The Glorious Russian Flag!
Welcome to La RussophobeYou may e-mail La Russophobe with comments or submissions for publication consideration at email@example.com. Congratulations, you are now reading the best Russia politics bloggers in the world! Our press: "Essential." -- Blogwatch "Ferocious." -- Peter Finn, Washington Post "Notorious." -- The Moscow Times Our creed: You don't really know Russia unless you read La Russophobe! Our motto: Russia is the best country in the world . . . except for all the others. Our slogan: "Что-то типа Новой Газеты на английском языке." (Translation: Something like Novaya Gazeta, but in English). NOTICE: This blog quotes from source material, and links to it. When a post contains quotes and original material, the quotes are in ordinary print and the original in boldface. See "About LR" in the title bar for copyright notice.
Supporting La RussophobeLa Russophobe does not solicit or accept financial support from any source. If you would like to show your support for LR and your opposition to the rise of dictatorship in Russia, the easiest way is to create a Digg or StumbleUpon or Delicious account and use it to favorite some of our posts. LR also welcomes your e-mail comments and submissions for publication, and we urge you to support the effort to boycott of the Sochi Olympics.
Feed La Russophobe!Click here to feed La Russophobe
Russia’s Invasion of Georgia: The Truth
Remembering Natalia EstemirovaClick here to honor the memory of Natalia's daughter Lana by making a contribution to her education fund, established by the Memorial human rights organization.
Search our Archives
Archives by Month
Blog Stats (add 300,000 from Blogger)
- 3,744,262 visits
- La Russophobe’s New Blog is now Live
- La Russophobe is now on Facebook and Twitter
- September 30, 2011 — Contents
- EDITORIAL: We Told you So
- EDITORIAL: Estonia Whips Russian Butt
- EDITORIAL: The Russian Economy is Collapsing
- Viking Russia, Land of Barbarians
- Andrei Zubov, Russophobe
- Kara-Murza on Putin’s Return
- CARTOON: Yelkin on Putin’s Return
- SPECIAL EXTRA EDITORIAL: Putin, President for Life
- September 23, 2011 — Contents
- EDITORIAL: Prokhorov in the Woodshed
- EDITORIAL: Drunken Russian Killers
- EDITORIAL: Does Britain still Remember Chamberlain?
Mbulelo Ramokoka on Peter LaVelle: Scum-sucking tr… georgefernandis on La Russophobe’s New Blog… Mortonweino on EDITORIAL: LR in Russian… VincentKab on EDITORIAL: LR in Russian… JosephTob on EDITORIAL: LR in Russian…
Tag CloudAnastasia Pavlyuchenkova barack obama boris nemtsov Boris Yeltsin bric chechnya china cold war cold war II dave essel dmitry medvedev economics editorial ellustrator essel estemirova freedom house Garry Kasparov gazprom georgia history hypocrisy ikea ingushetia internet iran journalism kasparov KGB khodorkovsky kozlovsky Kremlin latynina maria sharapova medvedev Mikhail Gorbachev Mikhail Khodorkovsky Moscow Nadia Petrova nemtsov novaya gazeta obama oleg kozlovsky ossetia paul goble Politkovskaya putin racism ramzan kadyrov russia russian army russian economy russian stock market russophiles saakashvili Sergei Magnitsky sharapova siberia sochi Soviet Union sports stalin stanislav markelov Svetlana Kuznetsova tennis ukraine united russia United States Vera Zvonareva vladimir frolov vladimir milov vladimir putin vladimir ryzhkov yulia latynina Yury Luzhkov
Category Cloudchechnya cold war II contents corruption economics editorial elections georgia halls of power history hypocrisy iron curtain journalism litvinenko militarism murders neo-soviet crackdown neo-soviet failure opposition groups rating russia rhetoric russia russian people russophiles social services sports sunday photos translations Uncategorized weaponizing energy
- Scumbag former senators look to profit from Russian evil. publicintegrity.org/2014/09/02/154… 6 years ago
- The Russian Mothers Waiting for News of Their Missing Soldier Sons newsweek.com/russian-mother… 6 years ago
- @Dr_Ariel_Cohen Important point! Obama, obsessed with nuclear disarmament, is radically impeding it! 6 years ago
- @DanielabKennedy Not where Russia is concerned. 6 years ago
