Putin's 'one trick' energy economy and the coming of winter

Anne Applebaum, in a talk given at the LSE (London School of Economics) on 28 January 2013, pointed out that Russia is a 'one-trick' energy exporting economy, much like e.g. Saudi Arabia.

As Danny Vinik, amongst many others, shows; Russia's total energy exports constitutes more than two-thirds of their total exports.

It is this singular and incontrovertible fact, together with the critical dependence of many EU countries on Russian gas imports, that gives so many in the EU cause for concern about not ruffling the feathers of the increasingly paranoid Putin, in particular over his invasion of Ukraine. Putin has no other alternative but to use a plethora of different economic, re-armament, and military threats against the Ukraine and the EU in particular purely as a means of disguising his major concern should  the income from Russia's energy exports begin to fall due to the start of fracking in the EU. As Bjorn Lomberg points out,"Fracking could free Europe from Putin" Is it therefore any wonder that Putin is throwing a lot of money into an anti-fracking campaign? As Robert Zubrin points out:

"... it should come as no surprise that the Putin regime is pulling out all the stops in fomenting the global anti-fracking movement, with Europe as its central target. Leading the propaganda campaign has been RT News, Russia’s state-owned television network, which broadcasts around the world in English and other languages."

Putin against fracking

And supporting Putin's anti-fracking propaganda in the EU Parliament are 50 Green MEP's.
 

With Putin's 'friends' like this in the EU Parliament, does Ukraine need enemies

With all of this in mind, and re-visiting that deal brokered after hours of acrimonious negotiations in Berlin by Günther H. Oettinger, the European Union energy commissioner, on 26th September, and that set out the following:

• Ukraine to pay 'over the odds' ($385 per 1,000 cubic meters) for it's gas from Russia when compared to the rest of the EU.
• Ukraine to pay 'upfront' for its gas. Gazprom will ensure that at least 5 billion cubic meters of gas are supplied to Ukraine from October to March which must be prepaid before delivery.
•  The EU to guarantee a loan from the International Monetary Fund to help Ukraine meet its debt payments. The deal foresees an initial installment of $2 billion due by the end of October, with the outstanding $1.1 billion due by the end of December,

is it any wonder that Poroshenko has backed off from this EU-backed Russian deal? Andriy Kobolev, [Ukraine's] Naftogaz state energy firm chief, has also firmly stated that "No final decision was adopted. Not a single document was signed -- period".

Günther H. Oettinger, the European Union energy commissioner

Why, therefore, are so many EU politicians blinded by the fact that Putin is more dependent on Russia's sale of gas to the EU than the EU is dependent on Russia supplying it with gas? Russia's threat to cut off gas supplies to Europe would seriously cripple the Russian economy. The European public may experience a rather cold winter in their homes, but the warmth that Russian homes will enjoy over this winter will be coupled with higher inflation, a drastic fall in their standard of living, and food shortages. Add to this Putin's threat to the Russian people to cut off their access to the internet, a threat that will particularly be hard felt by the younger generation, and you have a volatile mixture that could lead either to a 'Russian Spring' or to fully fledged Russian fascistic militarism. The stage has already been set up by Putin for the latter scenario. But even here Putin is taking a big gamble. Already he is causing Russia to be viewed negatively by the rest of the global community, not only by the EU and the US. The credibility of Russia in relation to the war in Ukraine has taken a rather steep dive at the UN. Russia may be able to use conspiracies as a "major tool" with which to manage its own people, but this will simply not work on the rest of the global community.

The question why so many EU countries are still afraid to bite the bullet and seriously confront Putin and his actions in Ukraine still remains.Why is only Ukrainian President Poroshenko standing up to Putin? Only last Sunday  he said that Kiev’s EU Association Agreement will come into force in full in November despite an agreement between Moscow, Brussels and Kiev to postpone full implementation until January 2016. This has rather angered Putin, forcing him into even more apopletic threats.“Russia is guided by the agreements reached at the three party talks, but at the same time is ready to defend its position. Russia remains committed to these agreements, but is ready to respond if [a party to the deal acts] in breach of previously reached agreements,” Dmitry Peskov (Putin's spokesman) said on 29 September 2014.

Dmitry Peskov. Putin's spokesman

Is this latest threat of Putin yet another indicator that the wobbling Russian economy could soon be teetering on the precipice of a headlong nosedive into recession? All those nest eggs that were stored away when the Russian economy was in full flow, and oil and gas money simply swamped the government coffers to overflowing, are already beginning to disappear thanks, in particular, to the implementation of the latest EU and US (and Japanese) sanctions against Russia.

(to be continued)