Russian gas and European energy security

I've been struggling for two weeks with the article in the Economist about Russian gas (A bear at the throat) as it takes legitimate (if often poorly informed) worries about Russia's sometimes blustering behavior on the energy markets to peddle the usual insane crap that market liberalisation is the only solution to promote energy security (I'll get to why I think it is insane below).

But two days ago, I spoke at a debate on Gazprom at IFRI, a French think tank. That conference was organised after the publication of two quite different articles about Gazprom:

Gazprom as a Predictable Partner. Another Reading of the Russian-Ukrainian and Russian-Belarusian Energy Crises by Jérôme Guillet
Gazprom, the Fastest Way to Energy Suicide by Christophe-Alexandre Paillard

The titles give a hint that the papers start from pretty different positions - as you can see in the executive summaries of each that I am posting below. Before jumping in, I'll flag that I am identified as an Oil Drum contributing editor in the paper, so the good name of the site is slowly spreading around...

The recent crises over oil & gas deliveries from Russia to Ukraine and Belarus have triggered alarm and virulent criticism in the West. This article describes how these conflicts are in fact not very different from those that took place in the early 1990s and reflect behind-the-scene conflicts between powerful factions inside the Kremlin and in Ukraine rather than the exercise of an “energy weapon.” In the context of a European energy policy driven by Britain’s panic at becoming a gas importer and by the ideological zeal to liberalize, the West should worry less about the exercise of a purported aggressive geopolitical strategy and more about Putin’s lack thereof, and his inability to control his warring lieutenants. Above all, the West should stop considering that Russia owes Europe any gas beyond its contractual obligations, which it fulfills with alacrity.

Jérôme Guillet is an investment banker in Paris, specialized in structured finance for energy projects, and the editor of the European Tribune, a website on European politics.

Russia is an unavoidable actor in world energy geopolitics. It is also the biggest energy partner of a European Union (EU) that is becoming ever more dependent on outside sources for its energy needs. However, the future of Russia's largest company-Gazprom-and the development of its future production capacities are at the center of a complex financial and political game dominated by numerous uncertainties, including Gazprom's actual reserves, its ability to invest in exploration and production, and its very capacity to develop production. Indeed, back in state hands, Russian gas and oil companies-Gazprom included-do not appear to be in a position to meet their future production commitments. Gazprom's ability to honor its contracts with gas companies in the EU is in fact already the subject of numerous interrogations.

Christophe-Alexandre Paillard is Head of the Industrial and Technological Trends Department within the French Ministry of Defense's Strategic Affairs Office.

But the most interesting thing, in fact, is that both in our papers, and during the debate, we ended up agreeing on many, if not most, things, the most important of which being:

  • European energy policy is inexistant and what passes for policy (the liberalisation of markets) is indeed considered insane by all;
  • Russian behavior is driven to a large extent by the personal strategies and interests of a few individuals at the very top. There is no overarching geopolitical plan, but a lot of political infighting and short term asset-grabbing strategies. That may be even more worrying in itself than purposeful strategies to use the "energy weapon", but the motivations are different. It is true however that the global energy situation allows Russia to be a lot more assertive, or even brutal, on the international stage, and there's little that can be done about that;
  • there is indeed a lot of uncertainty of what medium and long term production of gas in Russia will be - because of the decline of its existing "workhorses" (the huge fields that current provide most of its production) and the lack of incentives for Gazprom and/or its managers to invest in upstram assets. There are more or less optimistic views on this, but the question definitely exists for all - and brings us back to the lack of European strategy in the face of uncertainty.

The unanimous conclusion is that Europe can actually do something: it controls its own demand, and should focus its efforts on that.

That would mean, for instance, having an energy policy that does not encourage almost exclusively the construction of gas-fired power plants... And yet that's exactly what liberalisation does, as I explained in in this article in the Financial Times, by making it easier to invest in generation assets that are cheap to finance - i.e. those with lower upfront investment costs and higher running (fuel) costs like gas-fired and coal-fired plants.

Of course, that is a topic that is conspicuously absent from the Economist's article, which must sadly be presumed to better reflect the state of mind of our political and business leaders about European energy and Russian gas than the papers of academics or inlookers.

