European Scientific Journal April 2016 edition vol.12, No.11 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431
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The Use of Energy Resources as Foreign Policy Tools:
The Russian Case
A.Sait Sonmez, Assistant Prof.
Department of Political Science and Public Administration.
Faculty of Economics and Administrative Sciences,
OndokuzMayıs University, Samsun, Turkey
Sedat Cobanoglu, PhD Student
Department of Public Administration. The Institute of Social Sciences,
OndokuzMayıs University, Samsun, Turkey
doi: 10.19044/esj.2016.v12n11p78 URL:http://dx.doi.org/10.19044/esj.2016.v12n11p78
Abstract
The energy industry has an important place in the policies of
Vladimir Putin, who became the president of Russia in 2000. During this
period, Russia’s economic and political power has increased through the rise
of oil prices. Accordingly, Russia began to follow pro-active foreign policy
on a global scale. “Energy Resources” used as a tool in foreign policy, are
one of the dimensions of this proactive policy. In this study, how the energy
resources are used in foreign policies of states is analyzed by the sample of
Russia. Furthermore, the place of energy industry in the Russian economy
and some of the outstanding companies operating in this industry are
examined. On the other hand transportation policies (the energy corridors of
Russia), performed inside and outside the country, are accompanied with
some examples. Then, the role of energy is analyzed in the outputs of foreign
policy followed by Russia.
Keywords: Energy Policies, Russian Foreign Policy, Oil, Natural Gas
Introduction
In the post-Soviet era, Russia left its ideology based polices and
started to follow an approach which aimed to shift towards the liberal
system. New reforms were added to the ones introduced during the era of
Mikhail Gorbachev. In the period when Boris Yeltsin ruled, a privatization
program was put into practice for a rapid transition from the planned
economy to the market economy. A distorted economic structure occurred in
this process by leading to the formation of a quite limited, but powerful
capitalist class as well as indigent masses. Meanwhile, Russian economy
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found itself on the brink of the abyss when it faced with the Asian crisis
(1997) (Sönmez, 2010: 39). During these years, the oil prices in international
markets were quite low and this situation affected Russian economy
adversely. Undergoing a restructuration process, the Russian state had to
follow a passive foreign policy while trying to deal with its domestic
problems.
From then on, Kremlin began to concentrate its attention on the
energy policies. In the Soviet Union era, the income thatproducedby the
energy industry had formed an important portion of the budget. However, the
Soviet Russia used to make production on the basis of a planned economy
and its technological potentiality. The oil and natural gas pipelines crossed
over the former Soviet Republics and the former Soviet allies in the Eastern
Europe were constructed in this era. Since the 1960’s, the energy
transmission lines were constructed into Western European states such as
Germany. This situation became an important advantage for post-Soviet
Russia, because it was able to export energy via these pipelines. Moreover,
the other former Soviet Republics that used to compete with the Soviet
Russia in this respect lacked this specific advantage. The routes of these
pipelines were constructed in a way that would make the ex-Soviet republics
and the east European countries dependent on Russia. But these pipelines
were of old technology, thus they had a low productivity and a limited
capacity for energy transmission. Therefore it was necessary to find new
energy sources, to increase the production capacity of the current ones, to
restore the energy transmission lines and to construct new ones. With this
purpose in mind, the Russian state introduced a series of reforms which also
aimed to attract foreign investors. Especially, privatization program was put
into practice in order to increase productivity. Within the scope of this
program, a limited number of the companies inherited from the Soviet Union
were handed over to private companies and the rest of them to domestic
ones. The magical formula which would boost the Russian economy was
rediscovered: ‘the energy industry’.
The economic and political transformation that Russia had been
going through and its energy policies were supported by the primary
representatives of the liberal system such as the United States of America
(USA) and the European Union (EU). According to these Western powers,
the ideological background of the Russian foreign policy that had troubled
the Western world like a nightmare for almost seventy years could only be
changed through the integration of Russia into the liberal system. Therefore,
the economic and commercial relationships between the West and Russia
had to be consolidated and a ‘inter dependence’ should be established.
Enriching Russia would integrate into the liberal economic system much
more andbecome a feasible market for the Western world. Having been
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dominated after the Second World War, Japan and Germany were also
‘tamed’ through similar methods after all.
Vladimir Putin, having come to power in 2000, accomplished some
reforms in the economic and political domains. Among them, there are renationalization
of some strategically important institutions and the
termination of the sultanate of oligarchs. What Putin aimed to do was to
make it possible for the Russian economy to grow at least two times more
than the Western economies annually. Therefore, he concentrated on the
energy policies. It is important to mention at this point that Putin wrote his
dissertation on the issue of ‘foreign policy on the basis of energy’ (Onay,
2007: 279-281). Since Putin came to power, the oil prices has increased in
the global energy market, the pipelines that started to be constructed in the
Yeltsin period have been completed, additional trade agreements have been
concluded in the domain of energy and thus the share of the energy industry
in the Russian foreign trade has increased. As a result of all these
developments, the Russian economy has made a rapid developmental move.
To express this development in figures:
The high inflation in the Yeltsin period has stopped;
wages and the purchasing power of ruble have
increased. While the per capita income was 2.270
dollars in 2000, it reached 9.700 dollars in 2002 and
almost 13.000 dollars in 2007. By the year of 2008,
Russia has grown approximately by 8 % every year,
paid its internal and external debts and increased its
foreign exchange reserves to 280 billion dollars and
its gold reserves to 400 tones. Thus, it has got rid of
its dependency on the International Monetary Fund
(IMF) and the per capita income has gone up by
about six times (Sönmez, 2010: 46).
The four big countries which have developed the most in the recent
years are defined as BRIC, representing the initials of Brazil, Russia, India
and China, respectively. While the Western economies were traumatized by
the global financial crisis in 2009, Russia appeared as an economic and
political power again on a global level. Economically empowered Russia
started to challenge the Western powers. The crises in Georgia, Ukraine and
Syria show that Russia will not be hesitant to use force for its own interests
“despite the West’. After the annexation of Crimea, Putin announced that
‘the uni-polar system has come to an end” (Kavkaza, 2014:
www.prisonplanet.com).
The main theme of this study is based on the analysis of the energy
policies underlying Russia’s economic and political rise that has been
outlined above. In other words, this study interrogates what kind of
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developments energy resources might trigger in the process of their
empowerment in the foreign policies of states by focusing on the Russian
case. This study will also attempt to explain why Russia, which utilizes the
energy industry as a political tool in its foreign policy, features the role of
energy via its carrot or stick policy and what kind of players and factors take
part in this process. In brief, the study will discuss the nature of the
relationship between the energy policies and the foreign policy of Russia.
The Energy Card as a Foreign Policy Tool
States, especially the great ones, make use of non-military methods to
increase their economic and political power, shape foreign policies of other
states in line with their own interests and create a sphere of influence in this
way. The most widespread form of these methods is the use of economic
factors as a foreign policy tool. Sometimes great state powers attempt to
shape foreign policies of small countries through the method of foreign
assistance. And sometimes they punish the small countries whose foreign
policies they disturbing by activating such tools as embargo and boycott.
