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Showdown in Ukraine: Putin’s Quest for Ports, Oil, Pipelines and Gas

Showdown in Ukraine: Putin’s Quest for Ports, Oil, Pipelines and Gas.

By Claude Salhani | Tue, 25 March 2014 22:44 | 6

Yes, Russia is guilty of meddling in Ukraine, but then again so are the United States and the European Union. The major difference is that far less was said and much less reported by the international media over the Americans’ and Europeans’ interference than of Russia’s actions and the reactions it caused.

Where Russia is involved many in the West believe that one only needs to scratch the surface to see traces of the old Soviet Union begin to resurface. After all, Russian President Vladimir Putin is a former KGB officer. The truth is much more complicated than that: or perhaps somewhat simpler.

The Cold War that divided the East and West maybe over but the old rivalry still lingers. The rivalry between the West and Russia is no longer one over diverging political philosophies, but purely over resources – and the capitalistic gains they produce from mainly oil, gas and pipelines.

The West and in particular the United States seems to be suffering from collective memory disorder and have forgotten all the mud they slapped onto Putin’s face during the past 15 or so years. Or at least they expected him to forget and forgive.

Related Article: Ukraine – Full Circle to the EU Integration Issue

But then again Russian troops did move in to grab control of Crimea, taking over the territory from the Ukrainians. You can counter that argument by pointing to the US and NATO, who not only interfered, but swallowed former Soviet domains bringing them into the North Atlantic alliance, pushing NATO closer to Russia’s borders.

Yes, Russia needs access to warm water ports for its Black Sea fleet and many analysts also believe that this is a major issue of concern for Moscow, which it is. But the plot, as they say, thickens.

There is also another reason for Putin’s intervention in Ukraine and that has to do with Russia elbowing for dominance of the very lucrative and strategically important “energy corridors.”
That is very likely to be the major reason why Putin is willing to risk going to war with the West over Crimea, the pipelines that traverses the Caucasus and the oil and natural gas these pipelines carry westwards to Europe.

Given the geography of the region there are only so many lanes where the pipelines can be laid; and most of them transit through Ukraine. Others travel across Azerbaijan and Turkey. Most of Western Europe’s gas and much of Eastern Europe’s gas travels through Ukraine.

If Russia has vested interest in “recolonizing” Ukraine, the United States on the other hand has its own interests in Ukraine and other former Soviet areas.

What is going on today is nothing short of a race for control of what’s going to dominate the energy markets over the next two or three decades: the energy corridors from Central Asia, the Caucuses and through Russia and Ukraine.

As stated in a report published by the Woodrow Wilson International Center for Scholars, “the proclamation of independence, the adoption of state symbols and a national anthem, the establishment of armed forces and even the presence on Ukrainian territory of nuclear missiles—all important elements of independent statehood—amount little if another power, Russia, controls access to fuel without which Ukraine cannot survive economically.

Related Article: This Week in Energy: How Would LNG Get to Ukraine?

That same report denotes that “Ukraine’s strategic location between the main energy producers (Russia and the Caspian Sea area) and consumers in the Eurasian region, its large transit network, and its available underground gas storage capacities,” make the country “a potentially crucial player in European energy transit” – a position that will “grow as Western European demands for Russian and Caspian gas and oil continue to increase.”

Ukraine’s dependence on Russian energy imports has had “negative implications for US strategy in the region.”

As long as Russia controls the flow of oil and gas it has the upper hand. Russia’s Gazprom currently controls almost a fifth of the world’s gas reserves.

More than half of Ukraine’s and nearly 30% of Europe’s gas comes from Russia.  Moscow wants to try and keep things going its way; Washington and Brussels find it in their interests to try and alter that by creating multiple channels for central Asian and Caspian oil to flow westwards.
Ukraine today finds itself in the center of the new East-West dispute.

Ironically, the very assets that make Ukraine an important player in the new geopolitical game being played out between Washington and Moscow is also its greatest disadvantage.

By Claude Salhani of Oilprice.com

Ukraine Only Has Enough Gasoline For A Month | Zero Hedge

Ukraine Only Has Enough Gasoline For A Month | Zero Hedge.

