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NATURAL GAS AS AN INSTRUMENT

OF RUSSIAN STATE POWER

Alexander Ghaleb

Letort The

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Letort Paper

NATURAL GAS AS AN INSTRUMENT

OF RUSSIAN STATE POWER

Alexander Ghaleb

October 2011

The views expressed in this report are those of the author and do 

not necessarily reflect the official policy or position of the Department of the Army, the Department of Defense, or the U.S. Government. Authors of Strategic Studies Institute (SSI) publications 

enjoy full academic freedom, provided they do not disclose classified information, jeopardize operations security, or misrepresent official U.S. policy. Such academic freedom empowers them 

to offer new and sometimes controversial perspectives in the interest of furthering debate on key issues. This report is cleared for 

public release; distribution is unlimited.

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This publication is subject to Title 17, United States Code, Sections 101 and 105. It is in the public domain and may not be copyrighted.
ii

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Comments pertaining to this report are invited and should 

be forwarded to: Director, Strategic Studies Institute, U.S. Army 

War College, 632 Wright Ave, Carlisle, PA 17013-5046. 

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The author would like to express his gratitude to Professor 

Nicholas Kenney from the National Defense University for his 

trenchant critiques and guidance during the research and writing stages of this monograph. I am also grateful to the office of 

United States Senator Richard Lugar—and particularly to Marik 

String, Senator Lugar’s Professional Staff Member for European 

and Eurasian Affairs, Committee on Foreign Relations—for encouraging me to examine Russia’s use of natural gas as an instrument of coercion.

This monograph was made possible by conversations and interviews with a large number of energy security experts, energy 

professionals, natural gas lobbyists, and policymakers from both 

the United States and the European Union. Particular thanks to 

Alan Hegburg—Senior Energy and National Security Fellow at 

the Center for Strategic and International Studies—and Rosemary Kelanic—International Security Research Fellow at the 

Harvard Kennedy School—for helping me to better understand 

when oil and natural gas can or cannot be used as an instrument 

of coercion. Also to Vladimir Lefebvre—Senior Fellow at the 

Center for Advanced Defense Studies—Dr. Jennifer Jefferis—

Professor of International Security Studies and Kenneth Baker—

Distinguished Professor and Department of Energy Chair at the 

College of International Security Affairs at the National Defense 

University—and his research assistant, James Windle, for their 

early endorsement of my focus on Russian reflexive control. 

Furthermore, Robert Cekuta—U.S. Department of State Deputy Assistant Secretary for Energy, Sanctions and Commodities—

and Edward Christie—Research Partner with the Pan-European 

Institute (PEI) of the Turku School of Economics (Finland)—were 

instrumental in my understanding of the energy security challenges faced by the European Union. I am also grateful to the 

numerous energy-related lobbying groups—and particularly to 

the members of the World LP Gas Association for allowing me 

to attend their WLPGA North America/Europe Summit free of 
iii

charge—they were very eager to enhance my knowledge with 

regard to both the advantages and dangers of fossil fuels, and to 

Dr. Charles Ebinger—Director of the Energy Security Initiative 

at the Brookings Institution—who taught me a very important 

lesson about remaining objective when talking to lobbyists. 

Finally, I would like to extend my gratitude to a certain senior oil and gas executive from Doha, Qatar, Mark Trgovich—

Marketing Director at Qatar International Petroleum Marketing 

Company—who took precious time away from his incredibly 

busy schedule to educate me about the geostrategic significance 

of natural gas in the contemporary security environment; and to 

all the government agencies and private companies that offered 

me a job while I was conducting research for this monograph—I 

hope your offers are still on the table when my military contract 

expires in January 2014.

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ISBN 1-58487-510-0

FOREWORD

The slow re-emergence of Russia as a world power 

despite its weak military force is of critical significance 

for the strategic interests of the United States in Europe. Since the Cold War, Russia has been perceived 

as a broken nation that no longer represents a threat to 

the North Atlantic Alliance. This monograph emphasizes that Russia overcame this major vulnerability by 

developing the capacity to use unilateral economic 

sanctions in the form of gas pricing and gas disruptions against many European North Atlantic Treaty 

Organization (NATO) member states. It agrees with 

many scholars and politicians alike who fear that Russia will leverage its monopoly of natural gas to gain 

political concessions. The author suggests it is only a 

matter of time until Russia will use natural gas as an 

instrument of coercion to disrupt NATO’s decisionmaking process.

A key aim of this monograph is to explain why 

the rapid global transition from oil to natural gas 

will redefine the way policymakers and strategic security scholars look at the scarcity of natural gas in 

Europe. What is unique about this monograph is that 

it analyzes the oil and gas markets separately and illustrates, with examples, why in Europe natural gas 

is a more potent instrument of coercion than oil. Despite these revelations, only 1 month after the German 

Government announced its plans to abandon nuclear 

power by 2022, in July 2011 German Chancellor Angela Merkel disclosed that Germany will need to import more Russian natural gas to make up for the loss 

of over 10 gigawatts of generation capacity. Almost 

simultaneously, Germany’s largest energy utilities 

group, RWE, and the Russian state-controlled gas giv
vi

ant, Gazprom, have agreed to form a strategic partnership. The author argues that situations like these 

create a delicate state of affairs that will ultimately 

undermine the de facto power of NATO in the contemporary security environment, particularly vis-àvis Russia, unless the dependency on Russian natural 

gas is promptly addressed.

 

DOUGLAS C. LOVELACE, JR.

Director

Strategic Studies Institute
vii

ABOUT THE AUTHOR

Alexander Ghaleb is a U.S. Army captain with 

several assignments to infantry, military intelligence, 

and special operations positions. Captain Ghaleb has 

written several articles dealing with issues related to 

national security. He has studied at top European universities in Germany, France, and Hungary. Captain 

Ghaleb holds a B.BA. in international business from 

the George Washington University, an M.A. in strategic security studies from the National Defense University, and he is an energy security Ph.D. student in 

the Department of Environmental Sciences and Policy 

at the Central European University.

SUMMARY

The nation that leads on energy will be the nation that 

leads the world.1

 David Sandalow

 The Brookings Institute

The potential for natural gas is enormous.2

Barack Obama

President of the United States

Russia enjoys vast energy and mineral resources 

which serve as a basis to develop its economy; as an 

instrument to implement domestic and foreign policy. 

The role of the country on international energy markets determines, in many ways, its geopolitical influence.3

Vladimir Putin

Prime Minister of the Russian

Federation

While in the 1980s oil was considered “the only 

commodity whose sudden cutoff would have a drastic 

effect on national welfare or on economic activity,”4

the 2030s5

 come with the image of a world in which 

the sudden cutoff of Russian gas to Europe will have 

similar disastrous effects on the economies of many 

European and North Atlantic Treaty Organization 

(NATO) member states. This monograph argues that 

Russian control of the natural gas supplies and of the 

export infrastructure systems of natural gas to Europe 

gives tremendous leverage to Russia in imposing its 

national security policy. 

If in the traditional security environment the use 

of military force was the Union of Soviet Socialist 

ix
x

Republic’s (USSR) preferred method of political coercion, in the contemporary security environment Russia is struggling with a weaker military that no longer represents a threat to the North Atlantic Alliance. 

This monograph emphasizes that Russia overcame 

this major vulnerability by developing the capacity to 

use unilateral economic sanctions in the form of gas 

pricing and gas disruptions against many European 

NATO member states. It agrees with many scholars 

and politicians alike who fear that Russia will leverage its monopoly of natural gas to gain political concessions;6

 and it supports the viewpoint that “Russia’s energy-centered foreign policy is not limited to 

the states of the former Soviet Union and is clearly 

designed to increase its leverage in key geostrategic 

theaters and over United States allies.”7

 While Russian 

officials insist that these fears are overblown, skeptics 

believe that “if there were a serious enough dispute, 

the Russians might do just that [use its energy security 

leverage against NATO member states].”8

The concerns of these skeptics cannot be dismissed 

without an unbiased examination of the scarcity of 

natural gas in the contemporary security environment, of the salience of natural gas in Russia’s national security strategies, and of the natural gas pipeline 

politics in Eastern and Central Europe. To address 

these questions, the monograph has been separated 

into four chapters. Chapter 1 will demonstrate that 

like oil in the traditional security environment, under 

certain conditions, natural gas can serve as an effective unilateral instrument of state power in the contemporary security environment, and that its disruption 

by Russia will prove deadly to the economies of many 

NATO member states in Eastern and Central Europe 

(traditionally, Russia’s sphere of influence). Chapter 2 

will explain why Russia perceives NATO as a hostile 
xi

alliance, and how Russia uses natural gas as an instrument of coercion in its sphere of influence. In Chapter 

3, a look at Russia’s use of natural gas as a national 

security instrument of coercion in negotiations with 

Ukraine will help energy security analysts determine 

the conditions under which Russia will leverage its 

energy superpower position in its relations with European Union (EU) and/or NATO member states. 

Additionally, a look at Russia’s failures in the use of 

such coercion in Ukraine will assist NATO member 

states in Eastern and Central Europe to identify ways 

to reduce the threat of disruption of Russian gas supplies. Finally, Chapter 4 will expose the processes Russia uses in the context of natural gas negotiations to 

bribe Western European nations—such as Germany, 

France, and Italy—to divide the NATO Alliance, and 

to rule over its traditional sphere of influence in Eastern and Central Europe.

To avoid digressing into general theory, this monograph also makes one significant assumption: that 

unless new alternative energy sources emerge, natural gas will surpass oil by year 20509 and will grow to 

become the fuel of the future. While there is enough 

body of evidence to illustrate this, some of which is 

discussed in Chapter 1, it is not my purpose to enter 

into ideological arguments on the future global production and demand for natural gas. I will, instead, 

focus on the energy security implications of the current “global shift to gas,”10 and on how this move will 

change the way we look at Russia in the contemporary 

security environment.

Finally, given time and space constraints, this 

monograph will not be able to proffer solutions to 

Russia’s fast ascent to great-power status. However, 
xii

the conclusion will address several recommendations 

and implications requiring further research as a starting point for policymakers and national defense officials in their search for comprehensive answers to 

Europe and NATO’s growing dependency on Russian 

natural gas.

ENDNOTES - SUMMARY

1. David Sandalow, “Keynote Speech to Battery Technology 

for Transportation: From Scientific Discovery to Marketplace 

Event,” Washington, DC: The Brookings Institution, February 8, 

2011.

2. Bryan Walsh, “The Gas Dilemma,” (Cover Story), Time, 

Vol. 177, No. 14, April 11, 2011, p. 42.

3. Roman Kupchinsky, “LNG--Russia’s New Energy Blackmail Tool,” Eurasia Daily Monitor, Vol. 6, No. 77, April 22, 2009.

4. Richard H. Ullman, “Redefining Security,” The MIT Press, 

International Security, Vol. 8, No. 1, Summer, 1983, p. 144.

5. Flexibility in Natural Gas Supply and Demand, Paris, France: 

Organization for Economic Cooperation and Development 

(OECD)/International Energy Agency (IEA), 2002; Joe Barnes et 

al., “Introduction to the Study,” David G. Victor, Amy M. Jaffe, 

and Mark H. Hayes, eds., Natural Gas and Geopolitics from 1970 to 

2040, New York: Cambridge University Press, 2006, p. 3.

6. Jeffrey Mankoff, Eurasian Energy Security, Washington, DC: 

Council on Foreign Relations, 2009; Roman Kupchinsky, “LNG - 

Russia’s New Energy Blackmail Tool,” Eurasia Daily Monitor, Vol. 

6, No. 77, April 22, 2009.

7. Anita Orbán, Power, Energy, and the New Russian Imperialism, Westport, CT: Praeger Security International, 2008, p. 177.
xiii

8. Marshall Goldman, Petrostate: Putin, Power, and the New 

Russia, New York: Oxford University Press, 2008, p. 158.

9. Barnes et al., p. 3.

10. Ibid., p. 4.

1

CHAPTER 1

REDEFINING THE SCARCITY OF NATURAL 

GAS IN THE CONTEMPORARY SECURITY 

ENVIRONMENT

Natural gas will be the currency through which energy-rich countries leverage their interests against import dependent nations. The use of energy as an overt 

weapon is not a theoretical threat of the future; it is 

happening now.1

Senator Richard “Dick” Lugar

The purpose of this chapter is to show why natural 

gas can be used as an effective instrument of unilateral 

sanctions in the contemporary security environment.2

This issue is important not only because energy security3

 is an integral part of any state’s national security, 

but also because the scarcity of natural resources has 

been proven to create dependencies that could cripple 

a nation’s economic development. Of course, a strong 

economy depends not only on natural resources; but 

it is an indisputable fact that without access to natural 

resources, national industries and economies cannot 

grow. Under the right conditions, severing access to 

vital natural resources, such as oil, can also lead to 

imminent economic decline. This has already been 

demonstrated by the oil crises of the traditional security environment,4

 which had devastating effects on 

the economies of both developing and developed nations. A clear example is the 1973 Arab Oil Embargo, 

when a mere 7-percent cut in oil supply had a profound impact on both economies and consumers.5

 The 

purpose of this chapter is to show how the two conditions—political and economic—that arise from the 
2

nature of the natural gas global market and players 

make natural gas a potent tool of coercion for energy 

superstates, such as Russia. Furthermore, while the 

tendency of many scholars in the energy security field 

has been to analyze a nation’s dependency on oil and 

gas together, this chapter will analyze the two energy 

markets separately. This is an attempt to determine if 

natural gas is a more potent instrument of coercion in 

the contemporary security environment than oil was 

in the traditional security environment. 

Until recently, never in history have unilateral 

sanctions of gas disruptions been successfully employed. The notion that nation states, if given the 

opportunity, will resort to using economic statecraft 

to address foreign policy disputes is not new; it can 

be traced back in history all the way to 432 BC and 

the Megarian decree.6

 However, the notion that energy superstates, such as Russia, will leverage their 

neighbors’ scarcity of natural gas and attempt to use 

unilateral economic sanctions for political ends is a 

new concept, and one that does not have the full support of academia.7

 While some scholars recognize that 

unilateral sanctions can be successful when high dependency and lack of expedient alternatives to replace 

this dependency exist,8

 there are almost no examples 

presented in more recent academic literature to support the supposition that gas disruptions acted as the 

main instruments of coercion. 
3

ON DISAGREEMENTS INVOLVING THE 

THEORY OF UNILATERAL ECONOMIC 

SANCTIONS

Many of the disagreements between political 

scholars emerge from the use of definitions. Vague 

uses of terminology and ambiguous definitions almost always produce disputable conclusions. This 

treatise will adopt Steve Chan’s definition of sanctions 

as “the actual or threatened withdrawal of economic 

resources to affect a policy change by the target,”9

and will complement that definition with that of Ivan 

Eland, who sees the purpose of sanctions “to have the 

maximum political effect through introducing psychological pressure against its political leaders and 

populace.”10

Despite the arguments of political science scholars 

like Edward Mansfield,11 Johan Galtung,12 and George 

T. Doran,13 who argue against the use of sanctions as 

tools of foreign policy, this treatise belongs to the “unilateral sanctions can work” school of thought. This 

treatise also argues that under certain political and 

economic conditions, unilateral sanctions “can indeed 

work in terms of influencing the policies of the actor 

against which they are ostensibly targeted.”14 While 

the utility of sanctions was favored by many political 

scientists—most notably David Mitrany15 and Albert 

Hirschman;16 and more recently by Gary Hufbauer, 

Jeffrey Schott, and Kimberly Elliott (HSE)17—my argument is that under certain conditions unilateral sanctions can represent even better instruments of coercion than multilateral sanctions. Thus, I disagree with 

scholars like Barfield and Groombridge,18 who assert 

that only multilateral sanctions ought to be considered 

by policymakers. In fact, recent research shows that 
4

the success rate of economic sanctions decreases when 

sanctions are multilateral, multi-issue, and when no 

international institution is present.19

This monograph will not attempt to challenge 

the belief that multilateral sanctions “almost never 

work.”20 Instead, it agrees with the estimate of Hossein Askari, who writes that “the idea that economic 

sanctions can address foreign policy issues without 

military action requires a host of requisite economic 

and political conditions that are rarely found in the 

world in the right combination and at the right time.”21

More specifically, multilateral sanctions require a coalition with the political will and the economic power 

to impose the sanctions. Because this is the case, there 

are two main reasons depicted in academic literature 

to explain why multilateral sanctions more often than 

not fail: failure to agree on the strategic purpose of imposed sanctions (thus, a political consideration); and 

the differential cost of sanctions among the senders 

(largely an economic factor).

First, allies hardly ever agree on the objective of 

imposed sanctions. David Baldwin writes that “neither war nor economics can be divorced from politics; 

each must be judged as an instrument serving the 

higher goals of the polity”;22 economic sanctions are 

no exception to this rule. If the purpose of sanctions is 

“to affect a policy change by the target,”23 then senders (the countries imposing the sanctions)24 must determine which policy the target (the immediate object 

of the sanctions episode)25 is expected to change. Since 

each sender has different reasons to impose sanctions 

on the target (causing a conflict of the ends), and since 

only rarely do these motives coincide with those of the 

other senders,26 reaching an agreement on imposing 

multilateral sanctions is extremely hard to realize.
5

Second, the cost of imposing sanctions is simply greater for some sender states than the potential 

benefits brought upon by the sanctions.27 Winston 

Churchill once said that “the inherent vice of capitalism is the unequal sharing of blessings”28; and this is 

also the case with the benefits of imposing economic 

sanctions. There are times when the costs of imposing 

sanctions are just too high to bear by the sender. HSE 

determined that the relative cost to the sender can be 

classified in one of four categories: “net gain to the 

sender” (usually the case when only aid is withheld); 

“little effect on sender” (when insignificant trade disruptions occur); “modest loss to sender” (when trade 

is lost, but the loss is not substantial); and “major loss 

to sender” (when loss of trade adversely affects the 

sender’s economy).29 Each sender fits into one of the 

categories listed above, and in the case of multilateral 

sanctions, almost never do they fit in the same category. Because this is the case, senders that incur a major 

loss as a result of the sanctions are more likely to stop 

supporting the sanctions—causing their implementation to fail. 

As seen above, and almost every time, the failure 

of multilateral sanctions lies with the sender states, 

and not with the instruments of coercion (the means). 

This is not the case with unilateral sanctions. Some 

scholars wrongly assume that if an agreement cannot 

be reached on multilateral sanctions, then, logically, 

unilateral sanctions will also fail, because if unilateral 

sanctions are imposed, there is no guarantee that the 

target will not simply circumvent the sender by trading with other states.30 The problem with this argument is that it does not apply to situations in which 

the sender has a monopoly on the instruments of coercion. As we will see later in this monograph, Russia’s 
6

monopoly of the gas supply to Eastern Europe allows 

it to impose unilateral sanctions at will, without the 

fear that the target will attempt to get gas from other 

European states (simply because the other European 

states also get much of their gas from Russia). In fact, 

empirical evidence31 derived from the HSE data set (a 

total of 115 cases between 1970 and 1990),32 as well as 

from the Threat and Imposition of Sanctions (TIES) 

data set developed by T. Clifton Morgan (a total of 888 

cases from 1971-2000)33 “demonstrate convincingly 

and consistently that multilateral sanctions were less 

effective than unilateral sanctions,”34 and that under 

certain conditions, unilateral economic sanctions can 

act as successful tools of state power. This fact also 

explains why oil consistently failed to be used as an 

instrument of coercion against Western Europe in the 

past, because no one state holds the monopoly of supply and transportation of oil to Europe.35

The monopoly or near-monopoly of the sources of 

a critical energy supply not only satisfies the main economic condition for imposing unilateral sanctions, but 

also creates an environment in which the sender state 

can afford to impose economic sanctions without having to rely on a coalition of senders with conflicting 

political objectives—resolving the main political condition that is not satisfied by multilateral sanctions. As 

we will see in later chapters, Russia’s monopoly of the 

sources of natural gas to most of Eastern and Central 

Europe allows Russia to impose sanctions as a single 

state, because it does not have the same coordination 

and differential cost problems of a multilateral coalition of senders. 

Compared to natural gas, the economic and political conditions to impose unilateral sanctions were, 

however, rarely present for oil. While crude oil mar-
7

kets have had disruptions in the past, almost none of 

them have been politically motivated,36 and when they 

were, they only served to disprove the coercive potential of oil.37 In fact, Harvard University’s Rosemary 

Kelanic38 insisted that there are no examples in history 

in which oil was successfully used as an instrument 

of coercion,39 arguing that the global market for oil is 

structured to exacerbate the difficulties of imposing 

economic sanctions.40

OIL AS THE DOMINANT STRATEGIC 

RESOURCE OF THE TRADITIONAL SECURITY 

ENVIRONMENT

We know today that coal fueled the Industrial 

Revolution during most of the 19th century, resulting in unprecedented economic growth for both the 

European and the North American continents. The 

shift to oil started on the brink of the 20th century, 

when Lord Bearsted—the head of Shell Transport and 

Trading Company—succeeded in convincing Winston Churchill that switching from coal to oil would 

strengthen the British Navy. Indeed, the shift to oil 

proved to be most advantageous for Britain during 

World War I, when the Royal Navy managed to outmaneuver the German High Seas Fleet, because it 

was using oil as opposed to coal.41 The United States 

followed suit in recognizing the potential of oil; not 

only for military purposes, but for economic purposes 

as well. It could be argued today that without the oil 

supply glut of the early-20th century, the Ford Model 

T would never have become an affordable option for 

America’s middle class. 

The glut ended, however, with the start of World 

War I, when the attention of policymakers shifted to 
8

the scarcity of oil; to the possibility that national oil 

reserves might actually run out at one point in the future. Despite these concerns, oil replaced coal as the 

energy of choice in both Europe and North America 

by the mid-20th century. Dependency of the industrialized world on oil increased to such an extent, that 

by 1967 disruption of oil supplies from Saudi Arabia, 

Iraq, Kuwait, and Libya42 for 3 months would have 

cost the United Kingdom £1.2 billion, almost crippling 

its economy.43

The “oil weapon” concept appeared for the first 

time in 1935, when the League of Nations unsuccessfully considered multilateral economic sanctions 

against Italy.44 Only a few years later, in 1941, the 

United States (which was holding a near-monopoly 

on the supply of oil to Japan) successfully imposed an 

oil embargo on Japan for its incursion into China (the 

first recorded time that oil was used as an instrument 

of coercion). This gave Japan only 18 months to defeat the United States before the exhaustion of its domestic reserves, which would have led to a complete 

economic collapse. The Japan episode proved that oil 

can be used as an instrument of coercion when the 

sender can restrict access to most of the oil supply to 

the target (the United States successfully restricted 80 

percent of Japan’s oil supply).45 The U.S. capacity to restrict Japan’s military plans by imposing this new type 

of unilateral sanction influenced Adolf Hitler to state 

(in Finland, June 1942) that he could not have attacked 

Russia without access to the Romanian oil supplies.46

An attempt to use oil as an instrument of coercion 

against Western Europe and the United States was 

demonstrated during the 1973 Arab Oil Embargo, 

when Saudi Arabia, Egypt, Syria, and the Persian Gulf 

sheikhdoms attempted to lessen the American sup-
9

port for Israel by imposing an oil embargo.47 But the 

use of multilateral sanctions failed in 1973. On March 

17, 1974, less than 6 months after it was imposed, the 

embargo was lifted because of multiple disagreements 

between sender states;48 indicating how hard it is to 

use oil as an instrument of coercion. This is particularly true if we consider the “strategic deficits of prospective weapon users”49 (the lack of agreement between 

oil-producing countries), and the ease in circumventing the sanctions if they are unilaterally imposed.50

Given the lessons learned from oil in the traditional security environment, it may surprise many to 

discover that in the contemporary security environment, the problems with using oil as a sanction are 

not as acute with natural gas. If the global market for 

oil is structured to exacerbate the problems with using 

oil as sanction (largely because the oil market is a demand issue more than it is a supply issue),51 the global 

market for natural gas is structured to alleviate these 

problems, because the flexibility in the transportation 

of natural gas differs significantly from the flexibility 

in the transportation of oil.

