What is Putin trying to achieve?

The gas war between Russia and Ukraine was not only, as might seem at first glance, a war between two countries. In December 2005, Putin’s Russia, with the help of its “hyper-monopoly” Gazprom, began a determined counter-offensive against Europe. Two decades after the collapse of the USSR, Russia has only recently acquired the material, political, and ideological resources sufficient for such an attack.

Russia has been on the retreat from Europe since its victory in World War II. First there was the relinquishing of occupied Austria and the fiasco over Yugoslavia; then the retreat from the countries of central Europe (East Germany, Poland, Hungary, Czechoslovakia, Bulgaria, Romania) at the end of the 1980s; and finally the loss of the Baltic States, Ukraine, Belarus, Moldova, and the Caucasus after the dissolution of the Soviet Union at the beginning of the 1990s.

The era of Yeltsin’s Presidency has become fixed in the minds of the majority of Russians as a time of trouble. Traumatized, Russians inevitably sought an avenger as Russia’s “heir to the throne”, a person who would make up for the “humiliation” they saw themselves as having suffered over past decades. And just such a person emerged, naturally enough from the bosom of the KGB. Vladimir Putin was destined to rise to the top, and indeed did so thanks to conflict – the war in Chechnya and the apartment block bombings in Moscow. To ensure his success in the Russian consciousness, he needed permanent conflict and enemies assailing Russia from all sides. Now it is Ukraine’s turn.

The appearance of a “saviour of Russia” or “gatherer of the Russian lands”1 coincided happily with the rise in the price of energy resources – a rise highly advantageous for Russia. Since the oil crises of the 1970s, and particularly since the 1990s, the world has faced the realization that the world’s energy supplies are a finite resource. The main countries of the world understand that without control of the key bases of energy resources in one form or another, their own development, not to mention their dominant role in the world, is simply impossible.

Wars over energy supplies are not only wars for oil and gas fields, but also over the ways and means of transporting these resources. The main energy bases in the near future, aside from the countries of the Middle East, will be Russia and the countries of Central Asia. The Caspian Sea-Shelf is particularly promising. It is for this reason that there is so much interest in cooperation with Azerbaijan, Iran, Turkmenistan, and Kazakhstan. These countries are not themselves players on the geo-political chessboard but objects of manipulation by the main powers. As a rule, the availability of energy resources or involvement in their transportation serves less to develop the country than to preserve an undemocratic puppet regime, the only possible exception being Norway.

The biggest consumer of energy in the world is the US. In second place is the EU. The EU is most dependent because its own gas or oil reserves are extremely limited in comparison to its requirements, with Germany rejecting atomic energy as an alternative. Combined with this is the fact that the EU’s economic competition with the US, Japan, and China depends on its having adequate energy supplies.

The traditional source of energy supplies for the EU is the Middle East and the Maghreb. The fact that France and Germany compete with the US as consumers of these energy resources explains their restraint in supporting the war in Iraq. European oil and gas companies are competitors for control of oil and gas extraction in the region; allowing Turkey to join the Union does not seem an unreasonable price to pay for getting as close as it can to the oil and gas fields in Iraq, Iran, and Azerbaijan.

Another strategically important partner for the EU is Russia. Russian gas and oil deposits are relatively close to its territory. Not only that, but they are also quite possibly the only major deposits that are not to some extent or other controlled by the US. Moreover, Putin sees energy policy as being Russia’s last chance to once again become a real world power. Particularly since the major part of Russian export consists specifically of energy supplies, which also form the main source of State revenue for Russia.

The country has therefore not only transformed its entire energy sector into an instrument of State policy, but is also attempting through various means to gain control of the energy resources of its former colonies: Kazakhstan, Uzbekistan, Turkmenistan, and Azerbaijan. With a monopoly on the transportation of their energy resources to the EU and to the European states of the former USSR (including Ukraine), Russia is effectively able to exert influence over them. This it is already successfully doing.

Russia is no less actively endeavouring to hinder attempts to redirect the movement of energy resources bypassing its territory. The construction of a transport corridor from Baku in Azerbaijan to Supsa in Georgia has dealt a blow to Russia’s monopoly in this sphere. It will therefore make every effort to block the even more ambitious plan to transport oil and gas from Central Asia to its geo-political opponent, China, which recently has begun using ever more energy resources. The implementation of these two major projects could marginalize the “Russian route” for the transportation of energy resources. This will reduce Russia’s influence in the region, and thus Russia’s importance to the EU. It is this that Russia cannot allow.

The “energy-dependent” (in terms of consumption, not export) structure of the Russian economy determines “energy-dependent” Russian domestic and foreign policy. The sensational Khodorkovsky case demonstrated how “business” issues are resolved in Russia. There is no obstacle they would not be able to overcome.

Putin’s regime believes that the creation of puppet regimes, such as in Belarus, around Russia’s periphery is the best way to ensure that its new energy policy is controllable and unhindered. Russia has also enjoyed considerable success in the European vector of its policy. The majority of major European states, first and foremost Germany and France, have tacitly abandoned efforts to democratize Russia itself.

