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Russia: Breaking the bear hug

How Europe can end Russia’s grip on gas

by Dieter Helm / April 24, 2014 / Leave a comment
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Published in May 2014 issue of Prospect Magazine

Russian President Vladimir Putin in 2011 at the opening of the Nord Stream pipeline, which supplied Germany but bypassed Ukraine

© Bloomberg via Getty Images


Russia’s southern and eastern borders have been in a permanent state of flux since Catherine the Great first annexed Crimea in 1783. The latest opportunist annexation is but one more episode in a long history. Joseph Stalin gained almost all the territory Russia coveted in what he regarded as its backyard. Mikhail Gorbachev then lost most of it. The game is now being rejoined in Georgia, Ukraine, Moldova and possibly in the Baltic states too. Europe’s eastern borders have rarely been settled for long, and they are not now.

The Russian strategy has been financed in large measure by oil, and now gas, too. Oil kept the Soviet economy afloat. Having witnessed the collapse of the Russian economy under Boris Yeltsin in the 1990s as oil prices plummeted, Vladimir Putin understood that control of Russia’s mineral resources is essential to rebuilding the country’s standing in the world—and with it redressing what he sees as the greatest political catastrophe of the 20th century: the breakup of the Soviet Union. With a declining population and a sclerotic economy plagued by corruption, it doesn’t have much else. Putin’s graduate thesis on natural resources and strategic planning, which he completed at St Petersburg University in 1996, spelt all this out.

This poses a challenge to Europe, which needs to develop a coherent strategy for reducing its dependency on Russian gas. While European leaders have dithered, Putin has been utterly si…

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Comments

  1. Terence Hale
    April 25, 2014 at 19:48
    Hi, Russia: Breaking the bear hug. As a simple man my observation in respect to Ukraine are America provocted the situation. Being active in Ukraine for some time its objective are unclear as also Mr. Obama alienating China by his visit to Japan. It was strange that the President and the Vice President were both out side America at the same time. Russia has a strong hand with gas as the alternative don”t work for example exports from America most lands have not the technology to accept docking of such. Mr. Cameron's hope in fracking has frightened investors because of sink hole, environmental and legal problems. Using sun energy from where the sun it with wireless energy transmission seems to be ignored. One get the impression Mr. Obama with a policy of destabilisation will help America trade which is on the floor as the economy. America can certainly not afford a war, Russia can.
  2. G H P
    April 29, 2014 at 13:39
    Too much mundane stuff about the origins of the problem and not enough about the solution. And it's debatable to what extent Putin is now reacting, somewhat emotionally, to what he sees as Western encroachment rather than following a reasoned policy from way back.

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About this author

Dieter Helm
Dieter Helm is professor of energy policy at the University of Oxford and fellow in economics at New College, Oxford
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