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Debate: Russia and European Energy Security

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December 2018 Scott Ritter and Gary Peach

 

Is Vladimir Putin's Russia a threat to European energy security? That is the question addressed in the following debate between Scott Ritter, a US-based geopolitical analyst, and Gary Peach, an Energy Intelligence reporter in Riga, Latvia. Scott takes the negative or opposed view on the question, while Gary takes the affirmative or positive position. Their opening statements, which were composed blindly without discussing or seeing the argument of the other side, are followed by shorter rebuttals. Regardless of whom readers may pick for the winner, the ultimate value of the debate lies in the understanding gained by fully exploring the question from opposing perspectives.

Scott's Opening Statement

Energy security is a nebulous term, susceptible to variances in definition and interpretation. At face value, the concept of energy security hinges on the uninterrupted availability of energy sources at an affordable price, at least as defined by the International Energy Agency (IEA). This definition operates on a purely economic foundation. Matters become more complex when issues of national security are woven in, incorporating geopolitical considerations that often override the economic. Based solely on the IEA definition, Russia today offers Europe with unmatched access to natural gas at prices that are cheaper by far than the nearest competitor, making Russia virtually synonymous with any notion of European energy security. The ready availability of cheap Russian gas, however, is viewed by the US as a double-edged sword, providing Russia with unacceptable leverage over the economy of Europe. Seen in this light, Russia becomes the antithesis of European energy security.

The reality is that Russia has never sought to use its status as a major supplier of energy to Europe as a vehicle of policy influence. Those who label Russia as a threat have conflated Russia's objection to the attempted absorption of "near abroad" nations such as Ukraine and Georgia into the orbit of the EU and the North Atlantic Treaty Organization, and the use of gas embargoes as a means of influencing the policies of those two nations. The issue of Ukraine, Georgia and other "near abroad" nations is a geopolitical one that touches on the sensitivities of Russia and its president, Vladimir Putin, regarding Russia's proper role in a post-Soviet world.

Russia's relationship with Europe regarding the supply of natural gas, however, is purely economic, with Russia as dependent upon the income generated by the sale of gas to Europe as Europe is on the supply of Russian gas -- perhaps even more so. Moreover, those who cite Russia as a threat to European energy security are simply mirror-imaging their own energy-based policies toward Russia.  Russian gas has been, and continues to be, used as a weapon by the West against Russia when dealing with European policy disputes. The weaponization of Russian energy comes in the form of sanctions imposed against Moscow and the pursuit of policies designed to curtail development of Russia's energy sector. The Russian economy is driven by its energy sector, and the US, backed by the nations of Eastern Europe, has consistently sought to control Russian behavior by limiting access to critical technology, artificially suppressing energy prices to diminish much needed income, and to reduce Russian access to the global energy market. When seen in this light, it is far easier to make a case that the US and Europe pose a threat to Russian energy security rather than vice versa.

But the most salient argument against Russia posing a threat to European energy security rests in a basic comprehension of Russian national security policy as formulated and implemented under Putin's leadership. Russia no longer plays a zero-sum game with the West: it fully recognizes that it is not the global superpower it was during the Cold War. Moscow does not aspire to be the equal of the US in a bipolar setting, but rather to encourage the development of a multipolar world that dilutes American power. One of the major tenets of this policy is the need to drive a wedge between Europe and the US. Russia recognizes that the best way to do this is to establish a close interconnection with Europe, something its dominant position as a supplier of natural gas enables. The quickest way for Russia to unify the US and Europe would be to behave in a manner consistent with American warnings and hold Europe hostage to threats of a Russian gas embargo. To behave in such a manner would represent economic and geopolitical suicide for Russia. Vladimir Putin knows this, as does Western Europe. In the end, the notion of Russian gas being used to threaten European energy security is little more than a scare tactic invented by the US and its Eastern European allies, grounded more in fear and prejudice than reality.

Gary's Opening Statement

Judging by past behavior, Russia is undoubtedly a threat to European energy security. Time and time again since Vladimir Putin took office in 2000, European countries have endured Moscow's willingness to use energy supplies to punish and coerce. In fact, the very concept of energy as a political tool was enshrined in Russia's 2003 energy strategy, which stated in the introduction that "the country's role on global energy markets in large part determines its geopolitical influence." Such a statement ipso facto demonstrates the correlation in the Kremlin's mindset between energy exports and foreign policy. Granted, this clause was omitted in the updated strategy in 2009, but many would argue that its spirit is alive and well.

To be accurate, it is worth pointing out that Moscow's proclivity to sting its European clients with energy deliveries actually predates Putin. In the early 1990s, for instance, the Baltic states were slammed with exorbitantly high natural gas prices for their insolence in splitting from the Soviet Union and establishing independent states. So, Putin's Russia has merely taken the baton from his predecessors. Yet under his rule the Kremlin has proven remarkably proliferous in politicizing energy. In 2003, after Latvia refused to cede control over the Ventspils oil export terminal to Russian interests, pipeline deliveries of crude oil to the port ceased. Three years later, after big Russian oil firms were barred from taking over Lithuania's refinery, pipeline oil supplies to the facility stopped -- and haven't restarted since despite efforts by Vilnius. Meanwhile, Georgia, Belarus, and Ukraine have also experienced Russia's disfavor via oil and gas supplies -- too many instances to enumerate -- and the common denominator was always the desire of Putin's Kremlin to wield "geopolitical influence."