That article focuses on two things, which will not come as a surprise, despite their inherent contradiction:

  • Europe must take a tougher, more united, line against Russia
  • Europe must break up its cartelised market and open up to real competition in order to provide alternatives to Russian gas;

You can stop here for now; I add below some comments on various offensive bits of the article in the Economist.

:: ::

A bear at the throat

The European Union is belatedly grasping the riskiness of its dependence on Russian gas, but it is disunited and short of ideas for how to reduce it

Again, right from the first sentence, boiling blood. It is not the "European Union" that has decided to be worried about its dependence on Russian gas, it is the UK government, nudged by Cheney & co in Washington. France, Germany and Italy, as well as the Central European new members, who are the main importers of Russian gas in the EU, have long been aware of the the significance of importing large volumes of gas from Russia while being completely or mostly dependent on imported gas for domestic needs, and have managed the issue accordingly. Those Central Europeans that are wary of Russia are happy to use the issue to get the rest of Europe to worry more about Russia, but, in practice, as they are the first to be served on the pipelines, it is impossible to cut them and not the rest of the EU, so the risk for them is actually no worse than it is for France or Germany. Even better, they can 'force' solidarity by simply turning the taps.

Thus, as usual for the Economist, "disunited" just means that not all Europeans are on the US line (inspired by hawks around Cheney and helped by Condoleeza Rice's apparent nostalgia for the Soviets), as channelled by the Blair government (and the Polesall too happy to pile in on anything that can be used to bash Russia).

RUSSIA'S president, Vladimir Putin, must be feeling smug. His strategy of using the country's vast natural resources to restore the greatness lost after the break-up of the Soviet Union seems to be paying off. If power is measured by the fear instilled in others—as many Russians believe—he is certainly winning.

"As many Russians believe"?? Or as the gang in Washington has proven is the only rule they ever follow? Bluster, threats, unilateral action, the odd bombing or occupation of countries, blatant disrespect for the domestic laws of vassals, encirclement by bases, etc... Anybody that refuses to let American oil majors invest in their country declared an enemy and treated as such? Fearmongering at home and attempts at brutish dominance outside have been the trademark tools of the Bush administration. That the Russians respond in kind, especially when they have a strong bargaining position, is hardly surprising nor shocking, if unpleasant from our pespective.

And yet, in this case, to fear him is our choice, because gas trade is a fundamentally bilateral endeavour: the interdependence is mutual, structurally created by expensive infrastructure which hard to replace and impossible to divert to other uses - and codified in long term contracts that reflect the need for each party that the other side perform its obligations for a very long time.

The EU has few ideas for how to deal with its chief energy supplier. “We know we should do something about Russia, but we don't know what,” one Brussels official says. “In the EU we negotiate on the rules, whereas Russia wants to do deals.”

Heh, guess what: the EU does not set the rules for what it does not control. Russia's position is a lot more realistic: the two blocs can only do bilateral deals. But that's a market for you: you only enter into deals that are favorable to you, right? We should never forget this: the Russians have no obligations to sell us any of their gas, only to deliver when they contracted to do so - and they will only contract if it is of any benefit for them. Being bound by EU rules might be beneficial for them, but that's not, as of today, how they see the future of Russia, and there's little we can do about that. Threatening noises are not going to help, there.

Yet dependence cuts both ways. Europe may depend on Russia for half its gas imports, but Russia is dependent on Europe for the bulk of its export revenues. Repeated threats by the Kremlin to divert the flow of gas to China mean little without pipelines that it would take many years to build. Switching off gas to Europe will never make commercial sense for Gazprom. The fear in some EU countries is that commercial interests may one day become secondary to political ones.

A rare moment of sanity in that article (even if it suggests that the disputes with Ukraine and Belarus were about political issues rather than commercial ones, something I vigorously contest and debunked exdtensively in my text above). And yet the Economist continues to encourage the fearmongering and the strategy of alienating the Russians politically, by refusing to take their point of view into consideration, by blatantly provoking them with the missiles in Central Europe, and generally treating them as dangerous neighbors.

If all this is not worrying enough, there is another, more immediate source of concern for the EU: that Russia may be physically unable to produce enough gas to satisfy demand. Even worse than being dependent on a company like Gazprom may be to be dependent on a Gazprom that is short of gas.