- RT @ARothNYT: Two leaked convos btw Pskov paratroopers which claim 80 soldiers from their company were killed in Ukraine. 1/2 http://t.co/… 6 years ago
LR’s Google Page Rank
Daily Archives: April 18, 2007
WEDNESDAY APRIL 18 CONTENTS
Prison Camp “Russia”1
By Natalia Gevorkian, Kommersant columnist (pictured)
April 4, 2007
Ukraine is the talk of the town in Russia. Ukraine is percolating: There are Maidan-1* and Maidan-2, supporters of the Prime Minister pitted against supporters of the President, state institution against state institution, the Constitutional Court and the Central Election Committee (SEC) don’t see eye to eye, and even the people inside the court and the committee don’t see eye to eye. New elections are around the corner, or perhaps the opposite is true — the crisis will sweep the president away. Who is going to prevail — Yushchenko or the parliamentary majority which will use its numerical strength, amend the Constitution, and, in essence, stage a coup? We are arguing about Ukraine which once again has entered the political turbulence zone because it is unclear how — and in what form — it will emerge from this upheaval. We would never even contemplate talking about ourselves the same way we are talking about Ukraine though elections are around the corner here—both parliamentary and presidential — although our own Constitutions has been amended without any rules, despite the fact that our own Central Election Committee is undergoing most improbable and nauseatingly obvious mutations tailored to the so-called elections. We are arguing about the others because they have options, and this is fascinating. We don’t have any options. Unlike the Ukrainians, we don’t know how to (pardon my language) do the authorities doggy-style. The difference between us and the Ukrainians is in that their crises and Maidan are like in any vibrant, open society, while here we have the so-called stability, and everything is under control like in a prison camp1.
Here we grow ecstatic discussing somebody else’s political affairs, haven’t you noticed? Scandals in the United States, Cheney and Iran, the unpredictable outcome of the French elections, Hungary, Poland, Ukraine, and Georgia—we endlessly argue about these or those decisions made by our Baltic neighbors. We agree or disagree. And we understand a priori everything that our own government is ramming down our throats—from fake successors, fake minister of defense, and fake SEC chairman to fake elections, fake parties, and fake “Kinfolk.”2 We don’t stage a Maidan, we don’t scream that all that’s happening in the country is our business too simply because we are supposed to be voters. Yet they are screaming — right there all over again—in the Maidan. And what’s most remarkable, the fact that we don’t have a Maidan is a source of our hubris, and we are in no rush to defend the rights of those who are at times compelled to take to the streets and to tell us what they think about this government of ours.
A prison camp is what it is — a prison camp — and it lives by its own law. Malcontents are beaten with a nightstick over the head, mutineers are simply shot. There is no concept of human rights in a prison camp, there one doesn’t concern himself with any liberties because it is a prison camp after all. There cannot be opposition; dissatisfaction may brew in a prison camp but its manifestations are always fraught with bloodletting, and even the most enlightened members of the public—those who haven’t yet forgotten that but for a short time they lived almost like in a free country and felt as if they were free people — are keen on talking about it. And by the way, they themselves once went to meetings and demonstrations, took to the streets to defend this very democracy (pardon my language) when they felt that it was somehow threatened. And now they publicly declare that they won’t go marching with anybody even hinting that all this business is really horrible because blood may be spilled. In other words, they in fact admit that they live in a prison camp because if this is not a prison camp, then why would blood of unarmed people — people who came to the Kremlin, for example, to tell the president that far from everyone is thrilled about his rule — has to be spilled.
