Deconstructing the ‘‘energy weapon’’: Russia’s threat to Europe as case study
Karen Smith Stegen a,b,n
a
Jacobs University Bremen, Germany
b
Bremer Energie Institut, Germany
a r t i c l e i n f o
Article history:
Received 3 March 2011
Accepted 22 July 2011
Available online 24 August 2011
Keywords:
Energy weapon
Supply security
Russia
a b s t r a c t
As the likelihood increases that Russia will dominate the European Union’s (EU) energy supply,
questions have emerged as to whether Russia would use the energy weapon to influence EU member
policies and extract political concessions. Countervailing voices argue that Russia would be restricted
by interdependence and market forces. As of yet, no one has analyzed the assumptions underlying the
energy weapon thesis. Moreover, many scholars examining EU–Russian energy relations rely on nonRussian
data. This article seeks to fill several informational and theoretical gaps by including Russian
sources and first-hand data and by systematically analyzing the conditions that must obtain before an
energy supplier can successfully convert its energy resources into political power. The resulting model
can be utilized to analyze the capacity of a supplier to use the energy weapon—whether it be Russia,
Iran, Venezuela or any other energy heavyweight—and to assess whether the deployment was
successful. Five purported cases of Russian manipulation are analyzed in this article and the findings
indicate that, more often than not, Russia failed to achieve political concessions. Looking to the future,
the plausibility of Russia using the energy weapon to exploit Europe’s dependence, particularly on gas,
is also examined.
& 2011 Elsevier Ltd. All rights reserved.
1. Introduction
The tighter energy markets of recent years combined with the
political instability of several energy producing countries have
elicited widespread anxiety about energy availability (Yergin,
2006). Among the primary energy security concerns of policy
makers and analysts are the resurgence of resource nationalism,
the prospect of resource wars, and the vulnerability of energy
dependent countries to political manipulation. The threat that
energy exporting countries could use their control over energy
supplies to influence the political behavior of client states was
called the oil weapon during the 1973 oil embargo. In recognition
that suppliers can manipulate other energy sources, such as
natural gas, this article will use the term energy weapon.
Recent energy weapon threats include the oil disruptions
vowed by Venezuela’s Hugo Chavez in 2008 (Wilson, 2008)
and by Iran’s Ayatollah Khamenei in 2006 (Shanker, 2006). These
threats were overt, but the energy weapon can also be deployed
covertly—or implicitly—as Russia has purportedly done on
numerous occasions over the past two decades. Despite the risk
posed by use of the energy weapon and the numerous references
to this danger expressed in the energy security literature, no one
has yet systematically studied the energy weapon. In April 2010,
the Council on Foreign Relations convened a group of experts to
discuss the current state of energy security research. They
described a need for case study work and systematic analysis of
the relationship between oil and gas supply and political decision
making (Levi, 2010). Russian activities in the gas sector were
specifically mentioned as a valuable area of inquiry.
This article fills those gaps by accomplishing several intertwined
objectives: first, systematically disaggregating the component
parts of the energy weapon; second, providing a model of
the energy weapon that can be utilized to analyze the capacity of
any supplier to convert its energy resources into political power;
third, ascertaining, through a review of Russia’s behavior over the
past two decades, if and how Russia has accomplished the steps
necessary to wield the energy weapon; and, fourth, conducting
before-after analyses of several oft-cited cases of Russia’s deployment
of the energy weapon and ascertaining whether Russia has
indeed attempted to coerce political concessions. By examining
how states targeted by Russia responded, insight will be gained
into Russia’s potential danger to Europe.
2. Russia as an energy superpower
Russia’s propensity to inflict energy disruptions on its customers
in the former Soviet Union and in the former Warsaw
Bloc—such as the cut-offs to Ukraine in 2006 and 2009—raises
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Energy Policy 39 (2011) 6505–6513
the question as to whether Russia would (or could) levy an energy
weapon against countries of the European Union (EU). For forty
years Russia has been a reliable energy supplier to Western
Europe. As this section demonstrates, despite this track record,
suspicions linger that Russia will use disruptions—or the threat of
disruptions—to further its foreign policy and national security
objectives.
Some analysts, arguing that Russian–European energy interdependence
would temper any Russian inclination to employ the
energy weapon, lament the Cold War tone of recent discussions
(Stent, 2008). Proponents of the interdependence argument in the
U.S. note that disruptions would be economically counterproductive
as ‘‘Russia has little flexibility to suddenly change the flow
of its gas exports that are wedded to European markets by pipe.
Its only option would be to forego gas exports altogether’’ (Jaffe
and Soligo, 2008, 35). The interdependence argument also holds
sway in Europe where many scholars believe Russia would not
risk its relations with major European countries, which it needs to
guarantee its long-term prosperity, for short-term political gain
(Eden-Fleig, 2007; G¨otz, 2007; Rahr, 2006). Other analysts and
policy-makers, however, are less sanguine.
Among the adherents of the energy weapon thesis are notable
Eurasian scholars, foreign policy experts and policy makers.
United States Senator Richard Lugar (2008), in a hearing of the
U.S. Senate Committee on Foreign Relations, expressed concern
that Europe’s increased dependence on Russia and its vulnerability
to disruptions would result in ‘‘less [NATO] alliance cohesion
on critical foreign policy issues,’’ presumably because Europe
would be moderating its foreign policy to appease Russia.
A taskforce sponsored by the Council on Foreign Relations
(2006) and jointly headed by two members of the U.S. Congress
warned ‘‘Russia has used energy exports as a policy weapony.
The reassertion of government control over the Russian energy
sector increases the risk that this weapon will be used again (4).’’