The output of Gazprom's three super-giant fields, which account for three-quarters of its production, is declining at a rate of some 6-7% a year. Output from a new gas field brought on stream in 2001 has already peaked. Last year, Gazprom decided to develop a massive field in the Yamal peninsula—frozen and barren Arctic land—but that will take years. Meanwhile, Russia's domestic demand for gas is growing by more than 2% a year. For all its swagger, Russia is short of gas, a problem that is already affecting its electricity-generation capacity. This does not reflect any lack of reserves—Russia has the world's biggest—but rather a longstanding failure to invest enough in their development.

Gazprom has argued that it will invest in new fields only if it can pre-sell the output to Europe. Instead it has been spending lavishly on pipelines and downstream assets.

This reflects the pessimstic view on the long term prospects for Russian exports to Europe, in that the Russians are not doing what they should to deliver all the gas that will be needed (of course, the underlying assumption is that such need itself is not even open for discussion - we need the gas, dammit!). It does reflect an interested agenda as, again, the view that underpins this is that the Russians are really too corrupt to take care of that important business, and they should let "serious" people (like Shell or BP) take care of it.

It also reflects a fundamental ignorance of the structure of the gas business, where the downstream transport infrastructure is the single most important bit of it (being both the most expensive and the most complex, politically and commercially, to set up). Thus blaming Gazprom for investing in export pipelines - and even in distribution capacity at the end of the chain - is like criticizing an icecream merchant for investing in refrigeration capacity...

And it ignores both the way Gazprom behaves (it has always sought to export as much gas as it could), and the point that Gazprom has been repeatedly making (the upfront investments needed to increase production require predictable future flows and thus long term contracts). So far, Gazprom has always produced enough to ensure that it can both export and supply the vital domestic needs. There is no compelling argument yet to say that this will no longer be the case, other than the self-interested lobbying of the Western energy majors and their shareholders. On the other hand, as has been discussed on the Oil Drum (for instance here), there is some doubt on the long term availability of reserves, but that's not the point made by the Economist, which focuses on investment capacity in the medium term (an argument also used for the oil side, to blame the national oil companies and avoid the "peak oil" debate).

Vladimir Milov, the head of the Institute of Energy Policy in Moscow, says that the links between Gazprom and its European counterparts amount to a cartel between wholesale buyers and sellers. The losers in this game are European consumers who are forced to pay gas prices that are several times higher than the wholesale price which their national companies pay to Gazprom.

Considering that gas prices are linked, for very obvious reasons, to oil prices (oil products being the simplest substitute to gas for many of its uses), wholesale prices are what they are. The issue here seems unrelated to Gazprom, in that the Economists lambasts "national companies" (read: the evil French government) for making money off domestic customers. But hey, blame Gazprom anyway.

The best way to increase the EU's energy security would be for it to liberalise its own market and unbundle its national utilities. This would cut profit margins in gas distribution, and thereby reduce Gazprom's appetite for European domestic assets.

I thought the problem was the domination of national markets by former incumbents? Surely Gazprom coming into these markets would provide more competition and lower prices? But in any case, while I understand how that might lower prices for consumers, I fail to see how it would impact in any way wholesale prices, and thus Gazprom's willingness or not to sell us gas.

The European Commission has been urging EU members to break up their vertically integrated energy companies, but France and Germany are resisting. The problem, says the commission, is that national governments do not understand the link between liberalisation and greater energy security.

Or maybe they actually understand it, because they've been working on security for the past 40 years? Liberalisation can help those that did not make the effort to set up long term contracts, diversify sources, build storage capacity to freeride on those that did. No wonder the careful planners are a bit wary of seeing their insousciant neighbors, who have spent the past 30 years scoffing at their prudence while sitting on the North Sea treasure, now claiming their "solidarity" now that the treasure (which they did not share for the greater good of European energy security) is gone.

Origin of natural gas, France. Source: Gaz de France

Source: Financial Times

Europe is also talking of building more LNG terminals that can be stocked by other suppliers.(...) But LNG is expensive, and generally involves inflexible long-term sales contracts. Moreover, the IEA's projections assume that the Europeans overcome their squeamishness about building ugly LNG terminals. Equally improbably, they assume that Russia will not find some way to impede the emergence of rival exporters.

