THE EMERGING
RUSSIAN GIANT, Part 2 Washington's
nightmare By F
William Engdahl
(For Part 1 in this
two-part report, Moscow plays its cards
strategically, click here.)
Ironically, the aggressive Washington
foreign policy of the era of Vice President Dick
Cheney and Defense Secretary Donald Rumsfeld since
2001 has done more to nurture the one strategic
combination in Eurasia most dreaded by Washington
political realists such as Henry Kissinger or
Zbigniew Brzezinski, namely
a
strategic military and economic cooperation on a
deep, long-term basis between two former Cold War
foes, China and President Vladimir Putin's Russia.
Putin has taken a number of steps in
recent months to shore up relations with Russia's
most important potential strategic Eurasian
partner, China. In March he went to Beijing to
discuss increased bilateral energy cooperation, a
theme dear to the heart of energy-hungry China.
Top on that agenda was China's wish that a
pipeline from Taishet in Siberia be built to bring
oil to Daqing in China. In addition, the China
National Petroleum Co (CNPC) and the Russian
Rosneft oil company signed several agreements for
joint energy projects. And Gazprom and CNPC signed
a memorandum of understanding to supply Russian
natural gas to China.
With Sudan and the
Middle East under increasing pressure from the
United States, Sino-Russian energy cooperation has
moved to the top of China's foreign-policy agenda.
At the end of this month, Russia and China will
meet again in Moscow to discuss further energy
cooperation.
As well, Russia is a major
supplier of arms to China, and military
cooperation between the two states is increasing.
In 2001 the two signed the Russia-China Friendship
and Cooperation Treaty, the first such bilateral
treaty since 1950. A major point covered "joint
actions to offset a perceived US hegemonism". That
was two months before September 11 and the ensuing
Iraq invasion. In August 2005 the two countries
held their first joint military exercises to
increase bilateral coordination in "fighting the
war on terrorism".
They realize more than
one can play the game. In May, Russian Defense
Minister Sergei Ivanov hosted the chief of staff
of the People's Liberation Army and discussed
increased cooperation in the context of Russia's
and China's leading role in the Shanghai
Cooperation Organization (SCO). Russia will
increase deliveries of selected military
technology to China as well as train Chinese
military at the institutes of the Russian Ministry
of Defense.
With this bilateral
cooperation in mind, a broader look at Russia's
use of energy to build a counterweight to US
dominance in Eurasia is instructive.
Russian energy geopolitics In
terms of overall standard of living, mortality and
economic prosperity, Russia today is not a
world-class power. In terms of energy, it is a
colossus. In terms of landmass, it is still the
single largest nation in the world. It has vast
territory and vast natural resources, and it has
the world's largest reserves of natural gas, the
energy source currently the focus of major global
power plays. In addition, it is the only power
with the military capability to match that of the
United States, despite the collapse of the Soviet
Union and consequent deterioration of the Russian
military.
Russia has more than 130,000 oil
wells and some 2,000 identified oil and gas
deposits, of which at least 900 are not being
exploited. Oil reserves have been estimated at 150
billion barrels, similar perhaps to Iraq. They
could be far larger but have not yet been
exploited because of the difficulty of drilling in
some remote Arctic regions. Oil prices above US$60
a barrel begin to make it economic to explore in
those remote regions.
Currently, Russian
oil products can be exported to foreign markets by
three routes: Western Europe via the Baltic Sea
and Black Sea; the northern route; the Far East to
China or Japan and East Asian markets. Russia has
oil terminals on the Baltic at St Petersburg and a
newly expanded oil terminal at Primorsk. There are
additional oil terminals under construction at
Vysotsk, Batareynaya Bay and Ust-Luga.
