Putin’s Gas Weapon

Natural Gas as an Instrument of Russian Foreign Policy Ion IftimieWith the West’s relations with Russia at their lowest point since the end of the Cold War, worries about Europe’s reliance on Russian gas have again come to the fore. Russian gas makes up around 25% of EU gas supplies overall, but the dependence of some countries is much higher: six EU member states depend on Russia for their entire gas imports, and three of these rely on natural gas for more than a quarter of their total energy needs.

This raises the issue of the extent to which Russia will use this dependency to further foreign policy goals: a subject which is explored in a recently updated edition of Ion Iftimie’s book “Natural Gas as an Instrument of Russian Foreign Policy” (for a more detailed historical treatment of Russian gas exports, Per Hogselius’ “Red Gas” remains invaluable).

As the title of his book suggests, Iftimie has no doubt about the important role of energy – and gas in particular – in the foreign policy of a Russia which has revived international ambitions, but which no longer has the capacity to enforce its grand strategic ends through military force. He argues against the conventional “interdependency argument” – i.e. that Russia is as dependent on its gas customers for revenues as they are on Russia for energy – pointing out the fragmented nature of the European market. Lithuania, for example, is dependent on Russia for 100% of its gas needs, but sales to Lithuania are only 2.3% of Gazprom’s export revenues.

And Iftimie argues that Russia has often actually resorted to use of the “gas weapon”, citing data showing that it threatened to disrupt – or actually disrupted – gas supply to countries in its “near abroad” over forty times between 1991 and 2013. And moreover, the man now in charge has strong leanings in the direction of using Russia’s natural resources as a means of reasserting its status as an international power: this was precisely the theme of Vladimir Putin’s Ph.D. thesis.

So Iftimie makes a strong case, and certainly the EU takes the security of supply threat seriously – hence its support of increasing pipeline connections in Europe and of imports from the Caspian and Middle East through Turkey. But currently the European gas industry has more immediate things to worry about. European gas consumption has fallen some 20% since 2010, but Russia cannot be blamed for this: in fact at least part of the cause can, ironically, be traced to Russia’s main international rival, the USA. Thanks to the US shale revolution, cheap gas has displaced coal in the US power sector, and some of this cheap coal has turned up in the European market, undercutting gas in Europe’s power sector. Europe’s carbon pricing system was meant to prevent this sort of thing, but hasn’t, leaving the European gas business in the doldrums.