Another unguarded moment of clarity: LNG requires inflexible long term contracts, just like pipelines... It is usually touted as the way to bring spot markets to gas by the most breathless enthusiasts...but in fact it creates almost the same kind of highly interdependant relationships as pipelines. Arbitrage will take place to some extent (by diverting a cargo from one destination to another, when profitable), but will remain a small part of the business.

But the comment about Gazprom being able to "impede the emergence of rival exporters" somehow attributes a lot of power to Gazprom. Or is it an unwlling acknowledgement that Gazprom dominates the European gas market because its gas is, you know,... cheaper? That it's more competitive than alternatives? Hmmm... Of course - that's why we hate them for sitting on that treasury and not letting us grab a slice of the pile.

Russia's ability to cause harm to itself and to others in the cause of proving its greatness should never be underestimated.

Yeah, stupid Russians. Better to blame them rather than ourselves for our inability to even consider burning less of the stuff.

Note that this text is crossposted on European Tribune and on Dailykos

In my own simplified thinking, I find it useful to categorize discussion and concepts on these issues (Euro-Russian energy dilemma) into four categories:

1. Players
1.1. Financial players (i.e. voices heard through FT & Economist)

2.1. Government planners (i.e. voices heard through ministers, official and some think tanks)

2. Motives (or goals)
2.1. Enable more financial opportunities in energy markets (IPOs, take-overs, mergers, price gouging, etc), esp. in France & Germany. That is, possibility to redistribute wealth on the energy markets.

2.2. Ensure a supply of both STEADY and INEXPENSIVE energy in required forms, while minimizing unacceptable risks & dependencies. This is mostly seen, not as an end-goal, but as a tool to ensure economic growth opportunities (energy is and required by wealth).

3. Desired actions (for ensuring achieving goals)
3.1. Liberalize energy markets. Privatize NECs (national energy companies). Open up pricing schemes, long term delivery contracts and bilateral trade relations.

3.2. Diversify energy sources (esp. from various geographical sources). Ensure long term steady contracts (bilateral binding). Sometimes these actions are in conflict with each other.

4. Rhetorics (the way things are portrayed, often unrelated to motives or actions)

4.1. "Russia is untrustworthy".
"Gazprom doesnt play by free market rules"
"EU is in energy death spiral, only solved by liberalization of all energy markets"

4.2. "Russia should keep EU happy (to ensure energy infrastructure worth and future existence of customers)"
"EU will go nuclear energy in a swift transition, if Russia doesnt play ball"
"There is no problem with Russian energy reserves, just some political arm wrestling. Just move along. No need to worry."

I have intentionally left out the Russian side out of this, because of lack of information on my part. I am guessing, that Russian interests are probably plural and non-unified on these issues.

What I have found discomforting and Jerome and other bloggers have on several occasions pointed out, is that the following questions have not been touched in detail (at least in public mainstream discussion, afaik):

I) If energy market liberalization is such a great thing for EU, what explains the end use energy price difference between liberalized UK (fairly high) and say nationalized France (more moderate)?

II) If UK could not produce inexpensive energy with a liberalized market at the time when they still had domestic oil & gas production in significant volume, how would France & Germany be able to do that withOUT the fossil fuels during a time when more unified / big infrastructure investments are more likely to be needed? Is the "solution" to sell the same amount of electricity back and forth in the grid using Enron/California style rules?

III) In a time of decreasing primary energy sources, where will the new energy inputs come from? More nuclear? LNG from Iran? It is impossible to import something which is not there. One cant diversify to countries that do not have anything worth exporting.

IV) What is the non-propagandist view of both Russia's energy reserves AND its future capability (not assumed willingness) to export it, if one takes into account their domestic energy consumption increases? I.e. could they export, which fuels, in what quantity, for how long and where exactly?

V) Is there really no unified understanding of energy challenges within the big EU countries about the energy challenges ahead (and related geo-strategic consequences)? Is it really UK+US trying to pit the rest of old EU against Russia? What about the new entrants to EU? What about the smaller and less energy hungry countries?

VI) Is the bio-fuel talk, goals and investment within EU really just a smoke screen or a minor energy diversion that most politicians can see through? Or do some countries or politicians really believe these are tools for solving energy security, diversification and dependency issue (not to mention global warming)?

