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September 15, 2006

"Russia Won't Act Like an Energy Superpower": Making Promises that Can't Be Kept

Part II
 
"We're Not Behaving Like an Energy Superpower" - Really?

At the Valdai Club meeting President Putin exclaimed, "We're not behaving like an energy superpower". Is that a true statement? In a strictly confined context it is a true statement, but in a much larger and more meaningful context it is entirely a false statement. How so?

In the Ukraine gas dispute, for example, Russia watched very warily as the US and its European partners instigated a series of "colored" revolutions inside states strategically located on Russia's perimeter, attempting to cut deeply into Russian political and economic power and threatening Russian stability and even its own territorial integrity, all the while arrogantly expecting Russia to continue to provide extremely cheap, far-below-market-price energy to the new anti-Russian regimes that had been set up with Western clandestine and overt support. Only an idiotic Russia complicit in its own weakening and disintegration would have continued to supply cheap energy under such conditions and circumstances. Russia is neither idiotic nor will it be complicit in its own disintegration at the hands of the duplicitous West.

Ukraine constituted the red line for Russia. The Kremlin decided to give the West a strong dose of the bitter consequences of its own foolish foreign policies with respect to Russia. It used its powerful energy leverage to demand that Ukraine pay closer to fair market prices for its gas, but more importantly it served notice that the US and certain of its European partners will not be given any further free ride, as it were. If they insist on pushing Russia too far then there is a heavy price to be paid, and Russia will not shrink from pointedly exacting that price. After all, what was Russia supposed to do? Simply collapse in the face of the Western onslaught obviously aimed at carving away at Russian influence, Russian territorial integrity, Russian economic stability and other entirely legitimate core Russian interests? Russia will never simply hand over to the West what it keeps seeking by hypocritical and underhanded means. But while Russia has acted largely in a legitimate fashion in the Ukraine context, in a larger and more meaningful context it already gives powerful evidence of beginning to behave "like and energy superpower". How is that true?

There was a time when the US superpower could throw its irresistible economic and political weight around to virtually guarantee that it came out on top of any negotiations with its allies and rivals alike. All understood that the costs of angering the US were far greater than any short-term (at best) economic or political advantages that might be gained by standing up to it in opposition. The US didn't hesitate to "behave like a superpower" and use its unmatched strength, whether implicitly or explicitly, to secure significant advantage for itself. Of course, those days of unquestioned US strength and dominance are now past. Yet, the US still attempts (mostly unsuccessfully) to get its way by force, whether economic or even military.

Russia has begun to do similarly by virtue of its mounting energy leverage. In the direct aftermath of the Ukraine gas crisis Russia either cut off gas or threatened to do so to a number of other Eastern European customers including Bulgaria, Romania and others and has thereby secured for itself terms more to its liking. It has threatened Europe with accelerated diversification of its exports to the East if Europe fails to open its markets to rapidly advancing Russian investment and acquisition of downstream assets. It has abruptly changed existing contracts and agreements and forced Western oil majors to take much smaller stakes in its oil and gas projects (or denied such stakes entirely) and has sued in court to halt projects headed up by Western oil majors. It has cut off oil shipments to Lithuania and gas shipments to Georgia. Russia increasingly plays 'hard ball' very much like an energy superpower would be expected to play. The energy weapon is irresistibly effective and Russia already shows signs that it enjoys the exhilaration of its energy-based successes.

Russia's very strong suit is its industries related to strategic resources and other key industries that rely heavily upon such resources, like aviation, space, steel and shipbuilding. The Russian Federation is positioning itself in the global markets to massively capitalize upon, even monopolize, such key industries. It has embarked upon a clear strategy of ensuring a central role for itself, and of consolidating its global position in such a way that it cannot be shifted aside and must be reckoned with on its own chosen terms. It is already beginning to 'act like a strategic resources superpower'.

Also of great importance along these lines Russia, by actively taking leadership in defining and drawing the circle of international energy security, is "behaving like an energy superpower" by laying the comprehensive global basis for a new definition of energy security and the political and economic groundwork for a new global energy security arrangement with itself at the center, one that is quite able to include into the circle those powers that take a favorable stance toward Russia while simultaneously excluding to a significant degree those powers that do not take such a favorable stance. As instability mounts in the oil-rich Middle East and Africa, Russia's global energy leverage only increases, and its global energy leadership is only more firmly consolidated. Russian leaders see clearly that geopolitical developments are rapidly ushering Russia into the key global energy position, and they are flush with more than mere cash - they are becoming flush with the power that accompanies Russia's key position. As such, Russia can be expected to ever more fully act the role that it is progressively positioning itself for and that it is being handed - that of Energy Superpower, notwithstanding Mr. Putin's disarming claims to the contrary.

The West and the rising East are locked into competition for control of strategic global resources. What are the stakes and the rules of the revived Great Game?

Part III examines the answers to those questions.

 

Note: This Gold version of the analysis is significantly condensed as compared to the full text Platinum version available only to subscribers. The Platinum version addresses head-on the compelling and important issue of Russian corporate gigantism and how Russia's resources-and-industry-based corporations are seizing an excessive share of the global markets.

 

 

 

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See Also

 

Part I
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Part III
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Part IV
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Part V
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