13 February 2008

GPPi Fellow publishes article on five “myths” of Russian energy

Andreas Goldthau, a GPPi Fellow, published an article in the February-March 2008 issue of the political journal Policy Review. Entitled “Resurgent Russia? Rethinking Energy Inc.: Five myths about the ‘energy superpower’”, the piece challenges some of the key assumptions underlying Western policy towards Russia.

Russia is back on the international stage. Its resurrection towards a
$1 trillion economy at an average economic growth rate of 6.7 percent for the past decade is mainly attributed to high oil prices. At the same time, Russia's energy policy has become the subject of increasing controversy. As several recent gas disputes with Ukraine and Georgia suggest, energy has emerged as Moscow's foreign policy tool. Moreover, fears have emerged that a looming Sino-Russian alliance, glued together by oil and gas deals, could challenge existing power structures. In short, the new Russia is portrayed as an 'Energy Inc.', economically fueled by oil and gas, able to lubricate political alliances by oil and gas deals, and equipped with Gazprom as a foreign policy arm.

Goldthau's article challenges these assumptions on five accounts. He argues that the Kremlin does in fact not dispose of an effective 'energy weapon' due to structural logics of the energy markets. By examining the Russian gas market, he reveals that the rationale behind the recent gas disputes is to large extent sheer profit maximization. Goldthau also questions the assumption that Moscow will subordinate its economic interests in the name of a geostrategic Sino-Russian alliance. Further, he argues that Russia's economic kick-start is not based on high energy prices but a result of the 1998 devaluation. Finally, he shows, Russia will have a hard time retaining the status of an 'energy superpower' as it risks running out of gas instead, mainly due to heavy underinvestment.

Despite the excitement and nervousness Russia's energy policy may be stirring up in the West, Goldthau concludes that Western excitement about the Russian 'Energy Inc.' appears to be caused largely by a well-crafted piece of Russian PR.

To read the full article, please click here.

For more information please contact Andreas Goldthau.

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