I could of course asks smaller country-specific questions, like why are energy companies _guaranteed_ (not just given an opportunity) higher margins on electricity markets, when volatility goes up? This pertains to the Nordpool market and energy companies, some of which have a really distorted "guaranteed lowest price scheme" which enables them to automatically make bigger windfall profits the higher the volatility on the shared electricity pool market. What has this kind of system have to do with "liberalized markets", which we are claimed to have now? Whose benefits is this? Where are the inexpensive energy prices promised?

But I digress, this is about EU, its energy policy (or lack of one) and the muddiness of the public discussion.

To me it looks like we have already been sold full liberalization of the markets, without actually trying to show benefits, or showing actual new solutions to future diminishing primary energy sources. All we have gotten is emotional scare mongering and inflated rhetorics.

That is, emperors new clothes, without anybody calling the bluff (except, Jerome and a handful of others).

In this respect, I really do envy North Americans. At least they have discussion about future supply of energy sources, required investments in infrastructure and actual actions to solve these dilemmas (even if I may not agree with all the discussions and the actions taken to secure supplies).

Or maybe it just looks greener from this side of the fence :)

This Liberal Litany makes me sick. Articles like this seem to have been written by some marketing office at any given corporation. Who owns the Economist btw?

Right now there’s no problem with Natural Gas production in Russian, it is Europe that’s going into decline. Why is that fundamental fact being held from the masses?

These past winters “problems” with Russia are a very good case of the failure of the current Confederation-like EU setting. Would it have been the same if there was only one voice, one point of negotiation between Russia and the EU?

Part of the problem lies in the doubts cast over Russia’s ability (or even will) to comply with the multiple contracts celebrated with multiple European companies. Maybe they signed so many contracts that in the end their gas might not be enough. Well, imagine that on a fully liberalized market. What if Germany and France had themselves dozens of energy companies trying to get that share all at the same time?

Mid/long term contractual compliance will be function of, above all, internal Russian demand. Although current levels of production can be maintained for a long time (maybe two decades) Russian internal demand is engulfing exports. This is one thing European policy makers still have yet to understand – it is not only their demand that grows.

The problem, says the commission, is that national governments do not understand the link between liberalisation and greater energy security.

The problem, I say, is that the vast majority of European electors vote for Christian Democrats or Socialists, but they get a liberal Commission and liberal politics.

Liberal politics were quite popular during the days of plenty. But know that the cornucopia doesn’t look that full anymore, maybe it’s time for community centered politics to replace individual centered thinking. And along the way we may save the EU out of this numbness too.


Your analysis of inter-national energy politics strikes me as being reasonable. Whether liberalization of the European energy transport system is better or worse for Europe than national champions I am not competent to comment on. Your analysis of Gazprom commitment to timely investment in upstream operations is clouded by your views of the big 4 as a political tool.

There is strong evidence already today that there is a significant shortage of gas available to the domestic market. During the very short cold snap this winter businesses around Moscow were basically told to shut-up shop to prevent a brown out. Three energo's in the Volga region (Samara, Saratov and Volgograd) cannot acquire additional gas at any price. They, like the better-advertised demand for gas from the Mayor of Moscow, state that they are willing to pay prices in excess of $100/mcm. Not yet netback parity but getting close to it. That Gazprom refuses to supply them at these prices should provide some comfort to worried Economist readers (and even more concerned FT readers). The price issue is important because it tends to negate the story that GAZP will only produce gas which it can sell at market prices. Albeit that the politics of domestic gas provision requires a supercomputer to process all the competing claims. My focus is on two; inflation and inefficient energy use.

This has policy implications for either Russia or the European Union, or both. We would tend to agree that in the medium-term Europe will benefit ahead of Russian domestic demand. There is strong evidence that Gazprom can, at the margin, increase gas supplies (winter of 2005-06) but with demand for electricity growing at in excess of 4%p.a. in Russia and with European Russia (the bit that’s really growing) being almost exclusively powered by gas-fired generating units – something has to give. Note, that using BTU-equivalents an electricity producer in European Russia using coal would pay an equivalent of $180/mcm to produce the same kWH. The Russian government’s response has been to apply pressure to non-GAZP producers to stop flaring associated gas and a statement (straight from the absurd) that independent gas producers will produce 60% of domestic gas demand by 2015, some price liberalization – immediately followed by the countermanding threat to increase extraction taxes to RUR700/mcm.