Thus, it becomes possible for powerful states to have an impact on or govern
the moves of dependent states through certain foreign policies. From this
perspective, it is impossible to argue that the economic steps that
governments take can be free from political targets. The reason that certain
states choose to use their economic and commercial relationships as a
foreign policy tool may be explained on the basis of three conditions (Arı,
2011: 411-417):
1. Make some promises to the dependent state by taking advantage of
its needs and subordinate situation or threaten it economically,
2. Take hold of rich natural resources and deprive rival states of them,
3. Create a sphere of influence by forming economic satellites and
relationships.
In this context, countries that have rich energy resources may give
privilege subordinate states in some respects (through a rewarding method)
or impose certain sanctions on dependent states, and thus shape their foreign
policies in a way that will be advantageous in terms of their own national
interests.
Energy resources have a special place among the economic factors
that are used as a foreign policy tool. Hydrocarbon resources have strategic
significance and are found only in a limited number of countries in the
world. Therefore, certain countries that have rich hydrocarbon resources
such as natural gas and oil are able to transform these resources into a
foreign policy tool. The first example that comes to mind in this respect is
the oil shocks in 1973 and 1974. Because of the crisis started by the
Organization of Arab Petroleum Countries (OAPEC), the price of crude oil
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per barrel, which was 13.61 dollars in 1972, increased by about four times
and reached 53.94 dollars in 1974 (Darmstadter, 2013: 4). The oil shocks had
many internationally important economic and political consequences. Those
countries that had started the crisis had a certain economic welfare. However
they were not among the greatest states in the world. Even so, they were able
to affect the economic and political atmosphere of those countries that were
more powerful than OAPEC states but dependent on foreign energy
resources such as the USA, the United Kingdom, Japan and France. The oil
shocks also affected ‘not only the Arab-Israeli conflict, but also the Cold
War, relations within the European Economic Community (EEC), relations
between the EEC and the United States, referred to as the North-South
dialogue’ (The October 1973 energy crisis, https://networks.h-net.org :1).
Although certain economic tools were used in the oil shocks, the
prime mover of the crisis was actually political. The oil card was put into
action in the hope to deter the countries which chose to follow a pro-Israel
policy in the Arab-Israel war from this attitude. During the 1973-74 ArabIsrael
war, the Arab countries separated third-party countries into three
groups on the basis of their foreign policy regarding the war: the pro-Arab
(friendly) countries, the pro-Israel countries and the neutral countries. And
the oil card was used in three different ways in the face of these countries.
The friendly countries did not suffer from any oil cut; however, neutral
countries had to deal with it. The pro-Israel countries, on the other hand,
were faced with an embargo (Ülger, 2002: 150). After the crisis, the EEC
started to follow a pro-Palestine policy and mentioned the rights of the
‘Palestinian people’ in the summit organized in December 1973. In 1975, the
EEC countries declared that the ‘Palestinian people’ had a right to express
their ‘national identity’ and this might be possible only if Palestinians could
reach their legitimate rights, including ‘their homeland’. Another important
step that the EEC took in this respect was to issue the Venice Declaration in
1980. The Venice Declaration mentioned Palestinians right of ‘selfdetermination’
(Ülger, 2002: 151-152). The EEC continued to follow a proPalestinians
policy during and after the Madrid Conference (see Ülger, 2002:
153-156).
The developing countries that are dependent on foreign energy
resources were affected much more adversely by the oil shocks, therefore the
welfare difference between the North and the South started to increase from
then on. In addition, in 1974, the General Assembly of the United Nations,
which was dominated by the developing countries then, granted the Palestine
Liberation Organization the observer status and declared that ‘Zionism is a
form of racism and radical discrimination’ in 1975 (https://en.wikipedia.org-
c).
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The oil card can also be used in order to influence the foreign policies
of the countries that export oil. In the 1980s, when the Second Cold War just
started, certain petroleum exporting countries such as Saudi Arabia pumped
an excessive amount of oil and thus caused a decrease in the oil prices in the
global markets. One of the reasons that the Soviet economy went bankrupt in
the Gorbachev period was argued to be this decrease in the oil prices. In
1985, the oil prices in international markets saw the lowest levels since the
Second World War(Purtaş, 2005: 4). Similar policies are still being followed
today due to the encouragement of Washington, which is disturbed by
Putin’s policies. The Russian economy was affected particularly adversely
by the decrease in the oil prices. It is necessary to point out that while the oil
prices are determined in and through international markets, the natural gas
prices are agreed upon through bilateral agreements concluded between
exporter and importer states. Moreover, while oil is generally transported via
tankers, natural gas is mostly transmitted through pipelines. Hence, bilateral
agreements came into prominence and the exporter countries usually become
the advantageous party. Therefore, it is not surprising that Russia especially
makes use of the natural gas card effectively in its foreign policy.
There are various claims regarding Russia’s energy policies. For
example, Russia’s official documents state that the main target of the energy
policy is the Russian domestic policies. According to the Russian
governmental decree, Russia’s energy policies concerning fossil fuel which
has been exporting to many countries in Asia and Europe aims to utilize
natural energy resources at a maximum level, create a sustainable economic
growth, increase the life standards of the Russian citizens and consolidate the
Russian economy (Rasporyajenie No: 1715R, 2009). It has been argued that
Russia makes use of its oil and natural gas exportation as a political tool, i.e.
as a power mechanism, especially in the face of the former Soviet countries.
We can conclude from these arguments that Russia attempts to increase its
power and influence by using energy as a fundamental tool (Houtari, 2011:
121).
As can be seen in the following part of the study, attempts to be a
monopoly in the energy domain of the former Soviet geography, Russia uses
the energy factor in its foreign policy in three different strategic ways:
1. Importing the energy resources in the former Soviet Republics at a
discount and exporting them to other countries for higher prices.
2. Following a carrot or stick policy for the countries which have come
to be dependent on the Russian energy and trying to shape their
foreign policies for Russia’s own national interests.
3. Ensuring that the routes of the pipelines cross over either its own
territories or the ones of the friendly countries.
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Russia’s Energy Resources
Russia is one of the largest oil-rich countries in the world. Russia can
be said to be in a leading position in this respect since its energy resources
are not only intense, but also diverse, which means that it harbors many extra
energy resources. Therefore, it is one of the biggest energy suppliers in the
oil and natural gas industry both as a manufacturer and as a seller. Hence,
energy policies come into prominence for Russia (Chernitsına, 2015: 3).
Russia is on the first, second and eighth rank in terms of the proven natural
gas, coal and oil reserves, respectively in the world. Russia has 32% of the
proven natural gas reserves, 10% of the explored coal reserves, 12% of the
proven oil reserves and 8% of the proven uranium reserves in the world
(en.wikipedia.org-a). In this part of the study, the situation of the oil and
natural gas industries,which are the backbone of the Russian economy, will
be analyzed. In 2013, nearly half of the federal budget and 68% of the export
revenue were obtained via these two industries(US Energy Information
Administration, 2015: 13).
The Natural Gas Industry
The importance of natural gas has been increasing day by day in the
global energy market. The reason behind this is that natural gas can be
utilized in various areas and the demand has been constantly increasing.