Nothing to see here, move along. While it appears the Russians are willing to pay the price of modest sanctions from the west to ‘liberate’ their fellow countrymen, the fallout from further tension with Ukraine could “boomerang” once again on the divided nation. As RBC Ukraine reports, the Minister of Energy and Coal Industry Yuriy Prodan said at a press conference today that “oil reserves will last for 28-29 days” in Ukraine. After that, the negotiation begins as Ukraine already owes billions for previously delivered gas – as Ukraine’s storage levels more than halved in the last 3 months.

Via RBC Ukraine,

Stocks of petroleum products in Ukraine will last for 28-29 days, said at today’s press conference, the Minister of Energy and Coal Industry Yuriy Prodan.

Speaking on the situation with oil, then ensure there is quite stable. Today oil reserves will last for 28-29 days,” – he said, the ” RBC-Ukraine . ”

At the same time, the Minister noted the significant risk reduction in the supply and rising gas prices. As of March 25, 2014 in Ukrainian underground gas storage facilities located 7 billion cubic meters of gas.

“Up there can be about 2 billion is not the quantity that scares experts, it would be possible to hold only a week. It all depends on what kind of regime will be whether we can take about 20 million cubic meters. Meters of gas to reverse and so on “- said Prodan.

According to the company “Ukrtransgaz” abnormally warm winter 2013 2014. has reduced gas extraction from underground storage by an average of 37% compared to the same period last year: it was 60 million cubic meters per day.

In late December 2013. occupied at the time the post of Minister of Energy and Coal Industry of Edward Stawicki reported that Ukrainian gas reserves in underground storage is 16.5 billion cubic meters.

We suspect any further military intervention will only crimp this supply even faster.

Russia Is Slowly Turning The NatGas Tap Off To Europe | Zero Hedge

Russia Is Slowly Turning The NatGas Tap Off To Europe | Zero Hedge.

While Naftogaz (Ukraine’s gas pipeline operator) states that all gas transportation from Russia to Europe is running normally, Bloomberg reports that Russian natgas exports to Europe are declining.Shipments are down over 4% from the prior week and also lower to Ukraine. This ‘adjustment’ follows increased sanctions by the West as Medvedev’s notable statement this morning that Ukraine owes Russia $16bn.

NatGas output is tumbling

The good news:

Gazprom today said natgas transit to Europe via Ukraine, supplies for Ukrainian consumption  

But Pay Up…

Ukraine owes Russia $11b after collapse of 2010 deal, Russian Prime Minsiter Dmitry Medvedev says to President Vladimir Putin at Security Council meeting, according to transcript on Kremlin website.

 

Medvedev adds $3b Ukraine bonds bought in Dec., ~$2b debt to Gazprom for natgas supplies

 

NOTE: In 2010, Russia agreed to sell natgas at discount in exchange for extending lease to Black Sea naval port of Sevastopol in Crimea to 2042 from 2017

Or Else…

Russian natgas exports to Europe and Turkey, excl. former Soviet Union, declined to 405.3mcm as of March 22,  according to Bloomberg calculations based on preliminary data from Energy Ministry’s CDU-TEK unit.

 

Avg daily exports to region were ~457mcm in March, lower than yr earlier: calculations based on CDU-TEK data

 

Shipments March 16-22 were 3.04bcm, 4% decrease vs level in week ended March 15

It is too early to see a trend, but for now, the direction is not hopeful for Europe.

Furthermore, Gazprom has cut its Diesel output by the most in 7 months…

 

and then… (via NY Times),

Russia is now asking close to $500 for 1,000 cubic meters of gas, the standard unit for gas trade in Europe, which is a price about a third higher than what Russia’s gas company, Gazprom, charges clients elsewhere.

 

Russia says the increase is justified because it seized control of the Crimean Peninsula, where its Black Sea naval fleet is stationed, ending the need to pay rent for the Sevastopol base. The base rent had been paid in the form of a $100 per 1,000 cubic meter discount on natural gas for Ukraine’s national energy company, Naftogaz.

And if that’s not clear enough…

Russia Is Slowly Turning The NatGas Tap Off To Europe | Zero Hedge

Russia Is Slowly Turning The NatGas Tap Off To Europe | Zero Hedge.

