If Vladimir Putin carries through on latest threats, it would only hurt Russia

December 9, 2015

 

An employee stands near pipes made for the South Stream pipeline at the OMK metal works in Vyksa in the Nizhny Novgorod region April 15, 2014. REUTERS/Sergei Karpukhin (RUSSIA - Tags: BUSINESS ENERGY) - RTR3LET2

An employee stands near pipes made for the South Stream pipeline at the OMK metal works in Vyksa in the Nizhny Novgorod region April 15, 2014. REUTERS/Sergei Karpukhin

As the crisis over Turkey’s downing of a Russian Su-24 jet drags on, the Kremlin continues to threaten Turkey. President Vladimir Putin promised “significant consequences,” while Putin’s spokesman warned that the Russian president was “fully mobilized.” Russia even moved advanced S-400 anti-aircraft missiles to Syria, with the clear implication that they could be used to shoot down Turkish planes.

While Putin’s military rhetoric may sound ominous, one Russian warning makes no sense whatsoever: Putin’s threat to cancel major Russian pipeline and energy projects in Turkey. If implemented, these sanctions would cause far more economic and geopolitical harm to Russia than to Turkey — which completely defeats the point of introducing sanctions. In addition to hurting Russia, the sanctions would also force Europe to remain hostage to conditions of the Moscow-Kiev relationship. Russia uses gas as a weapon to maintain influence over its neighbors, and Europe is also affected by these Kremlin power plays.

To understand the foolishness of Putin’s threats, it’s necessary to understand the geopolitics involved. As part of its effort to punish Turkey, Russia just suspended work on its TurkStream natural gas pipeline, which would have pumped Russian gas into southeastern Europe, via Turkey, bypassing Ukraine. TurkStream is just one pawn in Russia’s ongoing game of “pipeline politics,” a longtime effort to end its dependence on Ukraine as a transit country through which to ship Gazprom’s gas to European customers.

Given the ongoing conflict in the Donbas and the collapse of the relationship between Kiev and Moscow, Russia’s desire to bypass Ukraine is not surprising. While Russia can shut off gas to Ukraine whenever it wants, Kiev has its own trump card: the ability to cut off Russia’s access to core European customers through Ukraine’s pipeline network.

So to reach Western Europe directly, Russia implemented the so-called Nord Stream -1 project, an underwater pipeline that ships Russian gas directly to Germany. After the European Union pushed back on South Stream, a complementary pipeline, Russia abandoned the project. It then teamed up with Turkey to develop TurkStream.

In September, Russia found another way to bypass Ukraine. Despite ongoing tensions between Russia and the West, Gazprom and various European energy companies such as Shell, Eon and BASF signed an agreement for construction of the Nord Stream-2 project. This pipeline, which traverses the same route under the Baltic Sea as Nord Stream-1 and doubles Nord Stream-1’s capacity, also bypasses Central and Eastern Europe. The additional volume would allow Russia to largely free itself from dependence on Ukraine’s pipeline network.

Unfortunately for the Russians though, it appears as though Nord Stream-2 is also going south. It now faces severe opposition in Central and Eastern Europe, and is likely to be vetoed by regulators in Brussels.

The end of South Stream as well as the likely demise of Nord Stream-2 makes Putin’s decision to terminate TurkStream a Russian “own goal.” While Turkey will lose transit revenue, Russia is now back to square one — still heavily dependent on Ukraine with no alternative transit prospects in the works.

While this may seem like a “loss” for Russia and a “win” for the West, Europe should not be too quick to celebrate, as what happens in Ukraine does not necessarily stay in Ukraine. The European Union obtains approximately 25 percent of its gas via Ukraine, and six member states are entirely dependent on Russian gas. This means that when Moscow plays the gas card with Kiev — as it did in 2006 and 2009 when it shut off all gas supplies to Ukraine in the dead of winter — Europe also shivers. So while Russia loses big from the demise of TurkStream, South Stream and Nord Stream-2, Europe takes a hit as well.

Moscow’s threat to terminate a huge nuclear power plant project in Turkey would also hurt Russia far more than Turkey if implemented. The project dates back to 2010, when the Russian nuclear power company Rosatom signed a $20 billion contract with the Turks to build four new nuclear reactors in the country.

This deal provides numerous advantages for Russia. First, it allowed Rosatom to both control the planned power plants and sell the electricity they would generate — an arrangement long sought by the Russians. It also offers Russia entrée to the fast-growing Turkish economy, the largest in the Middle East. With Turkish electricity demand projected to grow 7 percent per year through 2023, Russia would be leaving a lot of money on the table.

Finally, because the contract called for Russia to maintain full control over the plants’ operation — including the highly enriched uranium byproduct — Russia prevents Turkey from acquiring fissile materials for a nuclear weapon, and so limits the risks of proliferation by a powerful neighboring state. All of these benefits — plus the $3 billion already spent by the local Rosatom management company — would go down the drain if Putin cancels the project.

Turkey, by contrast, will suffer only short-term inconvenience should Putin terminate the project. While it would take some time to arrange, if Turkey wishes to continue its pursuit of nuclear power, it will find many other willing suitors, as companies like France’s Areva, the United States’ Westinghouse and Japan’s Mitsubishi would surely welcome the opportunity to enter a fast-growing new market like Turkey.