GAS IS BECOMING THE DOMINANT 

STRATEGIC RESOURCE FOR THE 

CONTEMPORARY SECURITY ENVIRONMENT

If the developed economies in the 19th century 

were fueled by coal, and in the 20th century by oil, 

the 21st century comes with great promise for natural 

gas.52 The world’s energy markets are experiencing a 

rapid transition to gas53 that will incontrovertibly redefine the way we look at the scarcity of natural gas 

in the contemporary security environment. Recent 

discoveries of natural gas fields and developments in 
10

exploitation capabilities already make natural gas the 

most readily available fossil fuel on the planet.54 According to the chief executive officer of Royal Dutch 

Shell, Peter Voser, “there’s now enough technically 

recoverable gas in the ground [worldwide] for 250 

years at current production rates.”55 This abundance56

of supply means that availability and/or scarcity of 

natural gas worldwide are no longer determinants of 

energy insecurity. Instead, in recent years, fears of imminent shortages have been replaced by fears of dependencies on foreign gas suppliers,57 and by regional 

concerns about the lack of natural gas infrastructure.58

These concerns will continue to grow as dependence on natural gas deepens. Natural gas is currently 

the world’s third leading energy source in terms of 

consumption and production, and is expected to replace coal as the number one fuel for generating electric power in the next several years.59 Global consumption is rising faster than any other primary energy 

source, and projections show that consumption will 

double in the next 2 decades.60 If this rate of growth 

remains constant, natural gas will become the world’s 

most important primary energy source by year 2050, 

surpassing both coal and oil.61

Environmental,62 economic,63 technological,64 and 

even geostrategic65 considerations indicate that this 

increase in both consumption and production of natural gas will not be inhibited in the coming years. First, 

from an environmental perspective, worldwide efforts 

to limit emissions of carbon dioxide66 and greenhouse 

gas67 mean the importance of natural gas will continue 

to grow.68 Natural gas is the cleanest-burning fossil 

fuel per unit of energy;69 its efficient combustion translates into a considerable drop in carbon emissions.70
11

Second, from an economic perspective, cheaper 

natural gas (relative to the cost of oil) translates into 

cheaper electricity.71 Academic research shows that 

cheaper gas results in a positive correlation between 

natural gas consumption and economic growth.72 As 

top economists from the International Energy Agency (IEA) are predicting a supply glut in the coming 

years,73 the price of gas will continue to go down until an economic equilibrium is reached.74 This trend 

also led to the emergence of the natural gas vehicles 

(NGVs). Acknowledging the coming shift to gas, 

some automobile makers have now started to develop 

natural gas powered cars. The 2011 Honda Civic GX 

is only the first to be sold by a major automaker. Before the Civic GX hit the market, however, there were 

already 10 million natural gas vehicles worldwide.75

With 70 percent of U.S. demand for oil resulting from 

the transportation sector,76 the emergence of the NGVs 

will also result in a decreased demand for oil and an 

increased demand for natural gas. Reports say an NGV 

translates into lower fuel costs, and there is almost no 

difference in performance, when compared with the 

gasoline-powered model:77

For drivers, natural-gas refueling costs are about onethird less than that for gasoline. Equally important, 

there is reportedly little difference in acceleration, 

mileage, and performance between natural gas and 

similar gasoline-powered vehicles.78

Third, technological advances79 in the extraction 

methodologies and the emergence of unconventional 

gas reserves (i.e., the “Shale Gas Revolution”)80 are 

also expected to play a major role in the increase of 

production. Daniel Yergin,81 co-founder and chairman of Cambridge Energy Research Associates, calls 
12

the extraction capabilities of natural gas from shale (a 

technique known as ”fracking”)82 “the biggest innovation in fossil fuel resource development since the start 

of the 21st century,”83 and suggests that current projections84 of unconventional gas production are conservative at best.

Finally, as the emergence of a society dependent 

on natural gas becomes more apparent, it has been 

wrongly assumed that because the “locations of gas 

reserves are more diversified regionally than oil,”85 gas 

supplies are also more reliable than oil. This argument 

ignores, however, the lack of flexibility in the transportation of natural gas and the over-reliance of most 

developing countries on natural gas supplies by pipeline. Because of this, unilateral sanctions using natural 

gas cannot be avoided if the sender has a monopoly 

on the supply by pipeline, and if the target does not 

have access to a constant supply of liquefied natural 

gas (LNG) as an alternative.86 If unilateral sanctions 

using oil are doomed to fail—as discussed previously, 

because of the ease in circumventing the sender of 

such sanctions—the corollary is that unilateral sanctions using natural gas will succeed if the target has no 

way of circumventing these sanctions.

WHY NATURAL GAS CAN SERVE AS AN 

EFFECTIVE, UNILATERAL INSTRUMENT OF 

STATE POWER 

In June of 2003, Alan Greenspan—who served as 

Chairman of the Federal Reserve of the United States 

from 1987 to 2006—testified before the U.S. House 

of Representatives’ Committee on Energy and Commerce that while natural gas reserves are more diversified globally than oil,87 limited capacity for LNG 
13

imports can effectively inhibit a state’s access to the 

world’s abundant reserves of natural gas.88 According to Greenspan, because the natural gas market depends highly on the use of pipelines, the “inability to 

increase imports to close a modest gap between North 

American demand and production (a gap we can almost always close in oil)”89 was, in fact, the reason the 

U.S. price of gas for delivery in July 200390 was almost 

double the price for delivery in July of the previous 

year.91 This inflexibility of the natural gas transportation system, said Greenspan, is not present in the 

transportation of oil:92

Such pressures do not arise in the U.S. market for 

crude oil. American refiners have unlimited access to 

world supplies, as was demonstrated most recently 

when Venezuelan oil production shut down. Refiners 

were able to replace lost oil with supplies from Europe, Asia, and the Middle East. If North American 

natural gas markets are to function with the flexibility 

exhibited by oil, unlimited access to the vast world reserves of gas is required. Markets need to be able to 

effectively adjust to unexpected shortfalls in domestic supply. Access to world natural gas supplies will 

require a major expansion of LNG terminal import 

capacity. Without the flexibility such facilities will impart, imbalances in supply and demand must inevitably engender price volatility.93

Not surprisingly, since Greenspan’s testimony, the 

United States has been trying to balance its supply and 

demand of natural gas by decreasing its dependence 

on natural gas imports by pipeline. To this effect, shale 

gas production increased 14-fold over the last decade,94

while LNG imports have continued to grow (though 

at a much slower pace). Furthermore, the U.S. Energy 

Information Administration is projecting that imports 

of LNG will steadily increase “from current levels of 
14

around 2.5% of total natural gas consumption to 12.4% 

by 2030,”95 further underlining the significance of LNG 

in increasing the flexibility of the natural gas transportation system. Ultimately, the current inflexibility 

highlights the negative effects that the dependency 

on natural gas pipelines can have on the well-being 

of states, and the latter’s inability to circumvent this 

instrument of coercion if the sender holds a monopoly 

on the supply of natural gas by pipeline, and no access 

to LNG is available to the target. 

The problem with LNG, however, is that it “requires a complex and extremely expensive infrastructure to link the source to final consumption.”96 The 

IEA, estimated that the United States alone had to invest half-a-trillion dollars in LNG infrastructure to fill 

the gap between current demand and supply,97 which 

was hard to come by, illustrating the fact that “regasification capacity is no longer and perhaps never 

was the constraining factor for U.S. LNG imports. The 

constraint now is willingness to pay.”98 Clearly, most 

developing countries around the world cannot afford 

to make this kind of investment in order to respond to 

unexpected natural gas disruptions.99 This effectively 

making certain states—particularly in Eastern and 

Central Europe—potential targets of coercion, especially if they have no access to LNG, and if the sender 

is the sole supplier of natural gas by pipeline to the 

target.100

REDEFINING NATURAL GAS AS AN EFFECTIVE 

TOOL OF UNILATERAL SANCTIONS IN 

EASTERN AND CENTRAL EUROPE

As with oil, Europe has access to very limited domestic reserves of natural gas. In fact, the consumption of natural gas in most European countries de-
15

pends entirely on natural gas imports (see Figure 1-1). 

Furthermore, nine European countries (Finland, Lithuania, Latvia, Estonia, Slovakia, Bulgaria, the Czech 

Republic, Hungary, and Greece) rely almost entirely 

on Russian gas. On average, at least 85 percent of their 

domestic natural gas consumption is supplied by Russia.101 The inflexibility in the transportation of natural 

gas to Eastern and Central Europe satisfies both the 

necessary and sufficient economic and political conditions for Russia to successfully employ natural gas 

as a unilateral instrument of coercion in this region 

(whereas this was not the case with oil). The corollary, 

as we will see later in this monograph, is that “Russia 

has already revealed its willingness to withhold natural gas supply based on political disagreements.”102

Thus, the concern in Europe—and rightfully so—has 

been that Russia’s monopoly of natural gas from the 

Caucasus will impact Europe’s energy security. 

In Western Europe, there are currently 15 operational LNG terminals located across eight countries,103

and no one country holds a monopoly of natural gas 

by pipeline. Despite this, Western European nations 

are planning on adding 65 billion cubic meters (bcm) 

to the current 68 bcm in LNG import capacity over the 

next decade (representing 19.6 percent of the over 676 

bcm of natural gas per year that will be imported to 

Continental Europe by 2020).104 This increase in LNG 

imports is due mainly to concerns about Europe’s 

increasing dependence on gas by pipeline, which 

remains evident in current statistics, showing that 

by 2030, the European Union (EU) will import over 

60 percent of its natural gas by pipeline from Russia 

alone.105 Dependency on Russian gas by pipeline is 

expected to rise because of a forecasted decrease in 

domestic gas production, and an estimated increase 
16

Source: Eurostat energy statistics; author’s calculations.

Figure 1-1. Europe’s Dependency on Natural Gas 

Imports By Country (2009 Estimate).

in consumption of gas in Organization for Economic 

Cooperation and Development (OECD) Europe by 87 

percent by 2030.106 This places natural gas right behind 

oil as Europe’s total primary energy supply (TPES).107
17

The dependency of Eastern and Central Europe 

(ECE) on natural gas imports is, however, of even 

greater concern. Often viewed as the periphery of the 

EU, but also as an important transit corridor for gas 

to many North Atlantic Treaty Organization (NATO) 

members, ECE is today the most important “battle 

space” of the “energy war.”108 Centrally positioned 

between the Moscow-Berlin-Rome-Paris Energy Axis 

in Europe109 and the growing Russia-China-Iran Energy Nexus in Asia,110 ECE arguably holds the power 

to consolidate Russia’s monopoly on energy supplies 

to Europe. As noted in the previous section, for most 

countries in ECE, almost all imports of natural gas are 

supplied by Russia. Without the Nabucco pipeline,111

the Russian control of gas supplies to ECE will exceed 

91 percent by 2020 (see Figure 1-2);112 Romania and Poland are the only ECE countries that will have access 

to domestic production and LNG supplies. 

Source: The values for the chart above originate from Lajtai’s 

report to the 24th World Gas Conference. Buenos Aires, Argentina, October 6-9, 2009; author’s representation.

Figure 1-2. Projected Russian Control of

Natural Gas Supplies in Eastern and Central 

Europe.
18

Despite these serious trends, and contrary to data 

that show that Europe will “become hostage to yet 

another vital energy source,”113 Russian-American 

economist and Harvard University Professor Andrei 

Shleifer114 and UCLA Professor of Political Science 

Daniel Treisman115 disagree with these concerns: “Has 

the dependence on Russian gas given Moscow political leverage over countries to the west? There is little 

sign of this.”116 The two scholars argue that there is 

little evidence to suggest “a more sinister design in 

the Kremlin’s foreign policy: to reimpose Russian hegemony over the former Soviet states, and perhaps an 

even greater portion of Eastern Europe, by means of 

economic and military pressure.”117 Their main argument is an economic one; that Russia needs to sell its 

gas to Europe more than Europe needs to buy it:

It is Russia’s dependence on the European market—

and not the other way around—that is most striking. 

Europe, including the Baltic states, is the destination 

for about 67 percent of Russia’s gas exports (other 

former Soviet countries buy the other 33 percent). . . .

Given the extent to which Russia’s income and budget depend on this trade, losing its European clients 

would be a calamity.118

Shleifer and Treisman argued that in fact “Russia has been in geopolitical retreat over the last 20 

years,”119 and that the LNG market and the shale gas 

revolution knocked Russia’s gas industry “off balance.”120 This has also been the view of various Capitol 

Hill officials—who have been interviewed in Washington, DC, by the author of this monograph—and 

that of former U.S. Undersecretary of Energy John 

Deutch, who wrote that the results of the current natu-
19

ral gas revolution will be that “countries that export 

large amounts of natural gas will suffer from lower 

than expected revenues and a reduced ability to use 

energy as a tool of foreign policy.”121 Furthermore, 

scholarly papers and scientific reports (like a 2010 report by IHS Cambridge Energy Research Associates)122

suggest that decreased reliance on Middle Eastern resources could in fact enhance each region’s energy security;123 and that “natural gas is not being affected by 

the global-geopolitical winds.”124 In Europe, however, 

their conclusions could not be further from the truth. 

First, Shleifer and Treisman are fundamentally 

wrong in their assessment that Russia needs to sell 

its gas to Europe more than Europe needs to buy it, 

because currently Europe does not have a united energy front nor an integrated energy market and infrastructure.125 Because of this, each European country 

must be looked at independently in its energy trade 

relations with Russia. If this is the case, clearly, many 

ECE countries need to import the Russian natural gas 

more than Russia needs to sell it to them (see Figure 

1-3).126 For example, 100 percent of Lithuania’s natural 

gas imports come from Russia, but that amounts to 

only 1.97 percent of total Russian natural gas exports. 

That means that if Russia decides to cut the supply of 

natural gas to Lithuania, the Lithuanian people may 

end up having a very cold winter, while Russia will 

simply recuperate its losses by slightly increasing its 

natural gas exports to other European nations.
20

Source: Eurostat energy statistics; author’s calculations.

Figure 1-3. Tearing Down the Myth of 

“Interdependency” between European NATO 

Member States (Plus Ukraine) and Russia 

(2009 Estimate).

Second, the LNG market did nothing to knock Russia’s gas industry “off balance,” as Shleifer and Treisman argue. While LNG represents only 20 percent 

of the European natural gas market,127 it is currently 

available only to Western Europe.128 Furthermore, the 

only LNG projects in ECE that are currently being considered have been initiated by the two ECE countries 

that depend the least on natural gas imports: Romania 

and Poland; these projects represent only 2.3 percent 

of the natural gas that will be imported to Continental 

Europe by 2020. The Swinoujscie LNG terminal will 

supply Poland with 7.5 bcm per year by 2018;129 while 

the AGRI—Azerbaijan-Georgia-Romania Interconnector—will supply Romania with 8 bcm per year.130

The rest of the Eastern and Central European nations 
21

will remain almost entirely dependent on Russian gas 

and, as shown in this chapter, will remain potential 

targets of unilateral sanctions.

Finally, shale gas will not reduce Russia’s ability to 

use natural gas as a tool of foreign policy in Europe,

as John Deutch proposes. While shale deposits131 are 

available all over the globe, “there are no reliable estimates about the size of the economically recoverable 

shale resource base worldwide.”132 For example, in 

Europe, companies are currently developing shale gas 

operations only in Germany, Poland, and Romania,133

and there is no indication that similar operations will 

begin in other ECE countries. Furthermore, recovery 

of unconventional gas reserves like shale gas is expected to be very limited in Europe due to environmental challenges: 

Communities are especially concerned about the 

fracking fluid—that it uses too much water (a typical 

well may require 3-4 million gallons), that it will not 

be cleaned up, that it contaminates drinking water, 

and that the chemicals used in it have not been publicly disclosed.”134

For the sake of argument, it could also be easily 

assumed that since Russia did not use oil as an instrument of unilateral sanctions in the traditional security 

environment, similarly, it will not use natural gas as 

an instrument of unilateral sanctions in the traditional 

security environment either. However, while oil and 

gas seem to be impacting Europe’s energy security 

equally, this chapter has shown that the inflexibility in the transportation of natural gas to ECE satisfies both the necessary and sufficient economic and 

political conditions for Russia to employ natural gas 
22

successfully as an unilateral instrument of coercion in 

this region (whereas this was not the case with oil).135

Indeed, over the past decade and in the absence of 

LNG supplies, the fear has been that the country that 

controls the supply of natural gas by pipeline from 

the Caucasus (Russia) will be in position of imposing 

unilateral sanctions if and when it so desires. Because 

of these concerns, EU Energy Commissioner Günther 

Oettinger admitted in 2011 that “the energy challenge 

is one of the greatest tests”136 for Europe.

To illustrate these concerns further, I have developed a metric for susceptibility to Russian coercion 

(see Figure 1-4) that takes into consideration the share 

of TPES representing Russian natural gas (from Figure 1-5),137 the asymmetry in diversification of natural 

gas trade partners (from Figure 1-3), the share of trade 

deficit as a percentage of total trade with Russia (from 

Figure 1-6),138 minus the share of Russia’s world trade 

occupied by each country inserted into the metric (see 

Table 1-1). The metric developed ranks Lithuania as 

the country most susceptible to Russian coercion; Germany ranks as the least susceptible. Not surprisingly, 

in March 2011, Lithuanian Energy Minister Arvydas 

Sekmokas accused Russia of putting “political and 

economic pressure” on the Lithuanian government.139

Russia stands accused of charging Lithuania higher 

rates than any other EU country as a “punishment” 

for taking steps to break away from Russia’s natural 

gas monopoly.140 Unfortunately, it may take Lithuania and other ECE countries years, if not decades, to 

break free from their dependency on Russian natural 

gas. Because of this, a current report published by the 

Council on Foreign Relations goes as far as to conclude that “no magic bullet will rescue Europe from 

its dependence on Russia for the foreseeable future.”141
23

Sources: Enerdata, CIA Factbook, Gazprom Export LLC, DG 

Trade, and Eurostat energy statistics; author’s calculations.

Figure 1-4. Levels of Susceptibility to Russian 

Coercion among European NATO Member States

 and Ukraine (2009 Estimate).142

Figure 1-5. Share of TPES Russian Natural Gas 

Holds in European NATO Member States and 

Ukraine (2009 Estimate).
24

Source: Eurostat energy statistics; author’s calculations.

Figure 1-6. Balance of Trade with Russia 

(2009 Estimate).
25

Source: Enerdata, CIA Factbook, Gazprom Export LLC, DG Trade; and Eurostat energy statistics; author’s calculations.

Table 1-1. NATO Member States in Continental Europe Plus Ukraine:

Trade with Russia Statistics (2009 Estimate).
26

Source: Enerdata, CIA Factbook, Gazprom Export LLC, DG Trade; and Eurostat energy statistics; author’s calculations.

Table 1-1. NATO Member States in Continental Europe Plus Ukraine:

Trade with Russia Statistics (2009 Estimate). Continued.
27

ENDNOTES - CHAPTER 1

1. Dick Lugar, “Senator Lugar’s Keynote Speech to the German Marshall Fund Conference in Advance of the NATO Summit,” Riga, Latvia, November 27, 2006.

2. In this monograph, the contemporary security environment 

refers to the way war is fought in the post-Cold War (or postmodern) environment, where the utility of force is diminishing, 

and diplomacy, information, and economics become methods of 

war just as relevant as, if not more important than, brute military 

force.

3. In a 2006 article, James Williams wrote that the “people’s 

need for energy is essential for survival, so it is not surprising 

that energy production and consumption are some of the most 

important activities of human life. Indeed, it has been argued that 

energy is the key ‘to the advance of civilization,’ that the evolution of human societies is dependent on the conversion of energy 

for human use.” See “Scientists and the Franklin Institute Making 

Their Cases,” April 25, 2006, available from www.fi.edu/learn/casefiles/energy.html.

4. In this monograph, the traditional security environment 

refers to the conceptualization of war as interstate conventional 

confrontations in which the utility of force (the notions of brute 

force, coercion, compellence, and deterrence) determines the way 

we look at strategic security concerns.

5. Bob Vavra, “1973: The Arab Oil Embargo Transforms the 

World,” National Petroleum News, Vol. 92, No. 12, November 2000, 

p. 2.

6. Steve Chan and Cooper Drury, “Sanctions as Economic 

Statecraft: An Overview,” Steve Chan and Cooper Drury, eds., 

Sanctions as Economic Statecraft, New York: St. Martin’s Press, 

2000, p. 1.

7. Dr. Bernard Cole, author of The Great Wall at Sea and professor at the National War College, is counted among the skeptics. 

Dr. Cole does not consider Russia as an “emerging power” in the 

energy field, mainly because Russia’s economy is “rife with cor-
28

ruption, absence of rule of law (in the western sense), and lack 

of energy flexibility [and] over-dependence on energy resources.” 

Bernard Cole, Interview by the author on Russia as an Energy 

Superstate, March 11, 2011.

This thesis will show that while Dr. Cole is right to consider 

China and India noteworthy energy security challengers of the 

United States because of their increasing demand for energy resources and the competition they will pose globally to acquire 

them, Russia remains very much a major energy security concern 

for many U.S. allies and NATO members in Eastern and Central 

Europe. 

8. James Ngobi, “The United Nations Experience with Sanctions,” George Lopez and David Cortright, eds., Economic Sanctions. Panacea or Peacebuilding in a Post-Cold War World? Boulder, 

CO: Westview Press, 1995, p. 19.

9. Chan and Drury, p. 2.

10. Ivan Eland, “Economic Sanctions as Tools of Foreign Policy,” in Lopez and Cortright, p. 37.

11. Edward D. Mansfield, “Alliances, Preferential Trading Arrangements and Sanctions,” Journal of International Affairs, Vol. 48, 

No. 1, Summer, 1994, p. 119.

12. Johan Galtung, “On the Effects of International Economic 

Sanctions: With Examples from the Case of Rhodesia.” World Politics, Vol. 19, No. 3, April, 1967, pp. 378-416.

13. George Doran, The Futility of Economic Sanctions as an Instrument of National Power in the 21st Century, Carlisle, PA: U.S. 

Army War College, 1998.

14. Brendan Taylor, Sanctions as Grand Strategy, New York: 

The International Institute for Strategic Studies, 2010, p. 21.

15. David Mitrany, The Problem of International Sanctions, London, UK: Oxford University Press, 1925.

16. Chan and Drury, p. 1.
29

17. Gary C. Hufbauer, Jeffrey J. Schott, and Kimberly A. Elliott, eds., Economic Sanctions Reconsidered. History and Current 

Policy, Second Ed., Washington, DC: Institute for International 

Economics, 1990.

18. Claude E. Barfield and Mark A. Groombridge, “Unilateral 

Sanctions Undermine U.S. Interests,” The World and I, December 

1, 1998.

19. Nevin A. Bapat and T. Clifton Morgan, “Multilateral Versus Unilateral Sanctions Reconsidered: A Test Using New Data,” 

International Studies Quaterly, Vol. 53, No. 1, December 2009, pp. 

1075–1094.

20. Ralph Nurnberger, “Why Sanctions (almost) Never 

Work,” The International Economy, Vol. 17, No. 4, Fall, 2003, p. 71.

21. Hossein G. Askari et al., Economic Sanctions. Examining 

their Philosophy and Efficacy, Westport, CT: Praeger, 2003, p. 28.

22. David A. Baldwin, Economic Statecraft, Princeton, NJ: 

Princeton University Press, 1985, p. 65.

23. Chan and Drury, p. 2.

24. Hufbauer, Schott, and Elliott, p. 35.

25. Ibid., p. 36.

26. Maria Sperandei, “Between Rational Choice and Historical Contingency: The Hidden Dilemma of Multiple Objectives in 

the Study of Economic Sanctions,” Conference Papers--International 

Studies Association, 2009, pp. 1-34.

27. Ignoring the fact that some states are simply unwilling to 

share in the costs of sanctions, and will support them only if they 

get a free ride.

28. Sir Winston Churchill, as quoted in Shlomo Maital, “What 

We Can Offer Russia,” The Jerusalem Report, October 22, 1992, p. 

56.

29. Hufbauer, Schott, and Elliott, p. 48.
30

30. Bapat and Morgan, pp. 1075–1094.

31. Navin A. Bapat states that “although policymakers adamantly argue that multilateral sanctions are more effective than 

unilateral sanctions, the empirical evidence to date clearly suggests otherwise. Repeatedly, empirical studies demonstrate that 

[under certain political and economic conditions] unilateral sanctions appear more effective than multilateral sanctions.” Bapat 

and Morgan, pp. 1075–1094.

32. Hufbauer, Schott, and Elliott.

33. T. Clifton Morgan, Navin Bapat, and Valentin Krustev, 

“The Threat and Imposition of Economic Sanctions, 1971-2000,” 

Conflict Management and Peace Science, Vol. 26, No. 1, February, 

2009, pp. 92-110.

34. Bapat and Morgan, pp. 1075–1094.

35. While the 1973 Arab Oil Embargo had economic repercussions, it did not accomplish its political ends, because of the lack 

of agreement among the sender states. 

36. Alan Hegburg, “Keynote Speech on the Impact of Fossil 

Fuels on Security,” Raleigh, NC: Triangle Institute for Security 

Studies, March 3, 2011.

37. Rosemary Kelanic, “Comments on the Impact of Fossil Fuels on Security,” Raleigh, NC: Triangle Institute for Security Studies, March 3, 2011.

38. Dr. Rosemary Kelanic, an International Security Program 

Research Fellow at the Belfer Center for Science and International 

Affairs at Harvard University, recently designed and taught an 

advanced undergraduate course on oil and international security 

aimed at determining whether states can blackmail adversaries 

by threatening to cut off their access to oil, and if so, why. Her 

Ph.D. dissertation also examines the coercive potential of oil.

39. Roger Stern argued that “the oil weapon seems an implausible threat when the economic, geographic, and military 

attributes of prospective user and victim are considered.” Roger 
31

Stern, “Oil Market Power and United States National Security,” 

Proceedings of the National Academy of Sciences of the United States of 

America, Vol. 103, No. 5, January 31, 2006, p. 1655.

40. Rosemary Kelanic, Alexander Ghaleb, “The Coercive Potential of Oil,” Interview by the author conducted after the Energy 

and Security Initiative Conference 2011a, March 3, 2011.

41. Edward Harry Shaffer, “Canada’s Oil and Imperialism,” 

International Journal of Political Economy, Vol. 35, No. 2, Summer 

2006, p. 55.

42. Keir Thorpe, “The Forgotten Shortage: Britain’s Handling 

of the 1967 Oil Embargo,” Contemporary British History, Vol. 21, 

No. 2, June 2007, p. 204.

43. Ibid., p. 215.

44. Stern, p. 1650.

45. The oil embargo, however, failed to achieve its political 

objective, as Japan attacked Pearl Harbor instead of giving up its 

expansionist ideology. Ibid.

46. The recording was aired by the Finnish Broadcasting 

Company and presents a 1942 private conversation between Adolf Hitler and Finnish military commander Marshal Baron Carl 

Gustav Mannerheim. Toward the end of the recording, Hitler emphasized the importance of the Romanian oil supplies for the war 

efforts, and justified his preemptive advance Eastward by stating 

that his greatest concern from the very beginning was an invasion 

of Romania by the USSR. Hitler argued that “if the Russians had 

occupied Romania in the autumn of 1940 and acquired the petrol 

sources, then Germany would have been helpless in the year 1941 

. . . without the addition of at least four or five million tons of 

Romanian oil, we wouldn’t have been able to fight this war.” Adolf Hitler, Private Conversation between Adolf Hitler and the Finnish 

Military Commander, Marshal Baron Carl Gustav Mannerheim, Adolf 

Hitler and Baron Carl Gustav Mannerheim, Recording, 1942 Finnish Broadcasting Company.
32

47. Mohammed Ahrari, “OAPEC and ‘Authoritative’ Allocation of Oil: An Analysis of the Arab Oil Embargo,” Studies in 

Comparative International Development, Vol. 14, No. 1, Spring 1979, 

p. 13.

48. Ibid., p. 16.

49. Stern, p. 1650.

50. Kelanic, “Comments on the Impact of Fossil Fuels on Security.” 

51. Dr. Kelanic argued that because the global market for oil is 

more flexible than that of natural gas, oil can be transported safely in mulitiple ways from mulitple places along different trade 

routes. In short, the global market for oil is much more flexible 

and adapts to changes in supply. No one state has full control 

over oil imports in relation to another state.

52. John Deutch argued that “since natural gas is cheaper 

than oil on an equivalent energy basis, meaning the price per BTU 

[British thermal unit] is lower, over time natural gas will begin 

to replace oil, first in the power sector and then in the industrial 

and transportation sectors.” John Deutch, “The Good News about 

Gas: The Natural Gas Revolution and its Consequences,” Foreign 

Affairs, Vol. 90, No. 1, January 2011, p. 89.

53. Joe Barnes et al., “Introduction to the Study,” David G. 

Victor, Amy M. Jaffe, and Mark H. Hayes, eds., Natural Gas and 

Geopolitics from 1970 to 2040, New York: Cambridge University 

Press, 2006, p. 21. Also, Amy M. Jaffe, Mark H. Hayes, and David 

G. Victor, “Gas Geopolitics: Visions to 2040,” Program on Energy 

and Sustainable Development, PESD. Working Paper #36, Natural 

Gas and Geopolitics: From 1970 to 2040, Stanford, CA: Institute for 

International Studies, 2005.

54. Rita Tubb, “Study Finds Nation’s Natural Gas Supply Will 

Last Well into Next Century,” Pipeline & Gas Journal, Vol. 237, No. 

4, April, 2010, pp. 34-36.

55. David Wagman, “Natural Gas Rising,” Power Engineering, 

Vol. 114, No. 10, October 2010, p. 6.
33

56. “Natural Gas’ Path to Low-Carbon Future,” USA Today 

Magazine, Vol. 139, No. 2782, July, 2010, p. 7.

57. Roberto F. Aguilera, “The Future of the European Natural 

Gas Market: A Quantitative Assessment,” Energy, Vol. 35, No. 8, 

August, 2010, pp. 3332-3339.

58. “INGAA Responds to Report on Reliance of Natural Gas 

for Electricity,” Underground Construction, Vol. 65, No. 9, September, 2010, p. 8.

59. Barnes et al., p. 3. Also see Deutch, p. A17; and Jaffe, Hayes, 

and Victor.

60. Barnes et al., p. 3.

61. Ibid.

62. Matthew L. Wald, “Study Says Natural Gas Use Likely to 

Double,” New York Times, June 25, 2010, p. 3.

63. Carlos Márquez and Gina M. Hernández, “Natural Gas: 

The Cleanest Fossil Fuel Catches on,” Caribbean Business, Vol. 38, 

No. 15, April 22, 2010, p. 27. Also see Deutch, p. A17.

64. Barnes et al., p. 21.

65. “Congress Should Do More to Support Natural Gas as 

Fuel: NGVAmerica Chief,” Bulk Transporter, Vol. 72, No. 12, June, 

2010, p. 12-12; Christine Birkner, “Natural Gas in a Range,” Futures: News, Analysis & Strategies for Futures, Options & Derivatives 

Traders, Vol. 39, No. 4, April, 2010, p. 16.

66. Wald, p. 3.

67. Carlos Márquez and Gina M. Hernández, “Everybody is 

on Board: Increased Use of Natural Gas Essential to Reduce Energy Costs in the Short Term,” Caribbean Business, Vol. 38, No. 15, 

April 22, 2010, pp. 20-27.

68. Barnes et al., p. 3; Rita Tubb, Future Role of Natural Gas and 

Shale Revolution Dominate at P&GJ’s 2010 Pipeline Opportunities 
34

Conference, Vol. 237, Houston, TX: Oildom Publishing Company 

of Texas, Inc, 2010, pp. 22-26.

69. “Uneven Prospects for Natural-Gas Vehicles,” Machine 

Design, Vol. 82, No. 13, August 12, 2010, pp. 23-26; Márquez and 

Hernández, p. 27.

70. Barnes et al., p. 3; Natural Gas’ Path to Low-Carbon Future.

71. Márquez and Hernández, p. 27; Deutch, p. A17.

72. Nicholas Apergis and James E. Payne, “Natural Gas Consumption and Economic Growth: A Panel Investigation of 67 

Countries,” Applied Energy, Vol. 87, No. 8, August 2010, pp. 2759-

2763.

73. Wagman, p. 6.

74. Birkner, p. 16.

75. Peter Huber, “Kill Oil with Natural Gas and Electricity: A 

Carbon Strategy the World can Afford,” Energy Policy & the Environment Report, No. 4, September 2009.

76. Ibid.

77. This begs the question: If driving an NVG is cleaner and 

cheaper, why aren’t they flooding the market? The problem lies in 

the lack of infrastructure and the high costs to install CNG (compressed natural gas) pumps. According to the Department of Energy datasets, California has the largest number of CNG pumps, 

with close to 300, followed by New York, with almost 200; while 

most states have 10 or fewer CNG pumps each, with South Dakota, Iowa, and Kentucky not having any CNG pumps available 

for customers at all. This data was calculated from “Natural Gas 

Fueling Station Locations,” Washington, DC: Department of Energy, available from www.afdc.energy.gov/afdc/fuels/natural_gas_locations.html.

78. Uneven Prospects for Natural-Gas Vehicles, pp. 23-26.

79. Barnes et al., p. 21.
35

80. Tubb, pp. 22-26.

81. Daniel Yergin is also the author of the 1992 Pulitzer Prize 

winner and number one bestseller, The Prize: The Epic Quest for 

Oil, Money, and Power. In 1997, Yergin was awarded the United 

States Energy Award for “lifelong achievements in energy and 

the promotion of international understanding.”

82. Richard A. Kerr, “Natural Gas from Shale Bursts Onto the 

Scene,” Science, Vol. 328, No. 5986, June 25, 2010, pp. 1624-1626.

83. Wagman, p. 6.

84. Deutch, p. A17.

85. Amy M. Jaffe and Ronald Soligo, “Market Structure in the 

New Gas Economy: Is Cartelization Possible?” David G. Victor, 

Amy M. Jaffe, and Mark H. Hayes, eds., Natural Gas and Geopolitics from 1970 to 2040, New York: Cambridge University Press, 

2006, p. 445.

86. Liquefied Natural Gas (LNG) is widely considered a significant tool to diversify the supply of natural gas, and is a “decisive factor in developing a global gas market.” Unlike pipelines, 

“the tanker-based LNG trade is much more flexible and does not 

lend itself as a geopolitical instrument.” See Florian Baumann and 

Georg Simmerl, Between Conflict and Convergence: The EU Member 

States and the Quest for a Common External Energy Policy, Research 

Group on European Affairs, 2011, p. 29.

87. As Greenspan put it, “natural gas reserves are somewhat 

more widely dispersed than those of oil, for which three-fifths 

of proved world reserves reside in the Middle East. Nearly twofifths of world natural gas reserves are in Russia and its former 

satellites, and one-third is in the Middle East.”

88. Alan Greenspan. Committee on Energy and Commerce, 

U.S. House of Representatives, Natural Gas Supply and Demand Issues, 2003.

89. Ibid.
36

90. $6.31 per million Btu.

91. $3.65 per million Btu.

92. Daniel Freifeld argued that “unlike oil, which can be put 

onto tankers and shipped anywhere, gas is generally moved in 

pipelines that traverse, and are thus tethered to, geography. Because a pipeline cannot be rerouted . . . today’s gas war is a zerosum conflict similar to the scramble for resources that divided 

Eurasia in the 19th century.” This was also underlined by Sergej 

Mahnovski, who wrote that “the most salient difference between 

oil and gas markets today is that gas markets are almost entirely 

regional, due to prohibitively high transportation costs. In fact, 

many energy analysts believe that approximately one-half of the 

natural gas reserves in the world are currently— ‘stranded’ economically or technically unfeasible to transport to existing markets with today’s technologies. Abundant gas reserves in many 

parts of the world are either flared or reinjected into oil wells to 

boost reservoir pressure, rather than transported to markets, due 

to high capital costs associated with natural gas pipeline construction and operation.” Daniel Freifeld, “The Great Pipeline Opera,” 

Foreign Policy, No. 174, September, 2009, p. 123; Sergej Mahnovski, 

“Natural Resources and Potential Conflict in the Caspian Sea Region,” Thomas Szayna, ed., Fault-Lines of Conflict in Central Asia 

and the South Caucasus, Santa Monica, CA: RAND, 2003, p. 115.

93. Greenspan.

94. Richard Newell, “Annual Energy Outlook 2011 Reference 

Case,” Washington, DC: The Paul H. Nitze School of Advanced 

International Studies, December 16, 2010.

95. Don Maxwell and Zhen Zhu, “Natural Gas Prices, LNG 

Transport Costs, and the Dynamics of LNG Import,” Energy Economics, Vol. 33, No. 2, March, 2011, pp. 217-226.

96. Julie A. Urban, “US Access to the Global LNG Market,” 

OPEC Energy Review, Vol. 32, No. 3, September, 2008, p. 223.

97. Ibid.
37

98. Ibid., p. 224.

99. Robert Cekuta, Deputy Assistant Secretary, Energy, Sanctions and Commodities at the Department of State, also acknowledged that cost is a prohibiting factor for many developing countries. This is not the case only with LNG terminals, but also with 

developing a natural gas pipeline infrastructure that is bi-directional (from West to East): “In building infrastructure, the first 

thought that comes to mind is cost--the companies need to see it 

as something on which it is worth spending the money. Building 

in the duplication needed for energy security is not cheap.” Robert Cekuta, Interview by the author on the Cost of Natural Gas 

Infrastructure in Eurasia, March 12, 2011; Flexibility in Natural Gas 

Supply and Demand, Paris, France: OECD/IEA, 2002.

100. The difficulty in decreasing the dependence on natural 

gas imports by pipeline has also been emphasized by RAND Policy Expert Sergej Mahnovski, who wrote that “natural” gas pipeline transport involves a careful matching of forecasted supply 

and demand. Whereas crude oil and other liquid products can be 

transported by some combination of rail, truck, or ship without 

major processing, natural gas must be compressed, liquefied, or 

chemically transformed to take advantage of nonpipeline transport.” Sergej Mahnovski, “Natural Resources and Potential Conflict in the Caspian Sea Region,” in Szayna, ed., Fault-Lines of Conflict in Central Asia and the South Caucasus, p. 120.

101. Similarly with oil, Russia supplies over 85 percent of 

Bulgarian, Hungarian, and Polish oil imports. However, Daniel 

Drezner argued that target states that rely on the sender for more 

than 80 percent of their energy demands or 50 percent of their 

trade face significant costs as a result of coercion. For the reasons 

discussed above, Russia never used oil successfully as an instrument of coercion. Daniel Drezner, “The Complex Causation of 

Sanction Outcomes,” in Chan and Drury, eds., Sanctions as Economic Statecraft, p. 224.

102. Urban, p. 228.

103. Ibid., p. 222.

104. “Europe Boosts LNG Purchases,” Russia Beyond the Headlines, June 10, 2010.
38

105. Jeffrey Mankoff, Eurasian Energy Security, Washington, 

DC: Council on Foreign Relations, 2009.

106. Flexibility in Natural Gas Supply and Demand, p. 45.

107. TPES refers to total primary energy supply, or the aggregate of all energy resources, such as oil, gas, coal, nuclear, hydro, 

and other renewables.

108. Keith Smith, Russia-Europe Energy Relations. Implications 

for U.S. Policy, Washington, DC: CSIS, 2010.

109. Ibid.

110. M. K. Amb Bhadrakumar, “Pipeline Geopolitics: Major 

Turnaround. Russia, China, Iran Redraw Energy Map. Turkmenistan Commits its Gas Exports to China, Russia & Iran.” Global Research, January 12, 2010, October 27, 2010.

111. Nabucco is a U.S.-backed natural gas pipeline from Azerbaijan to Austria meant to diversify the supply of natural gas to 

Europe.

112. Rolan Lajtai, Annamária Czinkos, and Tamás Dinh, 

“NABUCCO VS. SOUTH STREAM: The Effects and Feasibility in 

the Central and Eastern European Region,” 24th World Gas Conference, Buenos Aires, Argentina, KPMG in Central and Eastern 

Europe, October 5-9, 2009.

113. Urban, p. 228.

114. According to RePEc (Research Papers in Economics), Andrei Shleifer is the most cited economist in the world. He is also 

one of the engineers of the Russian privatization of the 1990s.

115. Professor Daniel Treisman also has experience with a 

U.S. Agency for International Development (USAID) team advising Russia’s finance ministry on tax reform in the 1990s.

116. Andrei Shleifer and Daniel Treisman, “Why Moscow 

Says No: A Question of Russian Interests, Not Psychology,” Foreign Affairs, Vol. 90, No. 1, January 2011, p. 129.
39

117. Ibid., p. 128.

118. Ibid., p. 126.

119. Ibid., p. 128.

120. Ibid.

121. Deutch, p. 89.

122. Kerr, pp. 1624-1626.

123. Barnes et al., p. 22.

124. Birkner, p. 16.

125. A report published in February 2011 by the Center for 

Applied Policy Research writes that this common energy policy 

is seriously hampered by member states’ efforts to defend their sovereignty: based on differing energy mixes, 

differing suppliers, and differing priorities the member 

states pursue national energy strategies that are only 

barely compatible with each other. Despite a perceived 

similarity of the challenges the member states face and 

the strategic objectives they ascribe to a common energy 

policy, security of supply, stable prices, and environmental protection, they nevertheless adhere to national strategies, which make them pull the common energy policy 

into opposite directions.

Florian Baumann and Georg Simmerl, Between Conflict and 

Convergence: The EU Member States and the Quest for a Common External Energy Policy, Research Group on European Affairs, 2011, 

p. 2.

126. Figure 1-3 accurately indicates the degree of asymmetry 

in diversification of natural gas trade partners, especially between 

ECE countries and Russia.

127. Ibid., p. 87.
40

128. Europe Boosts LNG Purchases.

129. “Swinoujscie LNG Gas Terminal, Baltic Coast, Poland,” 

Hydrocarbons Technology, available from www.hydrocarbons-technology.com/projects/swinoujscie.

130. “Azerbaijan-Romania LNG Project may Cost 4.5bn Euros,” News.Az, February 15, 2011.

131. Shale gas deposits refers to tight gas, which is found in 

relatively impermeable rock formations.

132. Deutch, The Good News about Gas, p. 86.

133. Ibid.

134. Ibid.

135. These conclusions have also been reinforced by RAND’s 

Sergej Mahnovski, who argued that: 

although they face similar obstacles, such as low domestic demand and high transportation costs to foreign markets, crude oil and natural gas producers must consider 

fundamentally different transportation options. With the 

exception of large markets with overland routes, potential crude oil pipeline expansions would likely terminate 

at high-capacity ports with access to international waterways in the Black Sea, Persian Gulf, Mediterranean 

Sea, and possibly the Indian Ocean. In contrast, natural 

gas pipelines would lead directly to regional hubs near 

demand centers, since large-scale maritime transport is 

impossible without capital-intensive liquefaction plants.

Mahnovski, “Natural Resources and Potential Conflict in the 

Caspian Sea Region,” p. 115.

136. Kathleen Davis, “EU Energy Commissioner Gets on 2020 

Bandwagon,” POWERGRID International, Vol. 15, No. 12, December 2010, p. 12.
41

137. This figure tells us that in Lithuania, for example, natural 

gas occupies 31.6 percent of the sum of all energy resources in 

that country, all of which is being supplied by Russia. The higher 

the share of TPES representing Russian natural gas, the more that 

country depends on Russian gas. It must be noted that 10 percent 

of TPES representing Russian natural gas is considered extremely 

high, and reflects on the country’s failure to diversify its energy 

supply.

138. It is important to look at the trade deficit with Russia 

because it significantly increases the costs of coercion when sanctions are imposed by Russia. Figure 1-6 underlines that even if 57 

percent of Russia world trade comes from the European Union 

(EU), half of that is coming from trade with Europe’s center (Germany, Italy, and France) alone. Furthermore, in 2009 EU had a 

near 50-billion euro trade deficit with Russia; with only 12 billion 

being attributed to Europe’s center, while the rest of the deficit is 

attributed mostly to Europe’s periphery, ECE countries. 

139. “Lithuania Demands Fair Gas Price from Gazprom.” Reuters, March 3, 2011.

140. “Lithuania Demands Fair Price from Gazprom,” The Baltic Times, March 4, 2011.

141. Mankoff, p. 33.

142. To better understand how this susceptibility to Russian 

coercion works, let us consider the economic effects on Bulgaria, 

which ranks as the second most susceptible country to Russian coercion, in case Russia were to cut its natural gas supplies. I chose 

Bulgaria to focus on because data are readily available—during 

the January 2009 gas supply cut to Ukraine, Bulgaria’s natural gas 

shortfall was 100 percent for 14 days—making it easier to estimate 

the economic effects if Russia were to cut its natural gas supplies 

to Bulgaria alone in the future. Edward Christie, Research Partner with the Pan-European Institute (PEI) of the Turku School of 

Economics, Finland, estimated that Bulgaria suffered significant 

economic losses during this period: “[I]ndustrial production fell, 

in seasonally-adjusted terms, in line with the share of natural gas 

in the energy product mix in Bulgarian industry, namely 23 percent for the 14-day period of the cut. The economy-wide effect 
42

may have been in the order of 0.35 percent of yearly gross domestic product (GDP), corresponding to a 9.1 percent GDP shortfall 

for the 14-day period of the cut.” This was also confirmed by the 

Bulgarian government, which estimated the cost to the Bulgarian 

economy at 250-million euros (for the duration of the 14 days), 

indicating that in the future, if Russia were to cut its natural gas 

to Bulgaria, the Bulgarian economy would collapse in a matter of 

months. Edward Christie, Pavel Baev, and Volodymyr Golovko, 

“Vulnerability and Bargaining Power in EU-Russia Gas Relations,” FIW-Research Reports 2010/11, No. 3, March, 2011, p. 1.
43

CHAPTER 2

THE SALIENCE OF NATURAL GAS 

IN THE EMERGING GEOPOLITICAL MODEL 

OF RUSSIA

AS AN ENERGY SUPERSTATE

The gas pipeline system is the creation of the Soviet 

Union.1

Vladimir Putin

Winston Churchill once admitted that he could not 

forecast “the action of Russia. It is a riddle wrapped 

in a mystery inside an enigma.”2

 What is clear today, 

however, is that Russia is on a quest to achieve the 

status of a great power—a quest that is promoted not 

only by Prime Minister Vladimir Putin, but by most of 

Russia’s political class—and it perceives the North Atlantic Treaty Organization (NATO) as a hostile alliance 

that is meddling in its backyard (rather than as a prospective ally).3

 This fact is important to bear in mind, 

because it provides a strong argument that Russia will 

use natural gas as an instrument of coercion against 

the European Union (EU) and NATO member states 

most susceptible to this type of coercion—particularly 

those listed in Figure 1-4: Lithuania, Bulgaria, Croatia, 

Slovakia, Hungary, Latvia, Greece, and Estonia—just 

as it has in Ukraine—a case that this monograph will 

analyze in the next chapter. Russia will do this in order to influence the decisionmaking processes of these 

nations—a strategy that will be discussed later in the 

monograph.

Putin’s Russia understands that it does not have the 

means to confront NATO militarily, but that it stands 

a chance to achieve its grand strategic objectives only 
44

by using its vast natural resources, like oil and natural 

gas. This chapter makes a case that Russia’s status as 

a world power cannot be achieved without the use of 

oil to increase Russia’s national wealth, and without 

the use of natural gas to promote Russia’s national 

interests in a well-defined sphere of influence. While 

only natural gas can be used successfully as an instrument of coercion—as discussed in Chapter 1—oil 

remains an important piece of the puzzle, because it 

provides Russia the profits it needs not only to grow 

its economy, but also to leverage the losses incurred 

from Russia’s use of natural gas primarily for political rather than economic ends.4

 But while much has 

been written about Russia’s use of oil to amass great 

wealth, little has been written about Russia’s use of 

natural gas as an instrument of state power—despite 

the fact that this detail stands out when analyzing the 

Energy Strategy of Russia through 2030, the Foreign 

Policy Concept, and the National Security Strategy 

(NSS) of the Russian Federation until 2020.

RUSSIA’S FOREIGN POLICY . . . IS THE COLD 

WAR OVER?

Over the past decade, a series of overlooked but 

obvious developments in the Eastern part of the EU—

to include an increase in the demand for Russian natural gas—contributed to the “emergence of a more confident and assertive Russia”5

 that threatens not only 

the stability and security of the European continent, 

but also the unity and the very indissolubility of the 

Euro-Atlantic sphere. As Frederic Labarre from the 

Partnership for Peace Consortium put it, “Russia is 

back,” and is on the verge “of becoming the new hegemon in Eastern and Central Europe [ECE],6

 an area 
45

intersecting with the interests of EU and NATO member states. The macro-strategic postulate is that a new 

world order is dawning before us.”7

To appease these concerns, the 2010 Institute of 

Contemporary Development (INSOR8

) report, Russia of the Twenty-First Century: The Image of the Desired 

Future, argues that Russia is not a threat to the West, 

among others reasons, because Russia’s impending 

foreign policy goals include membership in both the 

EU and NATO.9 To date, however, Russia has not 

shown any indication of its intent to join the former, 

and has repeatedly shown contempt toward the latter.

Because geographically half of Russia is in Europe, 

some security analysts mistakably assume that Russia 

is a European nation, and thus its interests ought to 

coincide with those of the West. In contrast to geography, however, political influences are not so axiomatic,10 and the past century of Russian history illustrates 

that Russia will resist any Western agenda of democratization.11 The bigger half of the Russian territory 

lies east of the Urals, on the Asian continent, whose 

outlook on life and the management of society plays 

an equally important role in defining Russia’s foreign 

and domestic policy. This aspect was emphasized by 

Russian Foreign Minister Andrei Kozyrev during a 

1992 speech before the Conference on Security and 

Cooperation in Europe (CSCE):

We realize that our traditions come mostly, if not altogether, from Asia, which establishes certain limits on 

the rapprochement with Western Europe. . . . The territory of the former Soviet Union cannot be regarded 

as the zone of full application of CSCE norms. In fact, 

this is post-imperial territory where Russia will have 

to defend its interests by using all available means, including military and economic ones.12
46

The resistance to Western thought was also emphasized by Putin, who argued in 2007—while he was still 

the President of the Russian Federation—that “blindly 

copying foreign models, will inevitably lead to Russia losing its national identity.”13 To this effect, Jerrold 

Schecter—former Time magazine’s Moscow bureau 

chief, and a former member of the National Security 

Council—argued that Russian national identity is “fueled chiefly by two forces: one is practical interest; the 

other, equally potent, is Russian nationalism.”14

The practical interest in the post-Cold War Russia 

has undergone a series of “cognitive processes”15 that 

separated it over the past 2 decades from the MarxistLeninist ideology of the communist period. Ian Bremmer—president and founder of Eurasia Group—wrote 

that Post-Soviet Russia follows a pragmatic approach 

in its relations with the West where practical interest 

presides over the notion of partnership: “When Moscow finally decided to welcome the increasingly free 

flow of ideas, information, people, money, goods, and 

services from beyond their borders, they would try 

their best to control these processes, and to carefully 

micromanage the risks they create.”16 This cautious 

approach to foreign policy became much more obvious after Putin became president and as he promoted 

change in a more “piecemeal fashion” than his predecessor.17

Russian unconventional wisdom under Putin was 

supplemented by Putin’s neo-Soviet/nationalist nostalgia, in itself defined in restorationist terms. Putin 

consolidated his power by promoting the organic 

unity of Russia as “distinct from both European and 

Asian cultures,”18 and by advocating for geopolitical 

expansion as proven by “constant and explicit references to the glorious Soviet past,”19 and by his view-
47

point on the collapse of the Soviet Union as the “greatest catastrophe of the 20th century.”20 As Alexandre 

Mansourov—Senior Associate of the Nautilus Institute for Security and Sustainable Development—put 

it, “empire-building based on national consolidation 

and external expansion is the most popular theme of 

public discourse, a magnet for elite opinions, and an 

integral part of President Putin’s modernization project.”21 The problem is that this preoccupation with 

achieving imperial self-sufficiency through the restoration of “Russia’s geopolitical status as the Eurasian 

Heartland” is not characteristic only to Putin, but to 

almost the entire Russian political class.22 Anatoly 

Chubais—former First Deputy Prime Minister of Russia—envisions a “Liberal empire”; ultra-nationalist 

Alexander Prokhanov—a “White empire”; Gennady 

Yuganov—First Secretary of the Communist Party of 

the Russian Federation—a “Red empire”; Aleksandr 

Dugin—president of the Eurasia Party—a “Eurasian 

empire”; Dmitry Olegovich Rogozin—Ambassador 

Extraordinary and Plenipotentiary of Russia to NATO—a “Patriotic empire”; Eduard Limonov—leader 

of the radical National Bolshevik Party—a “National-Bolshevik empire”; and finally, Vladimir Zhirinovsky—Vice Chairman of the State Duma and leader 

of the Liberal Democratic Party of Russia—an “AllRussian Empire.”23

Envisioning a Russia free of any Euro-Atlantic influences,24 Putin stated in his 2007 speech at the Munich Conference on Security Policy that Russia “will 

no longer accept the status of the West’s junior partner 

as during the 1990s”;25 sending a clear message to the 

West that Russia’s interests are unlikely to overlap 

those of the Euro-Atlantic community in the near future.26 This antagonistic relationship between Russia 
48

and the West was further affected by the NATO enlargement eastward, which was largely perceived not 

only as a threat to “Russia’s international status and 

role,”27 but as a betrayal by the North Atlantic Alliance.

Russia’s bitter reaction to the decision to base 

NATO antimissile facilities in Eastern and Central 

European countries—particularly in Poland and the 

Czech Republic—further shows that Russia regards 

NATO as a hostile alliance, more than as a prospective ally.28 This comes, however, as no surprise. From 

the very beginning, Russia viewed the eastward expansion of the North Atlantic Alliance as a direct 

provocation that challenged Russia’s security interests abroad.29 According to the Russian leadership, the 

Alliance was meddling in “Russia’s backyard,”30 and 

even though Russia lacked the power to prevent the 

expansion, its leaders threatened countermeasures if 

the West ignored the Kremlin.31 As indicated in 1992 

by former Russian Defense Minister Igor Rodionov, 

Russia insisted on the following points after the fall of 

the Soviet Union:

The neutrality of East-European countries or their 

friendly relations with Russia; free Russian access to 

seaports in the Baltics; the exclusion of “third country” 

military forces from the Baltics and non-membership 

of the Baltic states in military blocks directed at Russia; the prevention of the countries that constitute the 

CIS [Commonwealth of Independent States] from becoming part of a buffer zone aimed at separating Russia from the West, South, or East; maintaining the CIS 

states under Russia’s exclusive influence.32

Former Russian Defense Minister Sergei Ivanov 

also insisted (this time in 2004) that it made no sense 
49

for NATO to expand eastward because the countries 

bordering Russia—particularly the Baltic states—were 

“consumers, not producers of collective security in 

the region.”33 The Russian leadership also argued that 

Russia is better posed to provide security for its neighbors, and has even voiced its willingness to guarantee their territorial integrity and independence. These 

promises were met, however, with contempt by Russia’s former allies, and, as Latvian President Guntis 

Ulmanis put it, any alliance between the Baltic States 

and Russia was viewed as “the second annexation of 

the Baltic by Russia.”34

In the end, seven former Warsaw Pact members—

Bulgaria, Hungary, Poland, Romania, Slovenia, the 

Czech Republic, and Slovakia—and three “ex-Soviet 

republics”35—Estonia, Latvia, and Lithuania—were 

invited to join the Alliance.36 Russia viewed this as a 

violation of an alleged 1989 no-NATO-enlargement 

pledge made to Soviet President Mikhail Gorbachev 

in exchange for allowing the German reunification.37

According to Minton Goldman, a Professor Emeritus of Comparative Politics at Northeastern University who holds a Ph.D. from the Fletcher School of 

Law and Diplomacy, the NATO eastward expansion 

ushered in “. . . a new phase of competition and confrontation between Russia and the West.”38 This appraisal transcends all levels of Russian social strata. 

According to a 2011 opinion poll by the Russian Analytical Digest, the top five enemies of Russia—in this 

order—are Chechen gunmen (48 percent of Russians 

believe Chechen gunmen are enemies of Russia); the 

United States (40 percent); NATO (32 percent); other 

political forces in the West (30 percent); and Islamic 

fundamentalism (27 percent).39 International editor of The Economist Edward Lucas also agreed with 

Goldman’s assessment, adding, however, that Russia 
50

“lacks the Soviet Union’s hard power-military muscle, 

and seems unable to find a rival to Euroatlanticism.”40

While Russia’s interests are unlikely to overlap 

those of the Euro-Atlantic community in the next couple of decades, it is also unlikely that Russia will have 

the means to confront the West militarily.41 In his Ph.D. 

dissertation, however, Putin was less concerned about 

the state of the Russian military, and emphasized instead the strategic potential of the vast regional natural resources as Russia’s main source of state power.

In 1904, Sir Halford John Mackinder (English geographer, considered by many the founding father 

of geostrategy) warned that Russia could replace 

the Mongol Empire as the largest contiguous empire 

in history, because it occupies in the world at large 

“the central strategical position held by Germany in 

Europe.”42 This world empire, he argued, will be in 

sight if Russia exploits its “vast continental resources.”43 Some energy security professionals believe that 

Mackinder’s point was also underlined by Putin in 

his Ph.D. in Economics dissertation from the Saint 

Petersburg State Mining University. After reading 

Putin’s dissertation, Dr. Christina Lin, former director 

for policy planning at the United States Department 

of Defense, described the document as Putin’s plan to 

use the Russian resource sector to “once again reassert 

Russia’s imperial status.”44

While natural gas did not play a significant role 

in Putin’s manuscript, the strategic planning and the 

management by the state of the production and transportation of natural resources did.45 In the introduction, Russia is presented as a “region with high natural resource and industrial-economic potential.” Putin 

then writes that the purpose of his study is the “strategic planning of natural resources in the region, includ-
51

ing the formation of national strategy, forecasting, and 

planning of national strategic goals and objectives, as 

well as economic incentives, levers, and incentives for 

implementation of the strategy [by the state].” This 

“geo-economic,” “long-term” planning of natural resources by the state, he argued, “is applicable to solving any problem associated with national objectives 

abroad . . . and for the regional organization of exportoriented natural resources industries.”46 Ian Bremmer 

argued that the application of these principles during 

his time as the President of the Russian Federation, between 2000 and 2008, labels Putin as the chief architect 

of state capitalism in Russia and a strong promoter 

of resource nationalism47 as the driving force behind 

Russia’s current economic and political structure.48

Bremmer defined state capitalism—not to be confused with the traditional Soviet social central planning—as a form of a bureaucratically engineered capitalism “in which the state plays the role of the leading 

economic actor and uses markets primarily for political gain.”49 Like mercantilism, state capitalism is a form 

of economic nationalism “for the purpose of building 

a wealthy and powerful state; . . . it is an economic 

system in which governments use state regulation to 

amass national wealth and power at the expense of all 

other governments,”50 even at the expense of the free 

market:

As with mercantilism, state capitalists use markets to 

build state power. Forced to choose between protection of the rights of the individual, economic productivity, and the principle of consumer choice, on the 

one hand, and the achievement of political goals, on 

the other, state capitalists would choose the latter every time.51
52

Like the mercantilist merchants, contemporary 

state capitalists—such as Vladimir Putin—consider 

themselves “warriors on the front lines of a great national effort”52 to increase the national wealth and to 

promote the national interests and the nation’s status 

as a world power; not at the expense of crown colonies, but at the expense of a well-defined sphere of 

influence:

State capitalists see markets primarily as a tool that 

serves national interests, or at least those of ruling 

elites, rather than as an engine of opportunity for the 

individual. State capitalists use markets to extend their 

own political and economic leverage—both within society and on the international stage. State capitalism 

is not an ideology. It’s not simply Communism by another name or an updated form of central planning. It 

embraces capitalism, but for its own purposes.53

But state capitalism in Russia is not 21st-century 

mercantilism; nor is it a revamped version of socialism. Ernest Raiklin, a Professor of Economics at the 

University of Northern Iowa who previously taught 

economics in St. Petersburg, Russia, predicted the advent of Russian state capitalism as early as 1989, defining it as a form of “authoritarian mixed capitalism,” 

which combines central strategic planning and the 

lack of political democracy with Western capitalism.54

Today, both Putin, and Dimitri Medvedev see world 

trade with positive eyes. With regard to mercantilism, President Medvedev vowed that Russia “will not 

repeat the historic mistakes of protectionism of previous eras.”55 Furthermore, talking about command 

economics, Putin previously stated that “any Russian 

who doesn’t regret the disintegration of the Soviet 
53

Union has no heart, but one who wants to revive it 

has no head.”56 In his dissertation and during his years 

in power, Putin has “repeatedly affirmed his conviction that only capitalism—in this case, state capitalism—can generate prosperity in Russia and restore 

the country to great-power status.”57

On the Eurasian plateau, the power of the Kremlin 

is back; primarily because of Russia’s vast natural resources, like oil and gas—exactly as both Mackinder 

and Putin predicted would happen. This use of natural resources by the state as geo-strategic tools is also 

known as resource nationalism.

Effectively linked to the function of the Kremlin in 

the operation and strategic management of the energy 

industry,58 Russian resource nationalism is a type of 

“post-Soviet Russian-style laissez-faire capitalism”59

that is best described as a “blood sport”60 with referees 

who represent the interests of the state, of the political elite, and of Putin’s oligarchs—dubbed as patriots—to the detriment of everyone else. To this effect, 

Bremmer wrote that “nowhere is resource nationalism 

played on a grander scale than in Russia.”61 Over the 

past decade, Russia has been consolidating its control 

over the energy sector through the use of “national 

champions”62 closely aligned with the Kremlin—such 

as state monopolies, Transneft and Gazprom—where 

the government maintains ownership of more than 

50-percent equity,63 thus effectively containing the 

power held by foreign investors in the oil and gas industries.64

Through the use of resource nationalism, Russia 

effectively managed to become an “energy superstate,”65 a geo-political model that allows Russia to use 

its natural resources—and in particular its natural gas 

reserves—as strategic assets and political tools in its 
54

foreign relations and negotiations with many European and NATO countries.66 The main benefactors of this 

energy superstate—Russia’s political elite—understand that the control of the natural gas pipeline networks is a matter of geopolitics, just as oil was while 

still remaining to a certain extent a matter of economics.67 Both the political—promoted through the use of 

natural gas reserves—and the economic rationality68

are meant, however, to act as tools to project Russian 

power abroad.69

Russia leverages its natural resources and energy 

sector—including the natural gas pipeline networks—

to achieve both domestic political stability and geopolitical objectives.70 Domestically, the Russian political elite uses the large revenues it generates from 

exporting its natural gas resources to accomplish political goals.71 Furthermore, by securing its control of 

the production and transportation networks of natural gas, the political elite has been able to effectively 

take control of all major centers of political power.72

Internationally, Russia is actively using its natural gas 

production and transportation systems “as weapons 

with which to reestablish dominance throughout the 

territory of the former Soviet Union,”73 and to reassert 

its primacy “over both the energy-producing states 

of Central Asia and the energy consuming states of 

Europe.”74 In each case, Bremmer wrote, “the primary 

motive is political.”75

Sustainment of this geopolitical model, however, 

depends on revenues from oil production and on 

maintaining a monopoly on the sphere of natural gas 

production and transportation West of the Urals.76 On 

the former, Russia’s economic development depends 

on large profits from oil; and on the latter, exerting political influence in many Eastern and Central Europe 
55

(ECE) countries depends on maintaining a monopoly 

on natural gas transportation infrastructure. 

Paul Domjan—who previously served as the first 

energy security advisor to the United States European 

Command (EUCOM) and is currently an energy fellow at the Stockholm Network—rightly characterized 

resource nationalism as “a wide range of strategies that 

domestic elites employ in order to increase their control of natural resources” for political and economic 

gain.77 As we have seen above, resource nationalism in 

Russia is “a matter of the government’s political survival,”78 and acts as a politico-economic tool to facilitate the control of the periphery by the center—both 

within Russia and in its sphere of influence:79

Domestic stability is served by ensuring that “the 

commanding heights” of the economy—in this case, 

the energy sector—do not generate centers of political power outside the purview of the central government. Geopolitical influence is served by controlling 

the majority of Eurasian gas and oil export pipelines, 

enabling the Russian government simultaneously to 

exert influence over Central Asian energy producers 

and European energy consumers. 80

Because the economic objectives of the oil sector 

and the geostrategic objectives of the gas sector are 

“subordinate to political goals that are designed to reassert the primacy of the state in domestic and foreign 

affairs,”81 resource nationalism can only be supported 

by a “strategic long-term policy choice.”82 This point 

has also been argued by Putin earlier in the chapter—

particularly in his thesis—who also views Russia’s 

natural resources as ideal geopolitical tools “to reinstate Russia as a great power in a multi-polar world 

order.”83 Furthermore, resource nationalism also became an integral part of Russia’s NSS.
56

RUSSIA’S GEO-ECONOMIC REALISM: 

THE NATIONAL SECURITY STRATEGY AND 

NATURAL GAS

The theory that the current NSS is, in fact, an extension of Putin’s economics dissertation is not at all 

far-fetched. Written by a committed state capitalist, 

Putin’s dissertation comes with one clear-cut message: 

that “the management of Russia’s natural resources is 

too important to leave to private business.”84 As the 

chief originator of post-Soviet resource nationalism, 

Putin views the energy sector—and particularly natural gas—as an effective tool that Russia can use to regain its strength—as he put it in his 2006 State of the 

Nation Address—because “the weak get beaten.”85

Russia is the world’s leading natural gas producer 

and exporter,86 and controls almost a quarter of the 

natural gas trade worldwide.87 Because of this, Russia’s geopolitical and energy potential lies in its natural gas reserves and export pipeline networks. Not 

surprisingly, at a 2005 meeting of the Russian Security 

Council and at the 2006 Saint-Petersburg G8 Summit, 

President Putin’s speeches “gave rise to discussion of 

a new foreign policy idea—Russia as an energy superstate.”88 David Ignatius, co-author of America and the 

World: Conversations on the Future of American Foreign 

Policy, asserted that Moscow is “on its way to becoming the next Houston—the global capital of energy.”89

Peter Rutland, former visiting Fulbright professor at 

the European University in St. Petersburg, disagreed 

with this contention, arguing that Russia cannot use 

oil and natural gas as weapons because “the global 

energy market is complex, fragmented, and competitive; no single country or company is capable of exerting decisive influence over the market.”90 Russia’s 
57

monopoly of natural gas in most ECE countries, as 

seen in Chapter 1, proves Rutland wrong.91 Fiona Hill, 

director of the Center on the United States and Europe 

at Brookings, explained that in the 21st century Russia 

is poised to become an “energy superpower,” but not 

in oil: 

Russia’s energy future is in natural gas. As the next decade unfolds, continued crises in the Middle East and 

growing concern about pollution and global climate 

change will inevitably focus attention on Russia’s vast 

reserves of cheaper, cleaner natural gas.92

Because the export of natural gas serves a political goal,93 energy is of central significance for the Russian leadership, and maintaining the monopoly on 

the pipelines of natural gas to Eastern and Central 

Europe is at the core of Russia’s national security policies. To this end, Edward Lucas identifies four goals 

that Russia has in order to maintain its monopoly on 

natural gas trade in Europe: first, “the Kremlin wants 

to prevent European countries from diversifying their 

sources of energy supply, particularly in gas”; second, 

“it wants to strengthen its hold over the international 

gas market”; third, “it wants to acquire downstream 

assets—distribution and storage capability—in Western countries”; and finally, “it wants to use those assets 

to exert political pressure.”94 Lucas is not alone in this 

conviction; Lin’s research also indicates that Russia’s 

NSS is based on maintaining Europe’s dependence 

on Russian natural gas “via monopolistic control of 

pipelines and acquisition of transit countries’ internal distribution networks.”95 These goals are further 

reinforced by Paul Domjan, who wrote that the main 

pillar of Russia’s NSS until 2020, the Foreign Policy 

Concept, and Energy Strategy through 2030, is Rus-
58

sia’s control of the natural gas transportation network 

and export pipelines to Europe:

The government’s control of export pipelines . . . is a 

matter of geopolitics and history: not only has geography blessed Russia with a prime location between an 

energy-producing region (Central Asia and West Siberia) and an energy-consuming region (Europe), but 

political complications, some deliberately initiated by 

the Russian government, have prevented the full realization of a southern energy corridor that would bypass Russia by way of the Caspian Sea, the Caucasus 

and Turkey. Moreover, the enormous network of . . .

gas pipelines transiting Russian territory is a legacy of 

Russian political dominance. 96

Domjan further stressed that the curse of the Eurasian landmass has been that the Russian natural gas 

export pipeline networks and the quasi-state-owned 

company that controls them—Gazprom—serve as 

“state-sanctioned chokepoints” against other nations 

for whom these same pipelines have historically been 

the only option to export or to have access to natural gas.97 Fiona Hill also emphasized that “all existing pipeline routes run through Russia,” but blamed 

this on the failure of Western companies to “make 

the same inroads into Caspian Asian gas production 

as they have in Caspian oil.”98 It is this failure that allows Russia today to “use gas as a political weapon to 

blackmail a neighboring consumer state that depends 

heavily on Russian supplies of natural gas.”99 Not surprisingly, the Energy Strategy of Russia through 2030, 

the Foreign Policy Concept, and the NSS of the Russian Federation until 2020 all placed the energy sector—and particularly natural gas—at the core of Russian diplomacy.100
59

The National Security Strategy of the Russian Federation until 2020 (NSS), approved by Medvedev in May 

2009, asserts that Russia’s national security depends 

above all on energy security—which relies on Europe’s dependency on Russian natural gas, and on 

the economic benefits associated with profits from oil. 

Russia’s principal goals by 2020 are to become “the 

world’s fifth largest economy in terms of GDP”101—

through the profits derived from export of overpriced 

oil—and to “develop into a global power”—by securing its monopoly of natural gas to ECE. Both of these 

goals depend on future energy supply and demand.102

Because of this, energy security is closely identified 

with national security; the NSS warning that “competition for energy resources might create tension,” 

which could even lead to military confrontations, particularly in the “Near Abroad,” and in Russia’s sphere 

of influence.103 But while the NSS and the Russian political elite argue that Russia’s great-power status is 

inherent in its military and economic potential,104 in 

reality, this potential is almost nonexistent; leaving 

the energy sector as the main source of Russian power 

and influence.

The Russian military capabilities have been dramatically diminished after the collapse of the Soviet 

Union, and continued on this downward path during 

the Putin era—despite major investments in new military research and development. This fact is recognized 

not only by American academia and the intelligence 

community, but by much of Russia’s own academia 

and political elite. Talking about Russian public opinion with regard to Russia’s military strength, Vladimir Baranovsky wrote that this downward trend “is 

by and large considered irreversible.”105 According 

to Bernard Cole, at the grand strategic level Russia 
60

remains very much a major security concern for the 

United States and its allies, but not because of its military capabilities, but because of “the remaining Russian nuclear stockpile, and the problematic security 

of that stockpile.” Edward Lucas even went a step 

further and wrote that “the nuclear arsenal and conventional forces are more a background psychological 

factor than a physical one.”106 At the tactical level, the 

Russian soldiers, along with their military commanders, generate revenues by selling fuel and equipment 

and by working for local enterprises in order to survive.107 At all levels, the Russian military strength is 

characterized by helplessness:

In its decrepit, drunken, demoralized military, bullying (hazing) is endemic. On average 12 Russian soldiers 

commit suicide every month. Russia’s newest warplanes are formidably maneuverable, its submarines 

super silent, its torpedoes terrifyingly fast; but it has 

not yet been able to produce these brilliantly designed 

weapons in any quantities. Those in service are under 

deployed. Only the strategic nuclear arsenal gives 

Russia the right to call itself a military superpower. 

But two thirds of its missiles are obsolete. The Kremlin’s ability to launch a disabling nuclear first strike 

on NATO has disappeared into the history books. So 

has its capacity to project military power around the 

globe, or even to launch a crippling conventional attack on Europe. In so far as a nuclear threat still exists, 

it is that paranoia and incompetence might lead to an 

accidental conflagration.108

The military decline was further exacerbated by 

the unprecedented deterioration in the standard of living, which will continue to worsen during the current 

financial crisis. While Russia is a member of the “G-8 

club of big, rich, western countries,”109 at home, Rus-
61

sian workers are increasingly convinced that “life was 

better when Russia was run by the Communists.”110

The bottom line is that Russia remains too weak and 

too poor to impose its will through “high explosives, 

hardened steel, and enriched uranium.”111 Because of 

this, energy security and geo-economics occupy the 

top priority of Russia’s NSS: “National interests are 

identified mostly in terms of power—economic, military, informational, and political; not values, which 

are expedient and malleable. The power of gas . . . is 

more fungible than the power of nuclear weapons.”112

The resurgence of Russia as a great power and its 

growing function as an energy superpower is also 

asserted in the most recent Foreign Policy Concept, 

which was signed into law by Medvedev in July 2008. 

Christian Thorun, founder and managing director of 

ConPolicy, believes that the Russian leadership’s current foreign policy thinking is in fact a continuation 

of Putin’s legacy. During his presidency, Putin understood that “only an economically strong Russia would 

be taken seriously in the international arena and that 

economic power would significantly expand the tools 

available to Russian foreign-policy.”113 But Putin’s 

pragmatic geo-economic realism “seems impossible”114

to materialize without access to Russia’s vast energy 

resources, in particular to its natural gas. Russian security expert Marcel de Haas—author of the first edition of the Netherlands Defense Doctrine—emphasized 

this element of the Foreign Policy Concept:

The Foreign Policy Concept devoted considerable attention to energy, both in terms of security issues and 

resources. This approach was also in line with Putin’s 

2007 and 2008 statements. Energy became a consistent 

part of Moscow’s security thinking due to its ability to 

produce high revenues and its use as an instrument 
62

of power, particularly during the gas conflicts with 

Ukraine.115

Finally, the Energy Strategy of Russia through 2030

also identifies energy security as “one of the most important components of the national security”116 and 

defines it as the “protection of the country, its citizens, 

society, state and economy” against the threats to both 

energy supply and demand.117 Because of this, energy 

security “must be provided without prejudice to any 

national interests whatsoever.”118 The main external 

risks (geopolitical, macroeconomic, and market)119 to 

energy security are identified as “volatility of world 

prices, increasing competition at traditional markets, 

low diversification of export, and transit dependency,”120 and will determine “Russia’s future position on 

the world energy markets.”121 Furthermore, the document predicts that for the next 2 decades, Russia will 

“undeniably remain the leading player on the world 

hydrocarbon market”122—particularly due to Europe’s 

increasing demand for natural gas123—and that the energy sector “will retain its crucial role in resolving the 

important strategic task” 124 of geo-economic stability:

Russia will thus not only retain its position as the largest energy supplier in the world, but will also qualitatively change its presence on the world energy market 

by diversifying its commodities structure and destinations of energy export, actively developing new international energy business and increasing the presence 

of Russian companies abroad. . . . The strategic objective of the foreign energy policy is the maximum efficient use of the Russian energy potential.125
63

WHY AND HOW DOES RUSSIA USE NATURAL 

GAS AS AN INSTRUMENT OF COERCION IN 

ITS SPHERE OF INFLUENCE?

Since the end of World War II, with the Long Telegram of George Kennan—the father of containment, 

who wrote that “no single Continental land power 

should come to dominate the entire Eurasian landmass”—until the end of the Cold War, with President 

Bush asserting that containment was meant “to prevent any hostile power or group of powers from dominating the Eurasian landmass,”126 politicians, historians, and academics have viewed ECE as the “strategic 

heartland of the great European landmass.”127 All these 

voices resonate with Halford Mackinder’s theory that: 

“Who rules East Europe commands the Heartland; 

Who rules the Heartland commands the World Island; 

Who rules the World Island commands the World.”128

Indeed, all these assertions have proven to be historically accurate, and for this reason, ECE continues to 

be considered of great geostrategic significance for the 

security and stability of the Eurasian supercontinent:

In the 19th Century, they were objects of intense interest to the large empires on their periphery: Germany, 

Russia, Austria, and Turkey. Because events in Central/Eastern Europe were at the root of the two world 

wars, political development in the region is important 

to the security of not only Germany, the Scandinavian 

countries, and Russia and the Eurasian republics, but 

also to the states of Western Europe.129

Ronald Reagan, who once described the Soviet 

Union as an “evil empire,” understood very well that 

a Kremlin-controlled European natural gas pipeline 

infrastructure would provide the USSR with a great 
64

opportunity to control not only Eastern Europe, but 

the entire European continent. For this reason, during 

his first term in office, Reagan attempted—although 

unsuccessfully—to stop the first natural gas pipeline 

from being built between Russia and Germany.130 His 

legacy seems long forgotten today, when many energy 

security experts assert that “we live in a more benign 

world,”131 where conquest of land is highly unprofitable—persuading rulers to consider physical geography as politically neutral. Colin Gray also agreed with 

this assertion, but he pointed out that those who adapt 

best “to the terms and conditions of life and warfare in 

the jungle, will count that particular terrain as an ally 

rather than as a ‘neutral’ geographical stage.”132 In the 

dominion of Russian resource nationalism, state capitalists like Putin look at geography as an ally whose 

natural gas resources become a means of advancing 

Russia’s grand strategic ends in its sphere of influence.133

While most ECE nations historically have depended on Soviet natural gas,134 in the contemporary security environment Russian natural gas exports dominate

“both on the European gas market and on the gas market of the Commonwealth of Independent States.”135

Virginia Comolli, from the International Institute for 

Strategic Studies (IISS), believes that this dominance 

“heightens the tendency to use energy superiority 

for political purposes and to underline Russia’s claim 

to be a major force in international relations.”136 The 

significance of natural gas for Russia’s foreign policy 

is, on the one hand, the result of a structurally weak 

economy dependent on the export of hydrocarbons,137

and on the other, the result of Russia’s strategic goal 

to secure its traditional sphere of influence. As seen 

in Russia’s national strategies, geo-economic consid-
65

erations act as a pillar of Russia’s foreign policy, and 

economic growth itself depends on Russia’s sphere of 

influence. This is especially evident in the natural gas 

sector. Russia’s role as the main natural gas exporter 

to Europe—and for some European states, the only 

exporter of natural gas—and the significance of natural gas to Russia’s own economic development “has 

inevitably influenced Russia’s foreign-policy.”138 According to Jane’s Country Risk Assessment—and as 

illustrated in the first chapter of this monograph—this 

monopoly power indeed “extends beyond Russia’s 

borders, with countries such as Belarus, Finland, Turkey, Slovakia, the Czech Republic, Ukraine, Poland, 

and Austria relying on [Russia] for over half of their 

gas imports.”139 These facts persuaded scholars like 

Kazantsev to assert that “gas is a backbone not only of 

Russian foreign policy, but also of the domestic political system.”140 Consequently, Russia needs to maintain 

its sphere of influence for economic and geopolitical 

considerations (both domestic and international), and 

it needs to maintain its monopoly of natural gas in 

ECE states in order to retain control over this sphere 

of influence. Any attempt by ECE countries to circumvent this dependence on Russian natural gas will thus 

be met with much resistance by the Russian political 

elite:

Russia was, and still is, alarmed by the possibility of 

cheap Central Asian gas appearing on European markets because it would compete with Gazprom’s gas. 

A related fear was the danger of the South Caucasus 

being used for the transportation of Central Asian gas 

(through a Transcaspian gas pipeline and the Nabucco 

project) to Europe. As a result of this, Russian geopolitical power in the CIS serves the commercial purpose 

of keeping Gazprom’s position in European gas mar-
66

kets. So power considerations were mixed with the 

aspiration for profits, as it was in the case of European 

trade companies of the Early Modern period.141

What is even more alarming is that 60 percent of 

the Russian public supports reestablishing Soviet-era 

control over ECE countries; a threat that Keith Smith—

former U.S. Ambassador to Lithuania and currently 

a senior associate in the CSIS New European Democracies Project—believes “cannot be dismissed.”142

President Medvedev himself expects the West to accept that Russia has “privileged interests in certain 

regions,” particularly in the post-Soviet space and, in 

extremis, ECE.143 To this end, natural gas has become 

the preferred tool of Russian diplomacy, “making it 

subject to [the] Kremlin’s political strategy rather than 

commercial needs”;144 Prime Minister Putin being by 

far the most assertive promoter of using natural gas 

“to coerce the consuming countries.”145

Russia stands accused today of using natural gas 

as an instrument of state power. Indeed, over the past 

decade, several ECE countries have experienced “the 

suspension or reduction of . . . gas flows from Russia 

coincident with political or economic disputes.”146 And 

as it will be shown, in Ukraine’s case, in which natural 

gas was used as an instrument of coercion—particularly in the context of economic incentives and penalties,147 or by “withholding or threatening to withhold” 

vital natural gas shipments148—this type of unilateral 

sanction was very effective.

ENDNOTES - CHAPTER 2

1. Edward Lucas, The New Cold War: Putin’s Russia and the 

Threat to the West, New York: Palgrave MacMillan, 2009, p. 164.
67

2. David Knott, “Black Cloud Over White Night,” Oil & Gas 

Journal, November 8, 1993, p. 32.

3. Russia’s perception of NATO as hostile is clear despite recent claims by the NATO-Russia Council Joint Statement, which 

spoke of a “new stage of cooperation towards a true strategic 

partnership” and that “the security of NATO and Russia is intertwined.” These statements completely ignored the words of 

President Medvedev at the Lisbon NRC Summit, who pointed 

out that “Russia would participate only on an absolutely equal 

basis”; only as long as it benefits Russia’s foreign policy interests. 

Pavel Petrovsky and Vladimir Dedushkin, “Quo Vadis, NATO? 

A Glance from Lisbon,” International Affairs, Vol. 57, No. 1, 2011, 

pp. 49-57.

4. The two natural gas pipelines that will further increase 

Russia’s ability to use natural gas as an instrument of coercion, 

Nord Stream and South Stream, are expected to cost between €23-

28 billion, and profitability was not a major factor in the decision 

to build them. In fact, Zeyno Baran argued that the Nord Stream 

pipeline alone will cost several times more than a proposed overland project would have. Zeyno Baran, “EU Energy Security: 

Time to End Russian Leverage,” Washington Quarterly, Vol. 30, 

No. 4, October, 2007, p. 135; Christina Lin, The Prince of Rosh: Russian Energy Imperialism and the Emerging Eurasian Military Alliance 

of the Shanghai Cooperation Organization, Berlin, Germany: Institute 

for Strategic-Political-Security-and Economic Consultancy (ISPSW), 2009.

5. Stephen F. Larrabee, “Russia, Ukraine, and Central Europe: 

The Return of Geopolitics.” Journal of International Affairs, Vol. 63, 

No. 2, Spring 2010, p. 33.

6. For the purpose of this chapter, ECE is comprised of the 

Baltic Republics (Estonia, Latvia, and Lithuania); Central Europe 

(Poland, the Czech Republic, Slovakia, and Hungary); the Balkans 

(Serbia and Montenegro, Slovenia, Croatia, Bosnia-Herzegovina, 

Macedonia, and Albania); and Southeastern Europe (Romania 

and Bulgaria). Wayne Thompson, Nordic, Central, and Southeastern Europe, 5th Ed., Harpers Ferry, WV: Stryker-Post Publications, 

2005.
68

7. Frederic Labarre, “Russian Neo-Mercantilism,” 10th CDAI 

Graduate Symposium, Kingston, Ontario, Canada, October 27, 

2007, p. 2. 

8. The Russian Institute of Contemporary Development (INSOR) is a Moscow-based think tank affiliated with Russian President Dmitry Medvedev.

9. Andrey Kazantsev, “The Crisis of GAZPROM as the Crisis of Russia’s Energy Superstate Policy Towards Europe and the 

Former Soviet Union,” Caucasian Review of International Affairs, 

Vol. 4, No. 3, Summer 2010, p. 281.

10. Vladimir Baranovsky, “Russia: A Part of Europe Or Apart 

from Europe?” International Affairs, Vol. 76, No. 3, July 2000, p. 

443.

11. Matthew Clements, ed., Country Risk Assessments. Russia 

and the CIS, 24th Ed., Alexandria, VA: Jane’s Sentinel, 2009, p. 479.

12. Jerrold Schecter, Russian Negotiating Behavior, Washington, 

DC: United States Institute of Peace Press, 1998, p. 49.

13. Christian Thorun, Explaining Change in Russian Foreign 

Policy. The Role of Ideas in Post-Soviet Russia’s Conduct Towards the 

West, New York: Palgrave MacMillan, 2009, p. 37.

14. Schecter, p. 45.

15. Thorun, p. 151.

16. Ian Bremmer, The End of the Free Market, New York: Penguin Group, 2010, p. 53.

17. Stephen K. Wegren and Dale R. Herspring, eds, After Putin’s Russia. Past Imperfect, Future Uncertain, 4th Ed., Plymouth, 

UK: Rowman & Littlefield Publishers, Inc., 2010, p. 318.

18. Andrei P. Tsygankov and Pavel A. Tsygankov, “National 

Ideology and IR Theory: Three Incarnations of the ‘Russian Idea’,” 

European Journal of International Relations, Vol. 16, No. 4, December 

2010, p. 670.
69

19. Viatcheslav Morozov, “Imperial Discourse in Russian International Studies: Empire Vs. the Corporatist State as Images of 

Putin’s Russia,” 4th CEEISA Convention, Tartu, Estonia, June 26, 

2006, p. 6. 

20. Lin.

21. Alexandre Mansourov, “Mercantilism and Neo-Imperialism in Russian Foreign Policy during President Putin’s 2nd Term,” 

The Korean Journal of Defense Analysis, Vol. 17, No. 1, Spring, 2005, 

p. 158.

22. Tsygankov and Tsygankov, p. 676.

23. Mansourov, p. 158.

24. Tsygankov and Tsygankov, p. 676.

25. Andrei Tsygankov, “Russia’s Foreign Policy,” in Stephen 

K. Wegren and Dale R. Herspring, eds., p. 223.

26. Country Risk Assessments, Russia and the CIS, p. 479.

27. Thorun, p. 151.

28. Country Risk Assessments,. Russia and the CIS, p. 482.

29. Baranovsky, p. 452.

30. Lucas.

31. Minton Goldman, ed., Russia, The Eurasian Republics, and 

Central/Eastern Europe, 10th Ed., Dubuque, IA: Global Studies, 

2005, p. 100.

32. Lucas, p. 131.

33. Goldman, p. 55.

34. Ibid.

35. Lucas, p. 131.
70

36. Country Risk Assessments, Russia and the CIS, p. 482.

37. Goldman, p. 75.

38. Ibid.

39. “Opinion Poll: Nationalism in Contemporary Russia,” 

Russian Analytical Digest, Vol. 93, March 10, 2011, pp. 10-11.

40. Lucas, p. 131.

41. Country Risk Assessments, p. 479.

42. H. J. Mackinder, “The Geographical Pivot of History,” The 

Geographical Journal, Vol. 23, No. 4, April 1904, pp. 421-437.

43. Ibid.

44. Lin, p. 1.

45. Two things stand out from the very first page of the dissertation: first, that Putin’s field of study was Economics and the 

Management of the National Economy; and second, the name of 

the study itself was titled “The Strategic Planning of Regional 

Natural Resources under the Formation of Market Relations.”

46. Vladimir Vladimirovich Putin, “The Strategic Planning of 

Regional Natural Resources Under the Formation of Market Relations,” Ph.D. Thesis in Economics, Saint Petersburg State Mining 

University, pp. 1-218. 

47. The International Energy Forum, the world’s largest gathering of Energy Ministers, defines resource nationalism as ”. . . 

nations wanting to make the most of their endowment.” Paul Stevens, “National Oil Companies and International Oil Companies 

in the Middle East: Under the Shadow of Government and the 

Resource Nationalism Cycle,” Journal of World Energy Law & Business, Vol. 12, No. 1, 2008, p. 5. Resource nationalism requires said 

nations to “shift political and economic control of their energy and 

mining sectors from foreign and private interests to domestic and 

state controlled companies.” Ian Bremmer and Robert Johnston, 

“The Rise and Fall of Resource Nationalism,” Survival, Vol. 51, 
71

No. 2, April, 2009, pp. 149-158. This has also been emphasized by 

Professor Paul Stevens, Senior Research Fellow on Energy at the 

Chatham House, the home of the Royal Institute for International 

Affairs, who wrote that resource nationalism has been historically 

characterized by “a battle between national interests and foreign 

influences.” Stevens, p. 8. This has been the case in Russia.

48. Bremmer, The End of the Free Market, p. 107.

49. Ibid., p. 33.

50. Ibid., p. 34.

51. Ibid., p. 41.

52. Ibid., p. 37.

53. Ibid., p. 52.

54. Ernest Raiklin, After Gorbachev? A Mechanism for the Transformation of Totalitarian State Capitalism into Authoritarian Mixed 

Capitalism, Washington, DC: Council for Social and Economic 

Studies, 1989, p. 105.

55. Bremmer, The End of the Free Market, p. 39.

56. Ibid., p. 53.

57. Ibid., p. 107.

58. Ibid., p. 6.

59. Ibid., p. 5.

60. Ibid., p. 5.

61. Ibid., p. 63.

62. Ian Bremmer, “The Return of State Capitalism,” Survival, 

Vol. 50, No. 3, June 2008, pp. 55-64.

63. Ibid.
72

64. In many cases, foreign investors must gain approval from a 

government commission advised by the Federal Security Bureau, 

the former KGB, headed by Prime Minister Putin, before buying 

assets considered of national and/or strategic significance. Ibid.

65. Kazantsev, p. 271.

66. Ibid., p. 271.

67. Paul Domjan and Matt Stone, “A Comparative Study of 

Resource Nationalism in Russia and Kazakhstan 2004-2008,” Europe-Asia Studies, Vol. 62, No. 1, January 6, 2010, p. 43.

68. Kazantsev, p. 284.

69. Bremmer, The End of the Free Market, p. 107.

70. Domjan and Stone, p. 35.

71. Bremmer, The End of the Free Market, p. 63.

72. Domjan and Stone, p. 36.

73. Bremmer, The End of the Free Market, p. 63.

74. Domjan and Stone, p. 36.

75. Bremmer, The End of the Free Market, p. 63.

76. Kazantsev, p. 271.

77. Domjan and Stone, p. 38.

78. Ibid., p. 40.

79. Ibid., p. 38.

80. Ibid., p. 39.

81. Ibid.

82. Bremmer, The End of the Free Market, p. 52.
73

83. Domjan and Stone, p. 36.

84. Lucas, p. 163.

85. Thorun, p. 31.

86. Virginia Comolli, “Energy Security,” in Europe and Global 

Security, Bastian Giegerich, ed., London, UK: International Institute for Strategic Studies, 2010, p. 188.

87. The Energy Strategy of Russia through 2030, p. 21.

88. Kazantsev, p. 274.

89. Fiona Hill, “Russia: The 21st Century’s Energy Superpower?” in Russia. the Eurasian Republics, and Central/Eastern Europe, 10th Ed., Milton Goldman, ed., Dubuque, IA: Global Studies, 

2005, p. 220.

90. Peter Rutland, “Russia as an Energy Superpower,” New 

Political Economy, Vol. 13, No. 2, June 2008, p. 207.

91. But even if we combine oil and gas together, by Russia’s 

own admission, it controls 23 percent of the world’s oil and natural gas reserves, making it the world’s richest nation in terms of 

hydrocarbon reserves. In oil alone, by Rutland’s own admission, 

Russia ties with Saudi Arabia for first place in production.

92. Hill, p. 220.

93. Sophia Dimitrakopoulou and Andrew Liaropoulos, “Russia’s National Security Strategy to 2020: A Great Power in the 

Making?” Caucasian Review of International Affairs, Vol. 4, No. 1, 

Winter, 2010, p. 38.

94. Lucas, p. 163.

95. Lin, p. 2.

96. Domjan and Stone, p. 40.

97. Ibid., p. 41.
74

98. Hill, p. 222.

99. Kazantsev, p. 274.

100. Sophia Dimitrakopoulou argued that “the National Security Strategy reflects the restoration of Russia’s Great Power 

identity (derzhavnost) that took place during the Putin era,” Dimitrakopoulou and Liaropoulos, p. 42.

101. Ibid., p. 38.

102. Marcel de Haas, “Medvedev’s Security Policy: A Provisional Assessment,” Russian Analytical Digest, Vol. 62, June 18, 

2009, p. 3.

103. Ibid., p. 3. Also emphasizing the views of David Victor, 

former director of the Program on Energy and Sustainable Development at the Freeman Spogli Institute for International Studies 

at Stanford University, who wrote that “the world may be headed 

for a spate of resource wars, hot conflicts triggered by a struggle 

to grab valuable resources.” David G. Victor, “What Resource 

Wars?” National Interest, No. 92, November, 2007, p. 48.

104. Thorun, p. 37.

105. Baranovsky, p. 449.

106. Lucas, p. 10.

107. Goldman, p. 47.

108. Lucas, p. 5.

109. Ibid., p. 4.

110. Goldman, 45.

111. Lucas, p. 10.

112. Mansourov, p. 152.

113. Thorun, p. 31.
75

114. Baranovsky, p. 449.

115. de Haas, p. 2.

116. The Energy Strategy of Russia through 2030, Moscow, Russia: Ministry of Energy of the Russian Federation, 2010.

117. Ibid.; Nikolay Kaveshnikov, “The Issue of Energy Security in Relations between Russia and the European Union,” European Security, Vol. 19, No. 4, December 2010, p. 587.

118. The Energy Strategy of Russia through 2030, p. 22.

119. Ibid.

120. Ibid.; Kaveshnikov, p. 587.

121. The Energy Strategy of Russia through 2030, p. 22.

122. Ibid.

123. A fact also emphasized by Alexander Medvedev, deputy 

chairman of OAO Gazprom Management Committee and Director General of OOO Gazprom Export, who just this year reminded the world that “most forecasts by leading consulting agencies, 

government organizations, and industry associations point to an 

increase in European gas demand over the long term. According 

to the consensus forecast, demand for gas in the European countries will reach 637 bcm in 2020 and 648 bcm by 2030.” Alexander 

Medvedev, “The Economic Crisis and the Future of the Gas Sector,” International Affairs, Vol. 57, No. 1, 2011, pp. 188-191.

124. Kaveshnikov, p. 594.

125. The Energy Strategy of Russia through 2030, p. 55.

126. Peter Liberman, “The Spoils of Conquest,” International 

Security, Vol. 18, No. 2, Fall 1993, p. 129.

127. Goldman, p. 88.

128. Liberman, p. 127.
76

129. Goldman, p. 88.

130. Lin, p. 2.

131. Liberman, p. 125.

132. Colin Gray, “Inescapable Geography,” Journal of Strategic 

Studies, Vol. 22, No. 2, 1999, p. 173.

133. Edward Lucas identified this sphere of influence as “the 

countries bordering Russia, starting with those covered by the 

1939 Molotov-Ribbentrop Pact—the Baltic States, Central Europe, 

and the Balkans—but reaching around the Black Sea to the Caucasus.” This, he argued, is the main theater of the New Cold War. 

Lucas, p. 129.

134. Goldman, p. 101.

135. The Energy Strategy of Russia through 2030, p. 21.

136. Comolli, p. 188.

137. Kazantsev, p. 274.

138. Hill, p. 221.

139. Country Risk Assessments, Russia and the CIS, p. 472.

140. Kazantsev, p. 280. Andrey Kazantsev also argued that 

“there was also a very important peculiar feature of the gas sector in Russia: only in this sector of the economy where there was 

such a strong link between Russia’s domestic economic and foreign policies.”

141. Ibid., p. 275.

142. Keith Smith, Russia-Europe Energy Relations. Implications 

for U.S. Policy, Washington, DC: CSIS, 2010.

143. Larrabee, p. 37.

144. Country Risk Assessments, Russia and the CIS, p. 472.
77

145. Smith, p. 9.

146. Domjan and Stone, p. 44.

147. Lucas, p. 159.

148. Smith, p. 1.

79

CHAPTER 3

CARROTS AND STICKS:

A LOOK AT RUSSIA-UKRAINE GAS PIPELINE 

POLITICS

Without Ukraine, Russia is a desperately defensive 

power, lacking any natural defenses aside from sheer 

distance.1

Peter Zeihan

In the midst of the cold European winter of 2009, 

on January 7, Russia cut off its supplies of natural gas 

to Ukraine for 14 days, causing natural gas shortfalls 

in over 20 countries.2

 Russia stands accused of using 

natural gas to advance its foreign policy objectives by 

taking advantage of Ukraine’s susceptibility to Russian coercion (see Figure 4-1). Hrygoriy Perepelytsya—

Military Department Director of the Kyiv National 

Institute for Strategic Studies (NISS)—explained that 

this cutoff came as a result of Russia’s strategic move 

to damage the reputation of the Ukrainian Orange 

Revolution, which Russian President Dmitry Medvedev perceived as contrary to Russian interests:

From 2005 till 2009, the main tasks of Russia in foreign 

policy were to discredit [the] current government and, 

first of all its President Viktor Yuschenko as personification of orange power, and to disgrace [the] Orange 

revolution’s ideals in the eyes of [its] own citizens of 

Ukraine and [the] international community. Russian 

and Ukrainian society were obtruded the opinion on 

the falseness of democratic choice and European integration aspirations, and Yuschenko by himself . . . 

performed as [an] American marionette.3
80

Russia’s strategy was very effective: A 2008 opinion poll by the Ukrainian Centre of Economic and Political Studies indicated that between 2003 and 2008, 

the Ukrainian perception toward Russia was radically 

transformed; with 51 percent of Ukrainians believing 

that good relations with Russia should be the top priority of Ukrainian foreign policy in December 2008, as 

opposed to only 28 percent in September 2003.4

 Furthermore, according to a 2010 poll by the Levada Centre, “the absolute majority (92 percent) claimed their 

respect for Russia . . . bad feelings towards Russia 

was claimed by only 6 percent of interviewed Ukrainians.”5

 Russia successfully suppressed the Orange 

Revolution without firing a shot, but by patiently using natural gas as its instrument of state power.6

Russia no longer possesses the capacity to enforce 

its grand strategic ends through the use of military 

force. Peter Zeihan, Vice President of Analysis for 

Strategic Forcasting, Inc. (STRATFOR), accurately 

portrayed in the quote that opened this chapter the 

way many American geopolitical and intelligence 

professionals analyze Russia-Ukraine relations: underestimating Russian power and overestimating its 

vulnerabilities. The tendency to understate the influence Russia still has in Russia’s near abroad is also apparent in Zbigniew Brzezinski’s analysis that “without Ukraine, Russia ceases to be an empire, but with 

Ukraine suborned and then subordinated, Russia automatically becomes an empire.”7

 While Russia needs 

to maintain control over its sphere of influence for 

both political and economic reasons—as discussed in 

Chapter 2—this chapter will show that American geopolitical analysts who agree with Zeihan and Brzezinski fail to understand the shift in the preferred Russian methods of solving disputes in the contemporary 

security environment.
81

Both Zeihan and Brzezinski look at Russia from 

a traditional security mindset, focusing on the weakness of the Russian military power. With regard to 

the Russia-Ukraine relationship, both authors fail to 

acknowledge the importance of Ukraine’s gas infrastructure for Russia8

 (80 percent9 of the Caucasus gas 

exported by Russia to Western Europe passed through 

Ukraine), Ukraine’s role as a gas supply regulator 

(Ukraine’s extensive gas storage capabilities are vital 

in guaranteeing that Russian contracted gas reaches 

Western Europe despite seasonal fluctuations),10 and 

the fact that Ukraine imports 14.98 percent of Russian 

total gas exports—as seen in Figure 3-3. To use Albert 

Hirschman’s logic,11 a look at Ukraine as the main 

transit country for Russian gas to Europe presents a 

strong argument for Russia to use unilateral economic 

sanctions as a means to solidify Russian control of the 

Ukrainian gas infrastructure. Ukraine’s own vulnerability to the disruption of gas supplies remains crucial 

in solidifying this control.

To fully understand the “pattern”12 of Russia using 

natural gas as an instrument of economic coercion, it 

is helpful to recognize three of Moscow’s demands of 

Ukraine after the fall of the Soviet Union:13 (1) renunciation of its claims to the Soviet nuclear stockpile in 

Ukraine, and the surrender of all nuclear warheads to 

Russia; (2) recognition of Russia as the legal inheritor 

of all political, economic and military infrastructure 

belonging to the Soviet Union, to include exclusive 

rights to the Ukrainian pipeline infrastructure and to 

the Black Sea fleet and the port of Sevastopol; and (3) 

recognition of Russia as the regional hegemon.14
82

MOSCOW’S FIRST DEMAND: RENUNCIATION 

OF ITS CLAIMS TO THE SOVIET NUCLEAR 

STOCKPILE15

It is largely agreed in academic literature that Russia’s use of natural gas as an instrument of economic 

coercion has failed in the enforcement of the first demand.16 This episode is, however, important to discuss 

in order to establish a pattern in the use of this particular type of coercion. A series of events described in 

depth in Drezner’s writings come to mind:

• In 1992, popular support for retaining the 

Ukrainian nuclear deterrent is on the rise,17 and 

Ukraine declares legal ownership of the nuclear 

stockpile.18

• In February 1993, the Russian government 

threatens for the first time to raise the price of 

gas. Shortly after, the gas prices rise tenfold 

from $4 to $40 per 1,000 cubic meters.19

• In September 1993, gas supplies to Ukraine decrease by 25 percent. Russian President Yeltsin 

threatens to completely cut off gas shipments 

if Ukraine fails to make concessions on Russia’s demand for the Ukraine to relinquish its 

nuclear stockpiles.20

Despite these facts, Drezner argued that Russia’s 

first demand was not settled by the means of coercion, 

but by diplomatic means. In January 1994, the United 

States brokered a final agreement between Russia 

and Ukraine,21 whereas the latter would surrender its 

nuclear stockpile, and with it, its nuclear ambitions.22

This caused some scholars, including Drezner, to conclude that the use of gas as a national security coercive 

instrument, especially when coupled with military 
83

pressure—at that time Ukraine still feared a Russian 

military offensive,23 because Senior Russian officials 

kept describing Ukraine’s independence as a temporary phenomenon24—would “produce the fewest concessions” from Ukraine.25 Drezner’s evaluations are, 

however, arguably subjective, and largely based on a 

one-sided traditional approach that fails to recognize 

the bigger strategic design of economic sanctions.26

First, Drezner’s argument does not consider the 

fact that by 1994, almost half of Ukraine’s population 

supported retaining the Ukrainian nuclear deterrent.27

At the individual level of analysis, it is hard to believe 

that Ukraine’s leaders simply chose to ignore half of 

the electorate just because the United States provided written guarantees that it would protect Ukraine 

against Russia in the event of a regional conflict. This 

was an unpopular move that could have resulted in a 

loss of popular support.28

Second, Drezner, admits that, “by February 1994, 

Ukraine owed Russia $3.4 billion; an immediate halt 

to all energy subsidies would have cut Ukraine’s GNP 

[Gross National Product] by 3.5%.”29 It seems again 

impossible that the Ukrainian policymakers did not 

consider the economic implications of refusing Russia’s demands. 

Third, Drezner fails to acknowledge the twofold 

purpose of the unilateral economic sanctions:30 the target of the Russian Government was not only Ukraine, 

but also the Russian Parliament.31 In 1990, 73 of 79 billion cubic meters (bcm) of gas per year were delivered 

to Western Europe via Ukraine.32 With the export of 

gas being the main sources of revenue for Russia, the 

risk of over 90 percent of it depending on Ukrainian 

collaboration forced Russian policymakers to consider alternative transit routes to Europe.33 This is partly 
84

why projects like Yamal-Europe through Belarus 

and Poland, Nord Stream through the Baltic Sea, and 

South Stream through the Black Sea were considered; 

“to strengthen Russian influence in Europe.”34

Ultimately, Drezner failed to acknowledge the impact of gas disruptions on Ukraine’s decision to transfer its nuclear weapons to Russia.35 The fact that negotiations were concluded with the help of the United 

States does not mean that threats of gas disruption 

were ineffective. There is no proof to show that Ukrainian politicians used U.S. mediation as political cover 

so that it did not look like total capitulation, and this 

chapter does not intend to demonstrate that this was 

the case. Instead, it intends to show that natural gas 

as an instrument of coercion was used successfully, 

even though it was not the only tool used during the 

negotiations.

The effectiveness of gas as an instrument of coercion becomes more apparent in negotiations involving the last two demands made by Russia to Ukraine. 

A carrots-and-sticks strategy can also be identified in 

the way Russia approached these issues. For example, 

Russia’s second demand was resolved using natural 

gas as an incentive to move along negotiations with 

a friendly Ukraine, while the second demand favored 

the use of deadlocks in dealing with a belligerent 

Ukraine. 
85

MOSCOW’S SECOND DEMAND: 

RECOGNITION OF RUSSIA AS THE LEGAL 

INHERITOR OF SOVIET MILITARY AND 

GOVERNMENT PROPERTY, EQUIPMENT, 

AND NATURAL GAS INFRASTRUCTURE IN 

UKRAINE

A close look at Ukraine since the election of the 

pro-Russian Viktor Yanukovych in February 2010 reveals that, in dealing with a friendly Ukraine, gas-related incentives rather than pure threats were favored 

in pursuing Russia’s national security objectives at the 

Black Sea.36 This use of incentives, often even coupled 

with threats, has been successfully employed by Russia to obtain exclusive rights to the Ukrainian pipeline 

infrastructure37 and to the port of Sevastopol. 

Negotiations for the purchase of the Sevastopol 

fleet and for exclusive rights to the port of Sevastopol 

have been well-documented; they substantiate this 

use of gas as both an incentive and as an instrument 

of coercion even before the pro-Russian Yanukovych 

took power:

1. Demand of the Sevastopol Fleet: The 1993 demand for the Sevastopol fleet and basing rights came 

with an offer to forgive Ukraine’s gas debts to Russia. It also came with the use of gas dependence as 

an intimidation tool, when Yeltsin threatened that the 

failure of Ukraine to cooperate will result in the disruption of the Russian gas supply.38 The fleet demand 

was resolved during the Sochi Summit in 1994, when 

Ukraine sold most of its fleet to Russia. In return, Russia upheld its side of the bargain, and forgave most of 

Ukraine’s gas debts.39
86

2. Demand of Basing Rights in Sevastopol: When 

the 1996 Ukrainian constitution barred the permanent 

stationing of Russian troops on Ukrainian territory,40

Russia again threatened to raise the price of gas (as 

stated by the Ukrainian Foreign Minister).41 Not surprisingly, in May 2007, a 20-year “lease” of the base 

was signed between the two sides42 in exchange for a 

10-year deferment on Ukraine’s gas debts.43

Interestingly enough, after the pro-Russian Yanukovych took power, no outspoken threats were 

made in the conduct of negotiations over the port of 

Sevastopol. Natural gas was used as an incentive; 

while the instrument of coercion remained hidden in 

the background. The renewal of the Sevastopol port 

agreement in 2010 resulted in a 30-percent discount 

on gas prices,44 and on September 30, 2010, it brought 

a modest adjustment on the amount of gas Ukraine is 

obligated to purchase.45 The fact that the gas price discount was used as an incentive is not a secret:46 After 

the conclusion of negotiations, the Russian President 

openly admitted that the 30-year lease of the Sevastopol base was “intimately interconnected” to the 10-

year gas discount agreement.47

The fact that the flow of Russian natural gas was 

not interrupted to a friendly Ukraine does not mean, 

however, that Russia gave up its capabilities to employ gas as an instrument of coercion in the future. In 

fact, Russia was able to maintain its ability to threaten 

Ukraine in the future. Ukrainian authorities agree that 

a 30-percent discount on gas prices is really insignificant.48 Even after the discount was applied, the Ukrainian Prime Minister Mykola Azarov still considered 

the Ukraine-Russia bilateral agreement on natural 

gas prices as “extremely unfavorable for Ukraine.”49
87

Moreover, Naftogaz Ukrainy is still contracted to purchase double (41 bcm) the amount of gas than it can 

consume (22 bcm)50 per year, while waiving the right 

to export its surplus without Gazprom’s approval.51

These bargaining chips were kept for use in upcoming negotiations on exclusive rights to the Ukrainian 

pipeline infrastructure (which was also part of Russia’s demand of Ukraine after the fall of the Union of 

Soviet Socialist Republic [USSR]).52

Vladimir Putin stated that “Russian power in Eastern Europe depends on its role as Europe’s energy 

arbiter,” and Russian control of Ukraine’s natural gas 

infrastructure is vital to Russia’s grand strategic ends 

in its sphere of influence.53 Richard Andres, Senior Fellow and Energy and Environment Security and Policy 

Chair at the Institute for National Strategic Studies 

(INSS), explained that Ukraine’s natural gas transit infrastructure “would significantly boost Russia’s ability to use gas as a political lever against states within 

the region,”54 and the natural gas shortfalls in over 

20 countries as a result of the 2009 cut off to Ukraine 

proves just that. Even Western nations were affected, 

with Southern Germany being starved of 60 percent of 

its imported natural gas (see Figure 3-1).
88

Source: the European Commission.55

Figure 3-1. Natural Gas Shortfalls by Country

during the January 2009 Cutoff to Ukraine.

Recent developments indicate that the control of 

gas pipelines in ECE may become the focus of Russia 

over the next decade. This detail was emphasized by 

Russian Prime Minister Putin himself in April 2010, 

when he made public Russia’s intent of a merger between Russia’s Gazprom and Ukraine’s Naftogaz.56

Both companies are state-controlled; with Gazprom 

acting as the regional monopoly of gas.57 During his 

2006 State of the Nation speech, President Vladimir 

Putin called the growth of Gazprom “the result of a 

carefully planned action by the state.”58 Regaining 

control of the trans-Ukraine gas pipeline is of strategic 

importance to Russia because this route still transports 

80 percent of its total gas exports to Western Europe 

(as of 2010).59 In September 2010, the Ukrainian-Russian international consortium already lifted a ban 

that prohibited foreign companies from running the 

Ukrainian gas pipelines and initiated a bill that could 

allow Russian companies to control them.60
89

On October 27, Ukrainian Prime Minister Mykola 

Azarov, who holds a doctorate from the Moscow State 

University,61 tried to push back. He described the intended merger between Gazprom and Naftogaz as a 

“takeover rather than a merger,” while sources within 

the Ukrainian government described it an “absolute 

control of our [gas] transportation system.”62 This 

seems to be confirmed by a report of The Economist Intelligence unit, which warned that under the merger, 

Russia would also achieve full control of Ukraine’s 

domestic gas production.63 On November 1, however, 

Azarov declared that “both parties want to find the 

optimal conditions for this merger,”64 and on April 12, 

2011, Azarov told Russian Prime Minister Vladimir 

Putin that Ukraine is “interested in valuing related assets in the nearest future to find the best format and 

most appropriate terms of such a joint venture.”65

Ultimately, the Russian demand to have exclusive rights to the port of Sevastopol, and to a certain 

extent to the Ukrainian pipeline infrastructure,66 was 

resolved using gas-related incentives to move negotiations along. However, because of the mistrust between the two countries, the threat of gas disruption 

will remain constant in bilateral relations even with 

a friendly Ukraine: It insures that this friendly relation continues. A look at the Sevastopol affair clearly 

indicates this.

MOSCOW’S THIRD DEMAND: RECOGNITION 

OF RUSSIA AS REGIONAL HEGEMON

Ukraine’s cooperation, and the use of incentives to 

acquire it, was not always the case in Russo-Ukrainian 

negotiations. The use of gas as a coercive instrument 

during the Orange Revolution in Ukraine clearly indi-
90

cates this. The Orange Revolution was a direct affront 

to Russia’s third demand of Ukraine; recognition of 

Russia as the protector of Russians living in Ukraine 

(comprising of 22 percent of Ukraine’s population),67

and recognition of its status as the regional hegemon. 

Not surprisingly, when pro-Western Viktor Yushchenko was elected president in 2004, Russian President Putin was quoted saying that “Ukraine should 

think twice about any such embrace of the West,” and 

was quick to threaten that if Ukraine positioned itself 

against Russia, it might cost it a threefold increase in 

the price of gas (an average of $4 billion per year).68

Putin even threatened Ukraine “with dismemberment 

if it persisted in trying to join the NATO alliance.”69

With Ukraine relying on Russia for 51.6 percent 

of its domestic natural gas consumption, as indicated 

in Table 2-1, it meant that the mere threat of gas disruptions could be used as a significant instrument of 

coercion in combating Ukraine’s new pro-Western attitudes.70 In fact, Drezner named Ukraine “a primary 

candidate for Russian economic coercion,”71 and my 

own level of susceptibility to Russian coercion formula, 

presented in Figure 2-4, also confirms this. This threat 

of coercion became even more potent when domestic 

instability was present,72 as seen during the two winter 

Ukrainian “gas wars” of 2006 and 2009. It is no longer a 

secret that the 2006 and 2009 winter “Gas Wars”73 were 

meant to suppress the popular support for Ukraine’s 

Orange Revolution.74 Clearly, an impartial analysis of 

the rise and fall of the Orange Revolution cannot be 

done without considering the merits of gas as an instrument of coercion. For Russia, the two gas disputes 

were a matter of both compellence and deterrence:75
91

• The Compellence Argument: The Russian use 

of economic statecraft was clearly meant to 

convince Ukraine to change its recalcitrant and 

independent behavior. The rise in the price of 

gas following the January 2006 crisis76 resulted 

in the fall of Yushchenko`s government, led by 

Prime Minister Yuriy Yekhanurov.77 This created a rift in the governing coalition and weakened the Orange Revolution.78 Similarly, the 

January 2009 dispute resulted in the collapse 

of industry in Ukraine, and contributed to the 

shrinking of its economy by over 20 percent 

from 2008 to 2009—although certainly a large 

percentage of this estimate could be attributed 

to the great global recession.79

• Through these measures, Russia managed to 

send a clear, credible message to Ukraine: Europe and NATO are not viable alternatives to 

Russia.

• The Deterrence Argument: The threat of further gas disruptions deterred the Ukrainian 

voters, politicians, and even the government 

from continuing to support the Orange Revolution movement. Interestingly enough, the 

2006 dispute took place just months before the 

parliamentary elections in Ukraine,80 while the 

2009 dispute took place just 1 year before the 

presidential elections in Ukraine. While Russia 

denied the fact that the gas disruptions were politically motivated,81 and despite a lack of documentation to support the political implications 

of the two gas crises, it is hard to dismiss the psychological impact of a failed government and 

a failed economy over the electorate.82 Russian 

interference in the affairs of Ukraine is also undeniable: Before the presidential elections, Rus-
92

sian President Medvedev publicly expressed 

hopes that the Ukrainian elections would bring 

“competent and effective authorities . . . open 

to the development of constructive, friendly, 

all-around relations with Russia.”83 Ultimately, 

by February 2010, the Orange Revolution was 

already considered “a thing of the past,” or “officially over,” with both Tymoshenko, a former 

supporter of the Orange revolution,84 and Yanukovych taking pro-Russian stances.85 After 

the defeat of the Orange Revolution in 2010, 

the foreign policy of Ukraine “seems to have 

realigned itself closer to the Russian Federation 

on a number of issues”;86 Ukrainian President 

Viktor Yanukovych described Russia as a “strategic partner, friendly and brotherly state.”87

While the pro-Russian Yanukovych was willing 

to sellout “the strategic Sevastopol naval base in exchange for cash benefits for his oligarchic friends and 

supporters in the gas-trading and gas-consuming sectors,”88 at least according to European political analysts, pro-NATO Yushchenko tried to portray himself 

as the reformist alternative. But his Orange Revolution was short-lived, because of Ukraine’s dependence 

on Russian gas. A close look at Ukraine under the 

pro-NATO Viktor Yushchenko reveals that, in dealing with a noncooperating, even belligerent Ukraine, 

natural gas was an effective instrument of coercion in 

pursuing Russia’s national security objectives at the 

Black Sea.
93

ENDNOTES - CHAPTER 3

1. Peter Zeihan, “Ukraine’s Election and the Russian Resurgence,” STRATFOR, January 26, 2010.

2. Richard Andres and Michael Kofman, “European Energy 

Security: Reducing Volatility of Ukraine-Russia Natural Gas Pricing Disputes,” INSS Strategic Forum, No. 264, February 2011, p. 1.

3. Hrygoriy Perepelytsya, “Russia in State Policies of 

Ukraine,” in Editura Cartea Veche, Gabi Radu, and Iulian Chifu, 

eds., The Perception of Russia in Romania, Republic of Moldova, and 

Ukraine, Bucharest, Romania: 2011, p. 371.

4. Volodymyr Horbach, “Modern Russia in the Ukrainian 

Public Sphere,” Radu and Chifu, eds., p. 342.

5. Ibid., p. 343.

6. Russia continues to exert today a great amount of psychological pressure on Ukrainian “media, business and political decisionmaking,” but none of its pressures are as efficient instruments of coercion as is natural gas. Oleksandr Sushko, “Russian 

Economic Presence in Ukraine: Interests Evolution and Current 

Trends,” Radu and Chifu, eds., p. 330.

7. Zbigniew Brzezinski, Power and Principle: Memoirs of the 

National Security Adviser, 1977-1981, New York: Farrar Straus & 

Giroux, 1990; Zbigniew Brzezinski, “The Premature Partnership,” 

Foreign Affairs, Vol. 73, No. 2, March-April 1994, pp. 67-82.

8. Danylo Hawaleshka, “The Back-to-Moscow Election?” Maclean’s, Vol. 123, No. 5, February 15, 2010, pp. 22-23.

9. Catherine Belton, Neil Buckley, and Roman Olearchyk, 

“Russia-Ukraine Gas Peace Threatens to Unravel,” Financial 

Times, September 23, 2010.

10. Nadejda Victor and David G. Victor, “Bypassing Ukraine: 

Exporting Russian Gas to Poland and Germany,” in Natural Gas 

and Geopolitics from 1970 to 2040, David G. Victor, Amy Jaffe, and 

Mark H. Hayes, eds., New York: Cambridge University Press, 

2006, p. 164.
94

11. Steve Chan and Cooper Drury, “Sanctions as Economic 

Statecraft: An Overview,” in Sanctions as Economic Statecraft, Steve 

Chan and Cooper Drury, eds., New York: St. Martin’s Press, 2000, 

p. 1; Randall E. Newnham, “More Flies with Honey: Positive Economic Linkage in German Ostpolitik from Bismarck to Kohl,” International Studies Quarterly, Vol. 44, No. 1, March 2000, p. 73.

12. Daniel Drezner, “The Complex Causation of Sanction 

Outcomes,” in Chan and Drury, eds., p. 212.

13. Daniel Drezner, The Sanctions Paradox. Economic Statecraft and International Relations, New York: Cambridge University 

Press, 1999, p. 198.

14. This is a demand that in the case of Ukraine has not only 

geopolitical and economic considerations, but nationalistic ones: 

the Kremlin requiring recognition of Russia as the protector of 

Russians living in Ukraine—comprising 22 percent of Ukraine’s 

population. Drezner, The Complex Causation of Sanction Outcomes, 

p. 222.

15. Mykola Riabchuk, a former Fulbright fellow and a senior 

research associate at the Ukrainian Centre for Cultural Studies, 

wrote that “in 1991, when the Soviet Union suddenly and dramatically collapsed, the country inherited 15 percent of the Soviet 

nuclear stockpile: some 130 liquid-fuel SS-19 missiles, each with 

six nuclear warheads; 46 solid-fuel SS-24 missiles, each with 10 

warheads; and 44 Tupolev-95 and Tupolev-160 strategic bombers, 

with a total of 1,081 nuclear cruise missiles. Before it even had a 

constitution of its own, Ukraine possessed the third-largest nuclear arsenal in the world.” Mykola Riabchuk, “Ukraine’s Nuclear 

Nostalgia,” World Policy Journal, Vol. 26, No. 4, Winter 2009, pp. 

95-105.

16. Drezner, The Sanctions Paradox, p. 202.

17. Mykola Riabchuk, “Ukraine’s Nuclear Nostalgia,” World 

Policy Journal, Vol. 26, No. 4, Winter 2009, p. 99.

18. Drezner, The Sanctions Paradox, p. 199.
95

19. Ibid.

20. Ibid., p. 200.

21. Riabchuk, pp. 95-105.

22. Drezner, The Sanctions Paradox, p. 202.

23. John J. Mearsheimer, “The Case for a Ukrainian Nuclear 

Deterrent,” Foreign Affairs, Vol. 72, No. 3, Summer 1993, p. 53.

24. Ibid., p. 55.

25. Drezner, The Complex Causation of Sanction Outcomes, p. 

230.

26. George Lopez and David Cortright, “Assessing Smart 

Sanctions: Lessons from the 1990s,” in Smart Sanctions. Targeting 

Economic Statecraft, George Lopez and David Cortright, eds., Lanham, MD: Rowman & Littlefield Publishers, Inc, 2002, p. 16.

27. Riabchuk, p. 99.

28. This unpopular move did indeed contribute to the low 

voter turnout in the 1994 parliamentary elections in Ukraine.

29. Drezner, The Sanctions Paradox, p. 53.

30. Hossein G. Askari et al., Economic Sanctions. Examining 

their Philosophy and Efficacy, Westport, CT: Praeger, 2003, p. 123.

31. The costs of coercion was used to convince the Russian 

Duma to support the Government’s plans for additional natural 

gas pipelines.

32. Victor and Victor, p. 145.

33. Ibid., p. 123.

34. Jeffrey Mankoff, Eurasian Energy Security, Washington, 

DC: Council on Foreign Relations, 2009.
96

35. Gary C. Hufbauer, Jeffrey J. Schott, and Kimberly A. Elliott, Economic Sanctions Reconsidered: History and Current Policy, 

Second Ed., Washington, DC: Institute for International Economics, 1990, p. 41.

36. Alexander Bor, “Ukraine Seeks Changes in Terms of Russian Gas Accord,” Platts Oilgram News, July 5, 2010, p. 7.

37. Zeyno Baran argued that “Moscow’s entire energy strategy is predicated on continuing and expanding its dominant 

market position in Europe and Eurasia. This position can only be 

maintained if Russia holds a near monopoly on pipelines into Europe.” Zeyno Baran, “EU Energy Security: Time to End Russian 

Leverage,” Washington Quarterly, Vol. 30, No. 4, October 2007, p. 

138.

38. Drezner, The Sanctions Paradox, p. 200.

39. Ibid., p. 202.

40. Ibid., p. 203.

41. Svetlana Stepanenko, “Ukrainian Foreign Minister Deplores Russian ‘Blackmail’ Over Gas Prices; Some in Ukraine 

Want to Invoke International Guarantees of its Security Pledged 

in 1994 when it Gave Up Nuclear Arms; Russian Navy Chief: 

Terms of Black Sea Fleet Basing,” Current Digest of the Post-Soviet 

Press, Vol. 57, No. 51, January 18, 2006, pp. 7-8.

42. Drezner, The Sanctions Paradox, p. 204.

43. Ibid., p. 205.

44. Bor, p. 7.

45. “Russia: Ukrainian Natural Gas Purchases Cut,” STRATFOR, September 30, 2010.

46. It is widely acknowledged today that the drop in the price 

of Russian natural gas was the direct result of the April 2010 contentious ”Kharkov Treaties,” which allowed the stationing of 

Russia’s Black Sea Fleet within Ukraine’s borders. Christie, Baev, 

and Golovko.
97

47. Centre for European Policy Studies (CEPS), May 5, 2010.

48. Bor, p. 7.

49. Joanna Sopinska, “Eu/ Ukraine : Yanukovych Wins Praise 

for Energy Sector Reforms,” Europolitics Daily (in English), September 15, 2010.

50. Russia: Ukrainian Natural Gas Purchases Cut, September 30, 

2010.

51. “The Regulatory Effects of Russia and Ukraine’s ‘Gas War’ 

are Emerging,” MarketWatch: Global Round-Up, Vol. 8, No. 9, September 2009, p. 171.

52. Russia wants to control Ukraine’s natural gas infrastructure not only to increase its coercive power over Ukraine and 

ensure that natural gas to Western Europe is not interrupted by 

Ukraine in the future, but also to make sure that Ukrainian pipelines are not being used by anyone else to redirect natural gas, in 

case Russia decides to stop the flow of natural gas to other ECE 

countries like Poland through the Yamal pipeline in the future.

53. Andres and Kofman, p. 2.

54. Ibid., p. 2.

55. While during the 2009 Ukraine gas cutoff Russia moderately increased the delivery of natural gas supplies through the 

Yamal pipeline, many in the ECE and even Southern Germany 

were severely affected by the disruption of supplies. Christie, 

Baev, and Golovko.

56. Costis Geropoulos, “Putin to Ukraine: No Merger, no Gas 

Talks,” New Europe, October 31, 2010.