According to some experts, the demand for natural gas will be going on
increasing annually by 1.7% in average and reach 4.75 tcm in 2035. The gas
consumption is expected to catch up on the coal consumption in time and it
is predicted that the natural gas industry will play a key role in the energy
markets in the future (WEO, 2011: 155). It is known the fact that Russia has
the biggest natural gas reserves in the world and is one of the biggest
suppliers in this respect. It ranks second in the world as a dry natural gas
producer. Although many Russian companies have been increasing their
natural gas production, Gazprom continues its domination as a state-backed
company. According to the report issued by the US Energy Information
Administration (EIA) on January 1, 2015, as seen in Table 1, Russia has the
biggest natural gas reserves with 1.688 trillion cubic feet (tcf). According to
2011 data, the flared natural gas reserve in Russia is approximately 1.300
billion cubic feet (US Energy Information Administration, 2015: 11-13).
Although Russia has the biggest natural gas reserves in the world, but
it is noted the top of the list in production and exportation. As can be seen in
Table 2, Russia was the biggest natural gas producer in the world between
the years of 1992-1998 and of 2003-2008, however it has lost this title to the
USA in the recent years. According to the data provided by the International
Agency, while the USA produced 689 billion cubic meters natural gas in
2013, Russia produced 671 billion cubic meters. The Russian natural gas
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production corresponds to 19.3% of the total natural gas production in the
world (en.wikipedia.orb-b). Notwithstanding, such companies as Gazprom
and Novatek tend to increase their production. Moreover, certain oil
companies in Russia want to enter the natural gas sector (US Energy
Information Administration, 2015: 12).
Russia started to export natural gas in the era of the Soviet Union. It
entered into eight ‘gas-for-pipe’ agreements with such countries as West
Germany, France, Austria and Italy between the years of 1968-1975.
According to these agreements the Soviet Union would sell natural gas to
these countries in exchange for natural gas and pipeline equipments.
Moscow started to export natural gas to the Western Europe for the first time
in the 1970s (The Soviet Gas Pipeline in Perspective, 1982: 17). In the next
years, a dependency relationship may be argued to have emerged between
the EU and Russia with more agreements to have been concluded. The
income generated in and through the natural gas exportation became an
important item over time in the Russian economy. In 2013, natural gas
constituted 14% of the total revenue that Russia generated through
exportation. With the decreasing trend in the natural gas consumption in the
Western Europe as of the mid 2000s, Russia developed a new strategy to
diversify its natural gas market and started to sell liquefied natural gas to
Asian countries. In 2014, Russia tended towards the East upon the sanctions
imposed by the USA and the EU. In the same year, Russia and China entered
into an agreement to construct two pipelines between them. This agreement
also aims at an annual 2.4 tfc natural gas trade between the two countries
(US Energy Information Administration, 2015: 13).
The Oil Industry
According to January 2015 data, Russia has 80 billion barrels proven
oil reserves (www.cia.gov). As seen in Table 3, The production and
exportation figures show that Russia ranks among the top three in the world
in this respect. In 2014, it was stated that Russia was ‘the world’s largest
producer of crude oil (including condensate)’ and ‘the third largest producer
of petroleum and other liquids (after Saudi Arabia and the United States)
(…) with average liquids production of 10,9 million barrels per day (b/d)’
(US Energy Information Administration, 2015: 1). Russia is the second
largest crude oil exporter after Saudi Arabia. In 2014, while Russia exported
152.6 billion dollars of crude oil, Saudi Arabia reached to 268.2 billion
dollars of crude oil exportation. Russia’s export quantity corresponds to
10.5% of the total crude oil trade in the world (Workma, 2016:
www.worldstopexports.com). In 2013, the revenues from crude oil and
products formed 54% of the Russia’s total export revenue (US Energy
Information Administration, 2015: 7).
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Similarly, in the era of the Soviet Union, the oil revenues formed an
important portion of the economy. In the 1970s, almost one quarter of all the
oil production used to be exported. This corresponded to a daily average of
900.000 barrels of oil (The Soviet Gas Pipeline in Perspective, 1982: 17). In
the post-Soviet era, importance of the energy industry increased. As
indicated below, while the national borders shrank in the post-Soviet era, the
amount of production increased hugely. It is possible to analyze the oil
production and exportation process in the post-Soviet era in three periods. In
the first period between the years of 1990-1996, the oil production decreased
from more than 10 million barrels to less than 6 million barrels. During these
years, the production faced with an annual degradation by 9% in average.
This situation was one of the factors that would lead to the collapse of the
Russian economy. The second period between the years of 1999-2005
dressed the wounds of the Russian economy. During these years, the global
price of oil per barrel increased from 18 dollars to 55 dollars. In accordance
with this development, the annual production increased by 7.5% in average.
This situation accelerated the Russian economy and created extra sources of
income in the Russian private sector. In the third period between the years of
2005-2014, the annual production decreasingly grew by 1.3% in average.
The reason behind this deceleration was interpreted through the term of
‘Low Hanging Fruit’. It means that Russia attained a rapid success without
making much effort to reach its goals. Another fundamental reason behind
this deceleration was the transition from privatization to nationalization
(Henderson, 2015: 4).
Dominant Actors in the Russian Energy Industry
The prominent energy companies in Russia are influential both in the
determination of the Russian national interests and in the formation of
Russian foreign policy. A significant number of these companies are under
the state control. Particularly some big companies such as Gazprom have
been affecting government policies in many areas, foreign policy being only
one of them. Thus, in this part of the study, companies that affect both the
economic and the political life of Russiawill beanalyzed briefly.
Gazprom
As a state-connected company, Gazprom is one of the biggest energy
companies in the world. As for the estimates by British Petroleum (BP),
Gazprom has 16.5% of all the gas reserves in the world. Gazprom carries out
84% of the total gas production in the Russian Federation, and 19.4% of the
total gas production in the world. In addition, Gazprom is the only user of its
pipelines which transport the gas across the global market (Mitrova, 2008:
2). It is possible to state that Gazprom is the biggest company which serves
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the political and economic purposes of the Russian state. As a dominant
actor in the gas industry, Gazprom has been strengthened more by Putin
under the state control. The Russian state holds 51% of the shares of the
company (Finon and Locatelli, 2007: 4).
Rosneft
Rosneft is the leading company in the Russian oil industry and the
biggest publicly-traded oil company in the world. 40% of the yearly oil
production in Russia has been carried out by Rosneft. “Rosneft is a global
energy company with major assets located in Russia and a diversified
portfolio in promising regions of international oil and gas sector, including
assets in 18 states in America, Asia and European continents.”Rosneft’s
corporate activities include exploration, development, production, sale of oil
and natural gas, refinement of crude oil and transportation and sale of
petroleum products. These activities have been efficiently carried out at
home and abroad. Rosneft is one of those companies which have a
strategically important position. The main shareholder is OJSC Rosneftegaz
with a 69.50% of the shares. And this company is 100% owned by the state.
As for the other shareholders, BP holds 19.75% of the shares and the
remaining part is public shares (Rosneft, 2015: www.rosneft.com).
Transneft
As a petroleum pipeline company, Transneft has the biggest system
for petroleum transportation in Russia and the longest petroleum pipelines in
the world. Transneft transports approximately 420 million tons of crude oil
every year through its 80.000 km pipelines stretching between Siberia and
the Baltic. Transneft has 400 pumping stations, 1000 storage facilities and 35
refineries in 101 regions (ICONICS, 2010). The corporate governance in
Transneft has some state representatives, too. Transneft is significantly
influential in the determination of projects and strategies regarding
petroleum pipelines (http://en.transneft.ru).