Furthermore, Gazprom's supply contracts exhibit the underlying economic threat from Moscow: The pricing formula is roughly the same for all countries, but those countries in Russia's good graces receive an arbitrary "discount." Friendly client states get a bargain, while non-friendly ones pay the full rate. How else can one explain that, in 2012, neighboring Lithuania, arguably Russia's most relentless critic in the EU, paid $520 per thousand cubic meters of gas, while more distant, wealthier Germany paid $353? Maybe if Lithuania had a former head of government serving as board chairman of a Gazprom subsidiary the situation would have been different.

Beyond the former Soviet Union, countries such as Bulgaria and Poland have also suffered Russia's reckless energy policy over the years. In 2014-15, to recall a recent instant, Moscow decided to punish European countries pumping Russian gas back into Ukraine and thereby helping the war-torn country survive the winter. Gazprom cried foul and said these deliveries violated supply contracts, but in the end the corporation's army of lawyers couldn't prove it in a single European court. In March 2015, after nearly a half-year of curtailing gas supplies and losing billions of dollars, Gazprom gave up.

In terms of textbook foreign policy realism, Moscow's weaponization of energy supplies makes perfect sense. All nation-states use the means at their disposal to get what they want. Why should Russia be any different? But despite its vast resources and technological potential, Russia is still relatively weak. It possesses a nuclear arsenal, but this is useless in exerting influence in the day-to-day push-and-pull between nations. And unlike the US, Moscow cannot effectively use financial sanctions since it lacks a gargantuan banking industry and a widely adopted currency. But it does boast a seemingly limitless reserve of hydrocarbons, and so naturally the Kremlin has resorted to this as a means of getting what it wants.

Returning to Europe, it is important to note that Russia, both during and after Putin, will find it increasingly more difficult to be a threat to the EU's energy security, particularly in terms of gas. Thanks to the Third Energy Package, investments in infrastructure, the growing availability of LNG, and a series of binding commitments by Gazprom after an EU antimonopoly investigation, Moscow is seeing its geopolitical leverage in Europe diminished. In the future, its ability to punish and coerce will be limited to finite periods in winter when the temperature drops and Europeans need lots of Russian gas to stay warm.

Scott's Rebuttal

Russia's energy strategy in 2003 noted that the "role of the country on the world's energy markets largely determines its geopolitical influence." Gary, this was a statement of fact, not malign intent. Nowhere in any of the "energy strategies" published by Russia while under the leadership of Putin can one find any indication of Russia leveraging its energy as a weapon of subversion or coercion against Europe. The examples that you most often cite as the "weaponization" of Russian energy involve "near abroad" countries with which Russia had disagreements over contracts, pricing and payments. The fact that Russia engaged in lengthy legal battles in European courts is itself an indicator of Russian intent -- one doesn't normally wield a weapon in a court of law. 

The greatest argument against the Russian energy weapon is its actual conduct during times of geopolitical strain.  This past March the Stockholm Arbitration Court ordered Gazprom to compensate Ukraine $4.6 billion for lost profits from the reduction in the transit of Russian gas through Ukraine to Europe dating back to 2014.  The primary basis for the Court's decision was not contractual, since Russia was well within its rights to reduce gas flows due to a drop in European demand, but rather the poor state of the Ukrainian economy. Despite the highly politicized nature of this decision, Russia agreed to pay the fine while making sure that it met its contractual obligations to supply Europe with gas -- including providing emergency deliveries of LNG to the UK, all this at a time when the EU was joining the US in sanctioning Russia.

Actions speak louder than words. Russia's own deeds directly contradict the very scenario you painted. Russia has always delivered for its European customers "when the temperature drops and Europeans need lots of Russian gas to stay warm."

Gary's Rebuttal

Scott, it seems you conveniently ignore numerous cases over at least two decades when Russia interrupted availability of energy sources and failed to ensure their affordability -- the two IEA criteria you cite. Also, you fail to miss the whole point of competition: when Gazprom is the only conceivable gas supplier, it has shamelessly abused the monopoly. It's a fact of life here in Eastern Europe. The European Commission was quite comprehensive when listing Gazprom's market abuses in various Eastern European countries, and the findings of its investigation make for a harrowing read. This is the same body that penalized Microsoft and Google, so it can't be faulted for an anti-Russian bias.

And Russian gas is not cheap. Please pick up any analysis by Western or Russian experts, compare the data, and you'll see that Gazprom gouges unfriendly states, and sells cheap gas to friendly ones. It is Moscow's modus operandi, and quite boring in its predictability. You admit that Moscow has "geopolitical sensitivities" in the post-Soviet territory, and manipulating gas supplies to these countries is a straightforward manifestation of these sensitivities. As I said before, Russia has little leverage over these countries other than trade (barring an invasion), so when relations turn sour, the Kremlin's knee-jerk reaction is to look at the gas valves.

You bring up a valid point about the US being a threat to Russia's energy security, although this is nothing new and dates to the 1960s when the Soviet Union was beginning to build the first gas lines to Europe. It's part of the zero-sum game that exists in the Washington establishment and the mind of Putin, who pines for the era when Moscow was feared and whose only tool to remind others about those glory days is to mess with energy sources.

Scott Ritter is a former US Marine Corps intelligence officer whose service over a 20-plus-year career included tours of duty in the former Soviet Union implementing arms control agreements, serving on the staff of US General Norman Schwarzkopf during the Gulf War and later as a chief weapons inspector with the UN in Iraq from 1991-98.

Gary Peach is a reporter for Energy Intelligence based in Riga, Latvia. He has worked and lived in various countries of the former Soviet Union for the last 27 years.

Topics:
Gas Supply, Security Risk , Gas Prices, Alternative View
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