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Russia Using Energy Resources for Political Advantage, Expert Says

April 22, 2005

(Washington, DC--April 22, 2005) Russia's status as a "nuclear power and energy state" enables Russia to exercise political power over its neighbors, according to retired U.S. Ambassador Keith Smith. Smith, now a Senior Associate at the Center for Strategic and International Studies (CSIS), told a RFE/RL audience recently that this energy monopoly is a serious challenge, because Russian companies are not transparent and exacerbate corruption in the region.

In a report, authored by Smith for CSIS and titled "A New Stealth Imperialism? Russian Energy Politics in the Baltics, Poland and Ukraine," Smith describes how the former Soviet states have remained dependent on Russia's oil and gas and the problems that have resulted from that dependence. Drawing on material from that study, Smith told the briefing audience that energy companies are used as arms of Russian foreign policy. For example, from 1997 to 2000 Russia cut off oil deliveries to Lithuania's oil refinery at Mazeikiai at least nine times, at a time when the Lithuanian government was privatizing the refinery and hoping to attract Western investors. Lithuania's attempts to buy substitute oil from Central Asia were thwarted when Russia denied access to oil pipelines for transshipment. Smith said Vladimir Putin wrote a now-classified policy paper in 1999 (before he became President), advocating the use of energy resources to advance Russia's political interests. Smith also said it was noteworthy that the number of former Soviet intelligence officers working in Russia's energy sector has increased under Putin, from 50 at the time of Soviet leader Mikhail Gorbachev to over 6,000 today.

The lack of transparency in Russia's energy sector has amplified corruption in these neighboring states, where "daughter companies" of the Russian energy giants serve as middlemen to determine the price, availability and distribution of energy. According to Smith, many local politicians are long-time associates of the Russian energy companies, who often have ties with Russian counterparts that date back to the Soviet era.

Smith said that the problem of energy dependence has not received adequate attention from the international community. European Union (EU) membership has increased the dependency of Central and East European countries on Russian energy, because EU environmental policies have already forced the closure of Soviet-era built nuclear power plants and threaten the future of oil shale mining. Smith suggested that, if the EU could convince Russia to sign an "energy charter" requiring the building of privately owned pipelines, the resulting competition for oil and gas would help to normalize the energy markets -- and the politics -- of the region.

Smith provided other suggestions for how the international community could help the region become less dependent on Russian energy sources. They include: backing off of closing Lithuania's Ignalina-2 nuclear reactor; building pipelines to bring in Norwegian gas, eliminating national barriers to the sale of electricity, and connecting these countries to Western Europe's energy grid. He also urged more cooperation with anti-corruption watchdog groups, such as Transparency International. To hear archived audio for this and other RFE/RL briefings and events, please visit our website at www.regionalanalysis.org.