Lukoil
Lukoil is one of the biggest oil and gas companies in the world. More
than 2% of the total crude oil in the world is produced by this company.
Lukoil possesses approximately 1% of all oil reserves in the world. 16.4% of
the total crude oil in Russia is produced by Lukoil and 15.7% of this
production is processed (refined) in Russia. Lukoil is the biggest company in
which private sector takes part. According to the figures of 2014, Lukoil’s
annual revenue is approximately 144 billion dollars (www.lukoil.ru).
As influential actors in the global energy markets, these companies
can be used as a political and economic tool for pressure within the scope of
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the Russian foreign policy. Having been rapidly privatized after the
dissolution of the Soviet Union, these companies entered a period of
expropriation in the 2000s. Therefore, it is possible for the Kremlin to use
these companies, which have already been run by the state, directly in the
policies regarding the other nations.
The Energy Corridors of Russia
Apart from exporting the natural gas and the oil that has been drilled
from its own territories via transportation systems, Russia also transports the
energy resources of some of the former Soviet republics to international
markets through the pipelines. Therefore, Russia is able to manipulate the
countries whose energy resources it transports and has an indirect right to
comment on the decisions regarding these resources. Thanks to this
interventionist policy, Russia is also able to influence the global oil and
natural gas markets to a considerable extent. It is possible to say that Russia
has an advantage in this respect, because of two significant issues: First,
during the Soviet era, the pipelines that transported the oil and the natural gas
resources from the Central Asia and Caucasus were constructed to cross over
the Russian territories. In this way, interdependence occurred between
Russia and these countries. Second, the pipelines that transported energy to
the Eastern Europe had to cross over the Russian territories due to the
geographical necessities. Therefore, Russia gains a strategic advantage in the
face of its opponents thanks to the pipelines inherited from the Soviet Union.
After all, constructing new pipelines is an extremely expensive endeavor.
Another strategic advantage of Russia stems from its geographical
magnitude. Being the neighbor of continents and countries that import
energy such as Europe, Japan and China is a great advantage for Russia.
Therefore, as part of its energy policy, Russia has been trying to realize new
pipeline projects (www.gazprom.ru-b), which can be seen Table 4 and Table
5.
Russia has wide range pipelines network. Thus this country can easily
affect the other countries using energy policy. For example, as can be seen
above at Table 4 that Russia has gain power because of the crude oil
pipelines both western and eastern areas. Russia’s energy policy not
onlycontains crude oil pipelines but also natural gas pipelines. Both of them
for Russia are so vital dynamics to affect the foreign policy and correlations
between countries where is related with Russia about energy requirements.
These relations dated back to Soviet era. Moscow’s energy exportation was
began during the Soviet era. First, in the 1940s, the Russian gas was exported
to Poland, although in small quantities. 3.4 bmc (billion cubic meters) natural
gas that was sold to Europe reached 26 bmc in the 1970s and 1980s, and then
109 bmc in the 1990s (Stern, 2005: 1).
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After the dissolution of the Soviet Union, Russia constructed many
pipelines for energy transportation and thus took part in the global market.
As can be seen in Table 4, Russia has been increasing its maneuverability in
the foreign policy by conducting new projects. For example, it attempts to
head not only for European countries or former Soviet republics, but also for
new markets such as China within the scope of different projects such as
Siberia – 2. Being in the need of 94-106 bmc natural gas by the year of 2010,
China seems as becoming new market for Russia (www.gazprom.ru-c,
2016). Russia has such a big geographical place that it can control energy
policies on a few continents. It can be stated that both Europe and Asia are
under control of Russia in the context of oil and natural gas pipelines. As can
be seen at Image 1 Russia has a so complex pipeline network. In this context,
one example from each category of the pipelines will be chosen that Russia
has been using as a tool in its foreign policy and expand the subject matter in
this respect.
The North Stream Project
Most of the gas flow between Europe and Russia used to cross over
Ukraine and Poland. However, Gazprom started to search for new
alternatives due to the problems occurred bythe time between Russia and
these countries within the context of foreign policies. One of these
alternatives is the North Stream Project (Chyong et al., 2010: 2). The North
Stream project was first brought to the agenda in 1997 and officially put into
practice on April 24, 2001. The need that Germany, Holland, France,
Denmark and the UK have for natural gas is the primary reason behind this
project (Baytekin, 2010: 134).
The South Stream Project
The southern corridor of the natural gas transportation system will
supply the central and southern parts of Russia with additional volumes of
natural gas. It means that the Russian industrial units and municipal services
will develop in the regions through which the southern corridor passes. The
South Stream Project will also step up gasification rates and secure
uninterrupted gas supplies into the Turkish Stream. The total length of the
gas transmission system will be 2,506.2 kilometers. The project involves ten
compressor stations with a total capacity of 1516 MW. Once the southern
corridor gas pipeline system is put into practice, it will transport 63 bcm
natural gas every year. The project has been planned to be completed
between the years of 2010-2017. The line in question covers approximately 8
regions in the Russian territory. These are Nizhny Novgorod, Penza, Saratov,
Volgograd, Voronezh, Rostov Krasnodar and the Republic of Moldova
(www.gazprom.com). In addition, energy which comes from Russia will be
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carried into Central and Southern Europe by the Southern Stream Project
(http://www.iefe.unibocconi.it/).
The Natural Gas Pipeline of Yamal – Europe 2
The fundamental purpose of this pipeline is to transport the 4/5 of the
natural gas that is drilled from the Russian territory over Ukraine and the
remaining 1/5 over Belarus to Europe. Starting from the Yamal Peninsula,
the line reaches Germany through Belarus and Poland by passing through
approximately 4000 kilometers. Before the crisis arisen between Russia and
Ukraine, the pipeline of Yamal – Europe 2 was actually intended for another
route which would transport the Russian natural gas to Austria and Italy
through Poland and Slovakia. In addition to the Ukrainian crisis, Russia and
Poland could not agree upon the construction of the second part of the line.
Following these developments, Russia began to concentrate on the northern
pipeline instead of this project. According to Gazprom, the northern pipeline
project will generate more economic profit anyway. In the meanwhile,
Russia will be giving an answer to the inconsistent behaviors of Poland
(Erbil, 2010: 112).
The Role of Energy Industry in the Russian Foreign Policy
Since the Soviet era, Russia’s energy policy has been based on the oil
and gas industry. In the 1970s, the Soviet Union used to produce about 1
billion tons of oil every year. In this period, Moscow pursued a politicallyweighted
energy policy regarding the third world and the other republics in
the Soviet Union. Moscow’s energy trade with capitalist countries, on the
other hand, was based on pragmatism with the purpose of making economic
profit in mind (Sudo and Kazankova, 1998: 1-10). Today the Russian oil and
natural gas industry has become a key actor especially in the European and
Asian market. As indicated before, it is the Russian government that has laid
hands on these industries. In addition, the increasing influence of the people
who had key roles as intelligence officers in the Russian political life has
also increased the effectiveness of the state in this process. It has been
claimed that the Russian companies follow a policy which includes the
purchase of key energy fields, storage centers and pipelines in the Central
and Eastern Europe. After the dissolution of the Soviet Union, Russia may
sometimes remove subsidies and increase natural gas prices within the scope
of its energy policies regarding the former Soviet republics. This also
changes the prices in the global market (Woehrel, 2009: www.fas.org).
