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05.10.2005
The West & Russia: Dictatorship Support in Exchange for Oil and Gas
Simon Araloff, AIA European section
The Latvian Prime-Minister's claim that the former Russian politician and magnate, Boris Berezovsky "should be included in the list of unwanted persons" appears strange only at first glance. Analysis of the tendencies on the world's energy market clearly shows that this fighter of the Putin's regime became the victim of Moscow's 'energetic' blackmail. In this case Latvia has only performed as an obedient executor of the will of its American and European patrons. Thus, at this stage the attitude of the West towards Russia could be called 'the Shredder's principle'  – energy resources in exchange for abandonment of demands of Russia's democratization.

Russia – USA: the backstage of the energy policy

Russian President Vladimir Putin (L) and American President George W. Bush (photo: Russian President's website)  
 Russian President Vladimir Putin (L) and American President George W. Bush  
True reason of the Latvian authorities' 'bizarre' behavior towards Boris Berezovsky during his visit to Riga in February, as well as nowadays, lies first of all in the attitude of the American administration towards this man. The official Riga is geared to Washington. In the beginning of this year, Washington had a stake in arrival of irreconcilable fighter against the Putin's regime to the zone, where Russia's and the US interests collide. Therefore, the Latvian authorities, represented by the Vice-Secretary of State in the Ministry of Foreign Affairs, Andris Teikmanis, allowed a toughly negative position over the Russian demand of Berezovsky's extradition. Today the geopolitical situation is completely different, and, therefore, the Latvian Prime-Minister Aigars Kalvitis declares that Berezovsky is an "unwanted person".
So what is the reason of Washington's changing its attitude towards Berezovsky? The answer is very simple: situation in Iraq, Katrina and Rita hurricanes, high prices of oil in the USA, and, finally, President Bush's extremely low rating. The sum of all these factors defines the level of the White House's antagonism towards the Russian oppositionist.
Many analytical articles have been written concerning the situation in Iraq, and the Allies' incapacity of guaranteeing continuous Iraqi oil supplies, which would influence the level of oil prices on the world's market, is now generally agreed upon. The situation worsened considerably after the devastating Katrina hurricane. Enough to say that according to the data from September 1, the average day loss in the Gulf of Mexico shelf was 90.4%. Further on the situation improved to a certain extent, and by the middle of the month the loss already was about 79% (the average norm of oil production here previously was 1.5 million barrels a day, therefore the average loss was measured in some 1.185 barrels a day). Therefore, generally speaking, it was a colossal damage to the American petroleum refining industry. The same situation was registered in gas production. On September 5, natural gas extraction in the Gulf of Mexico totaled in about 5.8 billion cubic feet a day – 57.8% less than the previous norm, which totaled in about 10 billion cubic feet a day. By that time, 39 of 137 (29.1%) of drilling masts still did not manage to return to work. The process of resuming the activity of oil and gas industry was aborted by the second hurricane, Rita. This was immediately reflected in the oil prices, which were already very high, provoking an extremely negative reaction of the American population. This reaction is only being strengthened by the Administration's impotence in liquidating the aftermath of the recent hurricanes in Louisiana, Mississippi, and Alabama.
Coping with such a situation, George Bush's administration turned its gazes towards the Russian energy market. The idea of turning Russia into a strategic source of the American energy resources is not a new one. This idea was very popular in the USA three or four years ago, when it was suddenly learned out that the Middle East is a source of a dreadful threat to America, rather than a reliable strategic partner. One of the most active supporters of the 'Russian variant' was the former CIA Director, James Woolsy. However, after successful finishing the military phase of the Iraqi campaign, the American leadership abandoned the idea of strategic partnership with Moscow in the energy sphere. Although the deliveries of the Russian oil to the USA continued, their amount was very insignificant. In 2004, such deliveries totaled in 52.2 million barrels (7 million tons) – less than a tenth part of the total annual oil production in the Mexican Gulf.
The comeback to the ideas, voiced by Woolsy in 2002, was made in the beginning of 2005, against the background of the American Administration's realization of complexity of the situation in Iraq. These ideas were clearly expressed in the end of February, during the meeting between George Bush and Vladimir Putin in Bratislava. It was declared then that the USA is interested in augmenting the deliveries of the Russian oil and gas to the American market. At the same time, the Presidents signed a relevant agreement on "Cooperation in the energy sphere". Thus, the general geopolitical situation started gradually changing not in favor of Berezovsky, who, though, was still allowed to visit Riga as part of his oppositionist activity against Moscow.
After the meeting in Bratislava, the amount of information about the Russian-American cooperation in the energy sphere began to grow. In the end of June, during the meeting with the American businessmen, the President Putin stated that his country is ready to augment deliveries of the Russian oil to America up to 50 million tons a year (instead of 7 million tons in 2004). Besides that, Putin said that the so-called "energy quartet" (American and Russian ministers in charge of energy resources' deliveries) was working on particular projects for augmentation of the Russian oil and gas deliveries to the United States. It was planned to modernize and broaden the appropriate mining and transporting infrastructures, with the help of the American investments. "This will strengthen the steadiness of American economy," Putin told the US businessmen.
In July 2005, the news appeared about a considerable success that the American Schlumberger giant (its headquarters are in Huston, Texas) has on the Russian energy market. As it appeared, Schlumberger, world's largest service provider in the sphere of oil and gas production, in the second quarter of 2005 purchased 25% of shareholdings of the Russian PetroAlliance company, making its share in it 51%. PetroAlliance provides services that are required in search, exploration, and exploitation of oil and gas reservoirs. Schlumberger provides services to such big Russian companies as Sibneft, Slavneft, and TNK-BP.
Finally, on October 2, 2005, American and Russian press published the news about arrival in the USA of the first Russian tanker containing the liquid gas. Director General of the Russian GasExport company, Alexander Medvedev, told in this connection that the contract basis is now ready, allowing the Russian gas-producing giant – Gazprom – to perform regular deliveries of gas to Northern America. Medvedev assured that till 2009 – 2010, Gazprom will play on the American market not only the role of a wholesaler, but that of a retailer. At the same time, Gazprom's press-service announced that the American energy companies show a great interest for cooperation. The memorandums of understanding are already signed with Chevron, ConocoPhilips, Exxon Mobil, and Sempra Energy. In the nearest future, Gazprom and its American partners plan to start learning cooperation possibilities in the framework of the large gas-producing projects in the territory of the both countries.
In this context, the announcements that appeared in the Russian and the Japanese mass media should be mentioned, concerning the contacts between Gazprom, the Japanese Mitsui OSK Lines Ltd., and Itochu Corp. during the last month. The Russian and the Japanese companies plan to jointly work over a project of export of the liquid natural gas from Murmansk – the city, where the gas-refining plant will be built. It was earlier announced that in 2006, Gazprom plans to sell in the USA some 15 million tons of gas. For this purpose, the company already purchased 15 large tankers.
Thus, the flourishing of the relations between Russia and the USA in the energy sphere is evident. And this process fully corresponds to the current interests of the White House in its interior and foreign policies. These interests do not at all include the complication of relationships with the Kremlin because of Berezovsky's activity in Eastern Europe in general, and in Latvia in particular.

