Russia's Energy Politics

Wednesday, January 4, 2006

RUSSIAN PRESIDENT Vladimir Putin once again has overplayed his hand. In his zeal to reestablish Moscow's dominion over Ukraine, he has, as he did during the Orange Revolution, triggered an international crisis that could end up weakening rather than strengthening Russia's international position. Mr. Putin hoped that by shutting off gas supplies to Ukraine on Sunday, he could undermine its democratic and pro-Western government. Instead, he has provided a timely wake-up call to Western European countries dependent on Russian energy supplies. Those nations now see how Mr. Putin understands the question of "energy security," which he would make one of the principal topics for discussion by the Group of Eight this year.

For Ukraine and other former Soviet republics, Russia's crude use of energy for political ends is an old story. For years Moscow has been using its control over natural gas to reward neighbors who submit to its political diktat, such as Belarus, and punish those who seek greater independence, such as Georgia and Moldova. It has also been trying to gain control over pipelines carrying gas and oil, as well as electricity networks, by using gas as a lever. That leverage is considerable: Russia holds more than a quarter of the world's gas supplies and is a major supplier to virtually every country in Europe.

Ukraine used to be one of Moscow's pampered clients. In 2004, as part of his overt attempt to install a pro-Moscow puppet as Ukrainian president, Mr. Putin promised to heavily subsidize Ukraine's gas for years to come. But his meddling catalyzed the Orange Revolution, which gave Ukraine a democratic government determined to preserve its independence. So now Mr. Putin, acting baldly through the state-controlled company Gazprom, is seeking to quadruple the price Ukraine pays just weeks before parliamentary elections in which pro-Moscow parties are bidding to regain power. In partially shutting down supplies on Sunday, Mr. Putin calculated that Ukraine would allow Russian gas free transit to countries farther west through the same pipeline -- or, if it did not, that Western governments would blame Kiev.

Instead, when gas pressure fell off sharply yesterday in Vienna, Rome and Paris, it was Mr. Putin who was reproached -- including by such customers as Germany, which recently agreed to a controversial plan for a new pipeline under the Baltic Sea. Mr. Putin was forced to back down, though the underlying price dispute with Ukraine remains unresolved. He has a sensible way out of the conflict, which the Bush administration is urging on him: a negotiation in which Ukraine agrees to a gradual shift toward world market prices. Poland and the Baltic countries have cut such deals with Russia in the past -- though the prices they pay Gazprom are nowhere near what Mr. Putin proposed to charge Ukraine.

Even if Mr. Putin adopts this course, Western countries should absorb an important lesson. Without a prosperous or technologically advanced economy and with greatly reduced military strength, Mr. Putin hopes to restore Russia's world-power status through its control of gas. That inevitably means manipulating supplies to other countries for political ends. Western countries that do not wish to receive Mr. Putin's ultimatums -- from Germany, France and Britain to the United States, which is being pressed by Russia to line up as a major customer for new Arctic gas fields -- should realize that dependence on Russian gas is not consistent with "energy security." Instead they should develop alternative sources of supply, or a greater emphasis on nuclear energy. Russia cannot be allowed to hold its neighbors, or the world, hostage during a future cold winter.


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