Hence, Russia’s energy policies may change natural gas prices in the global
markets.
Russia follows certain methods which are similar to the global
policies carried out by the USA. In the post-cold war era, the USA has
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followed a foreign policy strategy based on some economic, political and
other precautions in the face of its opponents that have a geo-economically
important position such as China, Russia, India and Germany. The biggest
opponent of the USA in terms of military capacity and energy resources is
Russia. The global economic crisis that may arise at this point limits the
increase of the quantities demanded from the energy suppliers. In the 1970s
and 1980s, the USA followed a policy which included the changes in the oil
prices and in the pipeline roots that it used to transport energy resources.
This policy had an impact on the dissolution of the Soviet Union. Today
Russia has been using similar methods (Ageev and Loginov, 2014: 33).
Since the 2000s, there has been a mutual relationship between the Russian
energy policy and the energy prices in the global markets. The increasing
energy prices have permitted to Russia to grow more powerful and more
proactive in its foreign policy. The severity of the problems that Ukraine and
Georgia have been recently challenging with can be given as an example to
this situation. Today the Western World faces an enormous corporate state,
that is, Russia. This corporate state draws its power from fuel oil and natural
gas. Governed with a semi-authoritarian system with geopolitical goals,
Russia is able to use its political alliances as well as its natural gas and oil
reserves. Gazprom emerges as the most important tool for the foreign policy
at this point (Goldthau, 2008: 53-54).
Russia has been following these strategies in order to be an energy
monopoly in the former Soviet geography(Telli, 2015: 356-357):
1. Maintaining its monopoly on energy supply,
2. Preventing foreign energy companies from controlling the Russian
and the Central Asian energy areas and having a role in production
and transportation,
3. Determining policies not to let foreign gas producers enter the
European market,
4. Acquiring shares of foreign gas producers in order to be able to
influence their sales policy.
Russia uses the energy factor at its hand as a repressive tool in
various ways particularly for the former-Soviet republics. For example,
Moscow may sometimes cut off the energy flow on the basis of certain
political factors, but claims that the decision is based on “technical
problems”. Natural gas and oil companies with a monopoly power such as
Gazprom serve not only as an economic tool, but also as a political tool for
pressure. Some poor countries have become dependent on Russia especially
in terms of natural gas and oil. InNygren’s words,using energy as a
politically striking weapon, Russia tries to strengthen its hand during
negotiations and political discussions by cutting off the natural gas and oil
flow to these countries (Kanet, 2008: 9).
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It seems necessary to point out that post-Soviet Russiaactually has a
limited number of tools from which it can benefit in its foreign policy. These
“limited” tools determine the nature of relationships that Russia establishes
with the former Soviet republics and European countries and how it behaves
to these countries. Moscow attempts to use its energy card and thus realize
its economic and political projects. Among Russia’s political projects are to
establish customs and states unions with its strategic partners, establish
military bases in the strategic regions of these countries, support allies and
weaken enemies. Russia’s primary economic goal is to increase the income
that it has been gaining from energy sales. “This means reducing exposure to
transit countries that can hold Russian energy sales hostage, forcing all
customers to pay a market-based price reflecting EU price levels, increasing
ownership and control of energy infrastructure, and expanding access to
high-profit markets.” However, Russia can sometimes be torn between its
economic and political projects. In such situations, Kremlin has hard times to
make a decision between two domains. “Thus, Russia is sometimes willing to
sacrifice economic gain to assert political advantage, and vice versa”
(Orttung and Overland, 2010: 74, 75).
Russia has used the energy card particularly effectively under period
of Putin’s governments. As mentioned before, during the first years of
Putin’s government, the energy prices increased on a global level and Russia
increased its energy exportation. These two factors enabled the Russian
economy to gain a developmental speed. Putin’s government tries to sustain
this economic development and restore Russia’s power as in the cold war
era. Another goal that Putin’s government sets for itself is to increase
Russia’s influence in the Central and Eastern Europe, Caucasus and the
Central Asia. However, some outstanding authorities such as Andrey
Illarionov, the economy advisor of the Kremlin, do not support the idea that
Russia should use its energy resources as a weapon in its foreign policy.
What is behind this argument is that such foreign policies will actually
damage Russia’s own energy system in the long term (Smith, 2008: 4).
As mentioned above, Russia continues to use the energy resources as
the most important instrument in its foreign policy. It has even determined a
series of principles regarding its energy policy. In this context, a study
suggests that the current Russian government has already been planned its
energy policies that it will pursue up until 2020. The fundamental strategies
that the Russian government has adopted in its energy policies are as
follows:
• To ensure energy security
• To use energy effectively
• To form an effective budget
• To ensure the ecological security of energy
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Russian government itself shapes the fundamentals of the Russian
energy policy strategic goals of which are given below.The use of
underground sources; the management of funding of these sources; the
development of fuel and energy resources in the domestic market; the
evaluation of the role of energy in the regional and foreign policy; and social,
scientific, technical and innovative policies are all analyzed within the scope
of the energy policy of the Russian state. And the basic factor here is the role
of economic regulations (in terms of prices, taxes, customs and market
economy) (Rasporyajenie1234P, 2003).
Three Important Strategies That Russia Uses in its Energy Diplomacy
There are some parameters that determine how Russia is able to use
its energy factor effectively within the scope of its foreign policy. While one
of them is the fact that Russia imports cheap natural gas and oil and exports
them for a higher price, another parameter is the carrot and stick method that
Russia uses in the price negotiations with the countries that can be said to be
dependent on Russia. Finally, Russia can choose to change the routes of its
natural gas and oil pipelines if it has to follow a security policy or adopt a
particular strategy.
Strategy towards the Central Asian and Caspian Basin Energy
Resources
Russia’s energy policies are generally analyzed as having two phases.
The first phase represents the time period before 2010, and the second phase
is the time period after 2010. In the first phase, Russia tried to consolidate its
economy and improved its infrastructure in order to have a say in the energy
markets. Although the price of natural gas was increased, various programs
were planned in order to struggle with the socio-economic shrinkage that
would come about with the increased price of natural gas. Ranging from
drilling energy resources to selling them, many reconstruction projects were
carried out in this period, as well. In the second phase, the production has
increased more than 1.5% together with the infrastructural works; in
addition, various policies have been designed in order to construct
transportation systems to transport energy effectively (Rasporyajenie 1234P,
2003: 38-41). In other words, Russia attempted to complete its reconstruction
process by using cheap energy resources in the first phase, and it started to
follow an active policy in terms of energy in the second phase. Russia
pursued a relatively passive foreign policy in its reconstruction period until
1998.
While Russia had a high income on the basis of energy during the
Soviet era, not only Russia but also Kazakhstan, Azerbaijan and
Turkmenistan started to have control on the natural gas and oil reserves in
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the Caspian Sea region in the post-Soviet era. Having difficulties even in
paying its debts in the beginning, Russia attempted to organize and be
influential in the energy policies of Kazakhstan and Turkmenistan. Although
certain multinational companies started to dominate the Caspian Sea region
in the midst of the 1990s, Russia was advantageous anyway mainly due to
the fact that it had long and organic relationships with these nations and that
the transportation system had been made by Russia itself (Bilgin, 2005: 47).