We found out that one cannot live in a prison camp and be free of the prison camp. One develops a chamber mentality—from the word chamber [like a prison chamber], a constrained space with strictly defined dimensions and pre-approved conduct under the conditions of captivity. As strange as this may sound, Maidan has become a bogeyman not only to the Russian authorities and in the words of Russian government spokesmen but — indirectly — also in the words of those who once seemingly were sympathetic to the “orange.”3 Today’s crisis in Ukraine and the new Maidan could have easily been interpreted as an example of democracy’s instability. So the advantages of the morbid stability in prison camp “Russia” would look surprisingly nice against this backdrop. This is so not even because it’s to RF government’s advantage to present the situation in this light. This is so because the absolute majority of the people who are called upon to form the public opinion are in all earnestness publicly discussing different successors, dropping names, fantasizing, speculating about the third, or thirty-third, [presidential] term — or in other words are advancing postulates of a prison camp instead of repeating monotonously that this is not how things happen in a democratic country where nobody appoints successors and nobody tailors the length of the term to fit the specific person (unless the country is in a state of war), that the voter is under no obligation whatsoever to agree to all this, that the voter has rights and obligation guaranteed by the Constitution of Liberty, and these are worth to be defended. But this, in essence, is Maidan. Yushchenko can hear it outside his windows. And so can Yanukovich. They have no right not to hear.
But outside our windows one finds totally stable f***-up4 beyond the point of no return, as befits a model prison camp. And if one’s interested in real politics, the camp warden will turn on the TV, and Pavlovskiy5 will tell the inmates about the horrors of Ukrainian democracy and warn about where unchecked exercise of civil liberties could lead to. Let Maidan be their worst nightmare.
What do you think? [TN: This is an invitation to submit an electronic letter to the editors of Gazeta.ru at this link]
The views of this author are not necessarily those of the editors of publishers of Gazeta.ru.
* Maidan—Hyde Park writ large in Kyiv, city’s main public square
1 Зона in the original Russian, slang for prison camp, state farm, or correctional facility
2 Наши in the original Russian, literally ‘Ours’ – a Kremlin-sponsored public movement sometimes referred to as Putinjugend
3 The orange—pro-presidential Western-oriented public movement in Ukraine
4 A play on the words ‘stability’ and total ‘f****-up’
5 A stoolpigeon, putinoid political scientist and administration mouthpiece
Britain’s Telegraph reports on the overwhelming force used to crush the St. Petersburg protest march on Sunday:
Russia’s dwindling band of Kremlin critics tried to exercise their right to peaceful protest for the second time in as many days yesterday. And once again, they were met by riot police who showed neither mercy nor discrimination in their unprovoked response, freely wielding their batons at female students and male pensioners alike. As in Moscow on Saturday, yesterday’s March of Those Who Disagree in the nation’s second city of St Petersburg ended in mass detentions.
About 1,500 supporters of The Other Russia, a coalition uniting some of the disparate groups opposed to President Putin, gathered in a square to march down the city’s main street. After a 90-minute rally, permitted by the authorities, a core of about 400 tried to go along an unsanctioned route to the government headquarters. Outnumbered by the security forces, they never stood a chance. Phalanxes of riot police, directed by a helicopter, blocked every entrance to the square. As the protesters neared the Vitebsky railway station, the police charged, their batons flailing indiscriminately. A young male protester, covering his face in a futile attempt to stop the blows being rained upon him, was dragged on to a police bus. Another lay on the pavement nearby, his face covered in blood. A female pensioner waved an Orthodox cross as a line of helmeted officers, their arms interlinked, marched towards her. She implored God to forgive them as she too was bundled on to the bus, where detainees were subjected to further beatings. Ignoring chants of “shame” from protesters and passersby, the police grew more frenzied. Sweeping through a park, they pinned an elderly man to an iron railing and beat him senseless as his wife screamed nearby. At no point did the protesters try to fight back and only one was guilty of provocation when he threw lemonade over the police.
