Daily Telegraph: Putin's pipeline to power

Russia is fighting a new Cold War with banks and pipelines, not tanks and warplanes

By Edward Lucas

In classical mythology, Georgia was the land where the Argonauts had to harness bulls with bronze hooves to win the Golden Fleece. Modern Georgia is the source of a treasure scarcely less precious: oil and gas from central Asia and the Caspian, piped along the only east-west energy corridor that Russia does not control. But whereas Jason and his comrades triumphed, our quest has ended in humiliating failure.

As the occupying power in Georgia, Russia can close or destroy those pipelines whenever it wishes. The only country in the region that even came close to sharing Western values, one vital for our energy security, has been humiliatingly defeated and dismembered.


As politicians and voters in the free world return from their holidays, two big questions require answering. What happens next? And how do we stop it?

Decoding the Kremlin’s precise intentions is as tricky now as it was in the days of Kremlinology – a discipline as archaic as Morse code. But the outlines are clear.

Russia wants to recreate a “lite” version of the Soviet empire in eastern Europe and to neutralise the rest of the continent. Unlike the old Cold War, military action is a last resort: for the most part, it is banks and pipelines, not tanks and warplanes, that are doing the dirty work.

This may sound strange, given what has happened in Georgia. But it is vital to realise that this was not the beginning of a new Russian push, but part of something that began in the mid-1990s.

Russia has nobbled Belarus – the only other country, apart from the Hamas-controlled Gaza Strip, that is ready to recognise the new statelets of South Ossetia and Abkhazia. It props up the narco-state of Tajikistan, cossets the dictatorship in Uzbekistan and woos the benighted despots of Turkmenistan. It has a cautious alliance with China, in the form of the Shanghai Co-operation Organisation, an outfit dedicated to fighting “extremism, terrorism and separatism” (although this last “-ism” has evidently been forgotten when it comes to Georgia).

It has stitched up energy deals in North Africa; it flirts with Iran and sells weapons to Hugo Chavez, the America-hating windbag who runs Venezuela. And by using energy diplomacy and divide-and-rule tactics, it is stitching up Europe country by country, from Cyprus to the Netherlands.

And it works. Over the crisis in Georgia, Europe has shown astonishing softness. The leaders of the EU have been all but invisible.

Where is the supposed foreign-policy chief, Javier Solana? Or the foreign-affairs commissioner, Benita Ferrero-Waldner? Meanwhile, Nicolas Sarkozy, the French president, has been humiliated by the blatant Russian breaches of the ceasefire agreement that he negotiated. Europe’s weakness is the result of multiple forms of soft-headedness and short-sightedness.

Partly it is simple anti-Americanism: if Vladimir Putin is making life difficult for George Bush, he must be a good guy. That attitude lies behind the astonishing opinion polls in countries such as Germany, which show that people have more trust in xenophobic, authoritarian Russia than they do in the world’s most powerful democracy.

There is also a mistaken belief that Russia is an ally in the struggle against globalisation: here is a country, argue intellectuals such as the British historian Correlli Barnett, that does not let itself be pushed around by multinational companies and the meddling do-gooders of the self-appointed “international community”.

But this is to misunderstand Russia under its kleptocratic and chauvinist ex-KGB rulers. Russia likes multilateral organisations, so long as it dominates them. It runs a whole bunch: for example, the “Commonwealth of Independent States”, which it is using to legitimise its occupation of Georgia.

Russia is also advocating a new pan-European security organisation, with formal legal status. This, it hopes, will exclude the United States, and tie up the West in the knots of international law, so that military intervention of the kind seen in the former Yugoslavia becomes all but impossible.

Similarly, although the Kremlin makes life difficult domestically for Western oil companies and tightly restricts foreign investment in any industry that it dubs “strategic” (which potentially covers almost anything), it is another story abroad. Russia delights in the possibilities of the global economy. If regulators in New York are sniffy about listing stolen companies on the stock exchange, there is always London. And if you fail even London’s undemanding test, Dubai, Bombay and Shanghai await with open arms.