Russia's state-owned natural-gas pipeline
network, its so-called "unified gas-transportation
system", includes a vast network of pipelines and
compressor stations extending more than 150,000
kilometers across Russia. By law only the
state-owned Gazprom is allowed to use the
pipelines. The network is perhaps the most valued
Russian state asset outside the oil and gas
itself. Here is the heart of Putin's new
natural-gas geopolitics and the focus of conflict
with Western oil and gas companies as well as the
European Union, whose energy commissioner, Andras
Piebalgs, is from new North Atlantic Treaty
Organization (NATO) member Latvia, formerly part
of the Soviet Union.
In 2001, as it became
clear in Moscow that Washington would find a way
to bring the Baltic republics into NATO, Putin
backed the development of a major new oil port on
the Russian coast of the Baltic Sea in Primorsk at
a cost of $2.2 billion. This project, known as the
Baltic Pipeline System (BPS), greatly lessens
export dependency on Latvia, Lithuania and Poland.
The Baltic is Russia's main oil-export route,
carrying crude oil from Russia's West Siberia and
Timan-Pechora oil provinces westward to the port
of Primorsk on the Gulf of Finland. The BPS was
completed in March with capacity to carry more
than 1.3 million barrels per day of Russian oil to
Western markets in Europe and beyond.
Also
in March, former German chancellor Gerhard
Schroeder was named chairman of a Russian-German
consortium building a natural-gas pipeline going
some 1,200km under the Baltic Sea. Majority
shareholder in this North European Gas Pipeline
(NEGP) project, with 51%, is the Russian
state-controlled Gazprom, the world's largest
natural-gas company. The German companies BASF and
E.On each hold 24.5%. The project, estimated to
cost 4.7 billion euros ($5.8 billion), was started
in late 2005 and will connect the gas terminal at
the Russian port city of Vyborg on the Baltic near
St Petersburg with the Baltic city of Greifswald
in eastern Germany.
The Yuzhno-Russkoye
gas field in West Siberia will be developed in a
joint venture between Gazprom and BASF to feed the
pipeline. It was Gerhard Schroeder's last major
act as chancellor, and provoked howls of protest
from the pro-Washington Polish government, as well
as Ukraine, as both countries stood to lose
control over pipeline flows from Russia. Despite
her close ties to the US administration of
President George W Bush, Chancellor Angela Merkel
has been forced to swallow hard and accept the
project. Germany's industry is simply dependent on
the Russian energy import. Russia is by far the
largest supplier of natural gas to Germany.
The giant Shtokman gas deposit in the
Russian sector of the Barents Sea, north of
Murmansk, will ultimately also be a part of the
gas supply of the NEGP. When completed in two
parallel pipelines, NEGP will supply Germany up to
55 billion cubic meters more a year of Russian
gas.
In April the Putin government
announced the first stage of construction of the
East Siberia-Pacific Ocean Pipeline (ESPO), a vast
oil pipeline from Taishet in the Irkutsk region
near Lake Baikal in East Siberia to Perevoznaya
Bay on Russia's Pacific Ocean coast, to be built
at a cost of more than $11.5 billion.
Transneft, the Russian state-owned
pipeline company, will build it. When finished, it
will pump up to 1.6 million barrels per day of oil
from Siberia to the Russian Far East and, from
there, on to the energy-hungry Asia-Pacific
region, mainly China. The first stage is due to be
completed by the end of 2008. In addition, Putin
has announced plans to construct an oil refinery
on the Amur River near the Chinese border in
Russia's Far East to allow sale of refined
products to China and Asian markets. At present
the Siberian oil can only be delivered to the
Pacific via rail.
For Russia, the
Taishet-to-Perevoznaya route will maximize its
national strategic benefits while taking oil
exports to China and Japan into account at the
same time. In the future, the country will be able
to export oil to Japan directly from the Nakhodka
port. Oil-import-dependent Japan is frantic to
find new secure oil sources outside the unstable
Middle East.