Knowing why GAZP behaves this way, personal enrichment as priority A, everything else as priority Z, does not alter the fact that there is an unmet demand for gas. Also, and you have written about this previously, a lack of competent management at the highest level, which means that upstream plans are being missed on a quarterly basis. Pipeline capacity (both absolute and access to) from the two main gas producing areas, Nadym and Surgut, is a much greater issue than the development of reserves themselves and there seems to be little evidence of more than holding maintenance.

For an eminently sensible primer on the demand supply issue I would suggest this article from Business New Europe, which tends to promote the view of those actually doing business in Russia as opposed to pontificating from London and Washington.

Ah yes, evil Russia, going out of its way to sell gas to the EU. I think the regular harangues from the EU and internal pressure will eventually sour the gravy train that the EU gets at Russia's expense.

The financial criminals investors in New York and London of course hate Putin. Nationalizing natural resources prevented the outright complete theft of them.

The world has a new "evil empire" now, so in that respect Russia has nothing to worry about.

It would be interesting to see the FT graph in terms of storage/annual demand.......

When Russia was communist, they were the evil empire. Now they've embraced captitalism -- all the market will bear and all that -- and that's no good either. So what's the real problem? We (the US) weren't able to get rid of all their missles in time, were we? That's the problem. Otherwise it would be simple. I mean Iraq was simple, wasn't it?

The Lion called all the animals together and asked them how they would like to be eaten.

After some muttering the animals replied that they didn't want to be eaten.

"We are straying from the subject," said the Lion.

That's a good one -I also like the one that goes something like:

"When you and another person are being chased by a lion you don't have to run faster than the lion -just the other guy..."

In relation to PO: I think of it in the context that oil price is the speed of the lion and each country has a price point (running speed) at which demand destruction starts to set in. This would imply that lots of less well off countries will be wasted while the better off continue to be relatively unnafected for many years. It would be nice to see a model of this {per country export, import, price affect to include PO affects} but it would be a complicated beast.


'There is no overarching geopolitical plan' - I am not sure about that, but there is no question about the second half 'but a lot of political infighting and short term asset-grabbing strategies.'

We tend to leave China out of these discussions, which makes sense. But I remain quite convinced that the Russians will do their best to ensure that China remains a weak competitor - after all, Siberia is essentially the last major empty inhabitable area on Earth, and the two countries share a 3605 km (4,380 km/2,738 mi during Soviet times) border along it. Siberia is 'a territory larger than that of China. Less that 16 million people live in Eastern Siberia and the Russian Far East. By contrast, over 1.3 billion people live in China.' - not a great link, but adequate.

During the Cold War, that 2/3 of the Soviet Union's military was positioned against China is something I remember reading and being astounded about in the 1980s. And of course, China and the Soviet Union did actually have a not so minor border conflict in 1969 (if potential nuclear escalation is a definition of not so minor).

The Russians have more on their minds than merely dealing with the West. The emptiness of Siberia along with the crowding in China is a source of long term tension which is unlikely to go away. From the link -

'A March 2001 interview with Sergei Karaganov, Chairman of the Foreign and Defense Policy Council, a prominent Russian think tank with ties to the Russian government, illustrates this:

Question: “What should Russia’s attitude be toward NATO eastward expansion?”
Karaganov: “We should oppose it. Of course, we could spend tremendous effort and resources on fighting this ‘Evil,’ but it is the same as trying to restrict population growth
in China from the outside. By the way, the latter is potentially more dangerous for Russia.”

Russian historians are well aware of China’s history of encouraging the migration of ethnic Han Chinese to populate and solidify Chinese control of areas such as Inner Mongolia, Tibet, and Xinjiang. Therefore, Russians worry not only about outright war over its regions, but also about the slow migration of Chinese across their common border. Thus the legal and illegal presence of ethnic Chinese in Siberia and the Far East is viewed in Russia as a serious problem.'

The Russians have their own problems, which the West easily overlooks. Preventing a hundred million Chinese from simply walking into Siberia over the next generation or two is part of the geopolitical concerns involved with Russian energy policy, which has nothing to do with free market principles, or contractual obligations. always, I value your views.

