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Cashing in on Empire

Today Yulia Latynina has an important column running in the Moscow Times, which makes mention of a new item of legislation in the United States that would remove sovereign immunity from countries participating in cartels. Yulia is a national treasure: this article demonstrates once again not only her admirable prescience but also her unflagging courage in identifying Russia’s greatest scarcity … rule of law.

Cashing In on Empire By Yulia Latynina The day after U.S. Defense Secretary Robert Gates met with President Vladimir Putin and invited Russia to take part in a joint anti-ballistic missile defense system to counter the threat from rogue states, the head of the General Staff, General Yury Baluyevsky, snapped that Russia “would not cooperate in the creation of an anti-missile system directed against ourselves.” Two days later, Putin announced that Russia would suspend its participation in the Treaty on Conventional Armed Forces in Europe. Strange as the reaction was, it might have been in response to legislation introduced in Washington to eliminate sovereign immunity for countries participating in international cartels. The primary aim of the bill, which was approved by the U.S. Senate Judiciary Committee during Gates’ visit to Russia, is to counteract the OPEC-style gas cartel Russia has shown interest in helping create. One of Russia’s main foreign policy goals over the last few years has been to help Gazprom buy gas transport and distribution networks in Europe. Not even in the days of Peter the Great and his niece, Empress Anna Ivanovna, was foreign policy based on something as strange as the purchase of commercial real estate beyond the country’s borders. But this goal is clear to anyone who has read Putin’s public speeches over the last two years. In virtually every meeting with European leaders, Putin has brought up Russia’s desire to buy the West European pipelines. His message has been, “We’ll sell you the gas if you sell us the pipes.” But this plan has so far fallen through, not because it was unrealistic, but because of the way Putin went about trying to achieve it. The Kremlin conducted the pipeline negotiations with the same blunt diplomacy that the pro-Kremlin youth groups demonstrated in throwing eggs at the Estonian Embassy last week. It should come as no surprise that the proposals fell on deaf ears. Moscow’s next move was to replace that grand commercial plan with a new one: the creation of a cartel of gas-producing nations. Instead of meeting with German Chancellor Angela Merkel, Putin began holding talks with the emir of Qatar, switching his tack from the European Community to Saudi Arabia. In order to form an OPEC-style gas cartel, it was indispensable to first obtain Qatar’s agreement, since that country and Russia are the two largest gas producers in the world. The other major players in this game are Iran, Iraq, Indonesia and Algeria. As was the case with the pipeline plan in Europe, the idea of a gas cartel is based upon the ability of authoritarian governments to extract a commodity at well below market prices domestically and then sell it on the world market to reap enormous profits. Thus, a gas OPEC is just one more way for the Kremlin to convert its empire into a cash cow. For one of the potential cartel member states, it is easy to see how important Russia’s influence in the Middle East is, with its status as an empire and its ability to provide arms and enriched uranium. The problem, however, is that Russia’s status in the Middle East is not as high as it appears to be on state television. For the emir of Qatar, for instance, it was a fairly serious insult when his personal guest, Chechen separatist Zelimkhan Yandarbiyev, was killed in his country. Putin may have smoothed things over, but some aftertaste lingers. For this reason the gas cartel idea will likely go the same way as the pipeline plan. And if the Kremlin’s plans failed in Europe primarily because of its inability to conduct negotiations properly, then they will fall short in the Middle East because Russia’s status there is even lower than that of the United States. Not even an empire can always call the shots. Yulia Latynina hosts a political talk show on Ekho Moskvy radio.