Russia also uses its colossal war chest, fuelled by oil and gas revenues, to buy up assets in other countries. And that is the taproot of European softness: money.

In the Cold War, doing business with the Soviet Union was a rare and suspicious activity. Now Russia has penetrated our markets and businesses to a huge degree. Energy companies such as Austria’s OMV, Germany’s E.ON and Italy’s ENI work hand-in-glove with outfits such as Gazprom, which is nominally Russia’s biggest company, but better described as the gas division of Kremlin, Inc.

This directly affects politics. Germany, with Russia, is building the Nord Stream gas pipeline along the Baltic seabed to bypass Poland. Russia has already cut off energy supplies to punish Lithuania, the Czech Republic and other countries. When Nord Stream is built, it will be able to do the same to Poland.
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Yet even now, after a clear and brutal demonstration of Russian imperialism, Germany refuses to consider cancelling the pipeline. Angela Merkel was willing to pay a high-profile visit to the Baltic states – a likely target for Russia’s next push westwards – to offer support. But she would not even contemplate ending her energy alliance with Russia.

And it is hard to see this changing: European consumers will not pay hugely higher energy prices to finance alternative supplies, nor will politicians give the EU the weight it needs to bargain properly with Russia (a country, don’t forget, that is three times smaller in population than the EU, with an economy roughly a tenth of the size).

With the EU and Nato hopelessly divided, Russia can dismiss our toothless whimpers about Georgia. That leaves Eastern Europe to base its security on the United States.

Yet even America’s willingness to confront Russia is limited. Every incoming president since Bill Clinton has criticised his predecessor for being soft on Russia. But none has proved any better. For all John McCain’s fighting talk, and Barack Obama’s belated belligerence, neither man will be able to take a hard line. America needs Russia – for nuclear security, to hold back Iran, to contain North Korea, as a supply route to Afghanistan, in hunting down terrorists. And Russia knows it. If the mood in Washington is frosty, the Kremlin need only flirt more intensively with Iran, Venezuela and China, or withhold co-operation on some pressing topic, and America will buckle.

On top of all that, Russia’s leaders have a massively secure position at home. Their central bank has nearly $600 billion in hard-currency reserves, while their popularity is far greater than the Politburo ever dreamed of. Mr Putin, and the war in Georgia, are acclaimed – a view stoked by the docile media, which portrayed the conflict as a valiant crusade against genocide and Georgian leader Mikheil Saakashvili as a murderous fascist.

Abroad, Russia senses that power in the world is shifting east and south, to countries such as India and China, which see Georgia very differently. They may not much like separatism, but they also think that the West is practising double standards: America would not tolerate the Kremlin’s meddling in its backyard, so why should Russia have to put up with an America protégé in the Caucasus?

The German philosopher GF Hegel wrote that the owl of Minerva spreads her wings only at dusk: we perceive historical changes only when they are almost complete. We have enjoyed an extraordinary 20-year period in which Russia was weak and seemingly benign. Europe became (mostly) whole and free.

The idea that the continent could again become a battleground between East and West is unwelcome, and to many still inconceivable. But it is happening: and our resurgent enemy seemingly holds most of the cards.

There is, however, one chink of light, for us if not for the Russians. In the long term, the Putin regime means catastrophe for his country. The political system is opaque and fossilised, unable to respond to the needs of a changing economy or to rein in corruption, let alone deal with the fast-growing Muslim population, which has soared to 25 million – a 40 per cent rise since 1989 – as the birthrate among the Slavs has plunged. Modernisation of public services and infrastructure, in a country awash with money, has been dismally slow.

Foreign adventures are the traditional way for autocratic rulers to distract public opinion from problems at home, and Russia is no exception. The regime running Russia will come unstuck in the end. But the cost in the meantime will be dreadful.