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Do Russia's Energy Projects, Foreign Policy Move In Tandem?

  • Bruce Pannier

A Gazprom-owned refinery in Serbia. Gazprom rapidly expanded its European holdings in the 1990s

A Gazprom-owned refinery in Serbia. Gazprom rapidly expanded its European holdings in the 1990s

How closely connected are Russia's energy exports and the Kremlin's foreign policy? Is it possible to predict the ebb and flow of Russian decision-making based on the cost of oil and natural gas?

Anita Orban, the director of the Budapest-based Constellation Energy Institute, believes it is. In her new book, "Power, Energy, and the New Russian Imperialism," Orban looks at nearly two decades of Russian policy in Eastern and Central Europe and how the price of energy resources has helped determine the Kremlin's foreign-policy advances and retreats.

In the book, Orban unravels the close ties between Russian energy companies like Gazprom and LUKoil and the Kremlin's foreign policy goals. "This is the first comprehensive book which argues that Russia is using national energy companies as a tool of its foreign policy vis-a-vis countries who are NATO and EU members, like Poland, Slovakia, and Hungary," she says.

Orban argues that the Kremlin's goals in Central and Eastern Europe are to reassert as much of its Soviet-era influence as possible. Russian energy companies, she says, are both the vehicle and the fuel for this re-expansion, providing the needed revenue to carry out its plans.

She identifies two waves of Russian foreign-policy advances in Central and Eastern Europe. "When we look back at the last 20 years, we can see periods where Russian energy companies were very active in Central-Eastern Europe," Orban said. "And all these periods are when the Russian state was strong enough... financially to be able to use these companies and to execute its foreign policy aims."

The first wave was between 1994 and 1996, when Gazprom began setting up a range of joint ventures across Central and Eastern Europe for natural gas sales that rapidly escalated into a flurry of pipeline projects.

From there, new initiatives by Russian energy companies dropped to "literally almost nothing," Orban says. But when Vladimir Putin became president in 2000, the second wave of the energy-politics tandem began. As Putin consolidated state power, tax revenues skyrocketed, and Russian companies once resumed their march across Europe.

Orban does not credit Putin with being the force behind the second wave. She says the notion of energy companies as tools of the Russian state was already well established in the 1990s, under Boris Yeltsin.

The author says the model she developed in "Power, Energy, and the New Russian Imperialism" indicates that the countries of Central and Eastern Europe will witness a slowdown in Russian pipeline and purchasing deals as energy prices drop and the Kremlin scales back its policy ambitions.

While Moscow will focus on fewer energy projects, Orban says, it will remain committed to those it considers essential to Russian foreign policy. One such project is be the South Stream natural gas pipeline.

"It will really enhance the dependence [on Russia] of the whole Southeastern European region - Bulgaria, Romania, Serbia, Hungary -- and also the neighboring countries...for several decades."

Those countries are already heavily or totally dependent on Russian gas imports. The EU-backed Nabucco pipeline project, which could provide the region with an alternative to Russian supplies, recently received financial support from Brussels with an aim to start work.

But Orban says if energy prices once again begin to rise, Gazprom will have to ensure that work on South Stream outpaces Nabucco -- allowing Russia to keep its grip on Southeastern Europe and expand even deeper into Europe.

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