The ESPO can also supply oil
to the Republic of Korea and the Democratic
People's Republic of Korea, by building from
Vladivostok branch lines leading to the two
countries and to China via a branch pipe between
Blagoveshchensk and Daqing. The Taishet route
provides a clear roadmap for energy cooperation
between Russia and China, Japan and other
Asia-Pacific countries.
Sakhalin:
Russia reins in Big Oil Late last month a
seemingly minor dispute exploded and resulted in
the revocation of the environmental permit for
Royal Dutch Shell's Sakhalin II
liquefied-natural-gas project, which had been due
to deliver LNG to Japan, South Korea and other
customers by 2008. Shell is lead energy partner in
an Anglo-Japanese oil and gas development project
on Sakhalin, a vast Russian island north of
Hokkaido, Japan.
At the same time, the
Putin government announced that environmental
requirements had also not been met by ExxonMobil
for its De Kastri oil terminal built on Sakhalin
as part of its Sakhalin I oil and gas development
project. Sakhalin I contains an estimated 8
billion barrels of oil and vast volumes of gas,
making the field a rare "super giant" oil find, in
geologists' terminology.
In the early
1990s the government of Russian president Boris
Yeltsin made a desperation bid to attract needed
investment capital and technology into exploiting
Russian oil and gas regions at a time when the
government was broke and oil prices very low. In a
bold departure, Yeltsin granted US and other
Western oil majors generous exploration rights to
two large oil projects, Sakhalin I and Sakhalin
II. Under a production sharing agreement (PSA),
ExxonMobil, lead partner of the Sakhalin I oil
project, got tax-free Russian concessions.
Under the terms of the these agreements,
which are typical between major Anglo-American oil
majors and weak Third World countries, Russia's
government would get paid for the oil and gas
rights by receiving a share of eventual oil or gas
produced. But the first drops of oil to Russia
would flow only after all project production costs
had first been covered.
PSAs were
originally developed by Washington and Big Oil to
facilitate favorable control by the oil companies
of large oil projects in third countries. The
major US oil giants, working with the James Baker
Institute, which drafted Dick Cheney's 2001 Energy
Task Force Review, used the PSA form to regain
control over Iraq's oil production, hidden behind
the facade of an Iraqi state-owned oil company.
Shortly before the Russian government told
ExxonMobil it had problems with its terminal on
Sakhalin, ExxonMobil had announced yet another
cost increase in the project. ExxonMobil, whose
lawyer is James Baker III, and which is a close
partner to the Cheney-Bush White House, announced
a 30% cost increase, something that would put off
even further any Russian oil-flow share from the
PSA.
The news came on the eve of
ExxonMobil plans to open an oil terminal at De
Kastri on Sakhalin. The Russian Environment
Ministry and the Agency for Subsoil Use suddenly
announced that the terminal did "not meet
environmental requirements" and is reportedly
considering halting production by ExxonMobil as
well.
Britain's Royal Dutch Shell under
another PSA holds rights to develop the oil and
gas resources in the Sakhalin II region, and build
Russia's first LNG project. The $20 billion
project, employing more than 17,000 people, is 80%
complete. It's the world's largest integrated
oil-and-gas project, and includes Russia's first
offshore oil production, as well as Russia's first
offshore integrated gas platform.
The
clear Russian government moves against ExxonMobil
and Shell have been interpreted in the industry as
an attempt by the Putin government to regain
control of oil and gas resources Russia gave away
during the Yeltsin era. It would dovetail neatly
with Putin's emerging energy strategy.
Russia-Turkey Blue Stream gas
project Last November, Russia's Gazprom
completed the final stage of its 1,213km, $3.2
billion Blue Stream gas pipeline. The project
brings gas from its fields in Krasnodar, then by
underwater pipelines across the Black Sea to the
Durusu Terminal near Samsun on the Turkish Black
Sea coast. From there the pipeline supplies
Russian gas to Ankara. When it reaches full
capacity in 2010, it will carry an estimated 16
billion cubic meters gas a year.
