Thursday, January 29, 2009

Russia's Strategic Location for both Europe and the Far East

Today's article on Putin's commitment to build Russia's future on its ability to control the energy resources to Europe seems to me significant. In a sense Putin has limited options, but the one he has, the fossil fuels of Russia and Central Asia, is powerful leverage. Discussions of the topic so far seem to be about the provision of energy to Europe, but as China grows it will also demand huge amounts of energy; we know the Chinese have already been busy establishing connections withe the oil and gas rich Central Asian states. So, Russia and the neighboring states over which Russia will continue to be hegemonic are strategically situated for the future.
It is hard to see how the great populations of Eurasia cannot become desperately dependent on the Russian/Central Asian consortium, which controls the gas and oil fields critical to both ends of the continent. As much as I respect Parag Khanna's ideas about the future trends for the world (see his Second World), I think he mistakenly writes off Russia, noting its population problems. No matter how few people live in northern Eurasia, that area will be the energy source for billions of people.
Here I merely quote from a few statements in the article.
[Click on the title for the link to the source.]

NYTimes January 29, 2009
Putin’s Grasp of Energy Drives Russian Agenda

. . . from his earliest days in power in 2000, Mr. Putin, who left the presidency in 2008 and became prime minister, decided natural resource exports and energy in particular would not only finance the country’s economic rebirth but also help restore Russia’s lost greatness after the collapse of the Soviet Union.

. . . he ordered natural gas shut off to Ukraine, in the process cutting supplies to Europe. It was portrayed by the Kremlin as a protracted commercial dispute with Ukraine. But the hundreds of thousands of shivering gas customers in the Balkans and Eastern Europe sent an unmistakable message about the Continent’s reliance on Russian supplies — and Mr. Putin’s willingness to wield energy as a political weapon.

. . . In fact, the standoff in Ukraine was just one part of a far larger Russian playbook on natural gas policy under Mr. Putin. In the past year, Russia has formed a cartel-like group with Middle Eastern nations with the goal of dampening global competition in natural gas, sewn up sources of supply in Central Asia and North Africa with long-term contracts to thwart competitors and used its military to occupy an important pipeline route in Georgia.
. . .

“He has been thinking for some time, ‘What are the means and tools at Russia’s disposal, to make Russia great?’ ” said Lilia Shevtsova, a researcher at the Carnegie Moscow Center. In the post-Soviet world, she said, Mr. Putin concluded that “military power would no longer be sufficient.”

. . . A spokesman for Mr. Putin, Dmitri S. Peskov, said that the energy market “was, is and will remain a strategic sphere for Russia”

. . . In this contest, Russia’s overarching goal is to prevent the West from breaking a monopoly on natural gas pipelines from Asia to Europe. Boris E. Nemtsov, a former Russian first deputy prime minister who is now in the opposition, said: “It is the typical behavior of the monopolist. The monopolist fears competition.”

. . . The Nabucco pipeline was proposed in 2002 by executives from European energy companies with the express intent of undercutting Russia’s gas monopoly. It would pass through Turkey and Georgia to the Caspian Sea.

Under the best of circumstances, building an international pipeline is an intricate and arduous process, technically, financially and politically. However, Nabucco’s planners rapidly discovered that their biggest obstacle was not a mountain chain or a corrupt local politician, but Mr. Putin himself. When OMV, the Austrian energy company, formally created a consortium for Nabucco in 2005, he responded with a competing idea: a pipeline called South Stream that would terminate at the same gas storage site in Austria, but originate in Russia and bypass Ukraine by traveling under the Black Sea.

. . .
To pay the hefty upfront construction costs, a pipeline needs both an assured source of supply and a market for the gas it transports. The South Stream pipeline would flood the gas market in southeastern Europe, locking up the customers the bankers behind Nabucco were counting on to finance the project.

At the same time it would undermine Ukraine’s domination of gas lines headed west, one of the biggest obstacles to Russian domination of the European gas market.

But Mr. Putin did not stop there. Leaving nothing to chance, he also took steps to choke off potential sources of upstream gas supplies deep in Central Asia.

. . . While energy executives around the world rushed to Ashgabat, the Turkmen capital, to meet the new leader, Gurbanguly Berdymukhammedov, a former dentist, Mr. Putin was the first to cut a big deal.

. . . Mr. Putin and Mr. Berdymukhammedov agreed in 2007 to build a pipeline north, to Russia, depriving Nabucco of potential supply. It was not until 2008 that European Union officials got to Ashgabat with a memorandum of understanding for a trans-Caspian pipeline that could link to Nabucco. . . .
The West still had an important pipeline partner in Georgia, a critical geographical link. But that all but evaporated in the brief war last summer.

By 2007, a pipeline section had been laid across Georgia, the Baku-Erzurum pipeline, which is now used for local distribution but will become a part of the Nabucco pipeline, if it is ever built. This brought the struggle for Nabucco to a pivotal stage, for it was now playing out along a storied trade route in the petroleum business, and one highly sensitive to the Russians.

. . .
The August war sent a chill through boardrooms in the West when, for example, Russian tanks scurried back and forth over one of the buried pipelines and one crew occupied a pumping station. Russia, said Svante Cornell, a specialist on Central Asia and the Caucasus at the School for Advanced International Studies at Johns Hopkins University, sent a simple message: “We can blow this up at any time.”

. . .
Despite its best intentions, Europe is likely to remain dependent on Russian energy supplies for the foreseeable future and, perhaps, indefinitely if Mr. Putin has his way. And that reflects his long-held beliefs.

Copyright 2009 The New York Times Company

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