The New York Times has also linked Russia’s energy power with
its foreign policy objectives: ‘‘Now that Russia is seeking to
reclaim the geopolitical clout it had in Soviet days, it is wielding
its vast energy resources, rather than missiles, to reassert itself
(Kramer, 2008).’’
Although disagreements abound over how Russia may potentially
use its energy resources, almost no one disagrees about its
hydrocarbon reserves or potential. In 2009, Russia had 5.6% of the
world’s oil reserves, almost 24% of gas reserves, and 19% of known
coal reserves (BP, 2010). Russia is the world’s leading gas
exporter, with Europe receiving over 95% (EU ca. 60%) of that
supply (Gazprom Factbook). Some European countries are more
dependent than others: Germany, for example, receives over
40% of its gas from Russia. Italy, France, and Greece also receive
gas from Russia, at 26%, 22%, and 70%, respectively (Gazprom
Factbook). This gas is delivered by Gazprom, the former Soviet
Ministry of the Gas Industry. The ability of the Kremlin to
instigate a disruption against a gas customer would require state
control over Gazprom’s deliveries.
3. The Kremlin and Gazprom
In many ways, Gazprom appears to operate as the Russian
national gas company: the state earns 8% of its GDP through its
51% ownership of Gazprom (Ericson, 2009) and has the right,
which it has exercised on more than one occasion, to shake up
Gazprom’s management. Moreover, the revolving door between
the Kremlin and the leadership of Gazprom (Dmitry Medvedev,
for example, served as the Chairman of the Board for Gazprom
prior to becoming Russia’s President) indicates that Gazprom’s
decision-makers are acutely aware of the Kremlin’s foreign policy
goals. In return, Gazprom controls 65% of Russia’s proven natural
gas reserves (plus reserves it controls with partners) and produces
90% of Russia’s gas.
Gazprom claims to be an independent commercial company
and has undertaken a public relations initiative to promote this
view. In 2010, for example, high-level Gazprom executives visited
with a small group of energy industry elites in Germany and,
during an off-the-record discussion, dismissed any notions that
Gazprom could be used by the Russian government for political
reasons.1
These denials contrast sharply with opposing opinions
about Gazprom’s role. As Stelzer (2008), Director of Economic
Policy Studies at the Hudson Institute, stated: ‘‘To view Gazprom
or any Russian energy company as anything other than instruments
of Russian foreign policy is to be naı¨ve in the extreme
(17).’’ This perception of Gazprom and its pipelines is echoed,
perhaps in less caustic language, by many others, such as Krastev
et al. (2010) at the European Council on Foreign Relations and
Vatansever (2010) at the Carnegie Endowment for International
Peace. The fact that non-Russian observers hold this view is
not surprising, but over the years, Russian sources—and even
officials—have also linked Russia’s gas resources and Gazprom’s
control over pipelines with Moscow’s political power.
In 1997, the Russian Ambassador to the Czech Republic
directly linked Russian gas deliveries to the Czech Republic’s
position on NATO membership (Naegele, 1997). The Russian state
news agency RIA Novosti (2005) freely made reference to ‘‘gas
attacks’’—the Russian term for energy weapon—and the use of
gas supply as a coercive or punitive tool. In 2008, two Russian
journalists published a book, Gazprom: The New Russian Weapon,
replete with details of how and when Gazprom has carried out
Moscow’s foreign policy objectives (Zygar and Panyushkin, 2008).
Beyond anecdotes and speculation, however, the confirmation of
the Kremlin’s power over Gazprom is provided by President
Medvedev, who acknowledged in a 2010 interview that gas prices
played a key role in the Russian–Ukraine arrangement over the
Black Sea fleet (Interfax, 2010). Moreover, the Russian Ministry
of Energy’s (2011) website states that Russia’s energy resources
are an ‘‘instrument for domestic and foreign policy’’. Given the
Kremlin’s majority ownership of Gazprom, its relationships with
the various company executives, and the linkages of gas and
politics by Russian official sources, the assumption in this article
is that, although Gazprom may usually operate as a commercial
enterprise, when the Kremlin calls, Gazprom answers.
4. The energy weapon
Although the Kremlin has some measure of control over
Gazprom, the question remains: can Russia’s resources actually
be converted into real political power and yield foreign policy
gains? The energy weapon model presented here analyzes the
stages that must be accomplished before a state can be considered
to have transformed energy resources into political capital.
This model is based on the recognition that, for a state to wield
energy supply as a weapon, several conditions must be satisfied.
First, the state must consolidate the country’s energy resources.
Second, the state must acquire control of transit routes. Third, the
state must use the energy resources in an attempt to further
its own political objectives by—either implicitly or explicitly—
threatening, punishing, or rewarding a targeted client state.
Most literature and public statements on energy security and
the energy weapon concentrate exclusively on stage three (Baran,
2008; Lugar; 2008; Smith, 2006; Stelzer, 2008; Woehrel, 2009).
1
Author’s interview with meeting participant, February 19, 2011.
K. Smith Stegen / Energy Policy 39 (2011) 6505–65136506
Underlying this focus on the issuance of threats—as well as the
anxiety many observers express about European dependence—is
an automatic link between disruptions and client-state concessions.
This automatic linkage is problematic, and this article argues
that the energy weapon model should contain a fourth stage: the
reaction of the dependent government to the threats, price hikes or
cut-offs. It is surprising that this fourth stage is usually missing,
because the prospect that has concerned Senator Lugar and other
adherents of the energy weapon thesis is not the threat itself per se,
but potential policy change in reaction. After all, it is policy changes
by European countries, not Russian threats, which would ultimately
result in less NATO ‘‘alliance cohesion on critical foreign
policy issues.’’ As Fig. 1 demonstrates, each stage of the model is
necessary for the successful implementation of an energy weapon.