While Naftogaz (Ukraine’s gas pipeline operator) states that all gas transportation from Russia to Europe is running normally, Bloomberg reports that Russian natgas exports to Europe are declining.Shipments are down over 4% from the prior week and also lower to Ukraine. This ‘adjustment’ follows increased sanctions by the West as Medvedev’s notable statement this morning that Ukraine owes Russia $16bn.

NatGas output is tumbling

The good news:

Gazprom today said natgas transit to Europe via Ukraine, supplies for Ukrainian consumption  

But Pay Up…

Ukraine owes Russia $11b after collapse of 2010 deal, Russian Prime Minsiter Dmitry Medvedev says to President Vladimir Putin at Security Council meeting, according to transcript on Kremlin website.

 

Medvedev adds $3b Ukraine bonds bought in Dec., ~$2b debt to Gazprom for natgas supplies

 

NOTE: In 2010, Russia agreed to sell natgas at discount in exchange for extending lease to Black Sea naval port of Sevastopol in Crimea to 2042 from 2017

Or Else…

Russian natgas exports to Europe and Turkey, excl. former Soviet Union, declined to 405.3mcm as of March 22,  according to Bloomberg calculations based on preliminary data from Energy Ministry’s CDU-TEK unit.

 

Avg daily exports to region were ~457mcm in March, lower than yr earlier: calculations based on CDU-TEK data

 

Shipments March 16-22 were 3.04bcm, 4% decrease vs level in week ended March 15

It is too early to see a trend, but for now, the direction is not hopeful for Europe.

Furthermore, Gazprom has cut its Diesel output by the most in 7 months…

 

and then… (via NY Times),

Russia is now asking close to $500 for 1,000 cubic meters of gas, the standard unit for gas trade in Europe, which is a price about a third higher than what Russia’s gas company, Gazprom, charges clients elsewhere.

 

Russia says the increase is justified because it seized control of the Crimean Peninsula, where its Black Sea naval fleet is stationed, ending the need to pay rent for the Sevastopol base. The base rent had been paid in the form of a $100 per 1,000 cubic meter discount on natural gas for Ukraine’s national energy company, Naftogaz.

And if that’s not clear enough…

U.S. could start energy war with Russia – Winnipeg Free Press

U.S. could start energy war with Russia – Winnipeg Free Press.

By: Washington Post

Posted: 03/23/2014 1:41 PM |

A woman holds a banner that reads:

Enlarge Image

A woman holds a banner that reads: “Putin is Occupier” during a rally against the breakup of the country in Simferopol, Crimea, Ukraine, Tuesday, March 11, 2014. (DARKO VOJINOVIC / THE ASSOCIATED PRESS FILES)

Debate has raged over whether the United States can fight Vladimir Putin on the Russian president’s most favourable ground: energy politics. It can, and it should, particularly because there’s an obvious path forward that coincides with American — indeed, world — economic interests. That path is lifting irrational restrictions on exports and making it easier to build natural gas export terminals.

For years, Putin has used his nation’s wealth of oil and natural gas as a cudgel to bully his neighbours. At present, the European Union’s large imports of Russian natural gas discourage a forceful Western response to Russia’s aggressive actions in Ukraine. Meanwhile, the United States is tapping massive reserves of unconventional natural gas. That has not only made the U.S. self-sustaining in gas, but also driven down the price of U.S. gas to a point well below what Europeans are paying for the Russian stuff. If the federal government allowed more of it to be liquefied and exported, would the Russians lose a share of the European market?

The story is more complicated than that. Russian gas, which doesn’t need to be liquefied to move (by pipeline) into the European market, would enjoy significant price advantages over imported U.S. gas. The interaction of private buyers and sellers would probably direct U.S. exports to places where gas is more profitable to sell, such as Japan and Korea. The result would be a bounty for the U.S. economy and an improved American trade deficit — but not much direct displacement of Russian gas in Europe.

