Posted on September 1, 2008 - by Venik
The EU Gets the Pipe
As expected, the EU resolution on Russia was all gasconade and bravado. Russia’s unspoken threat to restrict energy supplies to the European Union did the trick. Gordon Brown found out that a “root-and-branch” review of relations with Russia may be difficult when you are covered head to toe in Russian oil. Today Russia is supplying nearly 35% of oil and 40% of natural gas consumed by the European Union. The EU is desperate to diversify its natural gas and oil supplies.
The key component in this diversification plan is the proposed Nabucco natural gas pipeline linking Erzurum, Turkey with Central Europe. The Nabucco project will connect with the gas pipeline running from Azerbaijan via unstable Georgia and separatist-infested Turkey. Not exactly the most dependable of arrangements. Just a few weeks ago PKK militants in Turkey blew up the Baku-Tbilisi-Ceyhan pipeline and threatened more such attacks in the future. Not to mention that the pipeline passes near another unstable, ethnically-distinct and potentially breakaway region of Georgia – Ajaria, which also controls Georgia’s largest commercial port in Batumi.
A possible decision by the EU to postpone the EU-Russia summit may force Putin to look for a new place to sleep. (Source: MARKKU ULANDER/AFP/Getty Images, Putin at the 2006 EU-Russia Summit)
For its part, Russia is also seeking to diversify its gas and oil export markets. The key to Russia’s plan is the nearly 3,000-mile Eastern Pipeline, linking East Siberia and the Pacific Ocean. The pipeline project, with an estimated cost of $24 billion, has been delayed by one year due to adverse weather conditions and technical problems. Also, because of environmental concerns, the pipeline had to be moved 25 miles north of lake Baikal. After stepping down as Russia’s president, Putin took personal charge of the pipeline project, which is currently due to open in late 2009. The pipeline will give Russian oil producers direct access to markets in China, Korea, and Japan, dramatically increasing Russia’s leverage over the European Union. In the pipeline war, Russia’s vast size is a definite advantage.
On Sunday, ahead of the EU meeting in Brussels, Medvedev announced that Russia’s recognition of independence of Georgia’s two breakaway regions was irreversible. He also announced that Russia will sign bilateral agreements with South Ossetia and Abkhazia to provide these two nations economic, social, humanitarian, and military assistance. The purpose and timing of this announcement were to show the EU that an economic confrontation with Russia was not going to change Russia’s policies toward Georgia and its former territories.
So why, twenty years after the end of the Cold War, the Europeans and the Americans still lack any kind of useful leverage against Russia? The various complicated reasons boil down to two simple points: political mistrust and economic protectionism that force the West to keep Russian businesses at an arm’s length. The US still haven’t repealed the 1974 Jackson-Vanik amendment denying Russia “most favored nation” trading status due to emigration restrictions. Such restrictions in Russia have been lifted in the late 1980s. The result of this pigheaded approach to doing business with Russia is that, when push comes to shove, the West finds itself without means to influence Russian foreign policy, while still dependent on Russian oil and gas.
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September 1, 2008
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The main problem with Nabucco is that there is basically no gas to fill it. It might have worked if Turkmenistan and the other Central Asian producers (who have much smaller reserves) would have committed to supplying via Nabucco. But it appears that they are content to ship via Russian pipelines if they get a fair price, which is exactly what Gazprom has guaranteed them.
You are right about the lack of NATO leverage on Russia’s economy. By isolating it for 17 years they have castrated their threat of isolation. I think that NATO will go into a spasm of hysteria when its impotence trickles down into the collective awareness. They were supposed to be masters of the universe but instead they are a Potemkin village. It is a very dangerous time for Russia, the reflex of the west is always “drang nach osten”. Russia must put the arms reductions process on long-term ice.
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September 1, 2008
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True, but the East got a lot bigger since those times. If the past twenty years showed anything, it’s that Russia cannot retreat behind its borders and count on NATO to keep its promise of non-aggression. When left with nothing to do, NATO will fall back on it founding principle: containing Russia in every way possible. America’s war in Iraq, NATO’s war in Afghanistan, difficult relations with Iran and Venezuela, and the resulting high oil prices are the reasons for the West’s weak, almost non-existent response to Russia’s action against Georgia. And so, it would seem, having NATO well entertained elsewhere is what Russia must do to keep the Alliance away from its borders.
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September 2, 2008
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A good blog venik. I’ve blogrolled you as “Opinionated Russky” – as a compliment.
My take on the current moves is that NATO wants to withdraw from Afghanistan (and partially from Iraq) in a year or two.
That will be a political defeat for NATO but it will free up military forces/(money for allies) that will be redeployed against Russia in Poland, Czech, (already in) Georgia, and most importantly in Ukraine. This pressure on Russia and predictable counter-action will provide a distraction for the Afghan/Iraqi “Peace with Honor”.
As many have said this new Cold War will also help McCain get into power, keep him there and justify the sky high US defence budget.
Medvedev/Putin meanwhile will also have a “noble” reason to lead strongly and boost the power/budget of the grateful Russian Armed Forces.
Basically the War on Terror is Out (and politically boring) while Bear baiting is back in vogue.
Peter Coates
http://spyingbadthings.blogspot.com/
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September 2, 2008
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True, in the past three week Bush seems to have lost his distaste for setting “artificial deadlines” on the withdrawal of troops from Iraq. Russia might have been against the US invasion of Iraq, but the whole game played out to Russia’s advantage, at least in short term. Oil prices skyrocketed and Russia made a killing despite the lost Iraqi oil contracts. Seems to me Russia will help the West find good reasons not to rush pulling its troops out of Iraq and Afghanistan. Something tells me Russia’s Georgian blitzkrieg is not even an overture – just the band getting tuned up. Russians have a particular affinity for long-reaching master plans
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