Russian oil spat is a stark warning to the world

News that Russia has suspended oil shipments to Belarus should give the rest of Europe cause for concern. It shows that more than ever before the country is willing to use its commodities leverage to ensure cooperation, even of its allies.

The collapse of commodities prices in July 2008 illustrated the true vulnerability of the Russian economic growth story: in the second half of 2008 the price of crude oil fell from almost $150 a barrel to under $33 a barrel, forcing the government to take a huge chunk out of its currency reserves to stave off a rouble collapse.

While the fall was almost catastrophic, it appears to have done little to dampen Russia’s swagger, which is riding comfortably once more following the sharp snapback of commodities prices. Like the gas dispute between Russia and the Ukraine in January 2009, Belarus is a further example of the negotiating technique employed by the Putin government—a stark warning that the country is once again willing to rile friend and foe alike to achieve its goals.

This is not extraordinary in itself; the standoff with Belarus has been rumbling for some time with similar measures taken against the country in January last year. The significance this time, however, is that it marks a return to a style of international engagement most notably marked in recent years by the impasse between America and Russia over the missile defence system.

In September 2009 Barack Obama abandoned his predecessor’s controversial plans to build missile defence bases in Poland. The move was largely seen as part of the conciliatory effort started by Hillary Clinton’s “reset” button given to Sergei Lavrov, Russia’s Foreign Minister, in March earlier that year.

Though initially greeted with cautious optimism on the Russian side, the posturing of the past few weeks would suggest that Moscow feels there could be more to be gained from the Obama administration’s appeasing tones.

In December Putin was reported as saying that Russia needed to develop offensive weapons systems to counter the threat of a missile defence system. His claim that certain international partners felt that they could “do whatever they want” was as thinly veiled a barb at America as he could have gone without sparking a war of words.

While commodity disputes between Russia and its erstwhile Soviet satellites are perhaps to be expected, especially with Russia’s own domestic gas prices still significantly lagging the level paid by its export customers, the broader implications should not be ignored. It would be politically disastrous for Obama to be seen to be bullied into further concessions by the Kremlin, but by failing to address Putin’s posturing the two sides also risk slipping back into the old, unproductive enmity of the recent past.

The current negotiations on a successor to the Strategic Arms Reduction Treaty (START) could therefore prove key to setting up a manner of discourse between the two countries. It could also pave the way to forming a cogent and consistent policy of the world’s two major nuclear powers towards Iran’s nuclear ambitions—something conspicuously lacking up to this point.