Hence, as per the energy policy that it followed up until 2010, Russia
preferred to obtain cheap natural gas and oil from the former-Sovietrepublics
and sell these energy resources in the European market with the price rate
that itself determined.
However, the pricing policy that Russia has been implementing for
the energy resources of the countries in the Caspian Sea region affect the
energy security of the EU in a negative way. First of all, Russia buys natural
gas from these countries for a cheaper price and then sells it in Europe for
higher prices. Second, Russia uses the gas that has bought from the Central
Asia in the domestic market and thus the domestic consumption of energy
resources gets relatively cheaper. Russia also sells the gas that has drilled
from its own territories in Europe for similarly higher prices. Third, Russia
makes Gazprom’s firms such as Itera, EuralTransGas and RosUkrEnergo
richer by selling the Turkmen gas to Ukraine (Socor, 2008: 75-76). Since
Gazprom remained incapable to meet the gas requirements of the Western
Europe and Turkey, Russia needed and tended towards the Turkmen gas
(Soltan, 2001: 185). Moscow was very well aware of the fact that Ashgabat
was dependent on it due to the energy routes crossing over the Russian
territory, thus used to cut off the gas at different times or did not pay its debts
to Turkmenistan by alleging its credits to the countries that it sold the
Turkmen natural gas such as Ukraine. In 1997, Russia demanded a higher
transportation fee for the pipeline and negotiated with Turkmenistan to lower
the natural gas price (Purtaş, 2005: 212). As a result, Russia managed to
purchase the Turkmen gas for a price that was only one third of the
international price and sell it for its normal market value, thus generated an
income from the gap between these prices (Baycaunova, 2000: 260).
Putin has entered into new agreements with Kazakhstan and
Turkmenistan regarding the domain of energy. According to the agreement
between Turkmenistan and Gazprom in October 2006, Turkmenistan would
annually sell Russia 50 million cubic feet of natural gas and take 100 dollars
for each 1.000 cubic meter. This was approximately 50% more than the price
that Russia used to pay before. However, Gazprom was selling natural gas
for 235 dollars to the West European states in the same period. Russia also
concluded a joint venture agreement with Kazakhstan; within the scope of
this agreement, the natural gas drilled from Karachaganak region, would be
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processed by Gazprom and transported to the European market through the
Russian territories. In 2007, the line that transports the Turkmen and Kazak
gas to Russia (through Uzbekistan and Kazakhstan) was improved. Hence,
the gas transportation was activated from the Central Asian countries to
Russia (Telli, 2015: 185).
The Carrot and Stick Policy
Russia’s Carrot and Stick policy constitutes risk for some of the
former Soviet Republics. This risk concentration stands out particularly for
Belarus, Ukraine, Moldova and Georgia. After the dissolution of the Soviet
Union, these countries became dependent on Russia. Russia cuts
hydrocarbon fuels of these countries partially or for a short period of time,
which constitutes a foreign policy medium Russia uses against these
countries. Although long-term cuts are a low possibility, they can be
expected of Russia. Since 1991, Russia has been using energy as a political
and economic tool. The number of events such as pressures on such
countries as Lithuania, Latvia, Estonia, Belarus, Ukraine, Moldova and
Georgia, in a way that covers most of Europe, accidents, energy cuts, selling
out companies to others, coercive pressure policies, blackmails or threats
exceeds 50. Almost half of them occurred during Putin’s government (during
first five years of his rule) (Larsson, 2006: 3, 4). Some European countries
have become dependent on Russia in the energy area through the agreements
that they have concluded with Moscow. The level of European dependence
to Russian gas is seen in Image 2. However, this situation includes many
risks for Europeans. Finon and Locatellisummarize this situation as follows;
manipulating the European market, risk of
cancellation of the contract unilaterally, inadequate
investments that can be withstand for long periods
against the prices, circulating European energy
market after constructing north stream and south
stream, agreement with Turkey to discourage the
construction of direct supply lines for Caspian gas to
the European market, moves to reach agreement with
major distributors, in particular Sonatrach, or even
the takeover of distributors with a dominant position
in specific national markets to partition markets
(Finon and Locatelli, 2007: 2).
Accordingly, in case of any crises between Europeans and Russia,
Moscow gains the opportunity to put political and economic pressures on
Europe 4
. The disagreements about the price of the natural gas that Russia
4
In this part of the study, a reference made to (Sönmez et al., 2015: 802)
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exports to Ukraine affect not only these two countries, but also the entire
Europe. By increasing usuriously natural gas prices before the critical
elections in Ukraine, Moscow aimed the electoral victory of the proponents
of Russia. Before 2006 Parliamentary Elections after Orange Revolution as
well as the Presidential Elections in 2010, Russia resorted to this method.
Russia wanted to raise the price of gas per 1000 cubic meter $50 to $230 in
2006 and from $250 to $418 in 2009. However, upon Kiev’s rejection of
both increases, Russia cut the gas transportation to Ukraine. Therefore,
Russia punished Orange Revolution and intimidated Ukrainian people. This
policy yielded some results; pro-Russian Yanukovych came through 2010
elections (Sarı, 2015: 83-84). In 2013, protests against the pro-Russian
government that did not sign the EU Customs Union Agreement led to
another crisis between Russia and Ukraine. The Kremlin started to put
serious pressures on Ukraine to pay its debts. Annexing Crimea as a result of
the problems that occurred in the eastern region of Ukraine in this period,
Russia at first decreased the gas transported to Kiev until June 2014 and then
completely cut it. However, Kremlin took a step back and continued
delivering gas. Yet, Russia limited the discount in the energy prices, which it
uses as a foreign policy tool. The Kremlin left amargin in legal context for
Europe and the international area (Stulberg, 2015: 112). Additionally, Russia
brought forward a discount in the prices of the gas it sold to Ukraine between
2006 and 2010. The fundamental reason for such a discount was its existing
military base in Crimea (Orttung and Overland, 2010: 84). In fact, in 2010,
when pro-Russian Yanukovych was ruling, Russia made a-30%-discount in
the gas price (Orttungand Overland, 2010:75). In exchange for this discount,
Ukraine concluded an agreement, which allowed Russian Black Sea Fleet in
Sevastopol to stay there until 2042, with Russia. In 2012, when Yanukovych
requested Russia to make a discount in the gas prices, Russian Prime
Minister Medvedev expressed that Kiev also should be a member of
Eurasian Economic Union established under Russia’s leadership (Sarı, 2015:
85).
Russia also has pressured Moldova within the context of energy
policies. Upon the fact that the Kremlin doubled the gas prices, Moldova
rejected this price increase. As a response to that rejection, state-subsidized
Gazprom cut the gas flow to Moldova on January 1, 2006. The flow of gas
was provided again after January 17 and the price of gas per 1000 cubic
meter, which was previously $60, was raised to $100. Furthermore, Moldova
had to sell Transnistria, which had 13% of the stocks at Moldova Gas
Company controlling natural gas pipelines and other infrastructure of the
country, to Russia (Woehrel, 2009: 11). As a result of the problems that
occurred between Russia and Georgia in 2006, Russia cut the flow of gas and
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electricity to Georgia. Throughout this year, Azerbaijan met the energy need
of Georgia (www.trend.az).
