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Russia: Better prepared to face the coming years than the other big global players

February 2010 (GEAB N°42)

That may seem paradoxical, especially for those who merely read the Western media, however the country has gone through a major transition towards the world after 1945 … since 1989. With Vladimir Putin probably holding the reins of power for most of the coming decade (as President or Prime Minister), Russia is, a priori, assured of a lasting period of stable central power, which is far from being the case for the other major global players.

Gas and oil revenues (which have not suffered a significant decline compared to the 2009 average price) allow it to plan its internal and external strategic development.

Three examples illustrate the fact that today Russia is in the course of retaking control of its own direct environment:

. Sapsan’s inauguration at the end of December 2009, the first high speed train between Moscow and Saint Petersburg begins what is going to be a decade of widespread modernisation of transport infrastructure, including oil and gas pipelines

. Pipeline projects aiming to « go round » Russia, like the Nabucco[1] project, are fizzling out because, without active US political and financial support[2], they are turning slowly but surely into mere economic projects, bound to either integrate Russia or be abandoned.

. The opening in December 2009 of Russia’s first oil terminal on the Pacific coast, at Kozmino (there are currently only two terminals on the Baltic and the Black Sea), will allow the country to fully participate in Asia’s growth in the coming years[3].

GEAB 42 - 1

South Stream contre Nabucco – Source : VoxThunae, 11/2009

In fact it is the huge bet of this key decade for the Kremlin: to be able to profit from Asia’s dynamism without being pushed around by the Asians, especially the Chinese whose presence is increasingly seen in Siberia, and to maintain a strong strategic relationship with the European Union whilst keeping European ambitions for Russia’s future at arm’s length[4]. The French and Germans have a key role to play in EU-Russian relationships in the coming years: any European balance will be impossible without close cooperation between these three partners, especially now that the « American cousin » is packing its bags[5]. The French and Germans form the major part of what Russia considers to be the « West » and they have unmatched attractiveness and partnership potentials from Moscow’s point of view. But this only holds true on the express condition that this European interest is really the EU’s and not a cover for Washington or someone else.

The notable refusal of France, Germany and Russia[6] to be drawn into the war and historic lie over the invasion of Iraq in 2002/2003 is a good example of the type of structured partnership at world level that the Europeans and Russians can create when they find common goals.

There is one which Russia has put on the potential negotiation table since the London G20 Summit, and that is the replacement of the Dollar as the international reserve currency. It is in Euroland’s clear interest to undertake such a step in order to bring current world monetary chaos to an end. If France and Germany actually had leaders with true strategic vision and a sense of history as De Gaulle and Adenauer or Mitterrand and Kohl had, then there is no doubt that the Franco-German duo would have already pushed the EU to seize this opportunity and discuss it with Moscow, and that this duo (unofficially representing the EU) would be a special guest at the next BRIC Summit.

It will probably be necessary to wait until 2012, and the French Presidential Elections, to know if such an opportunity has any chance to be seized upon. Failing which, French and Germans essentially, and Europeans in general, will be responsible for the descent into hell of the world monetary system in the second half of the decade, opening the way to Russia repositioning itself in the Asian sphere of influence.

Remember that it was Moscow which prevented twice the imperial domination of Europe by making a decisive contribution to the defeats of Napoleon and Hitler, and that Stalin tried, in vain, in the 1930’s to convince France and the United Kingdom to reach an alliance with the USSR against Nazi Germany. The fear of being accused of being « pro-communist » prevented such an alliance which would have saved Europe from a suicidal war and being divided for many decades.

The 2010 decade is going to see another test of the European elite on whether they are capable of overcoming their fear of being accused of « anti-Americanism » and anticipating a worldwide monetary catastrophe and its procession of disastrous consequences. One thing is clear: in the 1930’s the advice emanating from finance and banking circles (anything except an alliance with a communist USSR) should certainly not have been listened to if one was concerned with medium and long term global interests.

GEAB 42 - 2

1st Graph: Progression of production, exports and domestic consumption of Russian gas to 2020 (billions of cubic-metres) (blue line: exports and domestic consumption; red line: production) / 2nd Graph: Progression of Russian gas exports to 2020 (dark green: Europe; red: Asia-Pacific; light green: CIS countries) – Source: Energy Tribune, 02/2007

Unfortunately, Russian leaders are not very gifted in assessing European emotional reactions to some of their statements or actions which are particularly brutal: creating fear doesn’t take one far when looking for reliable partners.

Here, the French, Germans and Europeans in general, have an essential teaching role. In each and every case Russia is an ideal candidate for a rather steady decade compared to the other major powers. The fact that it has already lived through its chaotic transition period, the 1990’s, strongly contributes to this situation. Russia has indeed been involved in the “post-crisis world” for over twenty years, since the fall of the Berlin wall, and in the next years it will be able to move its pawns on the chessboard[7] whilst the imperial power of the United States disintegrates and the EU seeks its purpose.

However, without the Europeans or Asians (with their technical skills and investment), Moscow will not be able to supply the quantities of oil and gas that Russia will need to simultaneously fill its domestic demand and its export obligations, which would pose a serious problem for both Europe and Russia.

 

Notes

[1] This project, supposed to circumvent Russia, still hasn’t got any fully contracted suppliers and is in the course of seeing its partners joining the Russian project South Stream (supported by Italy), which it was intended to compete with. From Austria to Slovenia, via the French energy giant EDF, Russia is winning partners to the detriment of the Nabucco project, officially supported by the EU. The latter is a « NATO style project » pipeline officially launched in 2002 with Brussels’ and Washington’s support. Sources: F Bordonaro, 01/11/2010; Rzd Partner, 11/11/2009; Reuters, 12/03/2009

[2] And now the United States has neither the financial means, nor the diplomatic power to do it.

[3] Indeed the opening of this terminal in December 2009 marks a major step in the diversification of Russian oil outlets and the keystone of one of contemporary Russia’s biggest infrastructure projects (totaling almost 20 billion Euros). Source: Reuters, 12/27/2009

[4] An eminent member of the Russian Academy of Science admirably summarized this dilemma to our team in saying: « In the XXI° century, either we efficiently manage our relationship with Brussels, or we fall under Beijing’s influence ». Behind the sometimes very provocative announcements of the Kremlin there is indeed the profound conviction that it is with the West that a solid partnership can be built. It belongs to the Europeans, and in particular the privileged partners that the French and Germans are, to fairly address this issue.

[5] For those who still doubt about this development, it is worth reading the very interesting article by Judy Dempsey in the New York Times dated  02/08/2010, which describes the discreet way in which the German Government, however Atlanticist, is arranging, despite Washington’s protests, the definitive removal of the last 200 American nuclear weapons on German soil.

[6] It is besides a good example of what a European participation in a BRIC Summit could lead to in a very constructive manner.

[7] We do not under-estimate the very serious risks weighing on Russia’s Asian borders in particular. The Chinese are, de facto, in the course of occupying Siberia by immigration. But these risks will eventually turn into open conflict in the 2020-2030 decade if the Europeans and Russians haven’t succeeded in contributing to the emergence of a new international system by then.