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Energy Aggression
What follows is my latest and probably last post as guest blogger on the Danger Close blogsite. You can find the entire blog HERE and the exchanges that got me the invitation HERE.
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Energy Aggression
Imagine “energy aggression” as being the equivalent of military aggression except that afterwards you don’t have to clean up all that blood and fix all those broken machines of war. Energy aggression is cheap, it has an immediate effect on the entire population of your luckless victim and it is far less likely to provoke a response from that victim’s strategic partners. It doesn’t play well on the news, there are no photos of corpses at craters. It’s all good if you’re the aggressor.
It’s cold in Kiev today, New Year’s Day 2009. It’s always cold there in January but this year it’s special, special because today you can’t get warm unless you have wood or coal (or dried buffalo dung, you get the picture) heating fuel. And even if you do, you’re probably already running out.
Russia has turned off the gas. They have a couple of good reasons to spin, yes they do. Ukraine won’t agree to the 2009 price increases that Russia is demanding. Ukraine may owe $1.5 billion in past energy bills, too. And oh yes, Viktor Yushchenko is pro-west.
Let’s dispense with the second reason first. Ukraine may have paid that bill. They say they have or at least “the check’s in the mail”. Russia says “Have not!” It’s the sort of squabble that is usually left to deputy ministers… unless it furthers national policy to elevate a past due account issue to an international crisis. Unless it becomes an element of energy aggression.
As a financial justification for turning off the gas it is specious. Russia also says that Ukraine owes $600 million in unpaid fines. 40% more in fines? Why not make it $600 billion? The result won’t change and the fines won’t get paid, exactly as intended.
What about those proposed price hikes? Recent energy price trends in the west have been lower, not higher, with gas WAY lower. There is a left-handed tie-in (pardon me, lefties) with the topic at hand. As Gabe pointed out so well, “… Europe is VERY keen on finding a way out of Russia's petrodictatorship (which btw isn't looking so good now with Gazprom approaching bankruptcy faster than GM).”
But that isn’t energy aggression, not really, unless extortion is aggression. You decide. What it is, however, is the predictable (and predicted) result of reliance on a single supplier of critical and irreplaceable resources. This is what it’s like to be victimized by an energy aggressor: “Give me everything I want or I’ll freeze your children.”
The purposes of energy aggression are to extort unreasonable compensation or compel regime change. It’s what you do when a submissive neighbor and patsy resource colony refuses to submit to demands that you have taken for granted for 90 years. It’s what you do when neither your poisons nor your policies carry the day and an Orange Revolution succeeds in the face of all odds.
When Viktor Yushchenko didn’t die and the Russian-backed opposition to the Orange Revolution failed, what was left of Russia’s relationship with Ukraine? It could have simply acted as a responsible citizen of the modern community of nations. But noooo… (thank you, John Belushi). Instead it chose extortion and energy aggression by way of a 232% hike in the price of gas to Ukraine.
Think about that for a minute, a 232% hike at a time when the price of gas is going down. Reasonable? You make the call. Of course, if Ukraine would just return to its lapdog role and get rid of the now scar-faced Mr. Yushchenko, maybe something could be worked out. Energy aggression. Regime change.
Am I guilty of speculation? Sure, that’s what you do when you’re trying to understand potential outcomes rather than studying history. There are object lessons to consider, though.
Georgia’s Rose Revolution was a success by most measures. Certainly the Georgians are proud of it. The Russians, not so much. What the Russians did next was (drum roll)… repeatedly raise energy prices to the point that it made sense for Georgia to negotiate deals with suppliers like Azerbaijan and Iran. Georgia had choices then. Russia spins that it was only looking out for its newly-minted citizens in its neo-colonies of South Ossetia and Abkhazia when it invaded in August. Really? Then why bomb the two pipelines? May I suggest, as a lesson to the Azeris?
Russia was NOT NOT NOT looking to teach Georgia any object lessons in August, they assert. That bombing of the BTC? “Hey, we missed didn’t we? No harm, no foul.” If they hadn’t missed – and Russia bombed it repeatedly – it would be as cold in Kutaisi as it is in Kiev today. And pay no attention, none whatsoever, to Mr. Putin’s strangely sado-erotic desire to hang Mr. Saakashvili by his balls. “Heck, I was just funnin’.” Sure thing, Mr. Putin.
That’s Armenia over there, playing its familiar role of lapdog resource colony of its Russian overseer. The same gas, through the same pipeline, costs less in Armenia than in Georgia and that situation is unlikely to change. Russia also gets giant military bases there, “just in case”. In case, say, Armenia wants to bargain gas prices with Iran? Armenia doesn’t have the choices that Georgia has. Armenia’s treasury and its future have been stolen and are not likely to be returned any time soon. Energy aggression is brutally effective.
It doesn’t take an incisive mind to discern patterns here. This isn’t subtle. Russia uses energy aggression to get what it wants. Period. It backs it up with periodic military aggression against weaklings under its pretext of the moment, just to remind folks what kind of mindset they’re dealing with in Moscow.
Sure, it won’t be quite as easy in Poland or Germany and military aggression is less likely there. It won’t be necessary. Russia has tried out this show on the road and it plays quite well. Time for Broadway, if not now then soon enough. Russia has time and it gets cold every winter. Closing a valve is so much cheaper than crossing a border.
Ukraine is an object lesson. I previously wrote that Georgia is an energy lesson. Is it an important one? You decide. Should you care? Absolutely. As I read elsewhere, "Man, I hate being right."
