Max's Politburo

How the Russian bear took control of Europe

The single gravest political error committed by European nations in the past 10 years will turn out to be their failure to prevent Russia gaining control over energy supplies.  Now that we are well on our way into Cold War II, this failure will come back to haunt us in two forms: a lack of political leverage to influence Russia, and serious vulnerability to Russian threats, political or economic.

In spite of ample warning signs, significant academic analysis and continuous hectoring from the US on this topic, the EU -- riven by its usual divisions -- failed to enforce a common policy to diversify its energy sources.  And this is in spite of several EU-level resolutions to do just that, resolutions which were promptly contradicted by the actions of individual countries. 

Europe imports over 80% of its oil and and nearly 60% of its natural gas, and both figures are rising.  Half of the natural gas and 30% of the oil are imported from Russia.  Ever since Putin came to power, he has made it his (not explicit but obvious) policy to increase the dependence of Europe on Russian energy supplies.  He has done this in several ways:

• by consolidating Kremlin control over the supply through state behemoths like Gazprom and Lukoil, forcing out foreign investors (see the BP-TNK debacle) in order to take control of joint-ventures;
• by locking in long-term demand through bilateral agreements with European importers, with the added benefit of wrecking EU policy and dividing the continent;
• by extending government influence on downstream refining and distribution outside of Russia ('strategic investments' have been made in Poland, Lithuania, Estonia, Slovakia, Hungary, and Ukraine, as well as attempts to invest directly in Germany);
• by strong-arming neighboring countries (Ukraine, central Asia) into energy supply and transit 'clubs' that ensure their continued dependence on Russian supplies and transit fees;
• by promoting more pipelines that flow direct from Russia to the West, and sabotageing the development of pipeline projects that would avoid Russia (eg, in Georgia).

Yes, in Putin we have a man who can think strategically across a decade or more about how to increase Russia's leverage in the world.  This puts him in a strong position to undermine Europe, which is not capable of long-term strategic policy action.  On top of that, sustained high energy prices have enabled him to accelerate his plans.

France, Germany, Italy and Austria are all guilty of contravening stated EU policy and negotiating new, bilateral supply agreements with Gazprom.  This gives Gazprom long-term price stability and the Kremlin huge political leverage.  Is it any wonder that these countries can't form a united front in the face of Russian agression in Georgia?  Will they be able to stand up if Russia starts to pressure the Ukraine or the Baltics?

In 2007, Gazprom and ENI of Italy signed an MoU to run a gas pipeline (South Stream) from Russia to Italy via the Black Sea.  This directly undermines the only viable pipeline project -- promoted by the EU and the US -- that would reduce European dependence on Russia: the Nabucco pipeline that would have run from the Caspian via Turkey, Bulgaria, Romania, Hungary, and Austria, benefiting EU member countries.   With Russia's continued part-occupation of Georgia, the fate of existing oil and gas pipelines in that country is unclear.

I'm sure there is plenty of uncomfortable wriggling of bums in European parliaments now, but it is largely too late to undo this huge strategic error.  Russian President Medvedev has made repeated noises in the past 2 weeks about military retaliation against Poland if a US missile shield is installed there, and is likely to play very aggressive politics against Ukraine's accession to NATO.  (By the way, 95% of European gas imports from Russia go through Ukraine.) 

What is our leverage on Russia?  Delay Russia's entry into the WTO?  Kick them out of the G8?  Stop joint military exercises?  Block ministers' foreign bank accounts?  Whoop-dee-doo.  If we find a point of leverage that hurts or upsets Putin, he may just turn off the spigot for a week to see what happens...

[Good background material on this issue here, here and here.]

BBC on the US and Georgia

Good BBC analysis for Condi's visit last week to Georgia:

Anatol Lieven on Georgia

In today's FT, a good opinion piece from Anatol Lieven on Georgia's travails, and the West's complicity and options.

The Saakashvili delusion and the New World Order

Mikhail Saakashvili was always going to be a risky friend to keep.  But the combination of his delusions of grandeur with Bush's over-the-top support over the years has created a major liability for everyone.

First, for Georgians: if Saakashvili really thought he could prevail in a pre-emptive strike to reclaim territory occupied by people who don't want him he was sorely mistaken.  Instead of a waffling Russian government divided between President and Prime Minister he got the worst possible combination: Medvedev with no military credentials and desperate to prove himself strong plus Putin -- architect of the demolition of Chechnya -- still smarting the loss of Kosovo and seething about NATO's gradual encroachment on Russia.

Second, for the US and Europe: it was only a matter of time before the impulsive, arrogant and provocative Saakashvili caused a major incident.  By lavishing him with praise and turning a blind eye to his faults, Bush emboldened him to the point of delusion.  Here is a description of Bush's 2005 visit to the country, when 150,000 turned out to see him speak:

President Bush, under the influence of Georgian food, music and high-concept schmoozing, stayed up celebrating hours past his bedtime. "I learned firsthand what it means to be fed by a Georgian," said Bush right before hitting the dance floor. Georgians were so impressed that they renamed the road to the airport George W. Bush Highway.

Iraq proved to be the tipping point in Georgia's commitment to the West.  First, the US helped rewrite Georgian military doctrine and sent advisers to restructure its chain of command and train its officers. Then, Saakashvili eagerly sent a contingent of 2000 troops (the third-largest, after Britain) to Iraq.  What better way to obtain live-field training for his forces, without the provocation of American-run military exercises on the Russian border?  How stupid did he think the Russians were?

No one knows the byzantine politics of ethnicity and tribal conflict in the Caucasus better than Vladimir Putin, who personally engineered the first and second wars on neighboring Chechnya with a vengeance.  As soon as that region returned to an uneasy, brutalised calm in recent years, Russian troops were being repositioned for action er... peacekeeping in Georgia's renegade provinces.  At the same time Russia gave national passports to nearly all residents of Abkhazia, providing the requisite cover of 'protecting our citizens' if an excuse for intervention were ever needed.

Meanwhile, former New York lawyer Saakashvili showed the world that he is a Democrat (sort of), a free trader, that he wants to join NATO and the EU, that he is protecting an alternative oil pipeline to the West, and that he is willing to fight our wars in Iraq and Afghanistan.  It's easy to see why he thought the West owed him something.  Easy, but delusional.

Georgia's move to reclaim the lost provinces was a gross miscalculation.  No one will intervene on his behalf.  In fact, even if Russia had decided to cross the Mtkvari River and occupy Tbilisi, no one would come to save him.  The West has little political leverage, Russian coffers are bursting with hard currency reserves ($600bn and rising), Europe is divided, Bush is a lame-duck president, and the US is militarily and politically overextended in the world.

Luckily for ordinary Georgians Putin is too wily to get bogged down trying to occupy the fearsomely independent Georgians.  He will settle for his pragmatic war aims: the effective annexation of Abkhazia and South Ossetia, and the toppling of this man he despises: Saakashvili. 

In doing so, he has accelerated the establishment of the New World Order According to Putin, and halted NATO's Eastern expansion in its tracks.  This may seem aggressive, but it is consistent, predictable and -- from the Russian perspective -- eminently reasonable.  For NATO, what remains is an opportunity to consolidate its gains in Eastern Europe and the Baltics, with the de facto acceptance that other ex-Soviet states will remain Russian zones of influence.

Russia has been making noises recently about re-establishing its 'special ties' with Cuba, suggesting it might establish a military base there.  Provocative?  You bet.  Perhaps they were trying to highlight the parallels with Georgia.  Fair enough.  Sorry Georgia -- your aspirations are noble and admirable, but on that road to real independence your leaders drove too fast and recklessly crashed the car.