4.1. Stage one: resource consolidation
As revealed by several incisive analyses of Vladimir Putin’s
graduate thesis—titled ‘‘Mineral Raw Materials in the Strategy for
Development of the Russian Economy’’—Putin firmly believes that
the Russian government must control Russia’s raw resources to
both secure its domestic economic prosperity and to rejuvenate its
status as a world power (Nappert, 2010; Olcott, 2004). That Putin
believes such objectives cannot be trusted to Russian oligarchs and
foreign investors is evidenced by the reconsolidation efforts that
have followed the free-wheeling privatization rounds of the 1990s.
The tribulations of the oligarch-owned oil company Yukos is
perhaps the most infamous example: Yukos was dissolved following
tax disagreements (Perekrest, 2008) and its assets were
acquired by the majority state-owned oil company Rosneft. Foreign
companies have also experienced difficulties—ranging from contract
cancellations to harassment—and many, such as Marathon,
have opted to halt their Russian operations (for a succinct report on
Russian nationalization, see IHS Global Insight, 2006). While a small
number of private Russian oil companies exist, majority (75%) stateowned
Rosneft is one of the world’s largest oil companies and is the
second largest oil producer in Russia.
The Russian state has an even firmer hand over the Russian
natural gas industry. Following the 1990s privatizations, Itera and
Novatek were the only two major independent gas producers, and
in 2006 Gazprom bought a 19.9% stake in Novatek and acquired
shares in several of Itera’s businesses (Grib, 2006; Mazneva,
2010). In January 2007, a Moscow court removed anti-monopoly
restrictions that had hindered Gazprom from acquiring the
remaining private gas producers in Russia. According to one
report, ‘‘the latest ruling allows Gazprom to expand its existing
monopoly on natural gas export and transportation to include
production as well’’ (STRATFOR Global Intelligence, 2007).
In addition to resource consolidation in Russia proper, the
Russian state has also challenged unwelcome intervention in
Russia’s perceived sphere of influence—the former Soviet republics
and Warsaw Bloc members. This view is exemplified by the
writings of Michael Margelov (2002), who, as a member of Russia’s
Federal Assembly, stated that the South Caucasus and Central Asia
‘‘are historic zones of Russian interests’’ and therefore should not
become ‘‘strategic ‘black holes’ or lost to other states’ geopolitical
influence (209).’’ As Central Asia has significant resources, the
Russian government has vested considerable effort in attempting
to acquire or at least control some portion of those resources.
Central Asia is no stranger to energy-related geopolitical
struggles: the region was the site of some of the greatest oil
intrigues of the 19th century. The modern-day struggle for the
region’s resources began in October 1990, when the Soviet Union
invited foreign oil companies to tender bids for fields in the
Caspian basin. The first agreements were signed in the summer of
1991. When the Soviet Union disintegrated, those deals were
transferred to the new independent states. In 1992, a consortium
of Western oil companies signed an agreement with Azerbaijan to
develop three of the largest offshore fields in the Caspian Sea. The
consortium quickly discovered that the Caspian’s mineral wealth
far exceeded previous estimates and a fierce struggle for control
ensued. Russia was eager to recoup some control over Azeri
resources (‘‘lost’’ in the dissolution of the USSR) and attempted
to gain leverage through a variety of means, short of invasion
(although, the specter of invasion was at the forefront of the
Azerbaijan government’s concerns).2
Russia’s first tactic aimed at securing control over this oil
involved a legal approach. During the Soviet era, Iran and the
Soviet Union declared the Caspian a lake and therefore subject to
the relevant laws regarding international lakes: beyond each
country’s coastal resources, all other resources are joint property
(to be divided equally along with any eventual revenues) and any
development must be agreed upon by all littoral states. If the
Caspian had rather been defined as a sea, then each country
would have proprietary rights to the subsea resources contiguous
to its coast. After the USSR’s dissolution, Russia declared that the
original agreement was still valid and therefore claimed that it
jointly owned the subaqueous resources of Azerbaijan and the
other littoral states. The position of these states was simple: since
they did not sign the USSR–Iran agreement, they were not bound
by it. Russia has since given up its intransigence, but Iran continues
to assert its earlier claim and the Caspian’s status is still
uncertain, with a November 2010 summit in Baku the latest in a
series of failed attempts to achieve resolution (for more information
on the Caspian issue, see Pannier (2010), Paliashvili et al.
(2003), and Pomfret (2010)).
In addition to legal technicalities, Russia’s second tactic in the
Caspian was to obtain ‘‘ownership’’ by inserting a Russian
company, Lukoil, into the international consortium. The consortium
accepted Lukoil as a minority partner (holding a ten percent
stake) with the hope that this concession would mollify the
Russians and provide the companies with some leverage in case
the Caspian would ultimately be declared a lake. With the status
of many of the Caspian’s resources undetermined and development
at a standstill, Russia turned its attention to controlling the
delivery of other energy resources, both Central Asian and otherwise,
to market.3
In brief, despite the chaos following the Soviet Union’s collapse—
and the subsequent era of privatization—the Russian government has
undertaken steps to consolidate its control over Russia’s resources.
Energy Resources as Political Leverage
1. State Consolidation of Resources
2. State Control over Transit Routes
3. Implementation of Threats, Price Hikes, Disruptions
4. Target State Acquiescence and Concessions
Energy Resources in Country
Fig. 1. Energy weapon model.
2
Consortium history from author’s personal archives, collected while
employed by an energy company active in the region, 1989–1995. The Azerbaijan
government’s concerns were related to author in an interview with an Azerbaijan
Embassy official, Washington, DC, June 1994.
3
From author’s personal archives.
K. Smith Stegen / Energy Policy 39 (2011) 6505–6513 6507
In the early days, Russia doggedly attempted to hold onto the Soviet
Union’s earlier claims on Caspian resources. And, in Russia proper,
Putin has pursued a strategy to guarantee state—and not oligarch or
foreign—control over resources.
