RusEnergy

02/ 06/ 2007 - MOSCOW. (Ian Pryde for RIA Novosti) - It is hardly surprising that the main headline in the Western media from President Putin's annual press conference with Russian and international journalists last Thursday was his total rejection of accusations that Russia had used energy as a political weapon in its dispute with Belarus and, last year, with Ukraine and Georgia. Let's take a closer look at Western views on Russia's energy, although as usual there was much else of interest in the three-hour question and answer session. Writing in the Financial Times' survey of "The World in 2007" on January 24, for example, Quentin Peel, the paper's international affairs editor, asserted that one "worry is the increasingly nationalistic behavior of Moscow, with consequences for energy security," and that America's "weakness and distraction in the Middle East seem to provide opportunities for Russian assertiveness, especially in using its energy wealth." This is odd. Oil has always been highly political and it is naive to think it could be otherwise. Why, one wonders, is Russia not allowed to assert itself and defend what it sees as its national interests? After all, the most influential school of international relations is realism, which claims that is precisely what all nations do. While the West provides ample evidence to support realist notions in international affairs, its criticism of countries outside the West often rests on idealism and standards which the West itself fails to meet as well as it ought to. The inevitable result is that the West undermines its own influence by leaving itself open to charges of hypocrisy and double standards, charges which the Third World and Western left-leaning intellectuals have been making for decades. During the 1990s, many in the West criticized Russia's policy of subsidized energy supplies to the former Soviet republics as being anti-market, non-transparent and designed to maintain its informal empire after the collapse of the Soviet Union. The international financial institutions constantly called for the break-up of Gazprom and its monopoly and an end to subsidies on the domestic market - despite the fact that millions of people would be unable to afford the much higher market prices. Anyone who has experienced a harsh Russian winter knows this is no joke, but literally a matter of life and death. Russia's inept tactics in the gas wars have resulted in a PR disaster for the country, but it is par for the course that many in the West have chosen to concentrate on alleged bullying, rather than on Russia's broader strategy of ending these massive subsidies of billions of dollar a year to the inefficient economies of Ukraine, Belarus and Georgia. As Putin has pointed out, Russia has also increased energy prices to Armenia, with which it has particularly good relations. Western realism It is indeed ironic that the West now criticizes Russia for using the energy weapon. In the early 1980s, the Reagan administration opposed construction of the Trans-Siberian natural gas pipeline for fear it would make Western Europe dependent on the Soviet Union for energy supplies. It therefore prohibited U.S. companies from supplying parts to the pipeline and tried to extend the ban to foreign-based companies that were subsidiaries of U.S. firms or used U.S.-licensed technology. U.S. Chamber of Commerce President Richard Lesher wrote to Reagan in February 1982 that the pipeline policy could be likened to a "strategy of economic warfare." In 1985, the U.S. was more successful with the energy weapon when it prevailed upon King Fahd of Saudi Arabia to flood the market with oil in 1985-86 to weaken the Soviet economy. In mid-2001, the U.S. renewed the 1996 Iran-Libya Sanctions Act (ILSA) for five years, which penalized any foreign company dealing with Iran or Libya in amounts of over $20 million, a laughably low hurdle in the oil and gas business. Defenders of this approach would doubtless argue that the context of the Cold War and state-sponsored terrorism make such actions acceptable, but this hardly applies to the Jackson-Vanik amendment, which was originally passed in 1975 to punish Communist states by imposing trade sanctions for their refusal to allow Jewish emigration. Now, with Russians enjoying more freedom to travel than at any time since 1914, some circles in America, especially in Congress, want to retain this wholly anachronistic Cold War relic as a lever against Russia. The European Union is also very astute in defending its own interests. President Putin complained yet again during his press conference that while Brussels wants European companies to have access to Russia's natural resources, the European Union's single market is largely closed to Russian exports, an impasse which Putin hopes can be resolved through normal negotiations. Nor are the individual members of the EU reticent when it comes to defending their national interests. The economic absurdities of the Common Agricultural Policy led the United Kingdom to demand annual rebates from the EU budget, while the French loudly and vigorously defend their inefficient farming sector. The Polish vetoing of closer EU ties with Russia is merely a recent example. Examples abound in the real world of countries asserting what they perceive to be their national interests. Indeed, cynics might argue that nation-states do nothing else, even though this often comes at a high price to themselves and sometimes other countries as well, for not all policies are thought through properly, and they often result in unforeseen consequences. The EU has frequently been weakened and its decision-making slowed down or even paralyzed for years in some key areas, while decades before the current crisis in the Middle East, American foreign policy was criticized for being against its own national interests. Russia's national interests Certainly Russia has done considerable long-term damage to its reputation in Europe, more than it realizes. But the contretemps on energy is no worse, and certainly far less bitter and extended, than the long-running trade disputes between Japan and the U.S. in the 1980s and the more recent disagreements between Europe and the U.S. which culminated in the "banana wars." In fact, despite the saber-rattling and brinkmanship, Russia quickly agreed to lower prices and looser conditions than it originally demanded, with a long transition period which would gradually see prices rise to European levels. But of course the entire economy of the developed world is based on hydrocarbons, and there are simply no other viable alternatives at the moment. Russia's actions have inevitably led to a more intensive European debate on energy and energy security, with Angela Merkel rethinking the governing coalition's agreement to scrap nuclear energy. Russia can hardly afford any repetition of these gas wars, since the result will be to further undermine the confidence of its main trading partner and close neighbor, and switching supplies to the Far East is a less viable option than appears at first sight. Russia feels that the security of energy supplies to its main customers in Western and Central Europe are at risk from transit countries. But one of its proposed solutions, the Nord Stream pipeline running directly from Russia to Germany under the Baltic Sea, unleashed a storm of protest in Poland, which would lose out on the transit fees, and in Germany itself, not least because former Chancellor Gerhard Schroder is closely involved with Gazprom. The protests over the Nord Stream pipeline and the gas wars show just how difficult it will be for Russia to appease certain Western circles whatever it does. During her January meeting with Putin in Moscow, German Chancellor Angela Merkel demanded that in the future, Russia must inform Europe in good time about any expected interruptions to oil or gas supplies and suggested setting up a formal mechanism to ensure better communications. In contrast to the Soviet Union, however, modern Russia is poor at communications both internationally and domestically, and no longer enjoys a frighteningly powerful propaganda machine. At least a partial awareness of the problem is indicated by reports in mid-January of Gazprom seeking to engage international PR companies to polish up its image. Quentin Peel is wrong when he suggests that America's "weakness and distraction in the Middle East seem to provide opportunities for Russian assertiveness, especially in using its energy wealth." In the 1990s, following the collapse of the Soviet Union, Russia was weak, with its economy, like those of the other former republics, experiencing probably the biggest economic decline seen in peacetime in the twentieth century. Long-term trends It was, however, naive to assume that this state of affairs would last forever. Russia is becoming more active not only in the Middle East, but also in Asia and Asia-Pacific, Africa and Latin America, not to mention Europe and North America. These trends will continue irrespective of American strength or weakness for the simple reason that Russia sees itself as a great power. And, like China and India, Russia is embracing much from the West, but is doing so increasingly on its own terms. Russia is by no means above criticism, but Western accusations that the country uses its wealth as a political weapon - if indeed this was case - ring hollow and will be rejected by Russians as hypocritical and self-serving. Ian Pryde is CEO of Eurasia Strategy & Communications, Moscow. The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.