Some of those detained were doing nothing more than sitting on park benches. More than 150 people were seized including Eduard Limonov, the controversial leader of the National Bolshevik Party and one of Mr Putin’s most outspoken critics. An earlier protest in Moscow on Saturday also ended in violence and detentions. The former chess champion Garry Kasparov, now a prominent figure in the Other Russia movement, was held for 12 hours and later fined. According to his lawyer, he was found guilty of “shouting anti-government slogans in the presence of a large group of people”. After his release, Mr Kasparov condemned the police brutality. “The Russian state has shown it no longer respects the world press, public opinion or even Russian law,” he said. “Now it is a country somewhere between Belarus and Zimbabwe.” Since Mr Putin came to power in 2000, Russia has evolved from a dysfunctional quasi-democracy into near-autocracy. As repressive law has followed repressive law, open dissention has almost totally disappeared. With presidential and parliamentary elections due in the next 12 months, Mr Putin, who is meant to step down next year, is keen to keep things that way.
Enjoying huge domestic popularity, some have questioned the need to crush tiny Opposition protests. However, analysts say he has no choice. A failure to react toughly could persuade more Russians to join the demonstrations, raising the prospect of a repeat of Ukraine’s pro-democracy Orange Revolution in 2004. The tactic seems to be working. With four out of the last five Other Russia marches ending in police crackdowns, numbers of those participating have fallen away. But in some ways the opposition also has itself to blame. St Petersburg is the closest it has to a Russian stronghold, although even here liberal parties would struggle to command 10 per cent of the vote.
That the turnout yesterday was so poor reflects not only public fear but also disappointment at the Opposition’s failure to unite. Meanwhile, Mr Putin’s greatest rival, the London-based oligarch Boris Berezovsky, has suggested he was misrepresented in an interview with The Guardian in which he allegedly called for the violent overthrow of the Russian government. “I do support direct action,” Mr Berezovsky said in a statement. “I do not advocate or support violence”.
Robert Amsterdam has spoken by phone with Garry Kasparov and learned that Kasparov may have been arrested in Moscow to stop him from traveling to St. Petersburg to attend the rally the next day; as we reported the rally in fact did fizzle out, perhaps as a result. Amsterdam also has a column from hero journalist Grigori Pasko who was on the scene in Moscow. Meanwhile, writing in the Moscow Times, columnist Alexei Pankin describes the once-again-surreal quality of Russian “news” reporting during the protests. Welcome back to the USSR!
Last weekend offered a surrealistic view of the country’s news landscape.
All Saturday Ekho Moskvy radio reported on the mass arrests and beatings of participants in The Other Russia’s rally held on Turgenev Square, as well as the Union of Right Forces’ gathering on Slavyanskaya Ploshchad, the Young Guard rally on Pushkin Square and the protest against illegal immigration held on Bolotnaya Ploshchad.
The major television channels, in contrast, broadcast stories on bombings in Iraq, a Turkish bus accident involving children and unprecedented high temperatures in Germany. Only Ren-TV provided significant coverage of the rallies during its Saturday evening current events program. Later, Mayor Yury Luzhkov began appearing on screen trumpeting the success of the annual spring cleanup in the city and bragged about the maturity of Russian democracy in permitting a number of political opposition meetings in the capital on the same day. Yet all Saturday and Sunday, on state-owned Rossia television channel and Mayak radio, just about every commercial break contained a spot for a French documentary on the United States’ true motives in organizing revolutions in former communist countries.
“Our authorities have such little faith in their own propaganda that they have to depend on a foreign film,” I thought as I switched between the parallel worlds of radio and television.
Then, on Sunday, came the film itself. The first thing I noticed was the lack of a writer or director’s name in the opening credits, which immediately got the alarm bells ringing. Then came footage of attractive young people from Serbia, Georgia, Ukraine, Kyrgyzstan and Belarus who said they refused to accept their arbitrary leaders, demanded fair elections and saw U.S. President George W. Bush as their supporter. It was impossible not to sympathize with them, or to disagree with U.S. Senator John McCain, who decried the switching off of electricity to a printer in Bishkek that published newspapers opposed to Kyrgyz President Askar Akayev.
I could not help wondering whether airing it was a form of subtle subterfuge by Rossia staff fed up with being treated like pawns by the authorities or some ruse by Kremlin propagandists who believed that airing it would serve as some sort of inoculation against such a revolution here.
