The Gas Crisis and the Opportunities for the EU
For anyone following Russia’s increasingly assertive handling of its neighbours and business partners, Gazprom’s decision to turn off gas supplies to Europe should not come as much of a surprise. After all, Russia’s mammoth gas monopoly is in perpetual conflict with transit countries for its commodities, and Ukraine has faced the same very threat in the past years. However the European Union seems to have been unprepared for what was a predictable sequel to an old conflict.
To succeed in resolving this conflict and prevent future similar crises, the EU should change its paradigm in its perception of what Russian outward-looking economic policies stand for. In recent years the majority of European pundits have been favourable to the increasing state control over Russian industry and finance, as well as other strategic changes in Russia’s economy initiated by the former president (now prime minister) Vladimir Putin. In the conflict between the Kremlin authorities and the old-style oligarchs who controlled vast financial and industrial empires in the 1990s, the former were considered to bringing predictability and stability to the hectic Russian economic life, as opposed to the chaos and wilderness of oligarchy. The excessive wildness of the transition itself, as what is now called “looting of Yukos” by the Kremlin’s inner circle, appeared to many to be the inevitable price for restoring the order.
Subsequent developments proved to be disappointing to those who had believed Russia to be a responsible state governed by the rule of law. The new Russian economic order is now widely seen as corporatist, corrupt, short on both effectiveness and efficiency, and full of cronyism.
However the true picture is more complicated. The new Russian elite of so called siloviky (former secret service, law enforcement and military officers) may appear to be focused on only seeking financial gain, but this impression is flawed. Yes, they are greedy, and in their desire to ship their wealth out of Russia as fast as possible, rather than invest it in the country seem to be conceding that the good times cannot last for long. But they also still retain a vision of their country as a dominant regional superpower, and they challenge the European values with what they call Russian distinctiveness. In the Kremlin’s world it is logical to utilise economic advantages as political leverage, which is now seen as a softer version of the military face-off of the ‘90s. The present Russian leaders have both an enthusiasm and a propensity to politicise every issue at their first touch.
What this means is that, in its dealings with Russia, the EU has to find a way to deal, not with the objective facts of a situation but with economic pressure used as apolitical instrument, whenever Moscow feels it has the potential to convert trade into political advantage. In case where “Gazprom stands for Russia” there cannot be just a trade price dispute. What seems to be commercial wrestling turns out to be a geopolitical Big Game. The difference in prices for gas supplies to pro-Western Ukraine and the more conformable Belarus epitomises this geopolitical approach.
Yet still there are sufficient opportunities to outplay the offender. With a unified production and transportation system, Gazprom technically cannot easily survive any extended blockade of Ukraine and the 17 European consumer states that stand behind it. Mentally the Kremlin’s inner circle is not ready to sacrifice its own money for the sake of ensuring Russia’s political grandeur.
For Europe the successful strategy may be to create its own political leverage against Moscow’s gas truncheon. It is a historical fact that Europe has never talked to Russia with one firm voice, and if it were to do so it could have a staggering effect. The EU has a new president who is ready for this task – Czech president Vaclav Klaus is a politician who can tell the politically inconvenient truth. The Czech tradition of pragmatism and imperturbable common sense could help design an effective energy policy without excessive hype, arrogance or anti-Russian malice. But Prague will need help from Europe’s larger players, too, who by now ought to realise that the policy of exchanging chumminess with Moscow in return for gas from Gazprom has backfired painfully . The time to unite around a policy designed to match Moscows realpolitik, with our own if we are to succeed in securing Europe’s energy needs for the future.