Bear hugs

by Henry on July 11, 2006

This “FT”:http://us.rd.yahoo.com/finance/news/ft/SIG=119k1ua5r/*http://us.ft.com/ftgateway/superpage.ft?news_id=fto070920061427320025&referrer_id=yahoofinance op-ed by Timothy Garton Ash, Dominique Moisi and Alexsander Smolar makes some good trenchant points about the EU’s increasingly tricky relationship with Russia.

bq. Europeans are faced with a delicate balancing act in their policy towards Russia. Should the message be one of trust in a re-emerging power whose energy resources are vital to us, or wariness of a regime whose authoritarian instincts are clearer than ever? … Today we may be witnessing the emergence of competition between European states for privileged relations with Moscow and favoured access to Russian gas. … he time has come for the EU to develop a genuinely European policy towards Russia. While seeking a long-term strategic partnership with its giant Eurasian neighbour, the EU should not hesitate to ask three elementary things of Russia. …The first of these requirements is that Russia should allow its neighbours to determine their own futures. … The second requirement … Energy contracts should be clear, binding and respected … The third strategic requirement has to do with certain minimal standards of legal and political conduct inside Russia’s borders. …Non-governmental organisations should be allowed to function properly in civil society and media independence should be a reality. … The concepts of “sovereign democracy” or “managed democracy” advanced by Vladimir Putin, Russia’s president, remind us of yesterday’s concept of “people’s democracy.”

I was too busy grading to write a post a few weeks ago on Cheney’s comments on Russia’s slide into autocracy. These were undoubtedly hypocritical (Cheney was perfectly happy to kiss up to nasty Central Asian autocrats a couple of days later) but nonetheless dead on target. Russia is a real problem for both the US and Europe, but EU member states don’t want to face up to it. They’re increasingly dependent on Russian energy resources, and Russia has made it clear that it’s willing to exploit this dependency towards political ends. It has very successfully been playing the game of divide and rule, making individual deals with EU member states (many of which have been notably willing to reach agreement, sometimes under rather dubious circumstances). There were some mutterings a month or two ago about a special energy summit to be convened by the Finns, but as far as I know, nothing has come of this. Unless the EU comes up with a common approach to energy policy, its member states are likely to find their political choices greatly curtailed in coming decades. As far as I can see, there’s no sign that the EU is willing to do this.

{ 20 comments }

1

Maynard Handley 07.11.06 at 1:38 pm

“Russia is a real problem for both the US and Europe, but EU member states don’t want to face up to it.”

As opposed to the US which is investing major political capital in the issue?
I’ve no idea what the view looks like from Europe, but from the US it looks like, apart from the occasional yapping, the US is doing precisely nothing about this — have to concentrate on important issues, you know, like a bunch of medieval wannabes hiding out in some caves somewhere with the power to blow up one or two US office buildings, rather than minor issues like real nuclear weapons or the western world’s energy supply.

Sure the administration occasionally says something. Putin summarized this admirably a few months ago when, asked about some congressman criticizing Russia and threatening some ridiculous US response, said “The dogs bark and the caravan moves on”.

Right now Russia holds close to all the cards. The Europeans have boxed themselves into this position through unrealistic (ie nuclear-hostile) domestic energy policies. They need Russian gas and oil a lot more than Russia needs them — there are eager customers in China and Japan willing to buy what is going to Europe right now. I’d say the EU is facing up to the issue, in that they are well aware that their options are limited and they are trying to get the best deal they can from a position of weakness. Where the Europeans (like the rest of the world) won’t face up to issues is the reality of natural resources and population. Russia is an issue ONLY because there are lots of Europeans, they want to live a 21st century lifestyle which requires energy, and they don’t want nuclear energy which means they live or die by Russian gas.

2

abb1 07.11.06 at 1:58 pm

I don’t understand how “special energy summit” and “common approach to energy policy” and other officialy sounding phrases would make any difference here. A certain amount of BTUs has to be bought and it will be bought; and unless there are other sellers, it will be bought from Russia.

