RUSSIA'S MOST EFFECTIVE WEAPON

Vladimir Putin was the first Russian leader to recognize that his country’s vast energy reserves could be used to restore its superpower status but his successor, Dimitry Medvedev also wants to use them to deliver a powerful diplomatic punch.
When Putin stepped down as president to become prime minister, there were murmurs of glee in many western capitals, especially in Washington, where it was felt he had been cynically exploiting the power of the Russian corporate gas giant, Gazprom, to divide Europe and the US. He had even negotiated the building of a pipeline from Libya to pump its gas and oil into Europe in order to make Europeans dependant on Russia. That same gas would also be shipped to the US. To Washington’s astonishment, he personally oversaw the initial negotiations with Libya that gave Gazprom exclusive rights to Libya’s massive liquefied gas and oil reserves, eliminating competition from US and European companies. He was also active in developing energy ties with Iran to ship its oil and gas to Europe and China.
His upstaging of the West in the energy stakes was an embarrassment for the US, France and Britain. They had established strong diplomatic ties with Libyan leader, Muammar Gaddafi, choosing to overlook his past involvement with terrorism in the hope of getting access for western companies to his country's massive oil and gas reserves. Western leaders were therefore dumbfounded when he handed Gazprom the contract. That confirmed a US fear that Putin was determined to ensure Gazprom had a monopoly of gas supplies to European nations, thereby giving Russia a lot more political clout across the European continent.
The US retaliated by shutting Russia out of energy deals in Iraq and as a result a behind-the-scenes energy battle gained momentum. Putin’s was personally incensed by the US move because he had allowed himself to be persuaded by George Bush to write off Iraq’s billion dollars debt to Russia. Some observers reckon Putin did not write off the debt merely as a gesture to George Bush but also in the hope the Iraqi government would respond by giving Russia’s LUKoil access to Iraqi oil fields. It seemed Putin was oblivious to the fact that major decisions regarding energy contracts in Iraq were only made with Washington’s approval.
Putin responded by cozying up to Iran’s president, Mahmoud Ahmadinejad, who was only too happy to propose a deal whereby Russia and Iran would supply all of Europe and China’s energy, beginning first with the construction of an oil-gas pipeline across the Mediterranean.
Putin’s successor, Dimitry Medvedev, the quiet, reserved lawyer, lost little time showing he had no intention of plotting a different energy course than the one his predecessor had formulated. In fact, it quickly became apparent that Medvedev, in his role as head of Gazprom from 2000 to 2008, had equipped himself with a hard headed grasp of energy issues. Contrary to a western perception of him being a patsy for Putin, he was a tough negotiator. His objective was to take Putin’s energy policy a stage further by developing energy as a diplomatic rather than just an economic weapon, having in mind a global stage. One of his first acts after his inauguration on May 7, 2008, was to issue a directive that ESPO - Eastern Siberian Oil Pipeline – had to be up and running by the end of next 2009, thereby permitting Russia to provide large supplies of oil to the Asia Pacific region. He followed that up by making a grand tour of the “STANS,” particularly oil and gas rich Azerbaijan, Turkmenistan and Kazakhstan with a fat check book in his hand. During diplomatic meetings in Azerbaijan he said Russia was prepared through Gazprom and LUKoil to purchase the country’s whole energy reserves.
He was demonstrating to the West, especially Washington, that he was no slouch when it came to doing business in the energy sector. He was particularly conscious that it had been vice-president, Dick Cheney’s strategy to wrap up deals with “STANS” nations and pump oil and gas from the Caspian basin, bypassing Russia. Medvedev was making sure that would never happen. As far back at the early 1990s Dick Cheney had advocated a policy to buy up as much of the Caspian reserves as possible, claiming it would end America’s dependency on oil from the Middle East, particularly Saudi Arabia.
The new Russian president has cleverly exploited Washington’s continued diplomatic battle with Iran. As a consequence, overtures from Moscow to Teheran Iran have tilted the energy balance in the Middle East and bolstered Medvedev’s strategy of placing Russia at the top of the global energy ladder. He has not only expands Russian economic influence but has increased the power of its diplomatic punch from Europe to the Middle East and from Africa to Asia.
Gazprom at his instigation now has plans to exploit energy reserves in Africa, with a tentative agreement to construct a gas pipeline between Nigeria and Algeria. In an interview with Forbes, he predicted Gazprom would be a trillion dollar company within a decade. Already it is the world’s largest energy conglomerate. His prediction about Gazprom is based on the fact that it is controlled from the Kremlin and is seen as an essential element in Russia’s global economic and diplomatic outreach. As such, it is entitled to a monopoly of all gas contracts.
NATO nations have been made aware by Washington that Russia intends to use energy as a diplomatic weapon by becoming the main supplier of gas and oil to the continent thereby controlling prices. In the event of a Cold War between the US and Russia it is not inconceivable that Russia will use energy to pressure Europeans to adopt an anti-American stance. Russia has already shown it is not adverse to using gas and oil as a weapon by cutting off or threatening to cut off supplies in disputes with Baltic States. That could happen on a larger scale over missile deployment or NATO expansion.
Unfortunately, US foreign policy under the Bush administration has been too narrowly focused on Iraq. As a result, Russia has exploited anti-Americanism in the Middle East and beyond. It has also devoted a lot of its diplomatic and commercial efforts into making new friends in the energy sector across the globe. The next US president is going to find that the Russian Bear is sitting on top of gas and oil networks that provide enough diplomatic heat to worry the US and its European allies.