Belarus, one of the former-Soviet Union countries, is also dependent
on Russia in terms of energy. On January 1, 2007, upon Belarus’s
reservation about the high prices, Russia declared that it would stop the gas
flow. Then, an agreement was concluded between Moscow and Minsk and
Belarus committed to buy the gas by paying the double price (Woehrel,
2009: 13). Against the propaganda for supporting fascism, conducted in
Lithuania in 2012, Russian government decided toplace an economic
embargo on this country. Stating that European Union remains silent on the
events supporting fascism, Russia blackmailed Lithuania to close both the
gas and the oil valves (www.5-tv.ru/news).
Moreover, it is possible to say that countless numbers of states follow
carrot-stick policy in order to force another country to do things in the way
they. Bulgaria, particular Baltic States and Armenia among these countries
have been exposed to Russia’s carrot or stick policies. Therefore, the energy
resources that Russia uses as a source of political pressure, are its insurance.
The Policy of Changing the Energy Routes
Russia can change its energy routes with the countries it has
problems. In the beginning of the 2000s, approximately 95% of the gas that
was transferred from Russia to Europe used to be transported over Ukraine.
This meant that Russia was dependent on Ukraine in terms of energy
transfer. In some cases, Ukrainian government illegally hauled and used the
gas coming through the pipelines. It was even reported that Ukraine sold this
gas to the other countries. One of the reasons that Russia kept interfering in
the elections in Ukraine was this dependency relationship (Torbakov, 2001:
297-304). Later on, Russia tried to increase the number of its transportation
routes and started to get rid of its dependency on the transit countries. New
countries of transit have supported Russia’s policy in this respect. For
example, Yana Toom, an Estonian member of the European Parliament,
states that Ukraine’s gas transportation systems are 40 years old. Implying
that Ukraine’s lines are old and technologically inadequate for a transit route
from Russia to Europe, Toom emphasized that the North Stream Project 2
should be used (http://rg.ru).However, according to another news agency,
Russia may have to use Ukraine’s pipelines again in order to be able to send
gas to Europe. The reason behind this is that it may be more expensive to
construct new gas transportation pipelines. Notwithstanding, the agreements
point to the fact that the gas transportation system passing through Ukraine
will have been completely removed by 2022.Some experts state that even if
the system in question is removed, it will not be appropriate to go for a
choice that does not contain Ukraine in the future (http://www.gazeta.ru).
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Another policy that Moscow adopted to create alternative routes was
developed after the plane crisis arisen between Russia and Turkey.
According to RiaNovosti, a Russian newspaper, Russia decided to stop the
Turkish Stream Project in the context of the new energy policy shaped
through the crisis arisen between Turkey and Russia on November 24, 2015.
However, Russia continues to sell gas to Turkey due to the agreements
concluded by the two countries (http://ria.ru).
It is important to point out that Russia is not the only country that has
gone for a change in the routes. As an extension to the sanctions imposed on
Russia by the Western countries upon the annexation of Crimea, the EU
pressured Bulgaria to deter from being one of the transit countries in the
South Stream Project (www.euractiv.com). Consequently, the part in
Bulgaria of the project was stopped in 2014 (Andreev, 2014: www.dw.com).
However, after the crisis between Turkey and Russia occurred on November
24, 2015 when Turkish warplanes shot down a Russian military aircraft, The
Bulgarian authorities announced that the project would start again
(www.focus-fen.net).
Russia determines not only the routes through which its own energy
resources will pass. It has also followed a policy to ensure that the Central
Asian and Caucasian energy resources will be transported to the West
through the Russian territories. In the 1990s, when transportation of the
energy resources of countries such as Azerbaijan, Kazakhstan and
Turkmenistan to international emerged, Russia used the status of the Caspian
Sea5
as an excuse and tried to prevent signing oil or natural gas agreements
between the relevant countries and Western energy companies. With this
purpose in mind, Russia contributed to the internal disorder in those
countries by even supporting coups. When Russia failed in these attempts, it
pressured these countries to agree to transport energy to the West through the
Russian territories. In the 1990s, Azerbaijan and Georgia were particularly
exposed to the Russian pressure due to the reasons mentioned above.6
5
As the largest closed water mass in the World, the Caspian has led to a discussion regarding
‘whether it is a sea or a lake’ and created a sharing problem among the littoral countries.
6
Soon after AbulfazElchibey concluded certain energy agreements with some of the Western
countries, a coup was staged. Heydar Aliyev, who came to power after Elchibey, concluded
an agreement with some of the Western powers on September 20, 1994. This agreement was
called the ‘Contract of the Century’. Two weeks after the agreement, another coup was
staged now against Aliyev, but it failed (İşyar, 2004: 524). The Aliyev government gave
10% share to the company of Lukoil through the agreement and tried to appease Moscow.
However, Moscow started to pressure Azerbaijan from then on to have the pipelines on the
Russian territories (Purtaş, 2005: 232). What Moscow preferred was to transport all the
Azeri oil to the Black Sea through the line of Baku-Novorossiysk. It also pressured Eduard
Schewardnadze not to let the oil be transported through the alternative line crossing over
Georgia. However, when this pressure policy yielded no result, Schewardnadze was
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Although,its repressive policies did not yield results in Caucasus, but
Russia succeeded to transport oil of Kazakhstan and gas of Turkmenistan to
the global market through its territories. The Kazakh government planned to
transport the oil drilled from the Tengiz region of the Kazakhstan to the
Mediterranean Sea via the BTC line. With this purpose in mind, a joint
declaration was signed in October 1998 by the presidents of Turkey,
Georgia, Azerbaijan, Kazakhstan, Uzbekistan and the energy secretary of the
USA (observer). Russia opposed this project from the outset. As a
consequence, it prevented the project of Tengiz-Baku-Ceyhan from being put
into practice. The Kazak oil drilled from the Caspian Sea had been
transported to the Black Sea trough the Georgian Supsa harbor dating from
November 1997. However, Russia opposed this situation as well, and
ensured that the oil started to be pumped to the Russian Novorossisk harbor
at the Black Sea (Baycaunova, 2000: 268-270). Moreover, Russia and
Kazakhstan agreed on the Caspian Pipeline Consortium (CPC) which would
transport the Kazak oil to the Black Sea through the Tengiz-Atırau-AstrahanNovorossisk
line and started its construction in 1998 (Bayacaunova, 2000:
263).
In the 1990s, Turkmenistan embarked on a quest for alternative
routes to have its natural gas transported to international markets. The
Turkmen government negotiated with Washington, Ankara and Tehran with
this purpose in mind. The Trans Caspian project supported by the USA came
to the fore in this period. However, it became impossible to find an
alternative route to the Russian one due to Russia’s pressures, the breakdown
of the relationship between Azerbaijan and Turkmenistan and the USA
policy to exclude Iran from the routes of energy pipelines (Soltan, 2001:
195-196).
Russia wants to keep Eurasia under control for geopolitical reasons as
well as for its energy security. Eurasia is the crucial point in all energy
policies in the world. Being the junction point where energy resources and
global relations meet, Eurasia is the center of global decisions. Delivering
regional resources into international corridors is one of the leading issues
regarding the Central Asia. And the Western World wishes to have a corridor
construction that will be independent from Russia (Naumkin, 1999: 1-17).
