A nuclear umbrella prevented the Soviet army from rolling across Europe, but it is no match for supply cut-offs that can throw western economies into recession.
Russia achieved this dominant position for two reasons. The first is that the world’s capitalists behave as Lenin knew they would: “They will furnish credits . . . supply us materials and technical equipment which we lack . . . restore our military industry for our future attacks against our suppliers.” The West has supplied Russia with the technical skills and capital needed to exploit oil and gas resources and sold important bits of western energy infrastructure to Gazprom, chaired by Dmitry Medvedev, who is first deputy prime minister of the Russian federation. Never mind that Russia will not allow such foreign investment in its infrastructure, or that it is using its oil and gas wealth to beef up its military. “Our military is the second most powerful force in the world after America’s,” a Russian official trumpeted this month.
The second reason Russia has gained such a dominant hand in its negotiations with energy-dependent countries is the inability of the West to forge a common strategy, the necessary ingredients of which are clear: increase storage facilities as insurance against gas-supply interruptions; finance pipelines that avoid Russian-controlled territories; refuse to sell infrastructure to Gazprom; construct terminals that can receive liquefied natural gas (LNG) from Africa and the Middle East; unite to create countervailing buyer power.
Sunday, May 27, 2007
Rolling across Europe
In the Sunday Times business section, the Hudson Institute’s Irwin Stelzer says that Russia must not be allowed to turn gas into a new weapon: