May 16 2014, 6:28pm CDT | by Forbes
The crisis in Ukraine has provided the West with a stark reminder of an inconvenient fact: Many of Europe’s liberal democracies are heavily dependent on Russia for their energy supplies. The latest move by Vladimir Putin in his campaign to destabilize the fragile elected government of Ukraine came this week, as he announced that supplies of natural gas to the country would be cut off at the end of May unless Ukraine pays for them in advance.
Ukraine owes Russian gas giant Gazprom $3.5 billion, Putin said in a May 15 letter to European leaders. In April, Gazprom responded to the ouster of former Ukrainian president Viktor Yanukovych with a sharp hike in the price of the gas it sells to Ukraine, going from $268 per 1,000 cubic meters to $385. Russia has throttled its gas pipelines into Ukraine twice before, in 2006 and 2009.
Russia supplies around 27% of Europe’s natural gas, according to Emergingmarkets.org – much more in the case of former Soviet Bloc countries like Bulgaria (85% of its gas comes from Russia) and the Czech Republic (80%). Nearly half of the gas headed west to European markets flows through Ukraine.
The Law of Possession
Russia’s takeover of the Crimean peninsula has also thrown into turmoil plans for developing offshore oil & gas resources in the Sea of Azov and the northern Black Sea, where Chornomornaftogaz, Ukraine’s state-owned oil & gas producer, controlled rich oil & gas fields and at least a dozen offshore drilling platforms. Since the annexation of Crimea, Russia has laid claim to those resources. “If this is a part of Russia,” declared Denis Khramov, Russia’s deputy natural resources and ecology minister, “then it is subject to Russian law.”
Energy chaos on the edge of Eastern Europe has already prompted Fitch Ratings to warn that cutting off Russian gas supplies to Europe could derail the fragile economic recovery on the continent.
All of this points to a further sobering truth, of which Western democracies must be forcefully reminded at least once a decade: There is no national security without energy security. This fact will be less and less escapable as the effects of climate change accelerate, according to a major new report from CNA Corp., a strategic risk analysis firm in Arlington, Virginia. Written by the company’s Military Advisory Board, a panel of former high-ranking military officers, the report warns that inaction on climate change is seriously undermining the post-Soviet world order, destabilizing critical regions, fomenting terrorism, and endangering irreplaceable supplies of water and energy.
No Security Without Energy Security
“The volatile mixture of population growth, instability due to the growing influence of nonstate actors, and the inevitable competition over scarce resources will be multiplied and exaggerated by climate change,” the report says.
That conclusion was echoed by Helge Lund, CEO of the Norwegian oil & gas major Statoil, in an address at Columbia University’s Center on Global Energy Policy Spring Conference. “Energy policy is economic policy,” Lund remarked, adding that “Now is the time to support investments that spur carbon reduction. In that perspective, we at Statoil are strong believers in a high carbon price.”
What a growing chorus of top generals and admirals and senior business executives is saying is this: The proliferation of renewable energy sources, the spread of energy efficiency and conservation measures, and the reduction of reliance on fossil fuel imports from volatile (or hostile) states aren’t just feel-good green policies; they’re critical strategic responses to the harsh realities of climate change and growing resource conflicts. The world leaders who would resist a price on carbon include Vladimir Putin, whose expansionist tendencies and contempt for the censure of Western democracies is based on his country’s energy might.
If the world fails to act, wrote retired Adm. David Titley, former head of the Navy’s task force on climate change, in the CNA report, “I am afraid we will soon start getting into varsity-level instability.”
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.
blog comments powered by Disqus