The USA and the EU, too, have started to support alternative routes
against the Russian policy to be a monopoly in the market of transit
countries. As opposed to the Russian North-South corridor, the USA and the
EU wish to consolidate the East-West corridor which excludes Russia and
assassinated (Pamir, 1999: 36-37). Russia’s pressure policies intended for Azerbaijan and
Georgia remained inconclusive. The line of Baku-Tbilisi-Ceyhan (BTC) started to be
constructed in September 2002 and the production began in 2005 (www.btc.com.tr).
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Iran. With this purpose in mind, a series of negotiations were carried out in
the hope to transport the Kazak and Turkmen oil resources through the BTC
line (Telli, 2015: 138). Consequently, Kazakhstan at 2008 and Turkmenistan
at 2010 started to transport some part of their oil resources via the BTC line.
In this way, the CentralAsian countries managed to by-pass Russia for the
first time and transported some part of their energy resources to the Western
market by-passing Russia(Telli, 2015: 224). Moreover, Kazakhstan and
Turkmenistan have been tending towards Chine in order to alleviate their
dependency on the Russian pipelines (Telli, 2015: 169).
In recent years two projects7
have come to the fore, one being the
project of Nabucco Pipeline which will transport the Azeri and Turkmen gas
to the European market and the other being the project of Trans-Anatolia
Natural Gas Pipeline (TANAP) which will transport the Azeri gas to the
European market. However, Russia has adopted various tactics in the hope to
interfere with these pipeline projects. First, Russia came up with the South
Stream Project as an alternative to the TANAP. Then, it proposed “to
purchase all the Azeri gas for its market value’. Although this proposal was
rejected by Azerbaijan, Russia managed to persuade it to conclude another
agreement. According to this agreement in 2009, Russia started to import gas
from Azerbaijan for the North Caucasian republics. “Russia also accepted to
pay for the Azeri gas the same highest price as the one that it pays to import
gas from the Caspian and the Central Asia. Wishing to continue its control
over the natural gas reserves in the Middle Asia and the Caspian and be an
element of pressure in terms of the transfer corridor, Russia approached
Azerbaijan with quite reasonable conditions and thus prevented it from go
towards the West completely’” (Telli, 2015: 367-369). Moreover, Russia
pressured the countries that had planned to give gas to the Nabucco pipeline.
In order not to let the Nabuccoproject to stand, Russia made a last move in
2013 and applied a serious price reduction to the natural gas that it sold to
Europe, thus discredited the Shah Sea Consortium (Telli, 2015: 373).
7
Natural gas reserves were found in the Shah Sea region of Azerbaijan at the end of the
1990s. Then, with its connections with Turkey, Greece and Italy, the Baku-Tbilis-Erzurum
natural gas pipeline were constructed in parallel with the BTC line (Telli, 2015: 367).
Thanks to this project, The Azari natural gas will by-pass Russia by crossing over Turkey
and reach Europe, so that the EU will alleviate its energy dependency on Russia. The BTE
project is the first serious attempt to ensure the transportation of the Caspian gas to the EU
through a non-Russian route. However, only the lines that will cross over Azerbaijan,
Georgia and Turkey have yet been completed. Consequently, the Nabuccodaha and TransAnatolia
Natural Gas Pipelines (TANAP) came to the fore in order to enable the BTE line
reach Europe. As indicated before, the project of Trans-Caspian Pipeline designed in the
1990s to transport the Turkmen gas to Europe through Turkey remained on paper. However,
the project of Nabucco aims to transport the Turkmen gas to Europe, as well.
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Although Russia could not obstruct the TANAP, it stopped the Nabucco
project and prevented the transmission of the Turkmen gas to the West.
As a result it should be mentioned that, Russia has been
implementing the following strategies to shape its policy regarding the
energy routes:
1. Preventing its energy resources from getting into the global market
through alternative pipelines over which it does not have any control
and thus putting these alternative pipelines in a disadvantageous
position by constructing new pipelines to transport energy for more
affordable prices,
2. Constructing new pipelines and thus transport energy to the importer
countries in Europe without any need for transit countries,
3. Preventing non-Russian alternative projects from being put into
practice by purchasing the distribution systems in Europe through
Gazprom (Telli, 2015: 356-357).
Conclusion
The ideological discourse that Moscow used in the Cold War era
constituted one of the most important dimensions of the Russian foreign
policy. In these years, the ideological expansionism was one of factors that
enabled the Soviet Union to enlarge its sphere of influence on a global level.
In the post Cold war period, Russia’s political power andability to maneuver
have been increasing through the ‘energy factor’. Currently Russia is
exporting energy instead of ideology. Moscow was able to control the Soviet
Republics and the East Bloc countries by means of Red Army in the Cold
War period. Similarly, Russia now tries to dominate the former-Soviet
Republics through its economic power and energy policies. In brief, the
contemporary Russian energy policies have placed socialism and Red Army,
two important components reminding us of the Cold War period and the
Soviet policies.
As indicated before, the Russian economy caught a rapid growth
trend due to the reasons such as the rise of energy prices in international
markets in the new millennium. Growing economically, Russia has done its
best to consolidate its power in the former Soviet geography. Putin has
increased Moscow’s influence in the region by first concluding agreements
with the Central Asian countries regarding the domain of energy. After the
blockage occurred in the Colour Revolution in 2005 in Uzbekistan, the USA
lost some part of its influence in the region, as a result of which Russia got
rid of its most important rival in the region. Countries such as Kazakhstan,
Kirghizstan, Tajikistan, Armenia and Belarus participated in the regional
organizations established with the leadership of Russia,and thus being
‘warded’ by her. Choosing to follow a foreign policy oriented to the West,
European Scientific Journal April 2016 edition vol.12, No.11 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431
102
Georgia and Ukraine have been exposed to Russia’s power policy.
Consequently, while some countries have become dependent on Russia
because of the economic and political opportunities that it seems to offer, the
countries such as Azerbaijan, Georgia and Ukraine have gradually been
moving away from it.
Russia has succeeded to make Europe dependent on it in terms of
natural gas. Moscow’s energy policies have yielded some results which have
consolidated Russia’s power in the region. However, it cannot be denied that
these policies also include many risks. For example, The EU countries that
are dependent on Russia get confused by its practices such as cutting off
Ukraine’s gas or increasing the gas price that it used to pay. Therefore, they
try to import natural gas from other countries in order to come over this
dependency problem. This is the fundamental reason behind the projects
which aim to transport the Azeri and Turkmen gas to Europe. Moreover,
after the removal of the sanctions imposed on Iran, this country can be an
alternative to Russia for Europe since it can both supply natural gas and
become a transit country to transport the Central Asian energy resources to
Europe.
On the other hand, it is impossible for Russia to do the same thing to
all of its clients as the one it did to Ukraine. It would let Russia’s
trustworthiness be interrogated and deprive it of the income it generated
from the energy industry. This is also the reason behind the fact that although
Russia imposed certain economic sanctions on Turkey after the planecrisis, it
could not use its natural gas card.
Finally, it is necessary to point out that Russia’s great energy
resources are both an advantage which constitutes the great power that it has
and a soft belly waiting to be discovered. Russia’s economic power and
foreign policy have become dependent on global energy prices. Although
energy prices have been high in the new millennium so far, they show the
signs of decreasing nowadays. If this decreasing trend continues in this
manner, the Russian economy may get weaker as in the 1980s and 1990s and
result with being passivated inits foreign policy again.
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Image 1: Russia’s Oil and Natural Gas Pipelines
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2016