Gazprom
is now discussing transit of Russian gas to the
countries of southern Europe and the eastern
Mediterranean, based on new contracts and new
volumes. Greece, southern Italy and Israel all are
in some form of negotiation with Gazprom to tap
gas from the Blue Stream pipeline across the
territory of Turkey.
A new route for the
gas supply is being developed now - the one via
the countries of East and Central Europe. The
interim title of the project is the South European
Gas Pipeline. The main issue here is to establish
a new gas-transmission system, both from Russian
origin and from the third countries.
In
sum, not including the emerging potentials of
Gazprom's entry into the fast-developing LNG
markets globally, energy, oil and gas and nuclear,
is firmly at the heart of Russian attempts to
build new economic-alliance partners across
Eurasia in the coming showdown with the United
States.
US plans for 'nuclear
primacy' The key to the
ability of Putin's Russia to succeed is its
ability to defend its Eurasian energy strategy
with a credible military deterrent, to counter
now-obvious Washington military plans for what the
Pentagon terms "full-spectrum dominance". In a
revealing article titled "The rise of US nuclear
primacy" in the March/April Foreign Affairs, the
magazine of the New York Council on Foreign
Relations, authors Kier Lieber and Daryl Press
made the following claim:
Today, for the first time in almost
50 years, the United States stands on the verge
of attaining nuclear primacy. It will probably
soon be possible for the United States to
destroy the long-range nuclear arsenals of
Russia or China with a first strike. This
dramatic shift in the nuclear balance of power
stems from a series of improvements in the
United States' nuclear systems, the precipitous
decline of Russia's arsenal, and the glacial
pace of modernization of China's nuclear forces.
Unless Washington's policies change or Moscow
and Beijing take steps to increase the size and
readiness of their forces, Russia and China -
and the rest of the world - will live in the
shadow of US nuclear primacy for many years to
come.
The US authors claim,
accurately, that since the collapse of the Soviet
Union in 1991, Russia's strategic nuclear arsenal
has "sharply deteriorated". They also conclude
that the United States is, and has been for some
time, intentionally pursuing global nuclear
primacy. The September 2002 Bush administration
National Security Strategy explicitly stated that
it was official US policy to establish global
military primacy, an unsettling thought for many
nations today given the recent actions of
Washington since the events of September 2001.
One of Defense Secretary Rumsfeld's
priority projects has been the multibillion-dollar
construction of a US missile defense. It has been
sold to US voters as a defense against possible
terror attacks. In reality, as has been openly
recognized in Moscow and Beijing, it is aimed at
the only two real nuclear powers, Russia and
China.
The Foreign Affairs article points
out, "The sort of missile defenses that the United
States might plausibly deploy would be valuable
primarily in an offensive context, not a defensive
one - as an adjunct to a US first-strike
capability, not as a stand-alone shield. If the
United States launched a nuclear attack against
Russia (or China), the targeted country would be
left with a tiny surviving arsenal - if any at
all. At that point, even a relatively modest or
inefficient missile-defense system might well be
enough to protect against any retaliatory strikes,
because the devastated enemy would have so few
warheads and decoys left."
In the context
of a United States that has actively moved the
troops of its NATO partners into Afghanistan and
now Lebanon, and which is clearly backing the
former Soviet member-state Georgia, today a
critical factor in the Caspian Baku-Tbilisi-Ceyhan
oil pipeline, to join NATO and push Russian troops
away, it is little surprise that Moscow might be
just a bit uncomfortable with the US president's
promises of spreading democracy through a
US-defined Greater Middle East.
The term
"Greater Middle East" is the invention of various
Washington think-tanks close to Cheney, including
his Project for the New American Century, to refer
to the non-Arabic countries Turkey, Iran, Israel,
Pakistan, Afghanistan, the Central Asian
countries, Azerbaijan, Georgia and Armenia. At the
Group of Eight summit in the summer of 2004, Bush
first officially used the term to refer to the
region included in Washington's project to spread
democracy in the region.