Personally, I see the whole thing in light of my own political error of historic proportions. During the Congress of People’s Deputies elections in 1989, the first Soviet election where there was some choice, I voted for Boris Yeltsin. I disliked him strongly, but the authorities had staged such a huge campaign to discredit him that I had to vote for him out of protest. I am, therefore, at least partially responsible for all that followed: the appearance of borders and customs officers where we once traveled freely, the tens of thousands killed in disputed territories between former Soviet republics, the fact that press freedoms promised during President Mikhail Gorbachev’s tenure have yet to be delivered, the state-oligarchic excesses from 1993 to 1999, and the managed or sovereign democracy — take your pick — that inevitably followed.
This all led me to the conclusion that the shortcomings of the current leadership alone were not sufficient basis for supporting an even worse opposition. We now have a new, naive generation that seems ready to repeat the mistake I made in 1989.
On Saturday, operating on the principle of “the worse the current situation, the bigger the backlash,” The Other Russia delivered a blow against the authorities in the same way martial arts specialists use their more powerful attackers’ momentum against them to gain victory. I am confident that the number of young people who sincerely believe life will get better if this “bloody regime” is removed has risen.
Unfortunately, their faith is not borne out either by the “democratic” revolution in Russia or by recent events in Ukraine, Georgia and Kyrgyzstan.
The Economist reports on Russia’s attempt to get a chokehold on Europe’s energy supplies:
RUSSIA’S president, Vladimir Putin, must be feeling smug. His strategy of using the country’s vast natural resources to restore the greatness lost after the break-up of the Soviet Union seems to be paying off. If power is measured by the fear instilled in others—as many Russians believe—he is certainly winning.
The Soviet Union relied on its military machine for geopolitical power: its oil and gas were just a way to pay for it. In today’s Russia, energy is itself the tool of influence. To use it the Kremlin needs three things: control over Russian energy reserves and production, control over the pipelines snaking across its territory and that of its neighbours, and long-term contracts with European customers that are hard to break. All three are in place. For all the talk of a common strategy towards Russia, the EU is divided and stuck for an answer.
Gazprom, Russia’s energy giant, cherished by Mr Putin as a “powerful lever of economic and political influence in the world”, has long-term supply contracts with most European countries, including France, Germany, Italy and Austria. It also has direct access to these countries’ domestic markets. The EU reckons that half its gas imports now come from Russia. Newer EU members, such as Hungary and the Czech Republic, are almost entirely dependent on Russian gas. Moreover, a pipeline network that it inherited from the Soviet Union gives Russia control over gas imported from Central Asia.
The EU has few ideas for how to deal with its chief energy supplier. “We know we should do something about Russia, but we don’t know what,” one Brussels official says. “In the EU we negotiate on the rules, whereas Russia wants to do deals.” The deals are coming thick and fast. Last month, Russia secured one to build an oil pipeline from Bulgaria to Greece that will bypass the Bosporus. Symbolically, it will be the first Russian-controlled pipeline on EU territory. The pipeline will carry Russian and Central Asian oil straight to the EU, avoiding Turkey.
Oil can at least be bought from elsewhere. The bigger worry is about the EU‘s dependence on Russian gas. The flow of natural gas depends on the routes and control of pipelines, as European consumers were reminded when Russia switched off the gas supply to Ukraine just over a year ago and Ukraine started to steal Russian gas that was destined for the EU. Russia’s pipeline routes encircle the EU from the north and south.
Russia and Germany have teamed up to build a gas pipeline under the Baltic Sea, bypassing Ukraine and Poland (see map). Gerhard Schröder, a former German chancellor signed up by Mr Putin to preside over this Nord Stream pipeline, claims that it will make Europe safer. But a study by Sweden’s Defence Research Agency concludes that it will divide the EU and increase dependence on Russia. It will let the Kremlin turn off gas supplies to Ukraine, Poland and Belarus without affecting “more important” customers. Understandably, Poland is anxious. The pipeline will increase the flow of gas to Germany and hook in countries that do not yet consume much Russian gas, including the Netherlands and Britain.
