EDITORIAL: The End of Russian Energy Terrorism

EDITORIAL

The End of Russian Energy Terrorism

For too long now, the Putin regime has been terrorizing Eastern Europe, Central Asia and the West with energy warfare, little different from what Al Qaeda does with bombs.  At last, though, the tide seems to be turning on this pathetic last-ditch effort of the Russian Kremlin to once again dominate the globe.

At the recent World Gas Conference in Buenos Aires, the world learned that exciting new sources of natural gas are being developed in response to rising prices, which in turn in part result from Russian energy terrorism.  The Telegraph reports:  “If the new forecasts are accurate, Gazprom is not going to be the perennial cash cow funding Russia’s great power resurgence. Russia’s budget may be in structural deficit.”

Writing in the Financial Times, David Clark of the Russia Foundation, lays out the details of Russia’s horrifying miscalculation regarding energy.    He notes that Russia has just rejected the Energy Charter Treaty, which would apply the rule of law to international energy transactions, because “there is no room”  in Putin’s vision of worldwide energy terrorism “for the niceties of international law or respect for property rights.”  But Clark calls this tactic “unsustainable” over the long haul, and points out that it could lead Russia as a nation over the precipice of ruin.

Even the Russian government itself acknowledges the state is far too dependent on energy prices, yet this move further isolates Russia from international markets and literally puts all its economic eggs in the energy basket. 

It’s not a sturdy basket. As Clark points out, Russia’s pandemic corruption and inefficiency mean it has increasingly greater trouble with extraction of fuel from its frozen, remote fields. Foreign investment is crucial to increase technology and efficiency, but Russia is repudiating that investment by rejecting international law.

Clark makes the crucial point that the development of new energy resources is not the only serious pressure Russia will Face.  It must also deal with “the EU’s drive to liberalise its energy market by forcing a separation of production and supply activities and building the interconnectors needed to switch energy supplies rapidly across Europe. Properly implemented, these measures will neutralise Russian strategies of vertical integration and market segmentation while encouraging new suppliers to enter the market.”

The comes his devastating conclusion:

In its zeal to recover lost global status, Russia has over-played the energy card in a way that threatens to destroy demand for its own primary export. The second gas war with Ukraine earlier this year forced a widespread rethink about the level of European dependency on Russian supplies and accelerated the search for alternatives. After Russia’s rejection of the guarantees contained in the ECT, investors may now follow suit and look for less risky options for a return on their capital. If so, Russia’s potential as an energy superpower will remain unrealised and it will pay a heavy economic penalty in lost revenues and flagging growth. The Putin model is broken and sooner or later Russia will have to prove its worth as a reliable energy partner by signing up once again to the ECT or something very much like it.

In other words, Russia’s days as a nation of energy terrorists are numbered.

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50 responses to “EDITORIAL: The End of Russian Energy Terrorism

  1. MIA: Blast Derails Cargo Train in Western Georgia
    Civil Georgia, Tbilisi / 21 Oct.’09 / 11:28

    A cargo train was derailed after an explosive device went off in the Senaki district of Samegrelo region, according to the Georgian Ministry of Internal Affairs (MIA).

    Yet unidentified explosive device was planted on the railway section close to the village of Teklati, about three kilometers away from Senaki; the cargo train was transporting mazut to Black Sea terminal in Kulevi, according to the local officials.

    This was the fifth similar incident on the railway in western Georgia since June, 2009. All the previous incidents occurred in the Zugdidi district of Samegrelo region.

    http://www.civil.ge/eng/article.php?id=21591

    Pukins scum is at it again… :(

  2. Andrei Soldatov’s recent article in Yezhednevny Zhurnal [about Moscow’s alleged ceding of control of the counter-terrorist operation to Ramzan Kadyrov, see the link (tr.)] left me with mixed feelings.

    http://www.watchdog.cz/?show=000000-000024-000002-000026&lang=1

    From the Kremlin’s side is dangerous to trust its henchman Kadyrov. We already have a negative experience, when Kadyrov’s gangs conducted operations in Dagestan and Ingushetiya – which in both cases has led to clashes between the collaborators.

    Now, Nohchicho is not the only center of the puppet forces in the region: there is former “North Osetia” as well (now North Osetia is part of wilayat Galgayche) which is the main supplier of personnel for the armed gangs of “internal forces” in the region, practically, the main base of the occupying forces.

    To predict how the relationship will develop between all these criminal groups is impossible.

    “The Kremlin has no clear idea where all that might lead. It just does not have any prescribed scenarios of what might happen in the region whatsoever, and how to react to this fact. And this is the most dangerous thing … that may happen in situations like this”, says Soldatov, the “Agentura’s” chief editor, which is considered to be Lubyanka’s internet-project.

