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The root cause of the Ukraine conflict

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THE Russian Defence ministry on Thursday morning announced that it had taken on Ukraine’s air defences and its Air Force with a series of precision attacks, after airports and runways across the country were rocked by explosions. 

The Russian armed forces launched the much media-speculated offensive against Ukraine on Thursday morning on the orders of President Vladimir Putin, who said the goal of the operation was to demilitarise and “de-Nazify” Ukraine.

The Russian leader claimed that military action was necessary to stop Ukrainian attacks on the two breakaway regions of Donetsk and Lugansk, which Moscow recognised as sovereign states. 

Last Monday, Putin had claimed that Russia could come under attack by the Ukrainian far right government, unless their influence in the country is diminished. He accused Western nations of arming Kyiv against Russia.

The developments of Thursday morning, however grim and disturbing they may sound or look, it is very important that we turn the clock back to understand the Big Game behind this new conflict Eastern Europe finds itself embroiled in. 

Russia – an emerging energy giant  Post collapse of the Union of Soviet Socialist Republics (USSR) in the early 1990s and thereafter, many years of economic struggle and internal strife, the leadership of President Putin finally ensured that Russia is now seen as an energy giant, becoming the world’s third-largest producer of oil and second-largest producer of natural gas.

Russia is understood to have used energy revenue to accumulate some US$630 billion in foreign exchange reserves. For example, in the year 2021 Russia balanced its budget with a relatively low oil price at US$45 per barrel against an average of nearly US$70 a barrel. 

In the last few months, both print and electronic media all over the world had started to speculate about every likelihood of Russian aggression taking place in Ukraine.

The United States (US) also started to convey the message that the invasion of Ukraine by Russia was imminent. Thus, the administration of US President Joe Biden began insisting that its threat of “severe economic consequences” would deter Russia from invading Ukraine.

During President Biden’s meeting with the German Chancellor on 7 February 2022, the US and its allies were seen stressing that they were united on the consequences should Russia actually invade Ukraine. 

However, there was also a feeling that anti-US/UK internal politics of the European Union (EU) as well as its symbiotic relationship with Russia, may undercut this proclaimed solidarity. Number of Central European countries and Germany in particular, who are largely dependent on Russia for its cheap energy needs and, in turn, competitive manufacturing exports could, though silently, be reluctant to take sides with the US sanctions on Russia. 

Europe’s over-reliance on Russia’s energy 

While Russia depends on revenue from Europe, the latter depends on the supply of energy from Russia. Overall, Russia was supplying about one-third of European natural gas consumption, used for heating in the winter as well as electricity generation and industrial production. The EU also depends on Russia for more than one-quarter of its crude oil imports. 

Russia had, thus, turned out as the single largest energy source for this bloc of nations. 

Due to this inter-dependence, imposing tougher sanctions on Russia is going to make a serious dent in its energy supplies and thus eventually the dependent European countries will be the sufferers. 

In fact, a few EU states are far more dependent than others. While Portugal and Spain use little Russian energy, Germany, the largest European economy, was getting more than half of its natural gas and over 30% of its crude oil supplies from Russia. France gets most of its electricity from nuclear power; but relied on imports from Russia to meet its fossil fuel needs. 

Further, plans of Germany and other countries to phase out nuclear and coal power in times ahead would have only further increased this dependence on Russia for energy supply.

US bid to contain Russian pipeline projects 

When one looks back in time, it becomes evident that such a dependence on Russian energy has not happened overnight. The US has been speculating for a long time about Russian willingness to use trade to tie the hands of other countries — a concern dating back to the early days of the Cold War.

Post the Second World War, both the USSR and the US started to lock horns while trying to expand their hegemony to influence countries and get them into their fold who were not formally aligned with either superpower. 

