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Russia’s Energy Stranglehold

This comes from an op/ed in the Washington Times by William F. Shughart II of the Independent Institute:

When its tanks rolled into Georgia, the Kremlin sent notice it intends to dominate the oil and natural gas resources of the former Soviet republics in the Caspian Sea basin, raising the threat of supply disruptions to Europe. That possibility could give Russia political leverage over Germany, the Czech Republic, Slovakia, Ukraine and other Central and East European countries that rely heavily on Russian fuels.


As rising oil prices strengthened the Kremlin’s hand, Mr. Putin clamped down on Russian businessmen, most notably by prosecuting and imprisoning Yukos Oil Co. Chief Executive Officer Mikhail Khodorkovsky.

The company’s assets were later sold at bargain-basement prices to state-owned enterprises, one of which – Gazprom – was headed by Dmitry Medvedev, Mr. Putin’s handpicked successor as president.


Despite existing contracts with Western oil companies, the Kremlin voided exploration licenses held by ExxonMobil and Chevron, then forced Royal Dutch Shell to sell some of its holdings to Gazprom. Increasing the pressure, Russia then raised previously subsidized natural gas prices to Ukraine and Belarus, two important conduits for gas exports to the West.


The new Obama administration needs to realize Russia has a potential stranglehold on America’s European allies and will play its energy card when it wants to: to block the further expansion of NATO, for example, or the EU.