  3. Please sign a petition against the Nord Stream pipeline: http://www.balticsea.lt/en . If there exists any similar petition against South Stream, please post a link here!

    Join anti-Nordstream Facebook communities!

    http://www.facebook.com/group.php?gid=28527416878

    http://www.facebook.com/group.php?gid=63152183085

    Share thes links with your friends in Twitter!

    • Just for YI:

      Finland has signed the deal,Denmark has followed suit,now only Sweden`s approval is needed!
      Looks like the Germans are ramming this through,Lthuanians and Estonians,listen to you German masters…

  4. Finland has not signed the deal yet, but it probaly will.

  5. Russia’s worst fear: Iran’s theocracy is overthrown in a popular revolution and a democratic Iran is welcomed into the world economy, able to ship its natural gas unfettered to Europe.

    • You bet, Michel. Russia has a vested interest in the Iranian thugocracy destabilizing the ME.

      But, the nice thing about the situation is that the Iranians who hopefully will overthrow that miserable regime in time despise Russia. They know Russia was giving counsel to and is abetting their rotten regime.

    • 100% Agreed.

  6. What’s the point here? That the energy prices are falling? I don’t think so.

    That the energy prices will be lower in some distant future? We’ve been hearing this for centuries, but the prices are going up and will continue to go up, as the increased supply simply encourages more demand. With the global warming and population overgrowth, energy demand will be skyrocketing.

    • You don’t remember the 80s and 90s do you. Prices plummeted to lows of $8 or so a barrel. These low prices certainly contributed to the collapse of the Soviet Union and the Russian crisis in the 1990s.

      • Oil and gas prices did and will fluctuate wildly. But the long-term trend has been stable, even when adjusted for inflation. Here is the current gas graph from 1970to today, in today’s dollars:

        http://zfacts.com/p/35.html

        • Stable? Your own graph contradicts your statement. Prices dropped from 3.50 in 1982 to 1.50 in 1988. Then, prices stayed much lower for a decade and dropped down even lower just before the 1998 Russian default. In other words, prices dropped and remained low for close to two decades. Hardly a case of a long-term trend of prices increasing.

          • Michael,

            I don’t have time to explain to you the term “long-term” and how it differs from short-term. Let me just point out to you that today’s price is hiugher than in 1970, and the average for 2000s is higher than the avewrage for 1970s. That’s what I mean by long-term. In hte long term, the gas prics have ben stable, with a very slight upward trend.

            • What you have is speculative bubble that saw the price of oil being pushed much higher than could be sustained by the laws of supply and demand. This has nothing to do with “long-term” demand. The fact of the matter is that when prices rise to quickly and too high, consumption will either fall as people begin to conserve energy and use new technologies that are much more energy efficient, or high energy prices will lead to recessions that will in turn trim demand and cut prices.

          • http://money.cnn.com/2009/10/20/markets/thebuzz/?postversion=2009102013

            The return of oil price shock

            Higher energy prices are a sign the economy is getting better. But with oil nearing $80 and gas inching toward $3, some fear a further spike could derail a recovery.

  7. Recent technology advances in the production of natural gas in USA has completely changed the energy picture. USA, in only a short time, has ended the import of LNG (Liquid natural gas). Natural gas bearing shale is literally everywhere. Already the Saudis are asking for welfare help from the west. Go into NO HOT AIR for ongoing updates. The stupid Russians will pay a huge price for again behaving like a criminal gang rather than behaving like decent people. Russians seem incapable of learning to make friends rather than enemies.

    • Ron, we don’t need to import expensive LNG as we have plenty of domestic reserves. The problem is Europe which is dependent on the Russians.

      Now, if someday Iran with one fourth of the world’s NG reserves ever became a decent country LNG from them to Europe would destroy the Russian monopoly.

      It’s why the Russians are so invested in their alliance with that thug regime. Change there is going to eliminate them.

      • The United States does import a lot of natural gas, but from Canada, that does not seek to become an imperial “energy superpower.” We are quite happy to sell our goods and get money in return.

  8. “Once again dominate the globe”? You’re joking surely, my dear LR? Russia couldn’t even control ts own “Empire” when it had one. As you document well elsewhere, there’s not even a glorious past for it to return to. Just thuggery and brutality and cruelty. Let’s not over-estimate this spent, declining nation, even in retrospect.

    • Russia is not declining. Its economy, just like th eeconomy of Baltic states, is and will continue to grow until they catch up to the West.

      But indeed, Russia will never again come even close to being a world superpower. It poses no danger to Europe or anywhere else. Its population will soon forget their imperial ambitions and concentrate on the quality of living, just like the British, Spanish, French, Swedish, Germans, Austrians, Japanese and others have learned to, with time.

      • Well the problem with your argument is that the Russian state is pushing the dreams of emprire.

