Russia seeks to be recognised as a worldwide force, primarily for geopolitical rather than economic reasons.

PAROMITA DAS

Putin wants the world to recognize Russia as a global force, mostly for geopolitical reasons rather than economic ones. From being fascinated with Xi Jinping and China as the most important opponents, the Western world has been fixated on Russia for three months in a row, which has benefited Putin’s objectives.

If Russian President Vladimir Putin were an Indian politician, his representatives would be quietly collecting enormous commissions from the world’s major oil and gas corporations. Profits for five oil and gas conglomerates — Exxon Mobil, BP, Shell, Total, and Chevron — increased by 49 % between the third and fourth quarters of Calendar 2021.

Three of the largest oil firms are absent from the list: Saudi Aramco, the largest, and two Chinese behemoths, PetroChina and Sinopec, but their results are likely to confirm, rather than diminish, the trend.

However, this would be a side advantage. The Russian government and its state-owned oil and gas firms would stand to benefit the most. The oil and gas business accounts for about half of the Russian government’s revenue. These hydrocarbons account for over half of Russia’s exports. According to Reuters, the average price of natural gas exports in 2021 increased from $156.3 per 1,000 cubic meters, as estimated by Russia’s Economy Ministry, to $280 per 1,000 cubic meters.

Because of high oil and gas prices, Russia ran a historically high current account surplus of 7% of GDP.

Of course, the year-long performance is due to a combination of factors that depressed supplies from North and South America, an extremely cold winter that increased demand for energy for heating, and a desperate oil cartel, Opec, that decided to squeeze oil supplies below 4 million barrels per day, driving up the price of crude and, indirectly, gas, even as the International Energy Agency forecasted a post-pandemic recovery.

However, the impact of Russia’s mobilization of troops on Ukraine’s eastern and northern borders on oil prices cannot be overstated. The Russian-Ukraine confrontation began on October 26. Brent crude was trading at $85.65 a barrel on that day. Then a Coronavirus variant fear spread over the world, causing prices to plummet to a low of $69.88 per barrel on December 3. Brent crude has since closed in on $100 per barrel, tempered by rumors of Iran discussing deals in anticipation of the Iran nuclear deal being resurrected and Iran being able to bring its own supply to supplement world supplies.

Putin, on the other hand, is looking for geopolitical gains as well as economic rewards.

He wants the world to acknowledge Russia as a global force, not to jeopardize that status with NATO deployments in his local vicinity. From being fascinated with Xi Jinping and China as the most important opponents, the Western world has been fixated on Russia for three months in a row, which has benefited Putin’s objectives.

In the event that Russia invades Ukraine, the West has warned of severe economic penalties. Putin is betting that the West will not be able to carry out its threat.

If Russian banks are barred from using the SWIFT messaging system for global inter-bank funds transfers, and the US imposes secondary sanctions, which means that any entity that deals with a sanctioned Russian entity will also face sanctions, i.e., will be barred from using dollar settlement systems, Europe will be unable to pay for Russian gas. This would suffocate Russian gas supplies, which contribute 40% of Europe’s gas. As Europe scrambles to obtain alternative sources and bids up the price of gas everywhere, the cost of energy would skyrocket.

A moot point is whether Europeans, many of whom cannot see that getting vaccinated against COVID-19 is about protecting others as well as themselves, particularly the elderly and those on the frontlines of the pandemic, are willing to sacrifice their hard-earned money on avoidable energy bills to protect Ukraine’s right to join NATO. Are people willing to make personal sacrifices in solidarity with the people of distant Ukraine, whose sense of shared responsibility as residents of the same country is so strained that they regard vaccination as an authoritarian attack on personal autonomy? Perhaps, Putin is betting that they are not, and that the Europeans would not go through with the sanctions the US has threatened.

Of course, US energy companies stand to gain significantly if Russian gas is barred from entering Europe, a fact that is unlikely to go unnoticed in Paris and Berlin.

However, Berlin has halted Nord Stream 2, the latest pipeline built but not yet operational, to transfer gas from Russia to Europe. It would run parallel to the original Nord Stream, which transports natural gas from western Siberia to Germany via the Baltic Sea. Furthermore, pipelines those transport Russian gas to Europe run through Ukraine, Turkey, and Poland. Nord Stream 2 is being funded by Russia’s Gazprom as well as Western corporations.

SergiyMakogon, Chief Executive of the Gas Transmission System Operator of Ukraine, Kyiv, claims in the Economist that the pipelines passing through Ukraine alone would allow for the export of 146 billion cubic meters of gas per year, despite the fact that it currently transports only 40 bcm per year. As a result, postponing Nord Stream 2’s commissioning makes no effect.

As an act of aggression towards Europe, Russia is unlikely to switch off the gas. Severe penalties would make it difficult for western banks to make payments to Russian firms, thus shutting down Russian gas imports. Sure, Europe has some gas reserves to draw from, but these have been diminished slightly by the exceptionally harsh winter that Europe has experienced this year.

To protect NATO’s right to extend to Ukraine and Ukraine’s right to join NATO, ordinary Europeans and Americans’ energy bills would have to skyrocket.

However, President Biden has vowed to take such measures in the event that Putin invades Russia. Putin gains nothing by coercing him.

It would make more sense for Russia to station soldiers in the separatist Republics of Luhansk and Donetsk and threaten to invade the Donbas region populated by Russian speakers, an act of aggression that would not elicit harsh penalties while still causing harm to Ukraine. Such Russian efforts, let alone those of its western friends, may put Ukraine under pressure to abandon any plans to join NATO if Russia offers it security guarantees against further invasion.

Finland functioned as a buffer between the Soviet Union and NATO for decades and benefited from it, allowing it to merge with western liberal democracy and welfare capitalism without hosting NATO forces on its borders. Ukraine, in all likelihood, would as well.

Retaining Russia as an autonomous center of global power is preferable to dominance by two superpowers, the United States and China. A multipolar world provides greater leeway for a country like India seeking strategic autonomy in the global arena. This does not absolve Putin of the charge of authoritarianism within Russia and cyberbullying outside of Russia, nor does it implicate India in such behavior. If a volatile US and a dominating Russia drive Europe to establish its own geopolitical voice and build its own strategic capabilities outside of NATO while still cooperating with it, India will benefit even more.