In the south, Russia has a pipeline across the Black Sea which supplies gas to Turkey. Now Russia wants to extend this Blue Stream pipeline to Hungary. That would compete directly with Europe’s own plan to build a pipeline called Nabucco from Turkey to Austria. Nabucco has been one of the EU‘s few concerted responses to Russian domination of its gas supplies: it would be filled up with gas from Central Asia and thus bypass Russia altogether. But it is now creating more friction than unity.
Last month Hungary’s prime minister, Ferenc Gyurcsany, called Nabucco a “long dream”. Instead, he suggested that Hungary would support the extension of Blue Stream. Gazprom already supplies 80% of Hungary’s gas and has promised to build a large gas-storage facility that could be a hub for central Europe. “Blue Stream”, enthused Mr Gyurcsany, “is backed by a very strong will and a very strong organisational power.” (When Hungary was accused of undermining the EU‘s common energy policy, the tart response was that it was impossible to undermine something that did not exist.)
As well as controlling pipelines, Gazprom has also been busy buying up pieces of Europe’s gas infrastructure. It owns 35% of Wingas, a German distribution company, and also has stakes in the Baltic countries’ distributors. It has 10% of the interconnector pipeline between Belgium and Britain and wants a similar share of a British-Dutch link. It is also muscling its way into electricity, oil and liquefied natural gas (LNG) projects. “It is not enough for us to meet 25% of global gas consumption. We want to be the biggest energy company in the world,” Alexander Medvedev, Gazprom’s deputy head, has said of his company’s modest ambition.
Most European governments have been careful not to alienate Russia. As long as Gazprom plays by the rules, they say, it should be allowed to invest in their markets. Belgium recently said it had no problems with Gazprom owning parts of its infrastructure. Russia, in contrast, has a big problem with foreign companies owning, let alone controlling, any of its natural resources. It has bullied Royal Dutch Shell into ceding control of the Sakhalin-2 project in the far east of the country; it has blocked BP‘s plan to develop a gas field in eastern Siberia; and it has kept foreign companies out of the development of the giant Shtokman field in the Barents Sea, saying that it will go it alone.
In the same spirit, the Kremlin has flatly ruled out ratifying the EU‘s energy-charter treaty, which would require it to open up its gas pipelines to other countries and other suppliers. The Russians have made a mockery of a joint declaration on energy issued at the G8 summit they chaired in St Petersburg last July. The declaration called for more honesty, competition and transparency. Yet just two days later, Mr Putin enshrined into law Gazprom’s monopoly position as the sole exporter of gas.
Then there is the talk of creating a gas equivalent to the OPEC oil-exporters’ cartel. On April 9th Russia joined other gas producers in Qatar to discuss the possibility, and offered to lead a study into gas pricing. The next meeting of the group will be in Moscow. With almost 60% of the world’s gas concentrated in just three countries —Russia, Iran and Qatar—the notion of a cartel sounds appealing. But fixing prices for a commodity that is not traded on world markets will prove much harder than it has been for oil. Even so, as Mr Putin said earlier this year, “it would be a good idea to co-ordinate our activities.”
Gazprom has already signed a memorandum of understanding with Algeria’s Sonatrach to co-operate in gas production. This has unnerved European consumers, as Algeria is their third-largest supplier of gas, after Russia and Norway. America, too, is nervous. “Russia’s commercial and political shadow over the governments in central Europe makes it harder for us to deal with our allies,” says a senior State Department official.
The EU‘s dependence on Russian energy is hardly new. Nor is tension between Russia and America. “The Americans were constantly telling us we were too dependent on Russian gas in the 1970s and 1980s,” says Sir Rodric Braithwaite, a former British ambassador to Moscow. Yet, throughout the cold war, Russia remained a reliable gas supplier. Why should things be different now?
First, says, Cliff Kupchan, director of the Russian programme at Eurasia Group, a consultancy in Washington, DC, the Soviet Union was politically more predictable than its successor. “It was run by geriatrics, but we knew that one geriatric would succeed another.” Russia’s political stability is ephemeral. It relies on Mr Putin’s will, not on an institutional transfer of power. With nationalism on the rise, it is anybody’s guess who will be in charge of Russia in ten years’ time.
