News Analysis: New Cold War With Russia Brewing Over Oil and Gas

By Paolo Pontoniere, New America Media
Friday February 23, 2007

A new Cold War is under way, but unlike the conflict of the Reagan era it is not a fight for military supremacy but rather for gaining control, directly or through commercial proxy, of energy resources. 

At the heart of this new conflict are Western attempts to diffuse Russian President Vladimir Putin's drive to transform his country into a new oil and gas superpower with vast bargaining power with the European Community. Russia is already the world's eighth largest producer of crude oil and the first of natural gas. 

Most recently, UK authorities blamed Russian intelligence for the assassination of Alexander Litvinenko, a former KGB spy, who had accused Vladimir Putin of leading an autocratic, murderous and corrupt government. Litvinenko was a figure in the struggle between the Putin government and Russian oligarchs (whom Western powers favor) for the country's most prized possessions—the oil and gas fields controlled by the Russian oil companies, the state-controlled Gazprom and the privately held Yukos. 

Litvinenko's assassination nearly coincided with the signing of a commercial agreement between Gazprom and ENI-Italy's largest energy conglomerate—for the distribution of natural gas to Western Europe. The first of its kind, the agreement would allow Gazprom to operate independently under the supervision of the Italian partner, which would be tantamount to the Russian giant selling its product directly to consumers in Western Europe, bypassing EU's regulatory constraints. 

Western powers have come to despise what they see as Russia's heavy-handed form of capitalism, as in the case of mining rights to the Arctic sea floor, which is believed to hold vast oil reserves. According to Moscow, under the newly operating United Nations Convention on the Law of the Sea, more than 50 percent of those submerged resources belong to Russia. This assertion has compelled other powers -- such as Denmark, Norway, Canada and Iceland—to stake their own claims to some of the same underwater territories. The controversy is leading to an increased militarization of the Arctic, with Russian battleships often confronting the vessels of oil developers and Western navies. 

“Putin has decided to make a huge energy superpower out of Russia and there's almost nothing that can stop him,” says Robert Hueber, an analyst at the Centre for Security and International Studies. “Unless something slows him down, there's no way for the West to prevent him from putting his hands on some of the most prized resources of the planet.” 

Although China's higher profile in Africa is providing cause for concern to the United States and its allies, it is Russia that generates their strongest reactions. They believe Russia is using its energy clout for geopolitical gains, especially in the regions that were once under the Soviet control but are now independent countries. 

Western powers have been vehemently denouncing Russia for last year's rows with Ukraine and Belarus over the price of gas. Russia temporarily shut down its gas and oil shipments to these countries as a result of the quarrel. The action in turn caused great worry and anger in Western Europe, which imports respectively 30 percent of its oil and 40 percent of its gas from Russia. 

In some countries like Poland, Finland and Slovakia, imports account for more than 70 percent of consumption, and in Hungary the percentage soars above 89 percent. Reacting to the shutdown, Germany’s Chancellor Angela Merkel said Russia had lost its credibility as an energy partner. 

Western analysts have also accused Moscow of conspiring to turn the Shanghai Cooperation Organization—an intergovernmental body composed of China, Russia, Kazakhstan, Kyrgyzstan and Tajikistan, with India, Pakistan and Iran as invited observers, meant to foster good neighborly relations and deal with issues of Central Asian security—into a sort of “OPEC with nuclear weapons,” as described by Simon Sweeney, director of the International Studies Programme of York St. John University College in the United Kingdom. 

Not all analysts, however, are convinced that Russia wants to wage a New Cold War with the West and in particular with the United States. 

“Someone is still fighting the Cold War, but it isn't Russia,” Mark Almond, a professor of modern history at Oriel College, Oxford, wrote in The Guardian. “The chill is still coming from the West.” 

Thomas Friedman, a devout pro-West observer, agrees. Should Moscow, he writes, really decide to leverage its energy resources to subjugate the international community, it would have other, sharper arrows in its quiver. 

Russia could, as many of its hardliners have suggested, ban products from Moldova and Georgia or block the transit of their unemployed jobseekers to Russia, thus causing these countries' economic collapse. Moscow could also destabilize Georgia, Ukraine, Moldova and Kazakhstan and then agree to annex—as these populations have requested—their pro-Russian minorities living near the borders of the old Motherland. 

In the case of Georgia and Kazakhstan, destabilization could be extremely hard on the United States and its Western allies, as it would totally compromise direct access to the immense oil resources of the Caspian region—on which the West is greatly reliant—and their transfer to Western ports. 

Thus, for now, and short of an all-out confrontation with the Old Bear, the Western powers can only lash out at the feared expansionism of the New Oil Czar by accusing Moscow of renewed charges of murderous plots and dark conspiracies. 


Paolo Pontoniere is a New America Media European commentator.