4.2. Stage two: control over transit routes
The second stage of implementing an energy weapon requires
that the supplier state controls delivery to the customer. Russia, for
its part, has expended considerable political and economic capital
in securing both existing energy transmission infrastructure as
well as priority position in the development of new pipeline routes
in Northern and Southern Europe. Ninety percent of Russia’s oil
is transported, within Russia, by state-owned Transneft, and
Gazprom dominates the gas pipeline network (EIA, 2010). Outside
of Russia’s borders, former members of the USSR have come under
pressure to transfer control of transit assets to Gazprom. One
method involves using debt owed to Russia (usually energy debt)
as a bargaining chip. For the past fifteen years, Russia has been
purchasing majority ownership of energy assets, such as transit
facilities, in cash-strapped but energy dependent former republics
through these debt-asset swaps (Stent, 2008). Moldova provides
an excellent example. Reeling under energy debt owed to Gazprom
(in 1996 the figure was $332.6 million), in November 1998
Moldova relinquished 50%, plus one share, of its gas distribution
network to Gazprom (Bruce, 2007).
During the past decades, Russia has also been active in the
development of new transit routes. In the early 1990s, Russia’s
focus was on acquiring the rights to export oil from the Transcaucasian
region and Central Asia. During the Soviet era, Caspian oil
was piped from Baku, Azerbaijan, via Grozny, Chechnya, to the
Black Sea port of Novorossiysk, where it was shipped by tanker
through Turkey’s Bosporus straits. From the very beginning of the
Caspian saga in the 1990s, Russia made it clear to the consortium
and the Central Asian states involved that it expected resources to
once again travel through a route in its transit system. The Central
Asian states and the consortium looked unfavorably on the prospect
of complete dependence on Russia. They were also concerned
about the transit price offered by Russia, which increased
several times over the course of negotiations as different areas
along the route raised their fees. The city of Novorossiysk, for
example, demanded a renegotiation of its port fees.4
As the Central Asian states and the consortium partners
considered routes that would bypass Russia, Russia undertook
several measures to shape negotiations to its liking. First, Russia
showed its resolve with respect to Chechen separatists with a
forceful crackdown in the region. One possible pipeline route
would have crossed Chechnya and, although Russia has officially
attributed its conflict in the region to other factors, many analysts
in the oil industry believed that Russia’s invasion was directly
related to its desire to keep this routing under its control.5
Second,
Russia became increasingly involved in the South Caucasus. One
of the most geographically sensible non-Russian pipeline routes
would have passed through Azerbaijan and Armenia. The armed
conflict that raged between the two countries in 1992–1994 over
the Nagorno–Karabakh region made this proposition highly
unlikely. Although tensions did exist between the two countries
prior to the Soviet Union’s dissolution, Russia has been blamed for
fueling the conflict.
The consortium eventually selected two routes, only one of
which went through Russia. The Russian route was viewed as the
solution for the transportation of early oil and not as the main
long-term route. This apparent loss of transit control was met
with bitter disappointment in Moscow, as expressed in this
excerpt from a 1995 Pravda article: ‘‘It is now clear that the
long, exhausting struggle by Russian diplomacy and the Russian
oil business for priority rights—established long before the
Revolution—to transport raw materials from the Transcaucasus
region has been lost. The Americans and the Turks, who played
the main role in these behind-the-scenes intrigues, are cleverly
calling the outcome a ‘compromise.’ But in reality Russia is, of
course, the loser, for its priority influence as the main successor to
the USSR is being called into question (Bogomolov, 1995).’’
The considerable effort Russia invested in attempting to secure
oil transportation routes in the early 1990s has been replicated in
its more recent exertions concerning gas pipelines. The Nord
Stream pipeline, which will run underneath the Baltic Sea to
Greifswald, Germany, was relatively easy to arrange (for details
on Russia’s gas pipelines to Europe, see Baev (2010) and Dusseault
(2010)). However, the construction of a new southern pipeline
has proven to be a particularly controversial issue as both the U.S.
and Europe favor a diversification of routes and suppliers away
from Russia.
As with the Central Asian oil pipeline routes, Western companies
(and governments) have been seeking a way to transport
Central Asian gas without involving Russia, but the political and
geographical complexities of the region have made it difficult to
find routes that avoid the area’s hot spots. For many, the proposed
Nabucco pipeline, which after crossing Turkey, Bulgaria, Romania,
and Hungary would terminate at Austria’s Baumgarten storage
and distribution hub, seems a possible solution.
After having failed to insert Gazprom into the Nabucco project,
Russia proposed the alternative South Stream pipeline, which
would run underneath the Black Sea and have spurs terminating
both in Southern Italy and at Baumgarten. Although backers of
both pipelines typically refrain from designating the projects as
competitors, both sides are concerned that the winning pipeline
will be the one that is built first and secures both sufficient supply
and demand. The Nabucco project has experienced difficulties
obtaining supply contracts and has repeatedly pushed back its
construction start date. If South Stream proceeds, Russia may
indeed become the dominant transporter of gas to Europe from
both the north and the south. For those who worry about
European dependence on Russian pipelines, this prospect sets
off red flags, particularly as more than one scholar has expressed
the suspicion that Russia’s pipeline projects are the pursuit of
strategic advantage at the expense of financial feasibility (Baran,
2008; Vatansever, 2010).
In sum, the Russian government has acquired both control
over resources and control over pipeline assets within Russia
proper. Gazprom has also gained some transit assets beyond
Russia’s borders. High on Russia’s present agenda is the construction
of several new major pipelines, particularly Nord Stream
and South Stream, which will dramatically increase its ability
to control delivery of energy all the way from the source to
customers in Europe, signaling a major accomplishment as far as
the second stage of the energy weapon model is concerned.
