Putin’s Gazprom: An unhealthy mix of business and politics

Mohammad I. Aslam

129033699 300x238 Putin’s Gazprom: An unhealthy mix of business and politics The Russian Federation is a major player when it comes to natural gas. Not only are they in possession of the largest proven reserves, which account for nearly a quarter of the world’s total reserves; but they are also the biggest exporter of the commodity by supplying over fifteen percent of global gas production.

The relationship they have with Europe is much more intimate — and not merely because of its geographical proximity, of course.

Since 2010, the Russian state’s main gas exporter, Gazprom, is most of Europe’s energy lifeline. It accounts for nearly one-third of the total gas imports to Western Europe, which in 2011 meant that Gazprom’s share in the European market grew to twenty-seven percent — an increase of four percent from the previous fiscal year.

But for all the gas reserves this country may hold, the prospect of such a critical energy resource being utilized as a manipulative political tool in a zero-sum competition against an already suspicious west; is of serious concern.

Perhaps this explains the cautious response of many western nations to the recent electoral victory, although marred with accusations of fraud and corruption, that could potentially culminate in seeing former strongman Vladimir Putin return to the Kremlin until 2024.

His infamous 2000 campaign to rein in his county’s Oligarchs and, per his policy of the so called national champions, establishment of state control in strategic companies — inevitably meant the government having a controlling stake in its most prized asset: Gazprom.

Once in position to pull strings in the naturally monopolistic gas game, the former KGB spy set his sights on extracting exactly the type of concessions needed to slowly bring his country back onto a pedestal that was somewhat reminiscent of the Soviet Union’s heyday.

Putin seemed to have calculated early on that in order to gain leverage in a target country, the key lay in making inroads into that country’s vital energy infrastructure. This could then be developed further into a political presence and long-term energy partnerships favourable to Moscow.

And there could not have been a more quintessential example of this than the relationship with Germany and its former chancellor, Gerhard Schroeder.

In the dying months of his chancellorship in 2005, he lent his support to the secretly conceived North Stream pipeline project which would supply Russian gas directly to Germany and thereby bypass transit countries.

Even if we put aside the detrimental affect this had on the energy security of countries like Poland and fact that it made Germany dependent on Russian gas supplies more than ever; upon stepping down from power he dubiously accepted Gazprom’s nomination to head North Stream’s shareholders committee and would later head the consortium that built the pipeline itself.

The idea behind the Russian thinking was to use lucrative energy deals not only to gain commercial profit, but more importantly to promise the steady flow of cheap gas a means to make top German officials into virtual Kremlin lobbyists and thereby allow Moscow to have indirect influence in European decision making as well as exemptions from EU regulations.

If ever there was need to exemplify the use of gas resources to lock top European leaders into Russian influence, this was it.

In January 2009, whilst much of Europe was shivering with icy temperatures, the daunting reality of a Putin-controlled Gazprom could not have been made more transparent.

In what was ostensibly the culmination of a long-running dispute over price hikes with the ex-Soviet state of Ukraine, Gazprom unilaterally ceased supplying its market with gas — which inevitably meant disruptions or complete cut-offs to eighteen European countries whose gas reached them by virtue of being transported via Ukrainian pipelines

Although the matter was resolved and the steady flow of supplies soon continued, the audacity of what the Russians did, especially as it transpired to have been a political dispute with Ukraine’s western leaning President, was not going to disappear anytime soon.

Vladimir Putin’s mission is to make Russia once again become a regional player. Exploiting his nation’s vast energy resources as a foreign policy tool, especially at a time when NATO’s expansion, the U.S. missile shield, revolts in the Middle-East and the Russian economies struggle to overcome the affects of a global slowdown — would be a common political ruse.

And the exploiting of the monopolistic gas business, of which he now has plenty of discretion, has long been mentioned by some analysts as having strategic implications for western alliances.

According to Michael Klare, author of Resource Wars: The New Landscape of Global Conflict, “there is a fear in the United States that the more Europe becomes dependant on Russian gas, the more it will become beholden to Moscow…that it fall under the sway of Moscow under the political realm and this will somehow undermine NATO”.

But even as the Kremlin readies for a no doubt a lavish ceremony to mark Vladimir Putin’s third inauguration as President on May 7th this year, the monopolistic policies we’ve been accustomed to seeing from Gazprom over the years should underscore what the next round of an unchecked Putin Presidency might look like.

The ability to arbitrarily place a chokehold around the throat of EU energy interests as a pressure tactic to regain Russia’s long lost influence — may one day become a horrible reality.

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  • Philip

    I rate Putin and admire the Russians,good luck to them

  • evelinev

    Another obvious reason to reduce our dependency on imported fossil fuels, and develop our renewables technology and industry.

    And no, fracking is NOT the answer. Apart from possibly causing earthquakes it requires enormous amounts of our precious groundwater resources to release the gas, in a time when we already have hosepipe bans in large parts of the country. It can also pollute groundwater if the casings fail.

  • Lady G-force

    The prospect of Europe becoming beholden to Moscow is all the more reason to applaud and follow the current ambitious German policy of rapidly developing renewable energy resources.

  • eternalsceptic

    russia pursuing its own interests. Well I never

  • Lela2

    The latest news, I don’t see that in the British press:

    Lugovoy not guilty in Litvinenko death – British lie detector
    Lugovoy ‘could not condition himself not to react to lie
    (Paste the links and remove one more dot after

  • tomthumb015

    Not sure the Russians will ever shake off there Kremlin state mentality, and this definitely applies to there gas and oil industries. Run by the state and corrupted by the state; also with out oil and gas, I am sure Russia would be bankrupt as a country.

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