But that’s also not the end of the story. The U.S. entry into the Asian market would diminish Russia’s opportunity to profit there, as it aims to do. Contributing to an already widening and more diverse global supply of liquefied natural gas (LNG) would also give European importers more flexibility in sourcing their fuel — from the United States, Qatar, or others — the sort of market conditions that have already enabled Europeans to renegotiate gas contracts with Russia. The Council on Foreign Relations’ Michael Levi points out that Putin might end up with an uncomfortable choice between maintaining market share in Europe and slashing his prices more.

Ramping up U.S. exports would take years, but the effects would not only be long-term, as some critics charge. Action that communicates a certain intent to allow more LNG exports would send a signal that “the U.S. is open for business,” as the Eurasia Group’s Leslie Palti-Guzman puts it. That could deter Putin from playing the energy card and help many buyers in negotiating long-term contracts.

The economic case for allowing natural gas exports is compelling on its own. Doing so would bring money into the country and uphold the vital principle that energy resources should flow freely around the globe, making the markets for the fuels the world economy needs as flexible and robust as possible. The more major suppliers there are following that principle, the less control predatory regimes such as Putin’s will have over the market.

Obama Demands Russia Leave G-8; June Summit Cancelled While Ukraine Deploys Army Along Borders | Zero Hedge

Obama Demands Russia Leave G-8; June Summit Cancelled While Ukraine Deploys Army Along Borders | Zero Hedge.

UK Prime Minister David Cameron stated that it is “absolutely clear” that the G-8 Summit scheduled for June in Sochi, Russia will not go ahead. But it is President Obama that appears to be pressing the hardest for major changes:

  • OBAMA SAID TO PRESS ALLIES TO SUSPEND RUSSIA FROM G8: WSJ

This comes at a time when Ukraine forces are being withdrawn from Crimea and deployed to North, South, and East borders of the region.  Meanwhile, Ukraine is taking its soldiers pulled from Crimea and deploying them along all other borders.

  • UKRAINE’S PARUBIY: PRIORITY IS TO PROTECT BORDERS, LEAVE CRIMEA
  • UKRAINE DEPLOYS ARMY TO NORTH, SOUTH, EAST BORDERS: PARUBIY
  • UKRAINE HAS MOBILIZED MORE THAN 10,000 PEOPLE, PARUBIY SAYS

David Cameron says G-8 Summit Scrapped…

There will be no G8 summit in Russia this year, David Cameron said in a further ign of efforts to isolate Moscow over the Ukraine crisis.

The Prime Minister said it was “absolutely clear” the meeting could not go ahead.

Speaking in The Hague ahead of a meeting of G7 leaders, he said: “We should be clear there’s not going to be a G8  summit this year in Russia. That’s absolutely clear.”

Preparations for the planned June summit in Sochi had already been suspended as a result of Russia’s actions in neighbouring Ukraine.

And Obama is calling for Russia to be kicked out of the G-8.

  • OBAMA SAID TO PRESS ALLIES TO SUSPEND RUSSIA FROM G8: WSJ

Obama Demands Russia Leave G-8; June Summit Cancelled While Ukraine Deploys Army Along Borders | Zero Hedge

Obama Demands Russia Leave G-8; June Summit Cancelled While Ukraine Deploys Army Along Borders | Zero Hedge.

UK Prime Minister David Cameron stated that it is “absolutely clear” that the G-8 Summit scheduled for June in Sochi, Russia will not go ahead. But it is President Obama that appears to be pressing the hardest for major changes:

  • OBAMA SAID TO PRESS ALLIES TO SUSPEND RUSSIA FROM G8: WSJ

This comes at a time when Ukraine forces are being withdrawn from Crimea and deployed to North, South, and East borders of the region.  Meanwhile, Ukraine is taking its soldiers pulled from Crimea and deploying them along all other borders.

  • UKRAINE’S PARUBIY: PRIORITY IS TO PROTECT BORDERS, LEAVE CRIMEA
  • UKRAINE DEPLOYS ARMY TO NORTH, SOUTH, EAST BORDERS: PARUBIY
  • UKRAINE HAS MOBILIZED MORE THAN 10,000 PEOPLE, PARUBIY SAYS

David Cameron says G-8 Summit Scrapped…

There will be no G8 summit in Russia this year, David Cameron said in a further ign of efforts to isolate Moscow over the Ukraine crisis.