3

stuart 07.11.06 at 2:44 pm

Europe has a nuclear hostile energy policy? I guess you arent including the French as their 56th nuclear plant opens within a year, making 76% of their electricity usage. Germany of course is on the opposite side, planning to phase all nuclear out when they can. The UK has recently announced they are looking at building more to complement an increase in wind/solar etc. Various other EU nations have equally divergent attitudes over it, so trying to paint one attitude to nuclear over the area seems misguided.

4

blah 07.11.06 at 2:50 pm

The “delicate balancing act” explains precisely why a clear, well-defined and unified EU policy toward Russia will not be created. It’s a messy situation, and the EU and US will slog through it, hoping that things will improve on their own or at least not boil over into too many crises.

5

Walt 07.11.06 at 2:58 pm

Maynard: Not all discussions have to be about the United States, you know.

6

mpowell 07.11.06 at 3:16 pm

Isn’t part of the point of the EU collective bargaining power or something? Too bad that when they really need it on an important issue they can’t manage to cooperate (so far at least).

7

abb1 07.11.06 at 3:48 pm

There’s basically only one pipe coming in, so how’s collective bargaining gonna help here?

8

Maynard Handley 07.11.06 at 4:29 pm

“Europe has a nuclear hostile energy policy?”

France, of course, as any idiot knows, is pro-nuclear.
Germany, clearly, has been very hostile. Spain is ambiguous -last plant built was 1987. Italy shut down its plants in the late 1980s. Britain is again ambiguous; the govt is pro-nuclear, the population was very much against and is now sorta against.

Those are the four big countries, and I’d say that on balance they represent a nuclear hostile policy, just like the US. Existing power plants keep on ticking, but new ones are not built and, unlike France, there is no concerted scheme to switch dependence on fossil fuels to dependence on nuclear.

The policies are, of course, now becoming less nuclear hostile. But that doesn’t do them any good in the here-and-now dealings with Russia. As greenhouse people keep pointing out, it takes 20 years to turnover a substantial fraction of the energy infrastructures, 50 years to turn over the bulk of it; so people might want to plan for tomorrows problems today, rather than wait till the problems are staring one in the face.

As for other countries:

Sweden tries to do some sort of weird straddle where it claims to be against nuclear (and to be shutting down its reactors and not building new ones) while steadfastly producing 50% of its electric power via nuclear. This would be an interesting prototype for other European countries, ie lie about your intentions to keep the public happy while doing something different, but is probably not feasible if you don’t have the reactors already built.

Eastern European govts appear (in the face of little alternative) to be pro-nuclear. It’s not clear (at least to me) how much this support is shared by the population, and it certainly is shared by the EU negotiators who have (Lithuania, Bulgaria) asked them to shut down reactors. (Maybe justifiably, maybe not.)

9

Maynard Handley 07.11.06 at 4:30 pm

Hmm, why did some of my material above get strikethroughs? None of it is meant to be strikethrough.

10

etat 07.11.06 at 4:37 pm

like this? inadvertent use of angle brackets perhaps?

I’m curious about this issue for what it says about the prospects for communism’s revival, and the further prospect of a european revival of ideological support on that count.

11

otto 07.11.06 at 5:18 pm

“The concepts of “sovereign democracy” or “managed democracy” advanced by Vladimir Putin, Russia’s president, remind us of yesterday’s concept of “people’s democracy.””

Until the EU’s establishment is willing to agree that no votes on proposed treaties should just be run again and again under various more or less threatening environments, they aren’t in a great position to lecture anyone about managed democracy.

12

otto 07.11.06 at 5:21 pm

I think there’s a ‘not’ missing in the above post…

13

Tangurena 07.11.06 at 6:21 pm

The West has been meddling in all those “flower revolutions” on the border of Russia. And adding all those countries to NATO. Putin can’t help but feel threatened by anti-Russian rhetoric and deeds. If some other country engaged in the same behavior towards the US, we’d nuke them. Remember the Cuban missile crisis? The Europeans rightly see that Russia is holding the cards on natural gas, especially after the dispute with Ukraine last winter.

If I were Putin, I’d make energy availability conditional upon cessation of anti-Russian rhetoric and activities. You want to let Cheney show up in your country to piss in our corn flakes? Off go the taps for the next year. Putin can take his ball and go home. Once the IMF loans are paid off, European and US leverage on Russia will be crippled. Also, I’d take a page from the Enron Playbook: no contracts, everything is spot market. And maybe some drunken ex-soldier might accidentally hit the pipeline with an RPG. You never know – all that vodka.