Re Russia-China border...Not to be omitted for perspective, is that Russia unilalerally "annexed" a large part of "Siberia" that Chinese have not forgotten; namely, north and east of the Amur River, for example, by Muravioff [sp?] in 1800's. Simply a land/resource grab "because we can" and conveniently adopted by cartographers. Chinese do have a memory of history and their exploitation by acquisitive foreigners. In turn, there is Russian sensitivity to their own past being "projected" onto China.

I would love to discuss world political possibilities with you guys - does anyone have a risk board ready?

To think about:
Russian population is shrinking and (like much of the rest of the developed world) getting old. Right now there are about 145million. 2025: 128mil. Up to that time, the Chinese population will continue to grow, although the crest (or should I say peak?) will have been met around 2030 at about 1.5 billion. Birthrate has been very negative for a good while.

I've seen documentaries that many Chinese have already made the jump into Russian territory, turning the borderlands into a defacto Chinese province. China will hardly need to annex territory resulting from the excess population.

In order to secure RESOURCES on the other hand..

I'm sure you guys have read Clancy, right?, where the US and internet save the world (Russia's) butt from the expansion plans of a rotting Chinese political system. Don't think it'll happen, but I wouldn't doubt that there will be "tensions" once Russia becomes one of the last bastians where resources are to be had..

Now, if you were Russia, would you court a politically fractioned Europe or the Dragon to the South?

Cheers, Dom

My grandfather pumped oil with an engine-house,
my father pumped oil with a 20 lb. electric motor,
can't I just pump it online?

There is a campaign, by some interests in the West, to undermine the Russian government because it has become to successful in reversing Russia's economic decline.

Basically, we want a Russia that is weak politically and economically. We prefer a Russia that's like a third world country; a supplier of cheap labour and even cheaper raw materials. A country ruled over by an incompetent and corrupt elite who basically do what their told. Unfortunatley, Putin is a Russian Nationalist, and has bizarrely chosen to put Russia's national interests before those of the West. Basically, this makes him an outlaw seen from our perspective.

I'm not really a fan of Putin, or the current system in Russia. What I find absurd is the growing demonization of Putin's stabilization programme. Putin and those around him stopped the rot spreading and have begun to rebuiled, and for that he will never be forgiven.

Unfortunatley, Putin is a Russian Nationalist, and has bizarrely chosen to put Russia's national interests before those of the West. Basically, this makes him an outlaw seen from our perspective.

When the USA puts its national interests before those of Europe and Russia, it too is seen as an outlaw and criticized vituperatively.

Good policy involves generally attempting to find areas where your and other people's national interests can coincide most amicably.

Obviously it depends what team you play for

If you play for the US I would be seriously concerned about them putting their national interest first. As long as they put third party interests first and allow uncontrolled third world immigration they will continue in decline and at some point will not be able to float IOU's to pay for the military.

The absolute best thing that could happen for the US is if they found their own version of Putin, a strong nationalist leader with the power to make things happen. Problem is that will not happen any time soon.

This was a thoughtful essay Jerome A Paris - with a lot of clear-thinking – AND it leads me STRAIGTH AHEAD ONE MORE TIME TO THINKING of the ideas of the CARTER-Doctrine … and its implications.
( you never took the reasoning - all the way ... sort of - BUT what you came with made me a much more enligthened person - thx))

The Carter Doctrine was a policy proclaimed by Jimmy Carter in 1980 – as some sort of ‘blurred’ responses to USSR into Afghanistan and also as a hint for the oil producing countries spawning the oil embargo in the 70’s ….
…. roughly stating that
"The US will go to war overseas - if "our" energy supply ever is threatened" –

And then we have Dick Cheney – “American way of life is not negotiable…. “
(Wwwooow – though guys)

….I personally wonder what I would have felt if my government ever came out with something like this...... not well, I guess ..
(I live outside EU, but part of Schengen …. and EFTA though)

DOES EU have something like this doctrine?

Is it ever possible to morally defend such thing as this doctrine?

IF so how?? What would the arguments be?


A country is defined as a sovereign area on the surface of this planet - some borderlines are disputed though. And these countries are run by "some sort of rulers" - democratically voted for or grabbed by some kind of dictators.
And normally it is assessed that the people within this boundary are 'responsible' for whatever is happening here and the way forward / changes and so forth - ref American Civil war, French revolution, composition of India, Pakistan and later Bangladesh ......bla

Whatever is taking place within these countries are normally considered "internal affairs or domestic issues"... not for anyone outside to "dig their noses into”. Although this has changed some after the congregation of UN.