A second difference is that the energy relationship between the Soviet Union and the West stopped at the border—albeit the border of the Soviet block. The oil and gas ministry, Gazprom’s predecessor, did not try to take over any of western Europe’s infrastructure. Gazprom has no scruples about using its muscle to buy such assets. Gazprom’s desire to control their pipelines has been central to Russia’s recent clashes with Ukraine and Belarus.
Third, the Soviet energy business was run by technocrats who implemented centrally planned decisions. Today, it is controlled by former KGB men obsessed with money and power. Gazprom has several ex-KGB members on its board of directors. Rosneft, the state-controlled oil champion, is chaired by a former agent who is now deputy chief of the Kremlin staff. “People in Europe have a natural apprehension about their homes being heated by these people,” says one commentator on Russia.
Yet dependence cuts both ways. Europe may depend on Russia for half its gas imports, but Russia is dependent on Europe for the bulk of its export revenues. Repeated threats by the Kremlin to divert the flow of gas to China mean little without pipelines that it would take many years to build. Switching off gas to Europe will never make commercial sense for Gazprom. The fear in some EU countries is that commercial interests may one day become secondary to political ones. Of 55 cut-offs, explicit threats or coercive price actions by Russia since 1991, only 11 had no political underpinnings, according to the Swedish defence study.
Running on empty
If all this is not worrying enough, there is another, more immediate source of concern for the EU: that Russia may be physically unable to produce enough gas to satisfy demand. Even worse than being dependent on a company like Gazprom may be to be dependent on a Gazprom that is short of gas.
The output of Gazprom’s three super-giant fields, which account for three-quarters of its production, is declining at a rate of some 6-7% a year. Output from a new gas field brought on stream in 2001 has already peaked. Last year, Gazprom decided to develop a massive field in the Yamal peninsula—frozen and barren Arctic land—but that will take years. Meanwhile, Russia’s domestic demand for gas is growing by more than 2% a year. For all its swagger, Russia is short of gas, a problem that is already affecting its electricity-generation capacity. This does not reflect any lack of reserves—Russia has the world’s biggest—but rather a longstanding failure to invest enough in their development.
Gazprom has argued that it will invest in new fields only if it can pre-sell the output to Europe. Instead it has been spending lavishly on pipelines and downstream assets. This has a certain monopolistic logic. Raking in the middleman’s profits from exports is easier and more lucrative than investing billions in developing new fields for a domestic market which, although it consumes two-thirds of Gazprom’s production, generates hardly any profits, as regulated Russian gas prices are much lower than most European ones.
Meanwhile, Gazprom relies on Central Asia, especially Turkmenistan, to plug the gap in gas supplies, which makes many investors and consumers nervous. A study by UBS, a bank, concludes that Turkmenistan may have signed contracts to supply twice as much gas after 2009 as it can actually produce. The nervousness over potential shortages of gas, though, plays in Gazprom’s favour: as with talk of a gas OPEC, it prods the Europeans into striking special deals with Gazprom.
Gazprom’s position is reliant on support from Europe’s national energy champions such as Gaz de France, ENI of Italy and Ruhrgas of Germany. Companies such as Ruhrgas and Gazprom have each other’s interests at heart. Indeed, Ruhrgas owns about 7% of Gazprom, worth some $17 billion, and has a seat on Gazprom’s board. ENI and Enel of Italy this month acted directly for Gazprom when they bought the expropriated gas assets of the bankrupt Yukos company in a controversial auction. Under a pre-arranged deal, the two Italian companies agreed to cede control of these assets to Gazprom, which was too cautious to bid in its own name. In return ENI and Enel were given a foothold in Russia’s gas fields and possibly a seat on the board of Gazprom’s oil company. Gazprom also has long-term gas contracts with ENI, which gives it direct access to Italian consumers.
Gazprom has similar arrangements in Germany and France. Vladimir Milov, the head of the Institute of Energy Policy in Moscow, says that the links between Gazprom and its European counterparts amount to a cartel between wholesale buyers and sellers. The losers in this game are European consumers who are forced to pay gas prices that are several times higher than the wholesale price which their national companies pay to Gazprom.