The cynical “family friendship” between Putin and Schröder led not only to the signing of a bilateral agreement on the building of a northern European gas pipeline along the bottom of the Baltic Sea, thus bypassing Ukraine, the Baltic States, and Poland, but also marked out Putin’s Russia as the guarantor of stability in the region, thus perpetuating Lukashenko’s regime in Belarus. The situation couldn’t have panned out better for Putin. Not only is Germany a hostage in the energy field, it has also become an instrument for carrying out Putin’s policy. At a particular point, Putin effectively began to manipulate Germany’s attitude towards countries such as Ukraine.

Putin’s only failure has been the Orange Revolution, when Ukraine made an attempt not only to become more democratic, but also to break free of Russian control. However, Russia did not spend long licking its wounds. Its retaliation began with the conflict over gas supplies, though one can rest assured it will not be limited to the gas issue alone. Restrictions on the import of Ukrainian pipes to Russia and the increase in export duty on oil provide evidence of this.

Having assured himself of the EU’s deep vulnerability as regards energy, and having organized powerful political support for Russian policy in the economic and political establishment of a number of key EU countries, Putin decided to resolve several political and economic issues with one blow. The first of these was to gain political control of Ukraine.

What was needed for this? It was necessary to discredit the “pro-American” government of President Yushchenko as risk-taking, incompetent, and incapable of negotiating. And most importantly, to present it as an unstable American puppet that could choke the energy throat of the EU. It was important to force Ukraine to take steps that the EU would deem inadequate: turning off the supply of gas and oil and extracting gas or oil destined for the EU without sanction. This would present Ukraine as a zone of instability.

The very first step had to be to raise prices in all energy sources. The oil crisis in Ukraine in the spring of 2005 was the first warning bell. However, the Ukrainian government did not draw the appropriate conclusions and underestimated the determination of their opponent. The oil crisis was planned on the eve of the peak period for oil consumption – at the beginning of the summer. Therefore the gas attack could have been anticipated to come on the eve of the peak of gas consumption – in December, as indeed happened.

The timing was clever for other reasons: Ukraine is undergoing a process of reform and is moving from a presidential to a parliamentary form of republic. In addition, an election campaign is underway in Ukraine. However, first reactions showed that no destabilization of society had taken place. The government did not collapse. Even the anti-Yushchenko opposition responded in a reasonably lethargic manner, understanding that the main thrust of the offensive would hit their businesses in eastern regions.

Though gas-based blackmail did not bring about the full destabilization of Ukraine, it was entirely sufficient to ensure that Ukraine was discredited before its partners in the EU. Ukraine could not transport gas to the EU free of charge, and had every right to extract gas as payment for its transit in accordance with previous agreements. However, this inevitably reduced supplies of gas to the EU, making Ukraine seem like an unreliable partner.

Such a loss of reputation for Ukraine as a transit country would of course accelerate the process of building alternative gas and oil pipelines bypassing its territory. This was an enormous weapon for influencing the elections in Ukraine. The halt called to energy-consuming industries in the east of the country would mobilize Yushchenko’s opponents to an even greater extent.

However, the main political aim behind Russia’s actions was to block Ukraine’s entry into Nato. By stalling Ukrainian integration into the EU, Russia would effectively be prejudicing Ukraine’s membership in Nato, since Ukraine’s membership in Nato is dependent not only the US, but also on European Nato members. This is the price that Putin demands from Ukraine. The price for Russian gas was purely a pretext. The frenzied anti-Nato propaganda of Putin’s faithful supporters in the anti-Yushchenko camp is highly indicative.

A secondary aim was to reduce American influence in central Europe, which is particularly strong in Ukraine, Poland, the Baltic States, and other new Nato members. Furthermore, Putin’s gas strategy had some purely technical aspects, the main being to gain full control over Ukraine’s gas transportation system. Raising the price of gas was intended to lead to the handing over of the Ukrainian gas pipelines to Russia, which would remove Russia’s technical dependence on Ukraine in this area.

The next step could be to take over Ukraine’s oil pipelines; this will probably be the next “surprise” for the Ukrainian government in spring 2006. Moreover, whereas in the gas conflict Ukraine was able to force the EU to moderate Russian voracity – because both Ukraine and the EU are sitting on the same pipe – Ukraine will be more isolated in the case of oil pipelines.

What reactions can be expected from the major geo-political players? Russia will act with a view to the reaction of the US and the EU. In the gas crisis, Russia was just testing the waters.

The US is clearly not keen about an increase in Russian activity in the region and will therefore put pressure on Putin. For the US, what is under threat is not just the new democracies in the post-Soviet space, but also their entire geo-political concept. In the case of a collapse of democracy in Ukraine, the entire US plan for democratization (in particular of Belarus and Russia) could be ruined. The next thrust could be aimed at American influence and energy interests in the Caucasus and Central Asia. Of course, in this case the issue would not be one of democratization.

The EU may be divided in their response. Germany, represented by the new Chancellor Angela Merkel, is fairly consistent in emphasizing the importance of Russia, and says nothing about Ukraine. The countries of central Europe are more likely to be on Ukraine’s side, although they will express this cautiously.

Faced with this situation, the Ukrainian government will need to show two mutually exclusive virtues: decisiveness and flexibility.