.

Unless it modernises its economy and society, Russia can forget its claim to status as a world power in the 21st century and will continue to fall behind both old and newly emerging powers. Moreover, Russia needs partners for its modernisation, because its population and economic potential are too small for it to play an important role by itself in the emerging new world order. Russia’s strategic nuclear weapons will be insufficient to ensure it a place among first-rank powers.

But where can Russia turn? Towards East Asia? To the south and the Islamic world? Neither of these is a serious option. As it is, Russia can turn only towards the West, and to Europe in particular.
For Europe, however, Russia’s role is of critical strategic importance. Even a partial revision of the post-Soviet order in the direction of an increased Russian grip on ex-Soviet states or satellites would drastically change EU strategy and security policy.
Both sides claim to want improved bilateral relations, but there is room for doubt about whether Russians and Europeans actually think about their relations in the same terms. A look beyond the cordial rhetoric reveals profound differences.
When Russia’s former president and current Prime Minister Vladimir Putin declared several years ago that the greatest disaster of the 20th century was the demise of the Soviet Union, he didn’t just speak for himself but arguably for the majority of Russia’s political elite. The overwhelming majority of Europeans, however, probably view the USSR’s break-up as a cause for celebration.
Indeed, today’s Russia avowedly seeks to reverse the post-Soviet order in Europe that emerged after 1989/1990, at least in parts of its neighbourhood, while the Europeans and the West want to maintain it at all costs. So long as Moscow doesn’t understand these fundamental differences and draw the right conclusions from them, Europeans won’t view Russia’s opening towards the West as an opportunity, and Russia will always encounter deep mistrust in Europe. But this doesn’t preclude practical and pragmatic co-operation in numerous areas.
Russia today has retained its strength only as a supplier of energy and other natural resources. It is therefore no surprise that Putin has sought to use this lever to rebuild Russia’s power and to revise the post-Soviet order.
Russia’s natural gas supplies to Europe play a vital role in this regard, because here, unlike in the case of oil, Russia’s bargaining position is very strong. Even more importantly, its direct neighbours are either completely dependent on Russian gas supplies — Ukraine and Belarus — or, like Azerbaijan and Turkmenistan, are dependent on Russia’s pipeline system to sell their gas output.
Russia certainly pursues economic interests with its gas-export policy — all the more so when gas prices are trending down — and it wants to expand its role on the European gas market to intensify the dependencies that now exist. But this is unlikely: Russia’s disruption of gas supplies in January 2009 made clear to the EU in no uncertain terms what price might have to be paid.
That is why “diversification of gas-supplier countries” has since been EU policy — including, first and foremost, the Nabucco pipeline project, which would open a southern corridor between the Caspian Sea, Central Asia, northern Iraq and Europe. Nabucco would reach Europe via Turkey and would drastically reduce Caspian supplier countries’ dependence on Russia’s pipelines, and the new southeastern EU members’ dependence on Russian gas supplies. So it comes as no surprise that the Kremlin is trying to scupper Nabucco.
Two other developments promise to prevent increased European dependence on Russia: massive expansion of liquefied gas imports into the EU and — linked to this and to deregulation of the European gas market — the transition from long-term supply agreements and the oil-price peg to market-dependent spot prices.

Nonetheless, the primary goal of Russian gas policy isn’t economic, but political, namely to further the aim of revising the post-Soviet order in Europe — a quest that is not about the EU as much as it is about Ukraine.

Ukraine’s new Prime Minister Mykola Azarov, was stunned when Putin unexpectedly confronted him during a joint press conference with a suggestion to merge the Ukrainian and Russian gas companies. Unlike the Ukraine government’s assent to extending the Russian Black Sea fleet’s deployment in Crimea — a decision that led to physical violence in Ukraine’s parliament — this was not a prolongation of the status quo, but a public demand for its revision.—GN

Tags:Russia AzerbaijanEuropean UnionSouth Caucasus Natural gasGeorgia (Republic)