On October 3 this
year, the Russian Foreign Ministry warned that
Moscow would "take appropriate measures" should
Poland deploy elements of the new US missile
defense system. Poland is now a NATO member. Its
defense minister, Radek Sikorski, was a former
Resident in Washington at the hawkish American
Enterprise Institute think-tank. He was also
executive director of the New Atlantic Initiative,
a project designed to bring the former Warsaw Pact
countries of eastern Europe into NATO under the
guise of spreading democracy. The United States is
also building, via NATO, a European missile
defense system.
The only conceivable
target of such a system would be Russia, in the
sense of enabling a US first-strike success.
Completion of the European missile defense system,
the militarization of the entire Middle East, the
encirclement of Russia and of China from a
connected web of new US military bases, many put
up in the name of the "war on terror", all now
appear to the Kremlin as part of a deliberate US
strategy of "full-spectrum dominance". The
Pentagon refers to it also as "escalation
dominance", the ability to win a war at any level
of violence, including a nuclear war.
Integral to this strategy is a new US
policy of militarization of space, part of the
Pentagon's total-spectrum dominance policy. Bush
authorized a new US National Space Policy on
August 31 that establishes that the conduct of US
space programs and activities shall be a top
priority. It is part and parcel of the Bush
administration's defense strategy.
The new
policy document declares that the US will "take
those actions necessary to protect its space
capabilities; respond to interference; and deny,
if necessary, adversaries the use of space
capabilities hostile to US national interests". It
will not let any international body or treaty
hinder its militarization of space: "The United
States will oppose the development of new legal
regimes or other restrictions that seek to
prohibit or limit US access to or use of space.
Proposed arms-control agreements or restrictions
must not impair the rights of the United States to
conduct research, development, testing, and
operations or other activities in space for US."
That all would be a little more comforting
were it not for the bizarre way in which people in
Washington these days define "national interest",
in contrast to the interest of the world community
in peace and freedom.
Moscow's military
status Moscow has not been entirely passive
in the face of this growing reality. In his May
2003 State of the Nation address, Vladimir Putin
spoke of strengthening and modernizing Russia's
nuclear deterrent by creating new types of
weapons, including some for Russia's strategic
forces, which will "ensure the defense capability
of Russia and its allies in the long term". Russia
stopped withdrawing and destroying its SS-18
MIRVed (multiple independent re-entry vehicle)
missiles once the Bush administration unilaterally
declared an end to the Anti-Ballistic Missile
treaty, and its de facto annulling of START II
(Strategic Arms Reduction Treaty).
Russia
never stopped being a powerful entity that
produced state-of-the-art military technologies -
a trend that continued from its inception as a
modern state. While its army, navy and air force
are in derelict condition, the elements for
Russia's resurgence as a military powerhouse are
still in place. Russia has been consistently
fielding top-notch military technology at various
international trade shows, and has been effective
in demonstrating its capabilities.
In
spite of financial and economic difficulties,
Russia still produces state-of-the-art military
technologies, according to a 2004 analysis by the
Washington-based think-tank Power and Interest
News Report. One of its best achievements after
the dissolution of the Soviet Union has been its
armored fighting vehicle BMP-3, which has been
chosen over Western vehicles in contracts for the
United Arab Emirates and Oman.
Russia's
surface-to-air missile systems, the S-300 and its
more powerful successor the S-400, are reported to
be more potent than US-made Patriot systems. The
once-anticipated military exercise between the
Patriot and the S-300 never materialized, leaving
the Russian complex with an undisputed, yet
unproven, claim of superiority over the US system.
Continuing this list is the Kamov-50 family of
military helicopters that incorporate the latest
cutting-edge technologies and tactics, making them
an equal force to the best Washington has.
European helicopter-industry sources confirm this.