57. Anders Aslund and Andrew Kuchins, The Russia Balance 

Sheet, Washington, DC: Peterson Institute for International Economics, Center for Strategic and International Studies, 2009, p. 62.
98

58. Marshall Goldman, Petrostate. Putin, Power, and the New 

Russia, New York: Oxford University Press, 2008, p. 142.

59. Belton, Buckley, and Olearchyk, p. 4.

60. “Bill Allowing Russia to Run Ukrainian Gas Pipes Coming Soon-Gazprom,” BBC Monitoring Kiev Unit Supplied by BBC 

Worldwide Monitoring, September 24, 2010. That same month, Russia requested Ukraine to refuse transport of gas to Poland in an 

effort to leverage Poland’s gas shortage to coerce the latter into 

giving up its rights to the Yamal-Europe gas pipeline until 2045. 

“Ukraine Suspends Gas Supply to Poland at Russia’s Request,” 

BBC Monitoring Kiev Unit Supplied by BBC Worldwide Monitoring,

September 27, 2010.

61. “Government’s Gas Counter-Offensive,” Polish News Bulletin, September 23, 2010.

62. Geropoulos,.

63. “Russia/Ukraine: Putin’s Gas-Merger Plan,” Business 

Eastern Europe, Vol. 39, No. 16, May 3, 2010, pp. 1-2.

64. “Gazprom and Naftogaz Slow to Consolidate,” NEWSBCM, November 1, 2010.

65. “Ukraine Wants Naftogaz and Gazprom Joint Venture 

Soon Says PM,” RIA Novosti-Kiev, April 12, 2011.

66. This was emphasized also by Richard Andres, who predicts that “it is doubtful that Ukraine can continue timely payments for its domestic gas consumption and maintain its own 

pipeline infrastructure. Fundamental changes to Russia-Ukraine 

energy transport agreements are coming.” Andres and Kofman, 

p. 1.

67. Mearsheimer, 55.

68. Goldman, p. 144.

69. Edward Lucas, The New Cold War: Putin’s Russia and the 

Threat to the West, New York: Palgrave MacMillan, 2009, p. 145.
99

70. Drezner, The Complex Causation of Sanction Outcomes, p. 

224.

71. Drezner, The Sanctions Paradox, p. 207.

72. Drezner, The Complex Causation of Sanction Outcomes, p. 

229.

73. Gas Wars, Vol. 390, Economist Newspaper Limited, 2009, p. 

12-12.

74. “The Winter Gas War,” Wall Street Journal-Eastern Edition, 

Vol. 253, No. 5, January 7, 2009, p. A12.

75. Hufbauer, Schott, and Elliott, p. 11.

76. “Putin’s Gas Squeeze,” Wall Street Journal-Eastern Edition, 

Vol. 247, No. 1, January 3, 2006, p. A24.

77. “Gas Deal Brings Down Yushchenko`s Government,” Current Digest of the Post-Soviet Press, Vol. 58, No. 1, February, 2006, 

pp. 5-16.

78. “Gas Poisoning,” Country Monitor, Vol. 14, No. 2, January 

16, 2006, p. 4-4.

79. The Regulatory Effects of Russia and Ukraine’s ‘Gas War’ are 

Emerging, p. 171.

80. Gas Poisoning, p. 4-4.

81. Goldman, p. 145.

82. Hufbauer, Schott, and Elliott, p. 11. Russian analysts, together with the opposition in Ukraine, argued that the decrease in 

the standards of living and the reduction of income were solely 

the result of bad management of the economy by the leadership 

of the Orange Revolution. However, let us consider the facts: 

Between 2005 and 2009--basically, for the duration of Ukraine’s 

Orange Revolution--the price or Russian natural gas experienced 

a fivefold price increase, in a country where 40 percent of total 

goods exports came from Ukrainian iron and steel during the 
100

same period--commodities whose manufacturing depends on 

cheap natural gas. While conservative estimates indicate that this 

price increase represented less than 2 percent of Ukraine’s gross 

domestic product (GDP) during that period, one must also consider that these measures were taken during a global economic 

crisis. Also, this 2 percent represents the costs of the energy price 

increase alone, and completely disregards the secondary effects 

the price increase had on the Ukrainian industry as a whole; and 

does not account for the costs to the Ukrainian economy of the 

2006 and 2009 gas cuts, either. Edward Christie, Pavel Baev, and 

Volodymyr Golovko, “Vulnerability and Bargaining Power in 

EU-Russia Gas Relations,” FIW-Research Reports 2010/11, No. 3, 

March 2011, pp. 23-27.

83. Richard Bourdeaux, “Kremlin Ends Freeze with Kiev, in 

Relief Over Election,” Wall Street Journal-Eastern Edition, Vol. 255, 

No. 20, January 26, 2010, p. A11.

84. “A Storm is Brewing in the East Despite Temporary Gas 

Truce,” MarketWatch: Energy, Vol. 5, No. 8, August, 2006, pp. 19-

21.

85. Hawaleshka, pp. 22-23.

86. Christie, Baev, and Golovko. 

87. Perepelytsya, p. 373.

88. Michael Emerson, “President Yanukovich’s Dubious 

Deal,” EU Neighbourhood Policy, CEPS Commentaries, May 5, 2010. 
101

CHAPTER 4

DIVIDE UT REGNES:

REFLEXIVE CONTROL AND GAS PIPELINE 

POLITICS IN EURASIA

Russia’s gas companies pursue strategies that make 

little economic sense but that serve the long-term interests of the Russian state, namely, ensuring European 

dependence on Russian energy supplies. For example, 

Russia’s undersea Nord Stream pipeline will cost at 

least three times more than a proposed overland route 

through Lithuania and Poland would have.1

Zeyno Baran

In the contemporary security environment, Russia 

can no longer impose its will through the use of coercive military means against Western allies, as was the 

case in Soviet times, and particularly during the Cold 

War.2 While the grand strategic ends of the Russian 

foreign policy remain fundamentally the same, after 

Putin’s Russia at the Turn of the Millennium speech in 

1999, “Russia modified the methods of pursuing its 

foreign-policy objectives.”3

 Indeed, explained Edward 

Lucas, while the Old Cold War was fought with tanks 

and missiles, the New Cold War “is fought with cash, 

natural resources, diplomacy, and propaganda.”4 All 

of these are tools of foreign policy that cannot be divorced from the natural gas pipeline politics of Eurasia, 

and they are brought together by a concept known by 

the Russian intelligentsia as “Reflexive Control” (RC).

It was mentioned in Chapter 2 that the bigger half 

of the Russian territory lies east of the Urals on the 

Asian continent, and that much of the Russian political elite agrees with former Russian Foreign Minister 
102

Andrei Kozyrev that Russian “traditions come mostly, 

if not altogether, from Asia.”5 Not surprisingly, in accordance with Sun Tzu’s adage that the best stratagem 

is the one that attacks the enemy’s strategy, RC was 

developed by the Russians almost half a century ago 

as a means to interfere with the decisionmaking process of an opponent or a partner in support of Russia’s 

grand strategic ends. Timothy Thomas defined RC as 

“the means of conveying to a partner or an opponent 

specially prepared information to incline him to voluntarily make the predetermined decision desired by 

the initiator of the action.”6

 This chapter takes a quick 

look into RC as “the Soviet concept of influencing an 

adversary’s decisionmaking process,”7 and its use 

in the region’s gas pipeline politics to bribe Western 

Europe, to divide the members of the North Atlantic 

Treaty Organization (NATO) and the European Union 

(EU), and to rule the Eastern and Central European 

(ECE) states.

It is no secret that the Russians employ reflexive 

control at “the strategic level in association with internal and external politics . . . as a method for achieving 

geopolitical superiority.”8

 While much was written on 

the military uses of reflexive control, little attention 

was given to its use in international relations, despite 

the fact that “Russia’s political elite also employs RC 

in analytical methodologies used to assess contemporary situations,” and despite the fact that “when making decisions, the Kremlin pays attention to reflexive 

processes.”9

A reflex is meant to cause the adversary to “make 

a decision unfavorable to himself.”10 This chapter attempts to reveal how Russia uses natural gas as an 

instrument to apply power pressure—a significant 

component of reflexive control—in order to divide its 
103

Western neighbors and rule over its sphere of influence. To achieve these ends, Russia will continue to 

focus on bilateral economic deals that favor individual Western European states—like Germany, France, 

and Italy, the so-called center of the EU—in order to 

divide them politically from ECE countries—the periphery of the union and, as we have seen in Chapter 

2, part of Russia’s sphere of influence.11 My argument 

here is that while Europe’s center is able to achieve 

short-term economic interests from its dealings with 

Russia in the field of natural gas, at the detriment of 

the periphery, these gains will translate into long-term 

political loss for both the European center and its periphery, and into a geopolitical win for Russia. Russia 

is willing to incur a short-term economic loss as long 

as its long-term grand-strategic ends in its western 

sphere of influence are achieved.

REFLEXIVE CONTROL AGAINST NATO AND 

THE EUROPEAN UNION: BRIBE THE CENTER, 

DIVIDE THE UNION AND RULE ITS 

PERIPHERY12

Putin wrote in his Ph.D. dissertation that the primary focus of his study is an in-depth analysis of “the 

principles and mechanisms responsible for the formation of strategic systems used in strategic-planning,” 

and their use to control the use of natural resources.13

Putin defined strategic planning as “deliberate planning reforms based on prediction, managing and 

adapting expectations to achieve strategic objectives.”14 He emphasized that the strategic planning 

of Russia’s natural resources must remain part of an 

“ordered, controlled, and integrated set”15 of strategic 

decisions that are generated to support the greater na-
104

tional interests of Russia. A student of RC during his 

years in the KGB (the Russian security agency), Putin hinted in his dissertation, even though he never 

named the concept directly, that RC must become an 

integral part of Russia’s grand strategy. He also hinted 

that the management of Russia’s natural resources is 

a matter of the state, for the interests of the state, and 

not those of private entities.

Throughout history, Russia has used various tactics 

in order to ensure its survival and its status as a great 

power in Europe. During the Cold War, however, the 

means used in imposing the Soviet ends evolved, giving birth to what is known today as RC, or the concept 

of manipulating the decisionmaking process of both 

one’s enemies and allies for the interest of the state.16

While this concept can easily be confused with that of 

realpolitik—politics based primarily on practical and 

material factors and considerations—it differs from it 

in that RC allows for short-term material/economic 

loss on condition that long-term grand strategic political gains are achieved.

Russian military scholar Major General (Ret.) M. 

D. Ionov identified four basic methods for applying 

the concept of RC: (1) power pressure; (2) presenting 

false information about the situation (deception); (3) 

influencing the enemy’s decisionmaking algorithm 

(attacking the enemy’s strategy); and, (4) altering the 

decisionmaking time. In his essay about RC, Timothy 

Thomas focused on the last three methods, ignoring 

perhaps the most effective method of all, which includes the use of “ultimatums, threats of sanctions, 

and threats of risk.”17 This chapter suggests that Russia 

blends economic threats with incentives to achieve its 

political grand strategic ends, as seen in its relations 

with Ukraine, and that natural gas plays a central role 

in Russia’s strategy against NATO and the EU.
105

British foreign policy thinker Mark Leonard defined power as the ability of a nation to achieve its 

grand strategic ends; he emphasized that Russia’s 

power is growing because of its proven ability and 

willingness to use its natural resources, particularly its 

monopoly on natural gas, to weaken the EU.18 By pursuing ancient Roman strategies, such as divide ut regnes

(divide and rule), Russia is able to use its monopoly 

of the natural gas pipeline infrastructure to Europe to 

secure bilateral deals with individual member states, 

particularly Western states, to the detriment of the 

EU, although mostly to the detriment of Eastern and 

Central Europe.19 States such as Germany, Italy, and 

France reflexively engage in this behavior in pursuit 

of their own short-term economic interests, leaving 

their eastern neighbors at the mercy of the “predatory 

nature”20 of the Russian state, ultimately weakening 

the entire Union politically in the long term:

Today, Berlin, Rome, and Paris show greater reluctance to pursue any alliance policy strongly opposed 

by Moscow. In addition, U.S. support for greater diversification of energy supplies for the more vulnerable countries of Eastern and Central Europe has been 

undercut by resistance from major Western European 

states. More important than European energy solidarity is their hope for a larger financial stake in energy 

projects promoted by Russia. These ventures may only 

increase Europe’s vulnerabilities.21

Two such projects are the Nord Stream and South 

Stream natural gas pipelines. Nord Stream is a €10-15 

billion Russia-controlled joint venture between Russia, Germany, and the Netherlands;22 South Stream is a 

€12.8 billion Russia-controlled joint venture between 

Russia and Italy.23 The two projects alone are expected 
106

to transform political relations in Europe, dividing the 

East from the West not only in the field of natural gas, 

but geopolitically as well. This is, however, not a diabolical Russian plot to tear the EU limb from limb,24

but an attempt typical of the Soviet Union during the 

traditional security environment: to divide and weaken its neighbors in order to ensure its geopolitical supremacy. 

While the Russian political elite claims that bilateral relations are not meant to divide the Union’s center 

from its periphery, facts show otherwise. Konstantin 

Kosachev, Chairman of the Russian Duma Committee 

on Foreign Affairs and a member of Prime Minister 

Putin’s United Russia Party, vows that this decision is 

purely bureaucratic in nature: “We are sick and tired 

of dealing with Brussels bureaucrats. In Germany, Italy, [and] France, we can achieve much more. The EU is 

not an institution that contributes to our relationship, 

but an institution that slows down progress.”25 Valery 

Vorobiev, Prorector of the Moscow State Institute of 

International Relations, even emphasized that the Lisbon Treaty “opened a new page [for NATO member 

states and Russia] in moving towards a common foreign policy.”26 In Chapter 2, I have shown, however, 

that this strategy is meant to undermine NATO and 

the power of the EU; and to a certain extent, Russia 

has already managed to do just that. Edward Lucas 

blames this development on “the gullibility and lack 

of imagination of all too many Western leaders,”27 who 

fail to realize that Russia has not given up on its alleged right to control its sphere of influence. Whereas 

the relations between the center and the periphery of 

the EU are beset by national disagreements and bureaucratic impediments, the relationship between the 

center and Russia focuses primarily on natural gas, an 
107

area where Russia has the upper hand, particularly 

in ECE. Mark Leonard argued that “this has allowed 

Russia to maximize its influence over the Union, while 

the EU has been less able to capitalize on its potential 

to influence Russia. In short, Russia has transformed 

its weakness into power, while Europe’s power has 

been turned into weakness.”28 Leonard further emphasized that this is particularly astounding, given the 

power of the EU as a united geo-economic body:

What makes Russia’s ascendance so surprising is that 

on almost all indicators of power—soft and hard—the 

European Union continues to outrank Russia, by some 

measures even more than in the 1990s. The EU’s combined economy is almost 15 times the size of Russia’s. 

Even with all the oil wealth, Russia’s GDP is barely as 

big as Belgium’s and the Netherlands’ combined. The 

EU’s population is three and a half times the size of 

Russia’s; its military spending is seven times bigger; 

the EU has five seats on the UN Security Council (of 

which two are permanent) to Russia’s one.29

This radical shift from a position of power to one 

of weakness has been made possible particularly due 

to the EU failure to advance a common energy policy 

that encourages energy diversification, especially in 

ECE countries that depend heavily on Russian natural 

gas. Instead, Old Member States continue to “intertwine their rational self-interests vis-à-vis the EU (i.e, 

against supranationalism) with that vis-à-vis third 

parties, including negotiations with Russia”;30 even by 

encouraging economically unprofitable projects for 

Russia. However, that approach further subjugates 

ECE to Russia: “as such, Russia has partnered with 

Germany to build Nord Stream and with Italy to build 

South Stream pipelines to control the flow of Rus-
108

sian and Central European energy supply to Western 

Europe.”31 Not surprisingly, since Germany and Italy 

are the top two importers of Russian natural gas, the 

Nord Stream and South Stream gas pipeline projects 

were supported by many officials who benefited from 

their “financial ties to Russia’s Gazprom, thereby furthering European acceptance of Moscow’s pipeline 

projects.”32

But these divisions between the center and the 

periphery of the EU—between Old and New Europe—are anything but new; they originate in both 

the history and the geography of the Eurasian supercontinent. Nations like Germany and France have 

historically carried out bilateral relations with Russia 

on an equal footing, while conducting business with 

the countries in between from a position of superiority. Diana Bozhilova, a post-doctoral research fellow 

at the London School of Economics, asserts that this 

type of relationship at different echelons continues today; and it is justified by the fact that the EU’s center 

perceives that in successfully dealing with Russia in 

the past, it has much more experience than the Eastern 

and Central European countries: 

Old Europe . . . is relatively more experienced with 

international high politics through the conduct of two 

world wars. Moreover, there exists historical elements 

of equality in the internationalization of their respective relationships with both the former USSR [Union 

of Soviet Socialist Republics] and Russia throughout much of the twentieth century. As a result, their 

”knowledge” of and experience with bilateral relations 

with Russia is invariably greater than that occurring 

between the CEECs [Central and Eastern European 

Countries] and Russia.33
109

Both Russia and the European center continue to 

see international politics as “a series of tête-à-têtes between great powers,”34 seducing each other with economic incentives, in spite of the political consequences 

to the countries in between, which more often than not 

are viewed as “costly distractions.”35 This is particularly true in Russia’s relationship with Germany. In 

fact, it could be argued that the emergence of Russia 

as a more assertive player in international relations 

coincided with the improved dynamics in the political 

and economic relations between the two nations.36

Despite two world wars fought between the two 

nations, Russia’s special relationship with Germany 

dates back to 18th century’s Catherine the Great, when 

the latter allowed German nobles to control the Baltic 

provinces and encouraged German farmers to inhabit 

the Volga basin.37 Economic and political ties continued 

to be strong in prerevolutionary Russia, when royal 

families intermarried, and Germany invested a lot of 

capital in Russia. This historic relationship has been 

renewed after Germany’s reunification, particularly 

due to an increased dependency on Russian natural 

gas. (In Soviet times, East Germany imported most if 

not all of its natural gas from the Soviet Union.)

More recently, collaboration on projects such as the 

building of Russia’s Nord Stream gas pipeline beneath 

the Baltic Sea to Germany, a pipeline that is meant to 

bypass Poland and Ukraine and thus decrease their 

geostrategic influence, further emphasizes that Germany places its relationship with Russia before its 

relations with other ECE countries. Former German 

Chancellor Schröder, whom Moscow recruited as the 

chief executive officer of Nord Stream by paying him a 

substantial salary,38 personally championed the newly 

founded Russo-German alliance by testifying that 
110

Germany “must be a partner of Russia if we want to 

share in the vast raw material reserves in Siberia. The 

alternative for Russia would be to share these reserves 

with China.”39 Radek Sikorski, currently the Minister 

of Foreign Affairs of Poland, previously compared 

the new Russo-German alliance and the Nord Stream 

project to the Molotov-Ribbentrop Pact, also known as 

the Treaty of Non-Aggression between Nazi Germany 

and the Soviet Union. In 1939, the Molotov-Ribbentrop 

Pact divided ECE into Soviet and German spheres of 

influence, including geographically dividing Poland 

between the two countries.40

In its relations with Germany, the Russian leadership, particularly, Putin, proved to be a master of 

perceptions. He convinced the Germans that Russia is a reformed regional power and a credible European partner (effectively changing the narrative/

rhetoric in the German public sphere from Russia 

as the antagonist threat, to Russia as the protagonist 

partner). Russian President Medvedev declared that 

“the highly efficient cooperation between Russia and 

Germany in the international arena, which come to . . .

the strengthening of global and regional stability 

and security.”41 Yet, throughout the EU, this cognitive dissonance with regard to Russia is very much 

alive. While Putin provided economic incentives to 

Germany by opening his country’s market to German 

companies like; DaimlerChrysler, BMW, Deutsche 

Bank, etc, at the same time he took advantage of this 

friendship to increase his grasp over the ECE natural 

gas market.42 And with Germany remaining Russia’s 

largest market for gas (which will continue to be the 

case, now that Germany will shut all its nuclear reactors by 2022 in a reaction to the Fukushima disaster), it 

is unlikely that Germany will forgo Russia’s economic 
111

incentives for the sake of ECE—even though in the 

long term this economic alliance will cause NATO’s 

and the EU’s political disunity.43 Indeed, the lack of 

political agreement between the Old and New Europe, particularly in the natural gas field, means that 

Russia “increasingly defines the rules of the game”;44

and many ECE states already realize that “they cannot count on EU support when Russia uses economic 

coercion against them.”45

Improvements in Russo-German relations have 

been followed by an improvement in the relations between Russia and France. The sale by France, a NATO 

member state, of several Mistral class warships to Russia46 over the past couple of years also gave birth to a 

strong Franco-Russian alliance that is best described 

through the prophetic words of Charles de Gaulle: 

“[F]or France and Russia to be united means being 

strong, being separated means being in danger. Indeed, this is an immutable condition from the viewpoint of geographical location, experience and common sense.”47 Ironically, the French position has been 

that “close ties with Russia can be regarded not only as 

a means of augmenting the power of France within the 

European Union but also the power of Europe itself.”48

Marina Arzakanyan, Chief Researcher at the Institute 

of World History, and Tatyana Zvereva, Senior Fellow 

at the Institute for Contemporary International Studies, explained that this close relationship persuaded 

the two nations to dedicate the names of the year 2010 

to each other:

At the end of the 20th and beginning of the 21st centuries, Russian-French relations with their long traditions became a strong monolith of political economic 

scientific educational literary and art affairs. The two 

states have entered a stage of privileged partnership. 

This prompted the governments of both countries to 
112

declare 2010 the Year of Russia in France and the Year 

of France in Russia.49

To make matters worse, 2010 also marked the 

renewal in trilateral format of the France-GermanyRussia Summit, when Presidents Sarkozy, Medvedev, 

and Chancellor Merkel met in Deauville, France, and 

“compared notes on the main issues of international 

and European security on the eve of the NATO summit.”50 Jean-Louis Gergorin, cofounder and former 

Director of the Policy Planning Staff of the French 

Foreign Ministry who currently lectures at the Institut d’Études Politiques de Paris, emphasized that the 

tripartite51 meeting in Deauville represents the birth 

of a new Franco-German-Russian triangle,52 and from 

the political discourse in the three countries, it is likely 

that this alliance will take precedence over the greater 

interests of the NATO alliance.

But Europe’s core alone cannot be blamed for Europe’s divisions. Russia used similar RC strategies like 

it used in Germany and France in its natural gas negotiations with nearly every European nation. Mark 

Leonard argues that European Member States are already divided over their relationship with Russia, and 

Russia is already slowly emerging as the victor in its 

relations with Europe. To prove this point, Leonard 

divided the European Member States into five categories that differentiate each country’s partnership with 

Russia, particularly with regard to European policies: 

Trojan Horses, Strategic Partners, Friendly Pragmatists, Frosty Pragmatists, and New Cold Warriors:

”Trojan Horses” (Cyprus and Greece) who often 

defend Russian interests in the EU system, and are 

willing to veto common EU positions; “Strategic Partners” (France, Germany, Italy, and Spain) who enjoy a 
113

“special relationship” with Russia which occasionally 

undermines common EU policies; “Friendly Pragmatists” (Austria, Belgium, Bulgaria, Finland, Hungary, 

Luxembourg, Malta, Portugal, Slovakia, and Slovenia) 

who maintain a close relationship with Russia and 

tend to put their business interests above political 

goals; “Frosty Pragmatists” (Czech Republic, Denmark, Estonia, Ireland, Latvia, the Netherlands, Romania, Sweden, and the United Kingdom) who also focus 

on business interests but are less afraid than others to 

speak out against Russian behaviour on human rights 

or other issues; and “New Cold Warriors” (Lithuania 

and Poland) who have an overtly hostile relationship 

with Moscow and are willing to use the veto to block 

EU negotiations with Russia.53

While Europe’s core will continue to enjoy the 

benefits of good economic relations with Putin’s Russia,54 by signing long-term deals in the field of natural 

gas at the expense of the periphery,55 ”the countries 

in between”;56 the former ought to be reminded that 

Putin himself is keen on alluding to the Russian proverb: “friendship is friendship, but to each his own 

tobacco.”57 In other words, despite the economic partnership between the European center and Russia, the 

former must understand that economic alliances will 

only go as far as they contribute to Russia’s political 

grand strategic goals which, as we have seen in Chapter 2, depend on the weakening of NATO’s geo-strategic power, and on Russia’s control over its traditional 

sphere of influence.58
114

Source: author’s representation.

Table 4-1. Membership of European Nations

in EU and/or NATO.

AU REVOIR NATO CONSENSUS: HOW NORD 

STREAM AND SOUTH STREAM WILL 

TRANSFORM THE CONTEMPORARY SECURITY 

ENVIRONMENT IN EUROPE

The fear of many policymakers, including Zbigniew Brzezinski59 and Senator Richard Lugar, is that 

European divisions in the field of natural gas between 
115

Old Europe and New Europe can and will ultimately 

express themselves geopolitically in divisions among 

NATO’s old and new members. These divisions are 

amplified by the unwillingness of many ECE countries 

to oppose Russia because of fear that Russia will use 

its monopoly of natural gas to ECE as an instrument of 

coercion that could slow economic growth, but also by 

the reluctance of many Western European countries to 

oppose Russia politically, for fear of losing the shortterm economic benefits that Russia bribes them with. 

