Garvan Walshe is a former National and International Security Policy Adviser to the Conservative Party.
Catherine Belton’s wonderful Putin’s People is a lesson in long term contingency planning. She describes how, as the Soviet Union collapsed, the KGB converted the networks of front companies they had operated under cover in the West into commercial operations that allowed their operatives to amass wealth and influence.
These networks began to be activated when a KGB alumnus from the Dresden field office rose to become president of Russia.
This attitude, of laying down strategic assets in the hope that the opportunity to exploit them may come along later, is perhaps clearest not in the Kremlin’s campaign of strategic corruption, but in energy policy.
Despite Cold War conflict, Soviet energy policy became enmeshed in mutual dependence with the West. At the time military force and ideological subversion were the USSR’s main tools of power projection. Energy fulfilled a different need, the provision of hard cash.
This led to an arrangement that suited both sides. The Soviets needed hard currency, not least to pay back foreign denominated (Tsarist debt on which Moscow never defaulted), while Western Europe found Russia a cheap and ostensibly reliable source of fuel.
The Soviet collapse downgraded the role of military force in the Kremlin’s thinking, while upgrading the role of energy. Aggressive energy blackmail was used to intimidate Yulia Timoshenko in Ukraine, and is now focused on tiny Moldova’s new pro-Western government.
To make these tactics effective however, Russia needed to reorient its pipeline network, because the one it inherited passed through the former satellites it now tried to influence. Not only was Russia compelled to send its gas through countries like Poland and Czechoslovakia, they could charge Moscow hefty transit fees for the privilege.
Worse still from the Kremlin’s perspective, most Soviet-era gas storage was located in Ukraine. Together with the establishment of Liquified Natural Gas (LNG) terminals to allow tankers to supply gas from anywhere in the world, storage allows consumer countries to resist blackmail, provided they can last longer without gas supplies than Russia can without the money.
One element of Russia’s strategy has been to export gas to China, but because China is (obviously) extremely far away from the Western Siberian gas fields that supply Europe, it has opted to build new pipelines to circumvent Eastern Europe as well. The latest of these, Nordstream 2, goes directly to Germany, and despite opposition from Poland and Nordic countries, has now been complete. (It must however await European regulators’ verdict on whether it monopolises the market before the gas can start to flow).
The current German government has resisted pressure to cancel the pipeline, but its likely replacement, which includes the Green Party, is widely expected to be tougher on Russia, and more hostile to gas in general.
Facing the prospect of decades of careful planning unravelling, Moscow now hopes that the current tightness of the gas market, caused by a cold spring and a post-pandemic industrial revival, can concentrate minds. As prices rise, one would normally expect a market-oriented producer to increase the flow beyond the contractual minimum it already agreed to supply. Yet Russian state energy firm Gazprom has refused to increase production.
This blackmail must be resisted. In the short term, there may be no alternative but for our NATO allies to bear the higher cost of ordering LNG on the world market. But in the medium-term, Ukraine could provide the solution: opening up its gas storage facilities to non-Russian gas by reversing the flow in its pipelines.
A similar scheme already operates between EU member states, so that gas can flow to Poland from Germany, for example. Ukraine itself has suggested coming to an arrangement with Brussels as part of the revisions to the EU’s security of supply directive, expected over the next several months.
But there is a concrete British interest in coming to a bilateral arrangement as well.
Our energy market is tighter than most because the storage facility at Rough has been allowed to fall into disuse, but it might be possible to make up for this by securing storage in Ukraine. Rough had a capacity of a little over three billion cubic metres, and Ukraine has up to ten billion cubic metres in excess of its own needs.
As pipelines can be arranged to flow in reverse, non-Russian LNG could be loaded in Baltic ports, get to Ukraine through Poland in spring and summer and be shipped back to Britain in time for winter. While such a route would be dangerous in the event of an actual war with Russia, it is safe in any less-extreme scenario.
Alternatively, financing guarantees could be provided to ensure the construction of the long-bruited LNG terminal near Odessa on the Black Sea. Though Moscow would consider this more provocative, it would further help Ukraine diversify its energy sources, provided Western navies were willing to ensure the protection of cargoes.
Like the Death Star, Russia’s energy weapon has been long time in the making. But its ponderous construction gives free peoples the chance to evade its clutches. That doing so could improve the UK’s own energy security is an unexpected bonus.