In recent joint Indo-American air force
exercises, where the Indian Air Force was equipped
with modern Russian-made Su-30 fighters, the IAF
outmaneuvered US-made F-15 planes in a majority of
their engagements, prompting US Air Force General
Hal Homburg to admit that Russian technology in
Indian hands has given the USAF a "wake-up call".
The Russian military establishment is continuing
to design other helicopters, tanks and armored
vehicles that are on par with the best that the
West has to offer.
Weapons exports, in
addition to oil and gas, have been one of the best
ways for Russia to earn much-needed hard currency.
Already Russia is the second-largest worldwide
exporter of military technology after the United
States. As reported in various magazines, journals
and periodicals, at present, Russia's modern
military technology is more likely to be exported
than supplied to its own armies because of the
existing financial constraints and limitations of
Russia's armed forces.
This has
implications for America's future combat
operations, since practically all insurgent,
guerrilla, breakaway or terrorist armed formations
across the globe - the very formations that the
United States will most likely face in its future
wars - are fielded with Russian weapons or its
derivatives.
The Russian nuclear arsenal
has played an important political role since the
end of the Soviet Union, providing fundamental
security for the Russian state.
After a
bitter intra-services fight within the that lasted
from 1998 to 2003, the Russian General Staff
realized along with the Defense Ministry that a
further policy of neglect of nuclear forces in
favor of funding the rebuilding of conventional
forces in the face of tight budget constraints was
not tolerable. In 2003 Russia had to buy from
Ukraine strategic bombers and intercontinental
ballistic missiles warehoused there.
Since
then, strategic nuclear forces have been a
priority. Today the finances of the Russian state,
thanks largely to high prices of oil and gas
exports, are on a strong footing. The Russian
central bank has become one of the five largest
dollar holders, with reserves of more than $270
billion. The material foundation of the Russian
military is its defense industry. After 1991 the
Russian Federation inherited the bulk of the
Soviet defense industrial complex.
Today,
with little fanfare, the US is building up its
influence and military presence in the Middle East
despite a general draw-down in its military
commitments and expenditures. It is putting huge
resources into the periphery countries of the
Russian heartland of Eurasia. Why? Oil is a large
part of the answer - but oil seen in geopolitical
terms. The ultimate game, where the stakes are the
highest, is to render permanently impotent the
Eurasian land power, Russia, to control its access
to the seas and to China - just as Halford
Mackinder, "the father of geopolitics", argued.
The push for a US nuclear primacy over
Russia is the factor in world politics today that
has the most potential for bringing the world into
a World War III, a nuclear conflagration by
miscalculation.
The SCO, founded several
years ago by Russia and China to bring together
select Eurasian countries for common dialogue. Its
stated goal initially was to facilitate
"cooperation in political affairs, economy and
trade, scientific-technical, cultural, and
educational spheres as well as in energy". Iranian
President Mahmud Ahmadinejad was invited as an
honored observer last June, and Iran is being
encouraged by Russia and China to join the SCO.
Today the SCO remains on the surface a
rather amorphous discussion forum. Given a bit
more provocation from Washington and NATO, that
could change rapidly into the core of a broader
Eurasian military and energy alliance to
counter-weigh US nuclear primacy. The nightmare of
Halford Mackinder would be fulfilled, ironically,
largely because of the unilateral and aggressive
foreign policy of an overconfident United States.
The basic argument of Mackinder's
geopolitics is still relevant: "The great
geographical realities remain: land power versus
sea power, heartland versus rimland, center versus
periphery ..." This Russia understands every bit
as much as Washington.
This is the
conclusion of a two-part report.
F
William Engdahl is author of the book A
Century of War: Anglo-American Oil Politics and
the New World Order, Pluto Press Ltd. He has
completed a soon-to-be published book on
genetically modified organisms titled Seeds of
Destruction: The Hidden Political Agenda Behind
GMO. He may be contacted through his website,
www.engdahl.oilgeopolitics.net.
(Copyright 2006 F William Engdahl. Used
by permission.)