This being said, Germany, despite being the least European NATO member susceptible to Russian coercion, as shown in Chapter 1, will still support Russia’s 

policies as long as the short-term economic gains are 

ensured. In fact, because of the growing intensification of economic ties between Germany and Russia, 

Stephen Larrabee also expects that “Berlin is going to 

react cautiously to proposals that could lead to a deterioration of relations with Moscow. This will make 

the pursuit of a coherent transatlantic policy toward 

Russia much more difficult in the future.”60 Evidence 

of this is the recent UN Resolution 1973 (2011), which 

authorized NATO “to take all necessary measures . . . 

to protect civilians and civilian populated areas under 

threat of attack in the Libyan Arab Jamahiriya, including Benghazi.”61 The Resolution was adopted by a vote 

of 10 in favor to none against, with five abstentions: 

the BRIC countries (Brazil, Russia, India, China) plus 

Germany.62

But this economic relationship between Russia 

and Europe’s core does not diminish the importance 

of natural gas as an instrument of coercion. As we 

have seen in the data presented at the end of Chapter 

1, the degree of dependence on Russian natural gas 

varies considerably among EU and NATO member 
116

states—with many ECE states completely dependent 

on Russian natural gas.63 That means that aside from 

Europe’s center, its periphery may ultimately be NATO’s downfall, because while Germany is unwilling 

to forgo the economic benefits it receives from Russia, 

a change in this policy will not cause the collapse of 

the German economy. However, if ECE countries like 

Bulgaria were to oppose Russia’s foreign policy objectives, a Russian natural gas embargo would collapse 

their economy within months rather than years—as illustrated also in Chapter 1 by the secondary effects of 

the Ukrainian 2009 affair on the Bulgarian economy. 

This becomes problematic for the North Atlantic Alliance, particularly when we consider that “all NATO 

decisions are made by consensus . . . that has been accepted as the sole basis for decisionmaking in NATO 

since the creation of the Alliance in 1949.”64 Since it 

takes only one out of 28 NATO member countries to 

influence NATO’s decisionmaking process, and because many members’ economies depend on Russian 

natural gas, Russia can rest assured that NATO will 

not be able to adopt policies that will negatively affect 

Russia’s grand strategic interests. This is yet another 

reason why Russia must maintain a monopoly over 

the natural gas going to ECE, as was illustrated in the 

Ukraine case. 

While many European and American policymakers see the problem, they are not willing to risk their 

political careers to take on a fight that is considered 

by many as “existentialist.”65 Ultimately, nothing will 

stop German, French, and Italian companies “from 

doing their own deals with Gazprom”;66 and without 

a common European energy strategy, nothing will 

stop Russia from controlling the flow of natural gas 

through its perceived sphere of influence. In fact, Rus-
117

sia’s deals with Europe’s center, particularly with regard to the Nord Stream and South Stream projects, 

will further ensure Russia’s monopoly of natural gas 

to ECE. As Edward Lucas explains it, “so far, the stage 

has been set perfectly for the Kremlin’s favorite tactic: 

divide and rule. Its success can be seen most clearly in 

the tale of two pipelines.”67

In this Russian stratagem, both the Nord Stream 

and South Stream natural gas pipelines are instruments of Russian state power that will decrease the 

geostrategic importance of many ECE NATO member 

states as transit countries for Russian natural gas to 

the West. By circumventing many ECE countries (see 

Figure 4-1), the two pipelines will allow Russia to better employ natural gas as an instrument of coercion 

in its sphere of influence, Europe’s eastern periphery, 

without attracting the criticism of Europe’s core—

Germany, France, and Italy.68 This is particularly obvious in the case of Nord Stream,69 the undersea section 

of which was scheduled to be completed in mid-May 

2011. This will not only isolate Ukraine further from 

Europe, but will also increase Russia’s influence over 

Poland, Slovakia, and the Czech Republic, which so 

far have successfully used their attributes as natural 

gas transit states to protect themselves against Russia 

politically. 

Stream’s advantage for the Kremlin is clear. Russia’s 

two existing gas export pipelines to Germany go across 

other countries—Belarus and Poland in the north, and 

Ukraine, Slovakia and the Czech Republic to the south. 

That means that deliveries to Germany are hostage to 

those transit countries’ good will; put another way, if 

the Kremlin tries to punish those countries, it’s more 

important customers further west may suffer.70
118

Source: author’s representation.

Figure 4-1. Graphical Representation

of European Natural Gas Pipeline Politics.

Furthermore, Russia used Nord Stream as a “catalyst for increased Russian military presence and intelligence surveillance,”71 being protected by the Russian 

Baltic Sea Navy, whose new role gave Russia “an 

intelligence edge in the Baltic Sea concerning all air, 

surface, and sub-surface activities—especially around 

Estonia, Finland, Sweden, and Denmark, and NATO 

members’ military exercises.”72 Disturbingly enough, 

the project was supported by Germany, despite the 

dangers it represents for NATO, and even for Germany’s long term political interests in the European 

Union:73
119

Nord Stream is the child of the most notorious diplomatic alliance in Europe’s modern history, between 

the previous German government headed by former 

chancellor Gerhard Schroeder and Putin’s Kremlin. 

It was blessed with a secret €1 billion loan guarantee 

issued just days before the German leader left office—

shortly to become the chairman of the pipeline consortium.74

The strategic narrative with regard to Russia depends on how Russia uses natural gas to shape European politics: By combining calculated decisionmaking methodologies (through the use of RC) with the 

power to inflict severe economic harm or to provide 

incentives through the monopoly on gas supplies, 

Russia is able to use the Caspian and Russian gas 

pipelines to Europe to act either as “umbilical cords,”75

whose disruption would prove devastating to any belligerent state’s economy, or as pots of honey for energy-hungry friendly nations. Ultimately, controlling 

the decisionmaking process in individual EU Member 

States through power pressure in the context of natural gas negotiations is reflexive control at its best. This 

proves that traditional tools of influence are still very 

much relevant in the contemporary security environment, and in Russia’s ability to weaken the NATO alliance.76

ENDNOTES - CHAPTER 4

1. Zeyno Baran, “EU Energy Security: Time to End Russian 

Leverage,” Washington Quarterly, Vol. 30, No. 4, October 2007, p. 

135.

2. Christian Thorun, Explaining Change in Russian Foreign Policy: The Role of Ideas in Post-Soviet Russia’s Conduct Towards the West,

New York: Palgrave MacMillan, 2009, p. 33.
120

3. Andrei Tsygankov, “Russia’s Foreign Policy,” in After Putin’s Russia: Past Imperfect, Future Uncertain, 4th Ed, Stephen K. 

Wegren and Dale R. Herspring, eds., Plymouth, UK: Rowman & 

Littlefield Publishers, Inc, 2010, p. 225.

4. Edward Lucas, The New Cold War: Putin’s Russia and the 

Threat to the West, New York: Palgrave MacMillan, 2009, p. 10.

5. Jerrold Schecter, Russian Negotiating Behavior, Washington, 

DC: United States Institute of Peace Press, 1998, p. 49.

6. Timothy L. Thomas, “Russia’s Reflexive Control Theory 

and the Military,” Journal of Slavic Military Studies, Vol. 17, No. 2, 

April, 2004, p. 240.

7. Vladimir Lefebvre and Victorina Lefebvre, “Reflexive Control: The Soviet Concept of Influencing an Adversary’s Decisionmaking Process,” Englewood, CO: SAIC, 1984.

8. Thomas, p. 240.

9. Ibid., p. 241.

10. Ibid.

11. Edward Lucas identified this sphere of influence as “the 

countries bordering Russia, starting with those covered by the 

1939 Molotov-Ribbentrop pact—the Baltic States, Central Europe, 

and the Balkans—but reaching around the Black Sea to the Caucasus.” This, he argued, is the main theater of the New Cold War, 

Lucas, p. 10.

12. Edward Lucas wrote that “in the coming years, Europe 

will experience growing dependence on scanty and expensive 

Russian gas, with little chance of alternative supplies. Russia 

wields the energy weapon to bully its enemies and bribe its allies, 

and uses its financial clout to buy friends and influence.” Lucas, 

p. 11.

13. Vladimir Vladimirovich Putin, “The Strategic Planning of 

Regional Natural Resources Under the Formation of Market Relations,” Ph. D. Thesis in Economics, Saint Petersburg State Mining 

University, pp. 1-218. 
121

14. Ibid.

15. Ibid.

16. Lefebvre and Lefebvre, p. 4.

17. Thomas, p. 244.

18. Mark Leonard and Nicu Popescu, A Power Audit of EURussia Relations, Cambridge Grove, London, UK: European Council on Foreign Relations, 2007.

19. Baran, p. 131.

20. Lucas, p. xii. 

21. Keith Smith, Russia-Europe Energy Relations: Implications for 

U.S. Policy, Washington DC: CSIS, 2010.

22. Christina Lin, The Prince of Rosh: Russian Energy Imperialism and the Emerging Eurasian Military Alliance of the Shanghai 

Cooperation Organization, Berlin, Germany: Institute for StrategicPolitical-Security-and Economic Consultancy (ISPSW), 2009.

23. Ibid.

24. Leonard and Popescu, p. 14.

25. Ibid.

26. “Russia and France: A New Quality of Relations,” International Affairs, Vol. 57, No. 1, 2011, p. 37.

27. Lucas, p. xii.

28. Leonard and Popescu, p. 10.

29. Ibid.

30. Diana Bozhilova and Tom Hashimoto, “EU-Russia Energy 

Negotiations: A Choice between Rational Self-Interest and Collective Action,” European Security, Vol. 19, No. 4, December 2010, p. 

630.
122

31. Lin, p. 4.

32. Smith, p. 4.

33. Bozhilova and Hashimoto, p. 630.

34. Leonard and Popescu, p. 14.

35. Lucas, p. 158.

36. Stephen F. Larrabee, “Russia, Ukraine, and Central Europe: The Return of Geopolitics,” Journal of International Affairs, 

Vol. 63, No. 2, Spring, 2010, p. 46.

37. Lucas, p. 171.

38. Smith, p. 4.

39. Daniel Freifeld, “The Great Pipeline Opera,” Foreign Policy, No. 174, September 2009, p. 123.

40. Larrabee, p. 47.

41. Nikolai Pavlov, “Twenty Years of German Unity,” International Affairs, Vol. 57, No. 1, 2011, p. 84.

42. Matthew Clements, ed., Country Risk Assessments: Russia 

and the CIS, 24th Ed., Alexandria, VA: Jane’s Sentinel, 2009, p. 485.

43. Larrabee, p. 47.

44. Leonard and Popescu, p. 7.

45. Smith, p. 7.

46. “Russia and France: A New Quality of Relations,” International Affairs, Vol. 57, No. 1, 2011, p. 32.

47. Marina Arzakanyan and Tatyana Zvereva, “Three Hundred Years of Cooperation,” International Affairs, Vol. 57, No. 1, 

2011, pp. 12-21.
123

48. “Russia and France: A New Quality of Relations,” International Affairs, p. 23.

49. Arzakanyan and Zvereva, pp. 12-21.

50. Ibid.

51. “Russia and France: A New Quality of Relations,” p. 23.

52. Ibid., p. 32.

53. Leonard and Popescu, p. 2.

54. In fact, shortly after President Medvedev himself insisted 

that “there is a need to intensify cooperation between France, Germany, and Italy,” Sergei Vasiliev, Deputy Director of the International Institute of Energy Policy and Diplomacy at the Moscow 

State Institute of International Relations, was proud to announce 

that three joint institutes that focus on European energy security 

had been established by the renowned diplomatic school of the 

Ministry of Foreign Affairs of Russia: the Russian-German Institute of Energy Policy and Economics; the Russian-Italian Institute 

of International Energy Studies, and the Russian and French Institute of Energy Diplomacy. “Russia and France: A New Quality of 

Relations,” p. 37; Armen Oganesyan, “Energy Industry and Ecology,” International Affairs, Vol. 57, No. 1, 2011, p. 228.

55. Ibid.

56. Lucas, p. 158.

57. Minton Goldman, ed., Russia. the Eurasian Republics, and 

Central/Eastern Europe, 10th Ed., Dubuque, IA: Global Studies, 

2005, p. 112.

58. While an argument can be made that NATO and the European Union are two different bodies, and that affairs within the 

European Union will not impact the effective power of NATO, 

the reality shows otherwise. Divisions within Europe will in fact 

result in divisions within NATO, as Table 4-1 clearly indicates. 
124

59. Zbigniew Brzezinski wrote that: 

Russia is not an enemy, but it still views NATO with hostility. That hostility is not likely to fade soon, especially 

if Prime Minister Vladimir Putin becomes president 

again in 2012. Moreover, for a while yet, Russia’s policy 

toward NATO, driven by historical resentment of the Soviet defeat in the Cold War and by nationalist hostility to 

NATO’s expansion, is likely to try to promote division 

between the United States and Europe and, within Europe, between NATO’s old members and NATO’s new 

members.

Zbigniew Brzezinski, “An Agenda for NATO,” Foreign Affairs, Vol. 88, No. 5, September 2009, pp. 2-20.

60. Larrabee, p. 48.

61. United Nations Security Council Resolution, Public Law 

1973, 2011.

62. While purely symbolic, Germany’s vote on the UN Resolution 1973 illustrates best Germany’s foreign policy move away 

from its alliances in the traditional security environment and 

away from its fellow NATO member states, and closer to markets 

it perceives to have more economic potential, such as Russia and 

China.

63. Virginia Comolli, “Energy Security,” in Bastian Giegerich, 

ed., Europe and Global Security, London, UK: International Institute 

for Strategic Studies, 2010, p. 188.

64. Brzezinski, pp. 2-20.

65. According to Marik String, this is how the topic was addressed in Brussels when Senator Lugar approached it. Interview 

conducted by the author with Marik String, Professional Staff 

Member for European and Eurasian Affairs, Committee on Foreign Relations, Washington, DC, February 9, 2011.

66. Lucas p. 164.
125

67. Ibid, p. 166.

68. The two natural gas pipelines will give Russia more flexibility to punish and reward states it perceives in its sphere of 

influence, particularly in Eastern and Central Europe. This would 

allow Russia to accurately exploit the susceptibility of many European NATO member states and Ukraine to Russian coercion (as 

described in Figure 1-4), by depriving them of transit status and 

effectively isolating them from the West.

69. South Stream will have a similar effect, particularly for 

countries in the Balkans and South East Europe. However, since 

South Stream’s feasibility is still in question, its potential effects 

will not be emphasized in this monograph.

70. Lucas, p. 167.

71. Lin, p. 4.

72. This is not the first time that Russia has used its gas pipeline politics to aid in increasing its security; as proven by “Russia’s past history of installing fiber optic cable along the Yamal 

pipeline without informing the Polish government in advance.” 

Ibid.

73. Zeyno Baran argues that this project “undermines Europe’s efforts to foster the ideals of good governance, market 

transparency, and democracy both in Russia and in Russia’s 

neighbors.”Baran, p. 135.

74. Lucas, p. 166.

75. Marshall Goldman, Petrostate: Putin, Power, and the New 

Russia, New York: Oxford University Press, 2008.

76. Because of this, “RC theory will remain a most important 

area of study for the immediate and long-term future for Russian 

and other international groups alike.” Thomas, p. 240.

127

CHAPTER 5

CONCLUSION

Europe risks being caught in an energy stranglehold 

by states such as Russia.1

Gordon Brown

A 2008 report by the Swedish Defence Research 

Agency (FOI) uncovered that Russia has threatened to 

disrupt or actually had disrupted natural gas supplies 

to countries in its near abroad 40 times since the fall of 

the Soviet Union—an account that does not consider 

the 2009 Ukraine gas dispute, and several additional 

threats to cutoff natural gas supplies to Belarus and 

Moldova over the past couple of years.2 Almost every 

time, the use of natural gas as an instrument of unilateral sanctions coincided with political differences 

between Russia—the sender—and the target state 

(which depended heavily on Russian natural gas). 

This monograph emphasizes that with the construction of the Nord Stream and South Stream natural gas 

pipelines, and unless alternatives to Russian natural 

gas are found, it is only a matter of time until Russia will use natural gas as an instrument of coercion 

against NATO member states. 

Furthermore, this monograph agrees with Zeyno 

Baran’s argument that currently “there is still no European strategy to deal with a strong and determined 

Russia that uses control of energy supplies, transportation, and distribution to reestablish itself as a major 

world power.”3 As Richard Andres explained, “at best, 

Europe must live with continuing energy insecurity; 

at worst, a total breakdown of negotiations between 
128

the supplier and transit country could leave many 

European countries without heat or electricity.”4 Both 

options are unacceptable for a continent that houses 

most members of the North Atlantic Alliance, and 

member states that are most susceptible to this type 

of coercion, listed in Figure 2-4, must either address 

the dependency on Russian natural gas, or brace for 

the threat of a cold winter at one point over the next 

decade. Three feasible solutions to the main European 

vulnerabilities discussed in this monograph require 

further investigation by academia, industry, and policymakers.

First, the EU must consolidate its bargaining power 

in its natural gas negotiations vis-à-vis Russia.5

 As underlined in Chapter 4, a divided Europe that does not 

have a common energy security policy, and a strong 

instrument to enforce it, is not only a weak Europe, but 

a household whose members represent a liability for 

the North Atlantic Alliance.6 Most countries of Eastern 

and Central Europe, Europe’s periphery, are vulnerable to Russia’s use of natural gas as an instrument of 

coercion, and they are bound to remain so without the 

support of Europe’s center—Germany, France, and 

Italy. While Russia can afford to disrupt natural gas 

supplies to individual countries because of the asymmetric interdependence in the trade of natural gas between these states and Russia, as discussed in Chapter 

1 and represented in Figure 2-3, Russia cannot and 

will not use natural gas as an instrument of coercion 

against a united European front. The consolidation of 

bargaining power in Europe would underscore that, 

Russia needs to export its natural gas to Europe as a 

whole just as much, if not more than, Europe needs to 

import it from Russia.
129

Second, while costly to build, bidirectional natural 

gas pipelines7 between NATO member states in Europe represent the only way the North Atlantic Alliance can ensure that none of its member states will be 

bullied by Russia to break with the consensus when 

grand strategic policies are being considered. Without them, promises by NATO or by Europe’s center 

to protect ECE states, particularly the countries that 

are members of both NATO and the EU, from Russian coercion will be viewed as empty promises—as 

indeed such promises have proven to be in the past. 

Some limited progress has already been made in this 

field: “[T]wo projects, the Hungary-Romania and 

Hungary-Croatia interconnectors, were completed 

before the end of 2010. EEPR [European Energy Programme for Recovery] co-financing is also available 

for the Romania-Bulgaria and Bulgaria-Greece interconnector projects, making completion highly likely. 

A Bulgaria-Serbia interconnector also seems likely to 

materialize.”8

Lastly, alternatives to Russian natural gas, while 

expensive, will not only increase NATO and EU energy security, but will also pay off over the long term. 

The fuels of the distant future in Europe will most 

likely revolve around renewables, such as solar and 

wind, and even nuclear power (despite the Fukushima nuclear disaster and Germany’s decision to shut 

all its nuclear reactors by 2022) over the next decades 

(or until green power will be able to take on the electricity load) Europe will continue to depend “on gas 

for heating and some electricity, but the bulk of the 

supply comes from Russia, which hasn’t hesitated to 

use energy as a form of political blackmail.”9

 The potentials of liquefied natural gas (LNG)10 and onshore 

deposits of shale gas in ECE are huge, and must be 
130

considered serious alternatives to Russian natural gas. 

Access to LNG supplies has already been proven to be 

a valuable way to increase Europe’s supply security 

as demonstrated during the 2009 Russia–Ukraine gas 

dispute: 

Accounting for only around 10% of imports of gas in 

the OECD [The Organization for Economic Co-operation and Development] Europe region in 2008, LNG 

accounted for 24% of the short-term supply increase 

that was necessary to compensate for the shortfall in 

Russian supplies. This confirmed the “swing supply” 

potential of LNG and its very useful security of supply 

properties.11

Similarly, “natural gas from shale rock promises to 

provide cleaner, abundant energy”12 for ECE. However, while experts agree that shale gas “is out there, and 

it can be accessed,”13 this monograph also insists that 

the environmental issues surrounding fracking must 

be resolved before this alternative is considered.14

As it stands now, if Russia “refuses to provide gas 

or charges an unreasonable price, the consumer cannot 

quickly or easily turn to another source. The consumer 

state would have no choice but to accept the supplier’s 

conditions or go without natural gas, an option that is 

all but unacceptable for most.”15 This creates a situation that undermines the de facto power of NATO in 

the contemporary security environment, particularly 

vis-à-vis Russia, unless the dependency on Russian 

natural gas is promptly addressed.16

ENDNOTES - CHAPTER 5

1. Andrei Shleifer and Daniel Treisman, “Why Moscow Says 

No: A Question of Russian Interests, Not Psychology,” Foreign Affairs, Vol. 90, No. 1, January 2011, p. 126.
131

2. Robert L. Larsson, “Energikontroll: Kreml, Gazprom Och 

Rysk Energipolitik” (“Power Control: The Kremlin, Gazprom, 

and Russian Energy Policy”), Swedish Defence Research Agency, 

2008.

3. Zeyno Baran, “EU Energy Security: Time to End Russian 

Leverage,” Washington Quarterly, Vol. 30, No. 4, October, 2007, p. 

142.

4. Richard Andres and Michael Kofman, “European Energy 

Security: Reducing Volatility of Ukraine-Russia Natural Gas Pricing Disputes,” INSS Strategic Forum, No. 264, February, 2011, p. 1.

5. Edward Christie, Pavel Baev, and Volodymyr Golovko, 

“Vulnerability and Bargaining Power in EU-Russia Gas Relations,” FIW-Research Reports 2010/11, No. 3, March, 2011.

6. As was discussed in Chapter 4, and as was further underlined by Zeyno Baran, Director of the Center for Eurasian Policy 

and a Senior Fellow at the Hudson Institute, who argued that 

“Russia, the European Union’s primary natural gas provider, has 

deliberately taken advantage of this lack of cohesion to gain favorable energy deals and heighten European dependence on Russian supplies.” Baran, p. 131.

7. Robert Cekuta, Interview on the Cost of Natural Gas Infrastructure in Eurasia, March 12, 2011.

8. Christie, Baev, and Golovko.

9. Bryan Walsh, “The Gas Dilemma (Cover Story),” Time, Vol. 

177, No. 14, April 11, 2011, p. 42.

10. Christophe-Alexandre Paillard, head of the Industrial and 

Technological Trends Department within the French Ministry of 

Defense’s Strategic Affairs Office, argued that “Europe will have 

a stronger position vis-à-vis Russia if it develops its liquefied natural gas capacities and diversifies its suppliers. Russia will not 

be challenged unless Europe refuses to be threatened and blackmailed by threats over energy access. There is still a long way 

to go and the road is unfortunately paved with many obstacles.” 

Christophe-Alexandre Paillard, “Russia and Europe’s Mutual En-
132

ergy Dependence,” Journal of International Affairs, Vol. 63, No. 2, 

Spring 2010, p. 81.

11. Christie, Baev, and Golovko.

12. Walsh, p. 42.

13. Bryan Walsh, the staff writer behind Time magazine’s Ecocentric blog, argues that “as shale-gas drilling has ramped up, it’s 

been met with a growing environmental backlash. There are complaints about spills and air pollution from closely clustered wells 

and fears of wastewater contamination from the hydraulic fracturing process--also known as fracking--that is used to tap shalegas resources.” For this reason, Ralph Cavanagh, co-director of 

the Natural Resources Defense Council’s energy program, warns 

that the shale gas industry “can blow this if it doesn’t meet the 

public’s environmental expectations.” Ibid., p. 42.

14. The shale gas industry in Europe is doomed to meet with 

significant legislative challenges in the near future. As discussed 

earlier in this monograph, the European Union is likely to push 

forward an agenda against shale gas, due to a wide variety of environmental concerns. France has already banned the further expansion of the shale gas industry. The Chairman of the European 

Parliament’s Environment, Public Health and Food Safety Committee, Jo Leinen, a German Progressive Socialist and an influential Member of the European Parliament, believes Europe needs 

to look more carefully at shale gas, and at the consequences of 

pursuing it. As of July 2011, the prospects of shale gas in Europe 

remain dim at best.

15. Baran, p. 132.

16. Ultimately, this monograph supports Robert Gates’s assessment that NATO could face “a dim if not dismal” future, not 

because of funding considerations but, as discussed in Chapter 4, 

because NATO decisions are made by consensus. Many members 

will be unlikely to side against Russia in the future because of 

their heavy dependency on Russian Natural Gas.
133

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