Trying to persuade Russia to break up Gazprom’s monopoly is a futile task. The best way to increase the EU‘s energy security would be for it to liberalise its own market and unbundle its national utilities. This would cut profit margins in gas distribution, and thereby reduce Gazprom’s appetite for European domestic assets. It would encourage European network operators to invest in interconnectors between electricity grids and pipeline networks, weakening Russia’s ability to play off one customer against another. No wonder Gazprom does not warm to the idea of European energy liberalisation, which it has called “the most absurd idea in the history of the world economy”.
Break it up
The European Commission has been urging EU members to break up their vertically integrated energy companies, but France and Germany are resisting. The problem, says the commission, is that national governments do not understand the link between liberalisation and greater energy security. “New member states equate security with nationalism. But the only alternative to integration is isolation,” says one senior EU official.
At the most recent EU summit in Brussels, heads of governments pledged to separate their energy supply and production activities from transport networks, which will be managed independently. This falls short of an ownership break-up but it should increase competition. EU leaders accepted the need to link their energy networks, allowing more cross-border trade and thus both boosting competition and reducing Gazprom’s power. Europe is also talking of building more LNG terminals that can be stocked by other suppliers.
The EU‘s imports of LNG will certainly rise in coming years. The International Energy Agency (IEA) estimates that European imports of gas from Africa and the Middle East, mainly in the form of LNG, will quadruple by 2030. But LNG is expensive, and generally involves inflexible long-term sales contracts. Moreover, the IEA‘s projections assume that the Europeans overcome their squeamishness about building ugly LNG terminals. Equally improbably, they assume that Russia will not find some way to impede the emergence of rival exporters.
Getting direct access to Central Asian and Caspian gas is vital to European energy security. The Russians are well aware of this, as are the Americans, who have been active in the region and brokered the deal to build the twin oil and gas pipelines that now run from Azerbaijan to Turkey via Georgia. The Americans would like this gas to be carried on from Turkey to central Europe via the Nabucco pipeline, rather than the extension of Blue Stream.
But Azerbaijan’s resources are not enough to make a material difference to European energy security. The big strategic battle now will be over gas-rich Central Asia. The Americans have revived their old plans to build a trans-Caspian pipeline and are actively courting the region’s politicians, however dictatorial and disreputable. A change of government in Turkmenistan has given these efforts new impetus. But transporting Central Asian gas to the EU without Russian involvement will be testing. Apart from the unpalatable option of building a pipeline through Iran, the only way to get Turkmen gas to Europe would be across the bottom of the Caspian Sea. But a long unresolved dispute over the ownership of the Caspian between Iran, Kazakhstan, Azerbaijan and Russia makes this option explosive.
Russia has been jealously guarding its control over the Central Asian markets. It has more than doubled the price it pays for Turkmen gas and now claims to have a deal to buy all the gas the country can produce for the next 25 years. Last week Sergei Lavrov, Russia’s foreign minister, went to Turkmenistan to promote “close co-operation”, which means rejecting any American overtures. Russia cannot afford to lose control over gas exports from Central Asia because that would severely undermine its power over Europe.
The Kremlin’s determination to keep a grip on their gas supplies should be an obvious worry for Europeans. But it could carry dangers for Russia too. If the EU ever manages to find an alternative to Russian energy, in the form of more LNG, Iranian gas, renewable energy or a pipeline under the Caspian, Russia would lose control of its key market. Even if it does not, the Russian economy will become ever more dependent on natural resources.
As Mr Putin contemplates a gas OPEC, he should remember that although the 1973 OPEC oil shock extended the life of the Soviet regime, it also left a Russian economy trailing behind its Western peers. “Basing national power and prosperity on an inadequate monoculture is as risky as basing them on rockets in the cold war,” argues Sir Rodric Braithwaite. Still, Russia’s ability to cause harm to itself and to others in the cause of proving its greatness should never be underestimated.