IEEE Spectrum November, 2008 - 11

big chill: the relationship between europe
and russia is cooling. photo: Fyodor saVIntseV/wpn

commentary

gas pains

russia's dominance of eurasian markets
means long-term trouble

R

ussia expert Marshall Goldman
has dubbed the country a
"petrostate," but with all due
respect, that's somewhat misleading;
Russia is really a gigantic natural-gas
company backed by a huge nuclear
arsenal and an increasingly proficient,
conventional military [see The Data,
in this issue]. Though it's also a top
oil producer, it uses almost all of its
oil itself and has little influence on the
world market. But with its seemingly
boundless gas reserves, Russia is in
a position to dominate the Eurasian
market for at least a generation to come.
Why can't the European Union
just adopt a strategy of energy
independence and wean itself from
Russia and the "stans"? After all, the
EU has its ambitious 20/20/20 program,
aiming to obtain 20 percent of its
energy from renewables, increase
energy efficiency by 20 percent, and
cut carbon emissions by 20 percent,
all by 2020. And the EU has also been
trying hard to diversify gas supplies.
In mid-September, for example, it
informed Nigeria of its interest in
cofunding a proposed 4300-kilometer
pipeline to bring natural gas directly
from Africa to European markets.
Here's the problem: from any
viewpoint, natural gas is such an
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attractive fuel that no matter how much
you try to reduce your consumption
and diversify your supply, you're
always going to want more. Since the
1990s, gas has been the fuel of choice for
electricity generation, because of high
turbine efficiency and its cleanliness and
relatively low carbon content. Per unit
of energy produced, gas emits no more
than half as much carbon as coal, which
means it makes good sense to replace coal
with gas plants to meet emissions targets.
Gas is also a very attractive homeheating fuel and is increasingly
being used for motor vehicles too. In
compressed form, it's powering public
transportation and fleet vehicles in
cities from New Delhi to New York.
If fuel cells ultimately power most
cars and the vision of a hydrogen
economy is realized, a lot of that hydrogen will have to come from natural
gas-or from water hydrolyzed using
electricity generated by gas plants.
Under the circumstances, Europe
will want to keep importing all the
gas it can persuade Russia to sell at
reasonable prices. But Russia will be in
a position to manipulate the Eurasian
markets, playing off fast-growing East
Asian demand against Europe's needs.
Europe's dependence on Russian gas
would not necessarily be a big problem

if the Europeans trusted the regime
running Russia. But, increasingly, they
don't. Russia has repeatedly shown
its willingness in recent years to cut
off gas supplies for political reasons,
basically to bring countries it considers
its satellites to heel, notably Ukraine.
Of course it wouldn't dare cut supplies
to a country like Germany, which gets
about half its gas from Russia. But
where German and Russian interests
and values collide, Russia could
manipulate markets to get its way and
use the threat of its market power to
ward off diplomatic or military action.
For some years, as the Putin
regime has consolidated its position
and eliminated opposition, European
unease about Russia has grown. But
there has also been fierce determination
to avoid a renewal of Cold War tensions
and a tendency to focus on U.S.
misdeeds. Important turning points in
European elite opinion were the arrest
in October 2003 of oil oligarch Mikhail
Khodorkovsky, who had been pouring
millions into oppositional groups and
toying with the idea of challenging
Putin for the presidency, and the
murder a year later of the crusading
journalist Anna Politkovskaya, Putin's
sharpest and most persistent critic.
A recent survey by London's
Financial Times found that European
mistrust of Russia has increased
sharply in the past six months:
the proportion of respondents who
consider Russia the greatest threat
to world stability rose from just a few
percent in July to nearly 20 percent in
September, putting it well ahead of Iran
and almost as high as China. It may
come as a shock to many American
readers, however, that the United
States still ranks in European minds
as the greatest threat to world stability,
scoring over 25 percent in September.
-William Sweet
november 2008 * Ieee Spectrum * nA

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Table of Contents for the Digital Edition of IEEE Spectrum November, 2008