I see the 1st Gulf War as an action taken - in the name of The Carter Doctrine , and for anyone knowing the history of this region you know the lines on the map where drawn by the winners of WW1. And Saddam is definitely correct in assuming that Kuwait is "a virtual place" due to the Burgan-oilfield......

As petroleum is assessed THE COMMODITY of this planet - and 'everybody' depend on this for prosperity and growth AND we all know it is "gone by the wind in few decades" ..

NOW - to my SECOND point...
-and assuming the CARTER-Doctrine is still around

IF within a few years there comes to INTERNAL UPRISING WITHIN KSA (say civil war) - and the daily Saudi-oil-export was cut off - due to these events...

And by looking closely at the reasons for this uprising - most people (even in the US) would say ' my heart is with the insurgents' - their cause is legitimate.... that Saudi-kingdom has to GO!

EVENTUALLY - would it still be OK to act by the Carter-doctrine, BECAUSE your American way of life is challenged ?

WHAT is stronger - "AM way of life" OR "your inner morality”??

The american public is not happy with Bush. I think we are well aware on a broad public view of energy problems. The comments I hear are that $ spent on the war in Iraq could have been better spent on domestic energy conservation measures, so we wouldn't have to get involved in the ME.
Most people are very unhappy that Bush has alienated alot of the other countries. It is painfully obvious that to Bush oil exporters are "terrorist" if they don't sell the US oil cheaply. Most people are amazed that he could do so much damage in such a short period of time. We are currently waiting for him to get out of office, I don't see him getting impeached (it takes to long).
I think there is a ground swell by the general population toward greater energy efficiency and dealing with global warming on an individual and regional basis.
I don't believe the general US population realizes the severity to which declining oil/gas supplies will impact the US or the rest of the world. We want greater efficiency but still want our car driven way of life which obviously isn't going to be a long term option.
We have had too many "cry wolf' shortages for the population to respond to any messages of PO. Many people have tried to warn us since 1972 and look where we are today.
It is interesting to read the views of your side of the pond. I kept thinking somehow it would be easier for you with more rail for transportation of people, but heat(home) and industrial use(jobs) looks like problems for you too.
My wife who ussually gets things most accurate thinks a global disease pandemic is the most likely outcome of the decline of fossil fuels, because of weakened population from a lack of food and wars.
We face a very uncompromising future as the lion story above explains very simply.
I wish you guys the best,

In the case of homogeneous demographics and relative social fairness where a common point of interest can be found, I'm sorry to say that almost everyone would go for "way of life".

Jerome relates that he struggled for two weeks with this article in the Economist. I struggled for about thirty seconds with a similar diatribe on Venezuela a half decade ago, wrote them an explanatory letter - can you explan a Tory? - and cancelled my subscription. I now skim the Weekly Standard, which has the same plot without all the pseudoeconomic covering blather. Yes, it is important to track what this ideological group is pondering, but I don't recommend struggling for anywhere near that length of time. Fifteen minutes should do it.

Putin's term is nearly up. That's important as much for what we will do as they. Putin has succeeded in giving warning in a firm way that, on NG, he holds the cards. Arrogant toffs like the Economist guys are still struggling with that message. I don't need to watch.

Petrosarus, how true and an excellent article by Jerome. The situation is rather simple, Europe needs Russia (energy and possibly defence) and Russia needs Europe (market and population). The troublesome third party in this sense is the US and its sympathisers in Europe (who have little to offer but ideological nonsense). The sooner the third party is cut out of the loop in this matter the better for Europe.

Europe and the US have close ties, but these should be confined to trading and not ideological control. I expect NATO to eventually disintegrate and Europe to come under the protective nuclear umbrella of Russia. This in no way supposes a divide between the people of Europe and the US, just an unwillingness to be subjugated unfavourably to the US empire and its goals.

For Britain this poses a major problem, to go with the US or stay with the rest of Europe. I imagine the struggle within the UK will pull it apart, destroying the Union between England, Wales, Scotland and Northern Ireland. I also believe that other pro US regimes will also suffer the same internal dynamics as the waning US empire becomes a poisoned chalice.