Did I mention that it’s cold in Kiev today?
__________
Energy Aggression
Imagine “energy aggression” as being the equivalent of military aggression except that afterwards you don’t have to clean up all that blood and fix all those broken machines of war. Energy aggression is cheap, it has an immediate effect on the entire population of your luckless victim and it is far less likely to provoke a response from that victim’s strategic partners. It doesn’t play well on the news, there are no photos of corpses at craters. It’s all good if you’re the aggressor.
It’s cold in Kiev today, New Year’s Day 2009. It’s always cold there in January but this year it’s special, special because today you can’t get warm unless you have wood or coal (or dried buffalo dung, you get the picture) heating fuel. And even if you do, you’re probably already running out.
Russia has turned off the gas. They have a couple of good reasons to spin, yes they do. Ukraine won’t agree to the 2009 price increases that Russia is demanding. Ukraine may owe $1.5 billion in past energy bills, too. And oh yes, Viktor Yushchenko is pro-west.
Let’s dispense with the second reason first. Ukraine may have paid that bill. They say they have or at least “the check’s in the mail”. Russia says “Have not!” It’s the sort of squabble that is usually left to deputy ministers… unless it furthers national policy to elevate a past due account issue to an international crisis. Unless it becomes an element of energy aggression.
As a financial justification for turning off the gas it is specious. Russia also says that Ukraine owes $600 million in unpaid fines. 40% more in fines? Why not make it $600 billion? The result won’t change and the fines won’t get paid, exactly as intended.
What about those proposed price hikes? Recent energy price trends in the west have been lower, not higher, with gas WAY lower. There is a left-handed tie-in (pardon me, lefties) with the topic at hand. As Gabe pointed out so well, “… Europe is VERY keen on finding a way out of Russia's petrodictatorship (which btw isn't looking so good now with Gazprom approaching bankruptcy faster than GM).”
But that isn’t energy aggression, not really, unless extortion is aggression. You decide. What it is, however, is the predictable (and predicted) result of reliance on a single supplier of critical and irreplaceable resources. This is what it’s like to be victimized by an energy aggressor: “Give me everything I want or I’ll freeze your children.”
The purposes of energy aggression are to extort unreasonable compensation or compel regime change. It’s what you do when a submissive neighbor and patsy resource colony refuses to submit to demands that you have taken for granted for 90 years. It’s what you do when neither your poisons nor your policies carry the day and an Orange Revolution succeeds in the face of all odds.
When Viktor Yushchenko didn’t die and the Russian-backed opposition to the Orange Revolution failed, what was left of Russia’s relationship with Ukraine? It could have simply acted as a responsible citizen of the modern community of nations. But noooo… (thank you, John Belushi). Instead it chose extortion and energy aggression by way of a 232% hike in the price of gas to Ukraine.
Think about that for a minute, a 232% hike at a time when the price of gas is going down. Reasonable? You make the call. Of course, if Ukraine would just return to its lapdog role and get rid of the now scar-faced Mr. Yushchenko, maybe something could be worked out. Energy aggression. Regime change.
Am I guilty of speculation? Sure, that’s what you do when you’re trying to understand potential outcomes rather than studying history. There are object lessons to consider, though.
Georgia’s Rose Revolution was a success by most measures. Certainly the Georgians are proud of it. The Russians, not so much. What the Russians did next was (drum roll)… repeatedly raise energy prices to the point that it made sense for Georgia to negotiate deals with suppliers like Azerbaijan and Iran. Georgia had choices then. Russia spins that it was only looking out for its newly-minted citizens in its neo-colonies of South Ossetia and Abkhazia when it invaded in August. Really? Then why bomb the two pipelines? May I suggest, as a lesson to the Azeris?
Russia was NOT NOT NOT looking to teach Georgia any object lessons in August, they assert. That bombing of the BTC? “Hey, we missed didn’t we? No harm, no foul.” If they hadn’t missed – and Russia bombed it repeatedly – it would be as cold in Kutaisi as it is in Kiev today. And pay no attention, none whatsoever, to Mr. Putin’s strangely sado-erotic desire to hang Mr. Saakashvili by his balls. “Heck, I was just funnin’.” Sure thing, Mr. Putin.
That’s Armenia over there, playing its familiar role of lapdog resource colony of its Russian overseer. The same gas, through the same pipeline, costs less in Armenia than in Georgia and that situation is unlikely to change. Russia also gets giant military bases there, “just in case”. In case, say, Armenia wants to bargain gas prices with Iran? Armenia doesn’t have the choices that Georgia has. Armenia’s treasury and its future have been stolen and are not likely to be returned any time soon. Energy aggression is brutally effective.
It doesn’t take an incisive mind to discern patterns here. This isn’t subtle. Russia uses energy aggression to get what it wants. Period. It backs it up with periodic military aggression against weaklings under its pretext of the moment, just to remind folks what kind of mindset they’re dealing with in Moscow.
Sure, it won’t be quite as easy in Poland or Germany and military aggression is less likely there. It won’t be necessary. Russia has tried out this show on the road and it plays quite well. Time for Broadway, if not now then soon enough. Russia has time and it gets cold every winter. Closing a valve is so much cheaper than crossing a border.
Ukraine is an object lesson. I previously wrote that Georgia is an energy lesson. Is it an important one? You decide. Should you care? Absolutely. As I read elsewhere, "Man, I hate being right."
Did I mention that it’s cold in Kiev today?
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