The Prime Minister said it was “absolutely clear” the meeting could not go ahead.

Speaking in The Hague ahead of a meeting of G7 leaders, he said: “We should be clear there’s not going to be a G8  summit this year in Russia. That’s absolutely clear.”

Preparations for the planned June summit in Sochi had already been suspended as a result of Russia’s actions in neighbouring Ukraine.

And Obama is calling for Russia to be kicked out of the G-8.

  • OBAMA SAID TO PRESS ALLIES TO SUSPEND RUSSIA FROM G8: WSJ

Ukraine Leader In New Leaked Recording: 8 Million Russians In Ukraine "Must Be Killed With Nuclear Weapons" | Zero Hedge

Ukraine Leader In New Leaked Recording: 8 Million Russians In Ukraine “Must Be Killed With Nuclear Weapons” | Zero Hedge.

While the NSA is busy justifying its spying of every American its existence thanks to famous Moscow resident Edward Snowden, its Russian counterparts have been busy intercepting even more phone Ukrainian conversations.

After a month ago a leaked phone call between US assistant secretary of state Victoria Nuland and the US envoy to the Ukraine, Geoffrey Pyatt confirmed that it was the US that was pulling the strings in what was about to be a violent coup overthrowing Ukraine’s president Yanukovich, “someone” has just leaked another phone conversation, this time between parliamentarian Nestor Shufrych and former PM and ideological leader of the Ukraine “revolution” Yulia Tymoshenko and most probable future president of West Ukraine, in which Tymoshenko is makes the following threats, “It’s going too far! Bugger! We must grab arms and go whack those damn katsaps [a Ukrainian word used to refer to the Russians in a negative tone] together with their leader”, “I’ll use all my connections, I’ll raise the whole world – as soon as I’m able to – in order to make sure.. Bugger!.. not even scorched earth won’t remain where Russia stands” although all her empty threats collapse in the last sentence of the phone conversation in which she says, regarding the Crimea annexation, that “we are going to take it to the Hague International Criminal Court.” Good luck with that.

But the smoking gun, and where Putin once again shows just how masterful of a chess player he is, is the following statement by Tymoshenko, after asked, rhetorically, by her counterparty, “what should we do now with the 8 million Russians that stayed in Ukraine. They are outcasts“… to which she replies: “They must be killed with nuclear weapons.

Needless to say, that is not how you make Russian friends, or diffuse geopolitical tensions with your superpower neighbor, who just happens to be set on recreating USSR 2.0. Because just like that Putin has his provocation carte blanche, as the second something, anything happens to any ethnic Russian in east Ukraine, Putin can point to precisely this conversation as proof of how Ukraine’s “government” feels toward the ethnic minorities in the east, and why “they deserve to be protected” the Russian bearhug. Which has been precisely Putin’s plan all along.

It is not surprising that after this recording was leaked, that Tymoshenko admitted the validity of the recording except for this part, because she knows just how greatly it can and will be used against her once Putin decides it is time to expand a little further beyond just Crimea.

??????? ????, ??? ??? 8 ??? ?????? ? ??????? – ??????. ????????? ???????: ??????? ? ??????? – ?? ????????.?????? ???:) ??????? ?? ??????????

— ???? ????????? (@YuliaTymoshenko) March 24, 2014

Some of the other statements, transcribed by RT, confirming just how powerless Ukraine truly is in this struggle between David backed by the world’s most insolvent and natgas hungry countries, and an ascendent Kremlin goliath:

Tymoshenko, who plans to run in Ukraine’s presidential election, expressed confidence that she would have found “a way to zap those assholes [Russia].”

“I’ll use all my connections, I’ll raise the whole world – as soon as I’m able to – in order to make sure.. Bugger!.. not even scorched earth won’t remain where Russia stands,” she promised.

Despite being incapacitated by spinal disc hernia the ex-PM stressed she’s ready to “grab a machine gun, you know what I’m saying, and go shoot this bastard [Putin] in the forehead.”

Full recording below:

Ukraine Leader In New Leaked Recording: 8 Million Russians In Ukraine “Must Be Killed With Nuclear Weapons” | Zero Hedge

Ukraine Leader In New Leaked Recording: 8 Million Russians In Ukraine “Must Be Killed With Nuclear Weapons” | Zero Hedge.