Western Europe: stability in exchange for Berezovsky

Russian President V. Putin (L) and German Chancellor G. Schroeder   
 Russian President V. Putin (L) and German Chancellor G. Schroeder  
Until the recent parliamentary elections in Germany, in light of the anti-Russian rhetoric of the Christian Democrats, there were some questions concerning the destiny of the freshly signed Russian-German agreement on laying down the gas pipeline under the Baltic Sea (the Russian call it "Northern-European pipeline"). After Angela Merkel's indecisive victory with a minimal overbalance, it became clear that this agreement would continue to be valid. Moreover, realizing this fact, the other European countries hurried to declare their readiness to join the Russian-German gas pipeline. These countries are also influenced to a great extent by the information about the development of energy cooperation between Russia and the USA.
   
   Russian President V. Putin (L) and Belgian Prime Minister G. Verhofstadt (photo: Russian President's website)
   Russian President V. Putin (L) and Belgian Prime Minister G. Verhofstadt
All the abovementioned can explain such a success of Putin's visit to Belgium. Russian President came to Brussels to take part in Russia – EU summit (October 4). According to him, Gazprom has already agreed with its Belgian partners upon the construction in this country of large gas storage. Putin added that this project "Will undoubtedly become one of the important elements of the future project of Northern-European gas pipeline". Gas will flow to the storage through the Russian-German gas pipeline system. From there it will be used by the Belgian consumers, and for the deliveries to other countries of Europe. According to Putin, French, British, and Dutch companies have already shown interest for this project. Cooperation with them will let Russia not only augment gas deliveries to Europe by tenths of billions of cubic meters a year (a number of relevant contracts are already signed). It will also let it get a direct access to the European system of the energy carriers' distribution.
Therefore, the geopolitical situation in Western Europe is also developing not in favor of Berezovsky. The same way as the Americans, the Western-Europeans, with their growing economic and political problems, less of all want to irritate the Kremlin by the demands of democratization. The "Old" Europe now most of all needs the stability. And it is this 'merchandise' that is proposed to it by Vladimir Putin, with the skill of a marketing expert. It is enough to cite the statement made by him in Belgium: "Russia's aim at the European energy market is the energy security of Europe, and its stable economic development".

Epilogue: a tactic deviation or a change of strategic priorities?

The former Russian magnate, and now – the oppositionist in exile, Boris Berezovsky, is obviously a dubious figure, which can be treated in different ways. However, it is indisputable that at the moment, like Mikhail Hodorkovsky, Berezovsky is the symbol of a struggle that the liberal forces in Russia and abroad lead against the Putin's regime. The attitude towards Berezovsky can be some sort of a scale for the West's readiness to support this struggle. Democratization of the Russian society, and liberalization of the Russian economy are the tasks of a global importance. These tasks are too important for the future of humanity, to be put in dependence on tactical judgment of the ruling elites in the West. Fortunately, there are forces in the leadership of the USA and the EU, that realize all the absurdity and danger of the situation, when the energy security on the Planet is put in the hands of the clique of the former KGB officers, who fiercely oppose Western cultural and political values.

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