Meanwhile, This Is What Putin Is Doing…

For the last few days we have been bombarded with words that appear ‘peaceful’ and problem-solving from Russia with love. Of course, ‘no change’ benefits mother Russia the most as his government’s gas revenues (and political power) will continue to flow from Europe (a quarter of Russian government income comes from being Europe’s gas supplier). So it will come as no surprise that amid the Mother Theresa acts, The Telegraph reports that Putin is readying delivery of more S-300 air-defense missile systems to Iran and will continue to discuss “working together in the nuclear energy spehere.” Combine that with experts’ views that Russia’s plan to dismantle Syria’s stockpiles of mustard gas, sarin, VX nerve agents is a long shot; initially “sounding attractive, but very quickly, operational problems could derail obtaining international control, much less actually destroying the arsenal.” It would appear, despite all the chatter, that Putin is increasing his power-base in the region.

Iran-Aid (via The Telegraph),

President Hassan Rouhani is set to meet Putin on the sidelines of a summit of the Shanghai Cooperation Organisation held in Kyrgyzstan on Friday, in the newly-elected centrist cleric’s first meeting with a major world leader. The Kommersant business daily reported Wednesday that Putin will offer to supply Iran S-300 air defence missile systems as well as build a second reactor at the Bushehr nuclear plant.

forex

The S-300 offer would be a particularly contentious development given it would essentially revive a contract for similar missile systems that Russia cancelled in 2010 after heavy Israeli and US pressure. Putin’s spokesman Dmitry Peskov told Kommersant thatPutin and Rowhani were expected to discuss “working together in the nuclear energy sphere” and “questions of military technical cooperation” at the summit in Bishkek.

Chemical Weapons Decomissioning ain’t gonna happen (via WSJ). Of course, the practicalities of dismantling and storing these weapons is hugely problematic.

Carrying out Russia’s plan to dismantle Syria’s stockpiles of mustard gas and sarin and VX nerve agents is viewed as a long shot by many diplomats, top experts and current and former U.S. officials.

The Russian proposal sounds attractive, but very quickly, operational problems could derail obtaining international control, much less actually destroying the arsenal,” said Amy Smithson, an expert on chemical weapons at the James Martin Center for Nonproliferation Studies in Washington, D.C.

Syria’s chemical-weapons arsenal has been developed and stored in at least eight sites across the Arab country. Many of the missiles and artillery pieces are believed to have been moved since civil war broke out in 2011, according to current and former U.S. officials.

U.S. official cast doubt about how any deal to strip Mr. Assad of his weapons could be verified. “That is a problem,” the official said. “How verifiable does it need to be? Getting 50% or 60% of the chemical weapons is not good enough. We would have to get 90% to 95%.”

Mr. Assad’s arsenal is significantly larger than Col. Gadhafi’s was. And many experts don’t believe the Syrian leader intends to give up his weapons, in part, because his government is still at war.

“The Libyans basically decided to show us everything,” said Ms. DeSutter. “I can’t believe this will be the case with the Syrians.”

and by way of background – why Putin will defend this side of the game… (via Golem XIV’s blog),

European Energy dependence

Europe needs gas. Russia has it. Only Norway provides more gas to Europe (35% versus 34%). As Europe continues to rely more heavily on gas, as it will especially if Germany does phase out its nuclear reactors, then Russia will, unless something changes, become the number one supplier. Europe also depends on Russia for 27% of its oil imports, 24% of its coal imports, 30% of its Uranium imports and Russia is the third largest supplier of Europe’s electricity imports. (Figures are from Congressional Report – Europe’s Energy Security. Many thanks to reader Pamela Law for bringing it to my attention.) It is clear, Europe is dependent on Russia to keep the lights on.

That dependence and power is not, however, spread evenly.  To understand who is dependent we need to see who imports how much and who from.

Using figures from 2012, Germany is the largest gas importer in Europe at 3065 billion cubic feet annually. Next is Italy with 2359 billion, then Britain with 1734, France with 1600 , then Spain with 1225 and Belgium with 1084 (half of which it uses itself and half it re-exports).

 

 

But this only gives you a partial picture because not all this gas comes from Russia. The chart below while a little confusing does give a clear general picture of who is dependent on Russia.

 

The lighter the colour the less reliant the country is upon Russia. The darker the colour therefore, the more power Russia has, potentially.

Spain, for example, though reliant on gas imports does not get its gas from Russia. Neither does Britain (at least not directly). While Austria, though its imports are small in volume, depends very heavily on Russia.

In fact the whole central block of Europe, from Greece and Cyprus in the South up to Germany and Belgium in the North depend on Russia. Austria is the most dependent of the ‘core’ nations. Austria’s weakness and Russia’s power were recently made very clear. Until recently Austria was going to be the European terminus of the newest Russian gas pipeline project – the Southstream. Southstream which is now under construction will run under the Black Sea into Bulgaria, pumping 2.2 Trillion Cubic feet of gas per year. To be the European terminus would have brought money and certain power to Austria. However, when the Russian gas giant, Gazprom’s purchase of a 50% stake in a the Central European Gas Hub (CEGH), which is in Austria, was blocked by the European Commission, Russia changed the terminus from Austria to Italy. Italy has traditionally had closer relations with Russia on energy. Divide and rule.

So much for the vulnerable.What about the powerful?

Germany  is Europe’s paymaster and arguably its most powerful nation. However Germany also relies on Russia for 35% of its gas imports and is Russia’s largest client.

Russia has considerable power over Europe and has every reason to make sure it stays that way. No surprise therefore, that 

Russia has not been idle when it comes to protecting its share of the European Natural Gas Market. Moscow, including the state controlled company Gazprom, has attempted to stymie, European-backed alternatives to pipelines it controls by proposing competing pipeline projects and attempting to co-opt European companies by offering them stakes in those and other projects.

It’s worth noting that Russia gets not only political power but also massive income from this arrangement. In 2011 Gas exports generated at least half of all Russian government revenue and half of that came from exports to Europe. Thus a full quarter of all Russia’s government income comes from being Europe’s gas supplier.

European nations have responded to this situation in different ways.  Spain is lucky, it already imports most of its gas by pipeline from Algeria, so Russia has little leverage over Spain from gas sales at least. You might have thought Spain would join the US coalition against Syria and Russia. But then again Spain has little in the way of an armed force, so maybe not. Italy has a pipeline from Libya but hopes to remain the terminus for Russia’s South Stream pipeline. So no surprise Italy didn’t join the ‘bomb Syria’ chorus. Italy’s main energy concern recently has been to make sure that in a post Gaddafi Libya, Italy is still a preferred customer.

The UK has chosen to invest in LNG (Liquified Natuiral Gas as opposed to merely CNG, Compressed Natural Gas  – the Russian pipeline variety). Britain is Europe’s leading importer of LNG, which you would have thought, might have given it considerable freedom from Russia. Must have been a surprise all round that GB didn’t join the USA.

France relies on Russian gas nearly as much as Italy does. However, unlike Italy, France has also been building LNG capacity like Britain. The largest supplier of LNG to Europe is Qatar.

For its part Germany has decided to get closer to Russia rather than diversity its supply. Germany supported the building of the Nord Stream pipeline  which connects Germany directly to Russia via a pipeline under the Baltic. This direct connection means Germany is reliant on no third party’s relations with Russia. But those in Europe downstream do rely on Germany. This can only add to Germany’s pre-eminence.

Putting this together it seems clear to me we have most of Europe already considerably captured by their energy dependence upon Russia. Germany is not going to anger Russia because of Nord Stream and neither is Italy, because of South Stream.

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