Sunday, February 08, 2009

Russian geopolitics, gas pipelines, and underlying health trends in Central Asia

From the recent New York Review (Feb 12, 2009): Christian Caryl’s review of Edward Lucas’s book, The New Cold War: Putin's Russia and the Threat to the West brings together a number of sensible insights about Russia today.

For one thing, there is the discussion of the practical entailments of producing and distributing gas as opposed to oil in Eurasia.

Natural gas pipelines are immensely expensive. Once a line connecting a particular field with a particular consumer has been built, investors tend to be leery of putting money into duplicate or partially overlapping routes. And if the builder of the first pipeline refuses to allow it to be used by competing suppliers, consumers will be left with only one choice. This means that the monopolistic supplier can exploit its route to its own advantage in a myriad of ways—including, in the case of Russia, to exert political pressure.

And this, indeed, is precisely what Gazprom, Russia's powerful state-dominated gas monopoly, has done. Gazprom—whose chairman during much of the Putin administration was Medvedev, the current president and close Putin ally—doesn't just own most of Russia's gas fields; it also controls access to the pipelines that bring that gas to markets—above all to the European Union, which despite its status as the world's largest economy has relatively little in the way of indigenous energy resources and finds itself correspondingly dependent on Russian petroleum products. (By 2004, Russia was the sole gas supplier to Estonia, Finland, Latvia, Lithuania, Moldova, and Slovakia; and the principal supplier to Germany, Greece, Bulgaria, Hungary, Poland, Austria, the Czech Republic, and Turkey. Overall, it accounts for nearly 30 percent of the EU's gas supply.) Gazprom has already shown its willingness to employ its stranglehold over energy supplies as a political weapon, even if it often does so in the guise of dispassionate adjustment to market realities.

As we have seen in the startling recent dispute with Ukraine, governments that disagree with Russian policy have been punished by overnight price hikes or interruptions in service. The Ukraine standoff began in the last days of 2008, ostensibly over Russia's demand for a large increase in the price Ukraine pays for its gas; but the ensuing shutdown affected much of Europe, including leading nations such as Germany, and some analysts suggest that the standoff has been a way for Russia to warn the West about exerting too much influence in Ukrainian affairs. In fact much of the gas Russia sends westward actually comes from the Central Asian republic of Turkmenistan, which is forced to sell to the Russians at bargain-basement rates since Gazprom pipelines are the only way the Turkmens can get their gas to market.

Another issue: He also points out a contradiction (possibly an emerging issue in the future?) between how the Russians view Ukraine and how the Ukrainians view themselves.

But the real flashpoint—the fulcrum of Eurasia's destiny, as the recent natural gas crisis reminds us—is Ukraine, a big and unstable country that has always been a focus of geopolitical competition. A large chunk of Russia's navy, the Black Sea Fleet, is still based in Crimea, and many Russians continue to regard Ukraine in much the same way that Serbs see Kosovo—as a heartland of their own national culture. At the same time, although more than 20 percent of the Ukrainian population are ethnic Russians, a large and apparently growing number of Ukrainians increasingly link their own national identity and historical destiny with Europe rather than their neighbor to the east.

And the contradiction is already imbedded in the Ukrainian cabinet: There has been a

long-running feud between President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, who recently traveled to Moscow for a round of surprisingly convivial negotiations with Putin.

Other details of interest:
“Russian spying in Europe and the US … has, in fact, reached levels comparable to the bad old days of the Soviet Union.” [p23]
“What he insists upon very strongly is that Europe must make every effort it can to reduce its dependency on Russian energy supplies by creating a Europe-wide energy market with diversified sources of supply. [He proposes that] … European countries should cooperate in developing pipelines that would connect their market with Central Asian suppliers such as Turkmenistan and Kazakhstan while bypassing Russian intermediaries” [p23] [That would be nice, but how effectively could they manage that, given that Russia, recognizing that possibility, seems eager to position itself as the hegemon in Central Asia? Russia has demonstrated its readiness to intervene in such affairs, as it already has for other reasons in Chechnya and Georgia.]
• “Russia, contrary to all the feverish talk about its presumed status as a revived superpower, is nothing of the kind. It is a rising regional power that enjoys the benefit of immense geographical reach and huge natural resources. Yes, it has a nuclear arsenal and a big army—but, as Lucas correctly notes, the former is outdated and poorly maintained, . . . Meanwhile, the financial crisis has dramatically highlighted the anemic basis of Russia's supposedly formidable economy. . . . Russia's international image has deteriorated sharply, and investors both domestic and foreign have bolted. . . . Russia's stock markets [have lost] up to 75 percent of their value …. Meanwhile, the country's extraordinary demographic decline—aggravated by a nationwide drug and alcohol epidemic, a catastrophically underfunded health system, and the rapid spread of AIDS—continues seemingly unchecked. . . . One good start, though, might be to exercise a bit more caution in how we employ historical analogies. In reality we are not entering a "New Cold War" or anything like it. What we are facing is the messy challenge of figuring out where a big, ailing, mournfully post-imperial Russia fits into the chaotic twenty-first century.” [p24]

This last note on the internal decay of Russian society makes us wonder what’s going on in the other states of Central Asia, not only the “stans,” but also Iran, Afghanistan and Pakistan. If anything, health conditions in those countries are worse than in Russia. Even if, presumably, alcohol is less of a problem in those countries, we do know that drug consumption in some of them has been rising rapidly. A friend of mine has seen the figures on Iran: Iran has the highest incidence of drug abuse in the world.

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