We are now confronted with a Russia that is taking for granted its membership of the G8, whereas initially this was a form of credit in advance for a country that was supposedly on its way to become a democratic great power.

In the US, the neocons have never recognized that Russia is a democracy, nor anything other than the loser in the Cold War. Russia (or the New Soviet Union, if you will) does meet the criteria for a “great power” although one challenged in the wallet.

The first of these requirements is that Russia should allow its neighbours to determine their own futures. Today’s world cannot be one of spheres of influence.

Talk to bush about interfering in other countries. Perhaps we in the West ought to stop complaining when someone else uses our very same tactics.

The energy tap should not be turned on and off – or the price cut or increased – for political reasons.

Every oil producer can do that. And they’ve done it in the past. Remember the 1970s? The oil embargo? Or 1979 when Iran shut off all oil exports? When the loans are paid off, you (europeans) will need Russia’s oil and gas far more than Russia needs your money. You’ve painted yourself into a corner, with no one to blame but yourselves.

14

puzzled 07.11.06 at 7:46 pm

Maynard: Most Bulgarians are strongly pro-nuclear and the reason is the EU demand for closure of parts of the Kozlodui nuclear reactor. Most people perceived this to mean: ‘We can’t trust you to operate this complicated technology’. So nuclear power became an issue of national pride.

Also, a profitable business exporting electricity helps the cause of nuclear power.

15

Z 07.12.06 at 3:28 am

It could also be that as frightnening as Putin’s autocratic tendancies are, Russia has been less a threat to (at least some) european enrergy interests than the US in the recent years. I believe european states are not too willing to devise a common energy policy at least partly because there are diverging opinions as to what this policy main geopolitcal goal should be. I would go as far as to say that some european chancelleries would rather have a strong and autocratic Russia if that meant a weaker US. And the same would certainly be true with respect to China.

16

Ginger Yellow 07.12.06 at 7:33 am

While I agree with the post and find Russia slide away from democracy extremely troubling, I have to take issue with this:

They’re increasingly dependent on Russian energy resources, and Russia has made it clear that it’s willing to exploit this dependency towards political ends.

There isn’t a nation on earth with exportable energy resources that doesn’t use them for political ends.

17

Dale 07.12.06 at 8:39 am

Perhaps there’s a relation between the disaster of the shock therapy given the Soviet economy- the development of ganster capitalism- and the increasing authoritarianism of Russia?

18

Tangurena 07.12.06 at 9:22 am

Dale, many of the industries privatized after the collapse of the Soviet Union had exactly that problem: only organized crime had the money and opportunity to purchase those assets at “fire sales.” I think there may be a few more Yukos-type incidents, in the future.

http://www.thenation.com/doc/20060710/cohen

As for myself, I think Putin is playing the cards he was dealt rather smartly. And I think that he’s also stirring the pot in Iran, and making a fortune out of it as well.

1 – The US/Israel fears Iran, threatens to invade Iran, oil prices go up, Russia profits.
2 – Russia sells anti-shipping and anti-missile missiles to Iran, Russian aerospace industry profits.
3 – The US finds out about the missiles, rhetoric goes up, oil prices go up, Russia profits.
4 – GOTO 1.

My suspicion is that Putin is turning Russia into a new Soviet Union. And like Cohen in the link above, I think we’re busy destroying our ability and willingness to stop him. The old Soviet Union lost the Cold War, but the US never stopped fighting the Russkies after they gave up. That’s going to come back and bite us in the rear.

19

ajay 07.13.06 at 5:11 am

“There isn’t a nation on earth with exportable energy resources that doesn’t use them for political ends.”

How well I remember the bitter winter of 1981, when Europe was held hostage by the grasping petrocrats of Oslo.

20

abb1 07.13.06 at 5:46 am

How well I remember the bitter winter of 1981, when Europe was held hostage by the grasping petrocrats of Oslo.

I suppose in 1981 Europe was wise enough not to lecture Norwegians on how they should run their country. That’s just one way to fight those petrocrats.

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