While the NSA is busy justifying its spying of every American its existence thanks to famous Moscow resident Edward Snowden, its Russian counterparts have been busy intercepting even more phone Ukrainian conversations.

After a month ago a leaked phone call between US assistant secretary of state Victoria Nuland and the US envoy to the Ukraine, Geoffrey Pyatt confirmed that it was the US that was pulling the strings in what was about to be a violent coup overthrowing Ukraine’s president Yanukovich, “someone” has just leaked another phone conversation, this time between parliamentarian Nestor Shufrych and former PM and ideological leader of the Ukraine “revolution” Yulia Tymoshenko and most probable future president of West Ukraine, in which Tymoshenko is makes the following threats, “It’s going too far! Bugger! We must grab arms and go whack those damn katsaps [a Ukrainian word used to refer to the Russians in a negative tone] together with their leader”, “I’ll use all my connections, I’ll raise the whole world – as soon as I’m able to – in order to make sure.. Bugger!.. not even scorched earth won’t remain where Russia stands” although all her empty threats collapse in the last sentence of the phone conversation in which she says, regarding the Crimea annexation, that “we are going to take it to the Hague International Criminal Court.” Good luck with that.

But the smoking gun, and where Putin once again shows just how masterful of a chess player he is, is the following statement by Tymoshenko, after asked, rhetorically, by her counterparty, “what should we do now with the 8 million Russians that stayed in Ukraine. They are outcasts“… to which she replies: “They must be killed with nuclear weapons.

Needless to say, that is not how you make Russian friends, or diffuse geopolitical tensions with your superpower neighbor, who just happens to be set on recreating USSR 2.0. Because just like that Putin has his provocation carte blanche, as the second something, anything happens to any ethnic Russian in east Ukraine, Putin can point to precisely this conversation as proof of how Ukraine’s “government” feels toward the ethnic minorities in the east, and why “they deserve to be protected” the Russian bearhug. Which has been precisely Putin’s plan all along.

It is not surprising that after this recording was leaked, that Tymoshenko admitted the validity of the recording except for this part, because she knows just how greatly it can and will be used against her once Putin decides it is time to expand a little further beyond just Crimea.

??????? ????, ??? ??? 8 ??? ?????? ? ??????? – ??????. ????????? ???????: ??????? ? ??????? – ?? ????????.?????? ???:) ??????? ?? ??????????

— ???? ????????? (@YuliaTymoshenko) March 24, 2014

Some of the other statements, transcribed by RT, confirming just how powerless Ukraine truly is in this struggle between David backed by the world’s most insolvent and natgas hungry countries, and an ascendent Kremlin goliath:

Tymoshenko, who plans to run in Ukraine’s presidential election, expressed confidence that she would have found “a way to zap those assholes [Russia].”

“I’ll use all my connections, I’ll raise the whole world – as soon as I’m able to – in order to make sure.. Bugger!.. not even scorched earth won’t remain where Russia stands,” she promised.

Despite being incapacitated by spinal disc hernia the ex-PM stressed she’s ready to “grab a machine gun, you know what I’m saying, and go shoot this bastard [Putin] in the forehead.”

Full recording below:

Interpreting Putin’s Decision | The Diplomat

Interpreting Putin’s Decision | The Diplomat.

Interpreting Putin’s Decision
Image Credit: Wikimedia Commons

Interpreting Putin’s Decision

From Western weakness to its Eurasian Union project, a look at the factors that drove the annexation of Crimea.

By Wei Zongyou
March 23, 2014

People around the world were astounded by Vladimir Putin’s rapid decision to annex Crimea in response to the latter’s referendum to secede from Ukraine and join Russia, which Kiev and the West view as illegal. The decision also drew worldwide criticism and vehement condemnation by the West and Ukraine, and triggered a second wave of economic sanctions from the United States, and soon afterwards Europe. Relations between Russia and the West are at their chilliest since the end of the Cold War.