4.3. Stage three: threats, price hikes, and disruptions
To implement an energy weapon, an energy supplier must not
only control energy resources and delivery, but also intend to
convert its power into political gains. This intent can be expressed
by the issuance of threats—such as those made by Hugo Chavez in
2005 and Ayatollah Khamenei in 2006—or by actually instigating
a price hike or disruption (partial or total). Whereas the threats
issued by Chavez and Khamenei were overt, supply and price
4
Author’s data gathered during visits to Russia in April 1993 and to
Azerbaijan in April 1994.
5
This opinion is still prevalent in oil industry circles.
K. Smith Stegen / Energy Policy 39 (2011) 6505–65136508
manipulations may also be covert. Indeed, to avoid international
criticism, a supplier may attribute disruptions to weather, sabotage,
technical problems, or other causes. What elicits suspicion
in such cases is the timing of the disruption. Politically motivated
price hikes are especially difficult to ascertain, as they may also
be commercially justifiable. But again, the timing of the price
hikes and the magnitude of the increase may indicate political
motives, particularly when different customers receive different
treatment. In the case of Russia, for example, many energy
analysts have noted that the price of Gazprom’s gas differs from
country to country depending on each government’s disposition
towards Russia (Abdelal, 2004; Bruce, 2007; Jaffe and Soligo,
2008; Myers, 2006).
For decades, most countries belonging to the Soviet Union and
the Warsaw Pact received Russian energy at subsidized prices,
and many of Russia’s cutoffs and price hikes over the past fifteen
years may indeed have been commercial in nature—attempts to
bring prices to ‘‘market’’ levels or to punish customers for nonpayment.
However unseemly the prospect of Russia implementing
disruptions to coerce price increases or punish non-payment
may be, the real worry of many observers is that Russia will try to
influence the domestic and foreign policies and decisions of its
European customers.
Several of the most oft-cited cases, in which disruptions
seemed politically motivated, will be the focus of this paper.
These comprise the 1992 and 1993 reduction of gas supplies to
the Baltic States over the status of Russian civilians and military
installations in those countries, the 2006 pipeline explosions that
stopped supplies to Georgia, the oil refinery supply disruption to
Lithuania in 2006, the early 1990s disruptions to Ukraine coinciding
with the Russian–Ukrainian dispute over the Black Sea
Fleet, and the 2009 cut-offs to Ukraine. While some degree of
uncertainty over the root causes of these incidents will always
remain, a review of them will help highlight possible behavioral
patterns.
During the early 1990s, Lithuania, Estonia and Latvia were
considering how to treat the Russian civilians and military
personnel left on their territories; the discussions leaned heavily
toward identifying ethnic Russians as foreigners and ejecting the
Russian military. At the same time, Russia and the three Baltic
states were haggling over gas prices and Russia, to gain bargaining
leverage, on more than one occasion reduced gas supplies or
implemented total cutoffs. While Russia may have had commercial
reasons for the price increases and disruptions, a political read
seems compelling when one learns that the Russian government
viewed economic reprisal and threats as a bargaining tool. In July
1992, the Russian Duma itself made the connection between
economic manipulation and politics by threatening sanctions in
retaliation for any unfair treatment of ethnic Russians living in
Estonia (Bohlen, 1992). In a 2005 review of Russia’ gas conflicts,
even the Russian state-owned news agency RIA Novosti linked the
June 1993 gas cut-off to Estonia with that country’s decision to
define Russian speakers as foreigners (for more detail on these
conflicts, see Smith (2004) and Smith (2006)).
Another example is provided by the gas pipeline explosions
that disrupted supplies to Georgia in January 2006. For several
years, Russia had been attempting to take over Georgia’s transit
assets, an acquisition that would have allowed Russia to connect
pipelines from Iran to Russia and to hinder alternative pipelines
that would bypass Russia and supply Europe with Central Asian or
Iranian gas. Moreover, Russia and Georgia were tussling over the
status of South Ossetia. Against the backdrop of these political and
energy-related tensions, two explosions damaged the main and
reserve pipelines supplying Georgia with Russian gas and were
followed nine hours later by an attack, again in Russia, on the main
electricity line into Georgia. Georgia accused Russia of sabotage
and Russia blamed the attacks on insurgents, but no groups ever
claimed responsibility. At that time, Russia had been exerting
heavy pressure on the pro-Western Georgian government to sell
its pipelines and, according to Georgia’s president, Mikheil Saakashvili,
‘‘officials at several levels of the Russian government had
been issuing veiled threats (quoted in Chivers (2006)).’’ (For more
information on the Georgian pipeline explosions, see Guardian
(2006) and for a review of Russia–Georgia relations, see Allison
(2008).)
A third example again involves the Baltic region. In 2006,
Russia cut off an oil pipeline to Lithuania, supposedly for technical
reasons. The shutdown occurred just after the Lithuanian government
had reportedly antagonized Russia by opting to sell its sole
refinery to Polish rather than Russian concerns (Kramer, 2006a;
Socor, 2006; Torbakov, 2006). Whether the technical problems
and explosions that characterized these examples were deliberate
acts of Russian sabotage or not may never be determined; nonetheless,
they have raised suspicions because they occurred just as
Russia was displeased with its customer’s behavior.
The contentious negotiations between Russia and the Ukraine
over the Black Sea Fleet (a 300-ship fleet remaining from the
dissolution of the Soviet Union) in the early 1990s provides
another yet frequently cited example of Russia’s strategic political
use of energy supplies. In January 1992, Ukraine asserted ownership
over the bulk of the fleet and in April of that year Ukraine
President Kravchuk placed the fleet under Ukrainian jurisdiction.
