Nadhim Zahawi is MP for Stratford on Avon.
Russian power and confidence lags its economic health by about five years. The investment driven boom of the 1960s and 70s gave the Soviets swagger. With the 1980s oil prices collapse, they ran out of money but continued to binge on defence spending anyway. The hard landing didn’t come until the second half of the decade. But when it did, it destroyed the USSR.
Today as then, Russia is in deep recession but is embarking on a defence spending bonanza all the same. History may repeat itself if oil prices stay under $100 per barrel. Rumours abound that Saudi Arabia, currently flooding the market with oil, may be working with the United States towards exactly this end.
This year, the conflicting signals over sanctions from the European Commission’s leading duo, Federica Mogherini and Donald Tusk, have resembled less a good cop, bad cop routine than a dangerous division at the heart of Europe – just when unity mattered most.
So, after this testing time, the renewal of sanctions against Russia is a diplomatic triumph. Although the full effects of sanctions take years to manifest, they are working already.
The costs of Putin’s aggression are clear – if not to the general population, then certainly to the power base of former KGB officers and businessmen who dictate as much to him as often as vice-versa. An economy already plunged into recession by the dramatic oil price collapse is now being starved of investment and technology.
This will store up the most disastrous effects for the long term, but even today Russia’s currency reserves and banks are suffering. Indeed, the 3.7 per cent budget deficit is now large enough for the Finance Ministry to be tapping into its emergency funds to plug the holes. Last week’s agreement on sanctions is so important because it puts a stop to months of worries that Russian tactics of divide and rule would see them expire.
Long before the Ukraine crisis, Russia had been looking, in vain, for a way around the united Brussels front that it has faced since last spring. It has pressed hard on fissures of loyalty, throughout the continent looking for weakness.
First, Putin tried to buy off Hungary, and then played upon divisions between the Russophile German left and Atlanticist Christian Democrats. Doubters cast an eye at the City of London’s lucrative management of Russian money, and wondered about Britain’s stomach for the showdown.
Faced with the prospect of a lucrative pipeline deal, Bulgarian and Serbian loyalty looked circumspect. At the height of the crisis in the Eurozone, Southern European solidarity with their Northern European friends was called into question. But eventually, Putin’s credibility gap grew too large for leaders to ignore. They can see there is too much at stake to back down.
I believe the Russian President has miscalculated, and trapped himself in a self-destructive and mutually-reinforcing spiral of nationalist rhetoric, economic self-harm and military aggression. The Ukraine crisis is of his own making. Having used it to deflect anger at the corruption of his mafia state, he cannot now back down without a humiliation that could be fatal to his rule.
It is time to keep the pressure on, and signal our willingness to change Europe’s relationship with Russia long-term. This means blunting the energy weapon that we thought he was too smart to use, and shoring up European unity against external aggression, whatever form it may take.
The Commission has ruled that the intergovernmental agreements underpinning South Stream with Bulgaria, Serbia, Hungary and Slovenia do not comply with EU competition law. The project, designed to bypass Ukraine and bring Russian gas to Europe via a new southern corridor has, as a result, been killed off.
50 per cent of Russia’s gas exports to Europe are currently routed through Ukraine. This regulatory setback will delay Russia’s effort to separate its relations with Ukraine from its European gas business, thus allowing them to isolate and bully the country without impacting business in the wider continent.
The Russia-Ukraine gas crises of 2006 and 2009 showed that disputes between the two countries carry the risk of gas supply interruptions to Europe, with Russia unable to restrict supplies to Ukraine without affecting its European customers.
We must now ensure that the Trans-Anatolian and Trans-Adriatic pipelines (TANAP-TAP) go ahead, while making sure the European Commission delivers on the rest of its 2009 energy strategy. It is a project that gives Europe a supply of gas with no need to deal with Russia at all.
If it refuses to be a reliable supplier, Russia has little to offer Europe. Using his energy weapon has triggered a backlash, and will bring about Putin’s impotence sooner than was due. Our greatest geopolitical foe has become a regional nuisance. If Russia won’t be a partner, we should consign it to irrelevance.