So why has Putin risked Russia’s economic welfare and political space to swallow Crimea, push Ukraine out, and alienate the entire Western world? Is Putin “in another world” as German Chancellor Angela Merkel claimed he is? In my opinion, there are at least two considerations behind Putin’s decision.

The first is the realist, geo-political consideration. In Putin’s world, since the collapse of the former Soviet Union, Russia has lost nearly one fourth of its geography, one half of its population, and more than half of its GDP. Among the “lost” territories are those that are strategically important or militarily advanced, such as Ukraine and the Baltic states. With the eastward expansion of NATO, and the integration of former Soviet satellite states and republics in Eastern Europe and the Baltics into Europe, the traditional buffer zone between Russia and the West is increasingly squeezed and Russia’s space for strategic maneuvering becomes smaller with each year. When Russia craved for entry into the West, this might not have been particularly worrisome or embarrassing for Moscow. But since Russian leaders decided long ago that joining the West was neither particularly helpful to Russia’s political standing nor particularly attractive in terms of economic gains, it has begun to view the expansion of the West at its own strategic expense as both ill-intentioned and threatening.

Ukraine holds a unique position in Russia’s geo-strategic consideration. First, it is crucial territory in the passage of Russia’s oil exports to Europe. Each year more than one third of the oil Russia ships to Europe travels via the Ukraine pipeline. Second, Crimea gives Russia’s Black Sea Fleet access to the Black Sea. If the pro-West Kiev government were to have decided to end its lease to the Russian naval base in Crimea, Russia would have lost its strategic gateway to the Black Sea and the Mediterranean Sea. Third, Ukraine is deemed the most crucial member of Russia’s Eurasia Union project, an economic and strategic plan to closely connect Russia, Belarus, Ukraine, and Central Asia. If all goes according to plan, this union will integrate these former Soviet republics and now independent countries economically, politically, and diplomatically with Russia, and go some way to restoring the glory of the Soviet empire at its peak. The “coup d’état” in Kiev and the political orientation of the new government put all these things in jeopardy, if Russia remains disinterested and passive.

The second consideration is more psychological in nature. Following the end of Cold War, embracing the West was the first priority of Russian foreign policy. But to Moscow’s dismay, it found that the West still harbored strong reservations and considerable distrust. Years spent courting and wooing provided little of what Russia craved most: equal membership in the West and economic prosperity. Though Russia became part of the exclusive G8, it never enjoyed the full status and say of the other seven members, always remaining an “other.” Economically, the shock remedy proposed by the West and faithfully implemented by Boris Yeltsin didn’t bring the expected economic benefit. Instead, it took Russia’s economy into freefall, leaving the average Russian worse off than before. Russia’s look West ended in humiliation and disaster.

It was Putin who saved Russia from its miserable condition. He readjusted both Russia’s domestic and foreign policies, and distanced the country from the West, instead seeking opportunities to resurrect past Soviet glories. As the Russian economy improved, the West found that its time was passing. The 2008 economic crisis hit the U.S. and Europe hard and they found themselves more reliant on the emerging powers, Russia included. It is Britain, France, and even Germany who are now busy appealing to Russian oil barons to buy more and invest more. The balance of power between Russia and the West has shifted. The small war in Georgia in the summer of 2008 only strengthened this trend and the response from the West impressed Russia greatly: Europe is rotten and the U.S. has become too weak to lead. Then came the Arab Spring and the Syria crisis. In the former case, the U.S. “led from behind,” and in the latter it was Russia that decided the course of the Syria civil war.

Russians, and especially Putin learned a hard lesson from the post-Cold War romance with the West: For all the talk of democracy and freedom, the fact remains that the strong dictate to the weak.

With Europe rotten and United States weakened, a resurgent and confident Russia will definitely not let a geo-strategically important former Soviet republic fall entirely into the West’s camp. By annexing Crimea, Putin not only secured Russia’s naval base and its strategic gateway to the Black Sea, he also sent a powerful message to Ukraine and the West: Ignore Russia’s legitimate strategic concerns at your own peril.

Wei Zongyou, is Professor and Vice Dean of the Institute of International and Diplomatic Affairs, Shanghai International Studies University, Shanghai, China. His main research interests cover Sino-U.S. Relations, american foreign policy, humanitarian intervention and R2P

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