        Russia’s economy will never match that of western countries because of the rampant corruption and contempt for the rule of law, both domestic and international, that are at the core of the world view of its leaders.

        Another problem is the massive lead that western countries have, due to respect for law, and the relative lack of corruption.

      • I’d like to believe that Russia will indeed someday forget its imperial ambitions, but you forget how difficult it was for Britain, Germany and France to do so — and they had the benefit of being democracies while going through that process (or at least, part of Germany did). Russia today is saturated with pro-empire propaganda and controlled by an increasingly authoritarian regime which relies on the glorification of that imperial past. When you consider that the current regime — along with far too many Russians — still idolize the man who presided over the imprisonment, torture and murder more Russians than any other ruler, native or foreign, ever anywhere, well, what can you really expect from that country? It would be to everyone’s benefit, including Russia’s, for it to start down that de-imperialization process, but despite the brave work of a handful of Russian patriots who have tried to push their fellow countrymen down that path towards modernization and normalcy, the vast majority of Russians seem to prefer remaining stubbornly entrenched in the 19th century.

        And I disagree about Russia not being a danger; it is a state in decline — take a look at Transparency International’s corruption index, or Foreign Policy’s Failed State index, or any number of World Bank indices over the past decade — and states in decline which are ruled by authoritarian regimes who sense their declining power often turn out to be the most dangerous, as they seek to prop up their diminishing power through dramatic foreign policy acts. Will Russia invade Europe proper? Not likely, but woe be to those of us who border this dying beast; the Baltics, parts of Eastern Europe, the Caucasus.

      • Oh its energy supply economy is growing, but its domestic manufacturing industry is in a state of collapse.

        Aviation manufacturers, ship builders, car makers, appliance makers, all going down the toilet.

        Still when you look at the crap that Russian manufacturers produce its quite appropriate I suppose.

  9. All this baby talk. You even have no idea about what reasoning.

    • Thanks for the wonderful example of thoughtful, adult discourse. It will be a beacon for us in the future!

      LOL! Dude, your head needs serious work.

  10. Russia is developing under the laws of the wave function: for a period of decline should be rapid growth. And only depending on external conditions, this growth is due to military buildup, or peaceful development. This gave rise to the West in Russia and Stalin and the Soviet Union.

  11. Western civilization in general, will soon destroy the world and humanity – that’s where the root of evil!

  12. Who continues to destroy the world? West is not it? The Chinese invented gunpowder for fun, and Western man has used it for murder! And the idea of building socialism and communism in Russia, too, came to Russia from the west. Friedrich Engels and Karl Marx – for reference – the Germans! And Lenin has lived most of his life in Germany.

  13. Ecology, concern with global warming, democracy and similar ideas also came from the West. It’s a mixed bag.

    Maybe we’ll destroy this world, maybe we won’t. I think the jury is still out.

  14. But perhaps there is another way of human development? Not an industrial but the way of development of man himself.

  15. Why everyone thinks that the Russian use what they have gas and oil? But this is their own resources. America also does not sell oil and nobody accuses her of blackmail and terrorism, energy

  16. I once saw a comedy movie in which America has declared war on Canada because they oppose it, nobody else … With regard to Russia today a similar situation. Why does Russia have to fear? Or the Americans feel their weakness, which created a blog La Russophobe.
    I can understand that the Russian will create anti-American sites and blogs, for example, or the Iranians will do the same, but the Americans …

  17. Hey, Viktor SHM, the posturing I’m-a-
    Russia spiel isn’t working. You need a little more cleverness in doing the ESL shtick. It’s pretty obvious and pedestrian.

    Your back to back postings are a little overplayed too, but, with some work even a rather dullwitted American local like yourself can polish up a better on-line presence.

    Keep working on it.

  18. You are right Penny. A Russian-speaker who has not achieved a very high level of fluency in English would not use a verb such as “has declared” and Russian-speakers learning English usually have problems with the verb “to do” as there really wouldn’t be a Russian equivalent using the very “to do” in the sentence to “What does Russia have to fear.” A true Russian-speaker making typical errors in English would have gotten the “what” correct, but would have had problems with the verbs, invariably omitting the verb “to do.” For this reason, a Russian would not have written: “Why does Russia have to fear.” Good observations Penny.

    • How else is it possible to formulate this question about the fear?

    • Thanks, Michel, for deconstructing the obvious. It’s so glaringly phoney.

      The trollbots with the revolving monikers that post here from the keyboard of one or two homegrown idiots isn’t much of a talent pool.

      Just how fast they serve them up is amusing in itself.

  19. What are you talking about here?

  20. в каком смысле?

  21. I mean: in what sense?

  22. Yeah, Russian women are alright. I had fun with two of them last night.

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