In August 1992, Russia and Ukraine agreed to divide the fleet, in
principle, and to reach a final settlement by 1995. However, in
July 1993, Russia claimed Sevastopol, the Ukrainian home port for
the fleet, as a Russian city. Both sides agreed to resolve the issue
at the September 1993 Massandra summit. One week prior to
the summit, Russia reduced gas to Ukraine by 25%, purportedly
as punishment for late payment, as it had done several times
previously. At the summit, however, a link between fleet ownership
and energy debt—and Russia’s implicit right to reduce
supply for non-payment—was made when Russia offered to
cancel much of the Ukraine’s multi-billion dollar debt (mostly
for energy) in exchange for nearly full control over the Black Sea
Fleet (Pirani, 2007; van Hamm, 1994). Kravchuk agreed to the
deal and sent it to the Ukrainian Parliament for ratification.
The January 2009 cut-off to Ukraine has been attributed to
economic causes; namely, disputes over prices and the siphoning
of gas by Ukraine for its own use. While there may be some
validity to this, the timing and Russia’s propagandistic use of the
cut-off have raised suspicions that the disruption was also a
means to rally European support for Nord Stream. The cut-off
occurred just as the Baltic States—which had been reluctant to
support Nord Stream for environmental reasons—were about to
begin their review process of Nord Stream’s environmental
implications (The Times (South Africa), 2009). Moreover, Putin
and Gerhard Schr¨oder, who heads the Nord Stream project, took
the opportunity to appear on Russian television together to
discuss Nord Stream’s merits. Among Putin’s comments to
Schr¨oder, two particularly stood out as pertinent: ‘‘The current
situation only makes even more relevant our main task, our plans
for the construction of a gas pipeline system along the bottom of
the Baltic Sea,’’ and ‘‘I think that our European partners have now
finally realized that this project is necessary and has to be carried
out promptly (quoted in The Times (South Africa) (2009)).’’
The intentions behind the disruptions in the above examples
appear to be punitive or coercive. But Russia, it seems, may also
be using price as a reward. Countries with governments friendly
to Moscow pay considerably less than countries that lean more
towards the United States and Europe. For example, Jaffe and
Soligo (2008) found that westward-leaning Georgia paid $235 per
thousand cubic meters of gas, while Russia-friendly Belarus paid
K. Smith Stegen / Energy Policy 39 (2011) 6505–6513 6509
$46 and Ukraine, despite its highly publicized disputes with
Russia, paid $135. They concluded that ‘‘the fact that prices of
Russian gas are negatively correlated with the degree of proWestern
orientation of the government reinforces the belief that
Russia is using its energy resources as an instrument of its foreign
policy (33).’’ The Prime Minister of Georgia, after failing to thwart
a price increase in 2004 that coincided with disputes with Russia
over military bases and NATO membership, expressed similar
sentiments, holding the ‘‘view that the [gas] price increase [for
Georgia]yis a political decision’’ (quoted in Netreba and Solovyov
(2005)).
4.4. Stage four: acquiescence and concessions
The fourth stage of the successful implementation of the energy
weapon is the targeted state’s response: it must modify its
behavior on account of the threats or actual disruptions. In the
case of rewards, the targeted state must continue its support. To
examine reactions to use of the energy weapon, let us return to
the examples of perceived political pressure cited in the previous
section: the Baltic States in the early 1990s, Georgia and Lithuania
in 2006, and the continuous disputes with Ukraine. An examination
of the target governments’ actions after the price hikes and
disruptions should reveal if they became more co-operative with
Russia.
During the early 1990s, Russia was in intense negotiations
with Lithuania, Estonia and Latvia over the presence of the
Russian military in those countries. Despite the energy price
hikes documented in the energy security literature, the Baltic
States did not allow Russian troops to stay—a fact that is almost
always neglected. The last of the troops left in 1994 (The New
York Times, 1994) and in 1999 Russia turned over its last facility,
a radar station that Russia had considered critical to its national
security, to Latvia (Latvian Ministry of Foreign Affairs, 1999).
Rather than face down Russia on their own, the Baltic States made
a strategic decision to appeal to the international community,
and one of the initial agreements with Russia was arranged at a
Conference on Security and Cooperation in Europe (CSCE) meeting
in Helsinki in 1992.
The pipeline explosions in the Georgia example are widely
understood to have been a pressure tactic, but Georgia ultimately
did not sell its transit assets to Russia. Instead, over the next two
years Georgia moved even closer to the West; and, rather than
moderating his behavior with regard to Russia, Saakashvili
seemed to grow even bolder. The worsening of relations culminated
in the 2008 war over South Ossetia (Allison, 2008).
The third example—the Lithuanian refinery sale to Polish
concerns—differs from the first two in that the energy weapon
was supposedly used punitively, rather than preemptively. As it
was Lithuania’s only refinery, the supply disruption was presumably
painful, but Lithuania did not renege on the sale to the Polish
concern (Kramer, 2006b) and it is not clear if the disruption has
caused Lithuania to change any other policies. The motivation for
the disruption might have been to punish Lithuania and to send
a signal to other countries that Russia’s bids for assets should not
be refused.
These are three of the cases of political manipulation mentioned
with some regularity in the energy security and energy
weapon literature. Although only the two pre-emptive cases lend
themselves to assessment—because they allow for before-andafter
analysis—it appears that the energy weapon, when used for
political leverage, had limited or no impact. Despite their weaker
positions, the Baltic States and Georgia did not bend to Moscow’s
political will. Perhaps their appeals to the West—and all targeted
countries in these examples did receive some kind of support
from the West (see Socor, 2006; Stanley, 1994)—emboldened
them to stand Russia down. One tentative conclusion may be that
suppliers back down when the targeted country is able to benefit
from strategic alliances.