Lenin himself said, “spite in general plays the very worst role in politics.” Putin’s ill-considered plan for an energy war against Turkey demonstrates this maxim in spades.

16 comments

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Maybe Putin values the lives of his people more than he values profits. A strange perspective no doubt to those who worship Mammon above all else.

Posted by Moric | Report as abusive

lol, Putin is destroying Russia and the Russian people just don’t care.

Posted by MustangWanted | Report as abusive

All the reasons given in the article are what contribute to Western decision making. The West, which places money and power above national pride, simply doesn’t comprehend what motivates men like Putin. They thought they would teach him a lesson for cutting off the oil money keeping ISIS alive, but they’re the ones who need to learn. Unfortunately, they learned nothing from Vietnam, nothing from Iran, nothing from their numerous failures in South America, nothing from Afghanistan, Iraq, Libya, Egypt, or Syria. They just keep bumbling from one failure to the next certain that everyone is motivated by the same crass self-interest as they are.

Posted by lsmft52d | Report as abusive

There is a good explanation to this: other states will think twice before shooting at Russian planes. International relationships are entirely like those in the underworld. There are bosses, there are soldiers, there are pimps and prostitutes. Russia is the boss, Turkey is a p!mp

Posted by Boywhoasked | Report as abusive

Strange article (or maybe not so strange) At every step Russia is being manipulated by the west in particular by the US the goal being to deprive Russia of any outlet for its energy sector. Do we believe that the shooting down of the Russian yet was not yet another political act supported by the west to achieve this very aim. The problem comes when you have your prey cornered then its not so clever

Posted by Moties001 | Report as abusive

Moric
“Maybe Putin values the lives of his people more than he values profits…”
Yes, how Putin “values the lives of HIS people” is known.
Just ask Russians dead in Chechnya, or Nord Ost siege, or crew of Kursk submarine/passengers of “Bulgaria boat”/crew of trawler in Kamchatka, or families looking for Russian troops sent to Ukraine buried in secret, or dead Russian coming from Syria to annexed Crimea instead of coming home.
Russia has a long history of disregard of human life, and Putin is definitely a star.

Posted by NV1 | Report as abusive

What a strange comments to a well written article. When I read these two comments, I wonder who these people are? My guess is that these are fake accounts. I think Russia spends a lot of effort to influence opinion on websites all over the world. Fortunately we can think and speak freely for ourselves and form our own opinions, with the help of articles like this one. That is something they don’t seem to understand.

Posted by The_Fonz | Report as abusive

Another story telling, I was just thinking when Reuters will publish another opinion about Putin. Btw when you don’t pay for gas or in fact stealing transited gas for political agenda, then you forcing supplier to switch off the tap.
Also canceling TurkStream short term is beneficial for Russia due to political uncertainty in Turkey, Reuters should dig deeper when giving ‘expert’ opinions.

Posted by free_man | Report as abusive

You have to know “russian soul” to understand their politics…i guess when Hitler atacked soviet Russia he was propably folowing similar thinking …and dispite 20 million dead,Russia refused to bow to common sense unlike France and rest of Europe. Russia dont make sense my friend AND THAT IS ALWAYS BEEN LIKE WHAT:))))))

Posted by ivanauskas | Report as abusive

The high energy prices for those countries that have no access to cheap Russian Gas will help curb the climate change and keep those nations populations in decline. Any way the Slavs are only talking monkeys for the West, keep the South Eastern Europe in the dark for the next 1000 years.

Posted by Macedonian | Report as abusive

“In addition to hurting Russia, the sanctions would also force Europe to remain hostage to conditions of the Moscow-Kiev relationship.”

Otherwise EU will become friendly…..
What a joke….
I can’t remember what sanctions EU introduced against US and UK for destroying Iraq, using notorious lies?
Oh, I forgot, the oil reserves there were not the real reason, of course….
And yes, you cannot impose sanctions to your master, especially when you are a servant…..

Posted by zorand | Report as abusive

ivanauskas
“when Hitler atacked soviet Russia… dispite 20 million dead,Russia refused to bow to common sense…”
O? “Soviet Russia”?
Wasn’t Russia supposed to be ane of republics of USSR, “equal with other republics”?
And why is Russia, only 10% of which was occupied by Hitler, is taking a credit for sacrifices of 200 nationalities of Soviet Union that fought Hitler?

Posted by NV1 | Report as abusive

Putin is more clever than all the western leaders combined. American empire is in decline and the advent of a multipolar world is inevitable.

Posted by mash27 | Report as abusive

It never ceases to amaze me that if any comment on here points out that Russia is not to blame for the ills of the world that you get called a Russian troll (which is strange as I live in the north east of England) Comments such as ‘I think Russia spends a lot of effort to influence opinion on websites all over the world’ Dear me all nations do that especially the USA. the article is not well written and misses the fundamental point of the problem. Russia is having to make decisions based upon events that are forced on them by other organisations. That is not to say that Russia is not in need of social and democratic change. But this constant harassment by the west does not lend itself to sensible foreign politics.

Posted by Moties001 | Report as abusive

Well, actually is has been well substantiated that in Moscow there is a Government building with paid trolls to comment on websites all over the world= propaganda. Prove where they do that in the US.

http://www.theguardian.com/world/2015/ap r/02/putin-kremlin-inside-russian-troll- house

Posted by quilcene | Report as abusive

I love Putin <3

Posted by Queen_tatiana | Report as abusive