On the other hand, the disputes over the Black Sea Fleet and the
posturing over the construction of the Nord Stream pipeline have
had outcomes that fall into a different category. The agreements
made at the Massandra summit in 1993 were extremely unpopular
in Ukraine and not ratified by Parliament, leaving Russia and
Ukraine to begin negotiations anew, each still in control of 50%
of the Fleet. Though generally tumultuous, relations between
the countries gradually improved until 2004, when the ‘‘Orange
Revolution’’ in Ukraine swept into power a western-oriented
government, headed by Viktor Yushchenko. In January 2006
(following price disputes) supplies to Ukraine were cut off; in
March of that year, pro-Russian political parties and leaders did
well in the parliamentary elections (Elder, 2009; Pirani, 2007). In
2008, Yushchenko issued strongly worded statements of support
for Georgia in its war with Russia, set again against a threat of
major gas price increases and complications over Black Sea Fleet
negotiations (Maksymiuk, 2008). Finally, in early 2010, Viktor
Yanukovych (who had originally been forced out of the presidency
by the ‘‘Orange Revolution’’), won the presidential elections and
relations with Russia immediately began to improve. An agreement
was made in April of that year to extend the presence of the
Russian Black Sea Fleet (which had by now dwindled to about 40
operational vessels) in Sevastopol from 2017 to 2047 in return for
a discount on gas (Kuzio, 2010; RIA Novosti, 2011; Socor, 2011a).
The Ukrainian opposition was furious and security analysts
alarmed, but it seems as if years of negotiations and energy
diplomacy leveraged against pro-West Ukrainian politicians have
paid major dividends to Russia (Peleschuk, 2010).
On the Nord Stream front, the January 2009 disruptions to
Ukraine elicited a strong response from Western European countries.
The very next month, Jonathon Stern (2009) at the Oxford
Institute for Energy Studies wrote of the ‘‘imperative’’ of either a
European-partnered consortium controlling transit routes
through Ukraine, or the construction of ‘‘bypass’’ pipelines in an
article supportive of the Nord Stream project. Later that year, both
Sweden and Finland approved the project after environmental
and economic concessions on the part of Nord Stream (OSW/
Center for Eastern Studies, 2009). It seems as if various ‘‘European
partners yfinally realized that [the Nord Stream] project is
necessary,’’ just as Putin had requested, coincidently in the aftermath
of Russia’s price negotiation-driven gas cut-offs to Ukraine.
5. Discussion
As indicated by the energy weapon model developed here,
Russia appears to have accomplished the first three stages. Over
the past fifteen years, the Russian government has consolidated
its control over the country’s energy resources and transit assets.
It has also acquired many resources and transit assets that had
belonged to the Soviet Union’s former republics. Furthermore,
Russia has at various times implemented price hikes and supply
cut-offs, seemingly in the pursuit of political gains.
A Russia with the Soviet Union’s energy resources but without
its obligations (such as supplying cheap energy to its republics)
may become mightier than the Soviet Union ever was. The Soviet
Union wielded its monopoly over energy resources and delivery to
‘‘achieve political acquiescence in the Warsaw Pact’’ (Jaffe and
Soligo, 2008); thus, despite Putin’s assertion that Russia would not
use its energy supply to pressure Western Europe (Chance, 2008),
the prospect unsettles security analysts and other observers who
fear for Europe’s independence. However, as emphasized earlier,
most scholars stop their analysis at stage three—they recognize
K. Smith Stegen / Energy Policy 39 (2011) 6505–65136510
that a threat or disruption has occurred, which fuels their fear, but
do not examine whether or not the threat or disruption had its
intended effect.
In some cases, Russia does seem to have implemented its
energy weapon successfully. Without control over natural gas and
important energy transit routes, for example, Russia could well
have lost control over the symbolically significant Black Sea Fleet.
However, the evidence for the consistently successful implementation
of the energy weapon by Russia is less than overwhelming.
Client states, even weak and highly dependent states such as the
Baltic countries and Georgia, were able to resist changing their
policies to appease Russia, often through the use of strategic
alliances. This raises the question: why would Germany and other
European countries not be able to resist similar pressure?
This more sanguine reading of Russia–European energy relations
is, of course, grounded in the present. Twenty-five years ago,
few would have believed that the Soviet Union and Warsaw Bloc
would one day voluntarily dissolve themselves; what worries
some policy makers and others are the long-term scenarios of
world events that, from today’s perspective, seem improbable. In
one such scenario, a Russia led by the Siloviki (the Kremlin’s
hardliners) engages the West in a hot war and diverts Europe’s
supplies to China or elsewhere (Hill, 2006). The assumptions
underlying such scenarios, from an energy standpoint, are that
Europe’s current dependency on Russia will continue and that
European states will remain ‘‘helpless’’.
As the response of western states to the 1970s OPEC oil
embargo—the first use of the energy weapon—demonstrated,
consumer states can develop countermeasures to supplier state
manipulation. In the 1970s, these measures included the establishment
of the International Energy Agency, through which oil
importers can coordinate and limit supply shocks; creation of
90-day strategic oil reserves; significant reductions in the oil
intensity of Western economies as well as the emergence of a
strategic alliance between the U.S. and Saudi Arabia, which
further limited OPEC’s effectiveness. Thanks to these protections,
plus the rise of non-OPEC oil production, the Middle East oil
weapon lost some of its leverage (Perovic, 2009).
Similar to the countermeasures of the 1970s, the EU—after the
January 2009 Russia–Ukraine gas crisis—also implemented protective
measures against gas disruptions. The EU now requires all
Member States to adopt and regularly update preventive action
plans (the first action plans should be adopted by December 3,
2012) and to identify energy security threats—for which the
insights of this article are pertinent—and mitigation measures.
Unsurprisingly, suggested measures in Annex II of this regulation
include diversifying gas suppliers and gas routes; investing into
network infrastructure; increasing the share of renewable gas as a
supply side measure; and increasing energy efficiency and fuelswitching
as demand side measures (EU, 2010).
Even prior to legislating the above protective measures, the EU
was pursuing the establishment of a single European gas market,
which is expected to significantly contribute to European energy
security as it would increase gas flows within the entire European
Union and moderate the consequences of disruptions, no matter what
their cause (for example, natural hazard or political manipulation).
The recent implementation of the ‘‘third energy package’’—the
unbundling of energy producers from the network—will further
enhance energy security as suppliers such as Gazprom will have to
relinquish their transportation infrastructure. As one would expect,
Putin has vociferously protested the third energy package (Socor,
2011b). Unbundling could stop a producer from being able to enact
the energy weapon, but many questions remain over how the regulation
will actually be enforced. Moreover, a supplier with shared
borders could still own its domestic infrastructure and could still
cause a disruption on its side of the border.
These recent initiatives may help protect the EU, but Russia
will continue to have a dominant position in Europe’s energy
supply in the near- to mid-term. However, most analysts expect
this to change in the long-term as other sources—such as renewable
energies and unconventional gas—emerge. Momentum is
building for a large-scale renewable build-out. Utility-scale and
distributed renewables have gained favor with academics and
policy makers: Germany alone currently generates around 15% of
its electricity from renewable generation technologies and plans
to increase this to 80% by 2050 (Nicola, 2011). The DESERTEC
proposal alone (a plan to facilitate both the installation of largescale
renewable plants in North Africa and the transportation
of electricity to Europe) projects Europe receiving 15% of its electricity
from renewable energies by 2050 (DESERTEC Foundation).
Needless to say, projections such as these could imply a dampening
of demand for natural gas, which currently supplies around
13% of Germany’s electricity (European Nuclear Society). The
story is similar in other major EU economies.
New technological innovations in processing and handling
unconventional gas and liquefied natural gas (LNG) are also
potential game-changers. LNG is as mobile and storable as oil,
which means that formerly isolated gas reserves around the
world may become economically viable. Moreover, recent gas
discoveries in Brazil and the shale gas revolution in the U.S. mean
that more LNG is available for Europe (Gustafson et al., 2008).
Europe’s traditional major suppliers of LNG, including Algeria,
Nigeria, and Qatar (Kavalov et al., 2009), may find themselves
under competition.
Diversification away from gas supplied directly from Russia,
however, may not necessarily lead to diversification away from
Russian, or partly Russian-owned, gas. Russia has been pursuing
investments in several of the countries from which the EU hopes
to procure non-Russian gas. For example, the 2009 joint venture
between Gazprom and Nigeria’s national oil company includes
plans to construct a gas pipeline connecting African producers
with Europe (BBC, 2009).
6. Conclusion
The term ‘‘energy weapon’’ denotes that an energy supplier
state uses its resources as a political tool to either punish or
coerce (or sometimes a combination of both) its customers.
As tightening markets and concerns over scarce supplies seem
likely to characterize energy relations of the future, it would be
beneficial for policy makers to better understand energy relations
and assess threats. As about 80% of the world’s resources belong
to state-owned oil and gas companies (Orttung et al., 2009),
policy-makers around the globe may be increasingly faced with
supplier states attempting to convert economic resources into
political power.
A typical reaction to threats by pundits, scholars and policymakers,
such as U.S. Senator Richard Lugar, is the assumption that
threats or the implementation of an energy weapon equate
with target state acquiescence; an assumption that this article
has demonstrated is unfounded. As the case study showed, some
client states—even highly dependent and weak states—were able
to withstand the pressure of disruptions and manipulations.
Two interrelated objectives of this article were to analyze under
which conditions a supplier can actually implement an energy
weapon successfully and to provide policy makers with guidelines
on ascertaining the credibility of a threat. For example, does the
supplier sufficiently monopolize state resources? Does the supplier
actually control the transit infrastructure?
By understanding the stages and process of the energy
weapon, policy makers of consumer states would be able to
K. Smith Stegen / Energy Policy 39 (2011) 6505–6513 6511
better assess the seriousness of a threat. Grave and real threats
warrant a different response than bluffs. Policy makers have
many audiences and, if policy makers are able to place threats
in context and react accordingly, several desirable consequences
could ensue. For example, if the threat was perceived as nondangerous,
then policy makers could: first, avoid language and
actions that might escalate the conflict; second, help quell public
panic; third, signal to oil and gas traders that the situation is
non-threatening and thereby calm market reactions; and, fourth,
avoid the cost of enacting unnecessary emergency response and
contingency planning measures.
If an energy disruption threat is deemed as serious and
imminent, then different reactions would be necessary. As our
case study indicated, it seems that appeals to the international
community were sometimes—but not always—helpful in achieving
a resolution to the conflict. And, if contingency planning has
been adequate, then policy makers could reassure the public and
markets that the disruption is manageable. A feedback loop could
also be in play here—as policy makers become better equipped to
assess threats, they can also initiate and promote proper and
adequate contingency planning.
In sum, appropriate responses by policy makers—informed by
an understanding of the energy weapon—can help states cope
with both real and empty threats of disruption and manipulation.
At the European level, policy makers have already been pursuing
measures—such as promoting a single energy market and
diversification—that would, in addition to achieving other objectives,
help minimize the threat and impact of supply disruptions.
In addition to policy tools, the growth of renewables and LNG
could potentially reduce dependence on Russian gas. The combination
of all these measures, to the great relief of several U.S.
senators and other observers, will help defuse Russia’s energy
weapon and restore the balance of power.
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