The Soviet Union began to extend favourable trade deals and offered other economic assistance to not only Warsaw Pact countries, but also reached out to other countries such as Finland, the United Arab Emirates and India in a manner that created sustained dependence on Soviet Union. Thus, as the USSR began developing oil and gas pipelines to Europe, the resultant increasing energy dependence on it by nations in the region became a matter of great concern for the US.

Western Europe imported 6% of its oil only from the Soviet Union in the 1960s. The new planned oil pipeline connecting the Russian far east and going through several European countries such as Ukraine and Poland, finally terminating in Germany, was bound to increase the supplies manifold. 

This increased dependence was to definitely give significant coercive power to the Soviet Union. Thus, these changing dynamics raised strategic concerns and rang the alarm bells in Washington.

The Kennedy administration in 1963 had attempted to stall construction of the Druzhba or “Friendship,” Oil Pipeline by imposing an embargo on the wide-diameter pipe to Soviet-aligned countries. As this embargo alone was not enough to stop the project, the US pressured the allies, especially West Germany, a major pipe exporter to join hands. Though Britain refused to toe the US line, somehow West Germany reluctantly agreed, which ensured a partial Nato embargo. 

However, notwithstanding this partial embargo, the pipeline finally got completed one year later. 

Later, after a span of nearly two decades, interestingly, the Reagan administration too faced a similar dilemma. In 1981, when the Soviet Union commenced building a natural gas pipeline from Siberia going into Western Europe, the US once again tried to persuade the European allies such as France and Germany to join its embargo on not only providing pipeline equipment for the project, but financing as well. 

But when all these countries refused to comply with the US dictates, it then responded with sanctions to dissuade the European companies from providing money or equipment for the project. However, this arbitrary action by the US led to strained relationships among the Western nations, sowing seeds of division between the US and Europe. This compelled the US to retreat and lift the sanctions imposed within few months of its imposition. 

The pipeline eventually got completed three years later in 1984.

Energy security – Foreign policy tool 

Unlike his predecessors who refrained from shutting off energy exports, President Putin smartly merged his economic policy with geopolitical objectives.

For example, Ukraine continued to receive the same heavily subsidised gas shipments from Russia in the early 2000s as it did when it was part of the Soviet Union a decade earlier. 

However, when the “Orange Revolution” near the end of 2004 led to the ouster of a pro-Russian leader, replacing him with one who sought closer ties with the West, the Russian Gas corporation, Gazprom, immediately demanded Ukraine to pay full market rates for its gas.

When Ukraine refused to comply, Russia restricted the flow of gas through the pipelines, leaving just enough to fulfil its contracts with other countries in Western Europe.

This move by Russia, besides putting economic pressure on the pro-Western government in Kyiv, was also used as the basis for claims that Ukraine was an unreliable gas transit country. This narrative thus helped build support for a new pipeline named Nord Stream which directly channelled gas from Russia to Germany.

Nord Stream pipeline that was commissioned in 2011 not only inflicted an annual loss of US$720 million in transit fees on Ukraine, but also significantly increased Germany’s dependence on Russian energy supply. By 2020, Russia began to supply Germany an estimated 75% of its natural gas, up from 35% in 2015. 

Natural gas is widely required in Germany to run the power industry, meet with heating requirements and to generate electricity for extensive use in the country. 

The Nord Stream pipeline carries natural gas from Northwest Russia through the Baltic Sea directly to Germany with the pipeline handling one-third of all Russian gas exports  Ukraine – US stops Nord Stream 2 

Now Nord Stream 2, which is an expansion of the original Nord Stream pipeline, was approved by the German government in 2018 and its construction was completed in September 2021. Its launch, however, faced regulatory delays due to pressure from the US on European politicians.

Once functional, Nord Stream 2 would have ensured higher levels of export of Russia’s natural gas to Germany bypassing Ukraine and other current countries through which the pipelines currently transit. This had added to US worries that Russia would perhaps no longer be held hostage by pro-West countries such as Poland and Ukraine of Eastern Europe for its energy exports. 

In December 2021, post commencement of the present crisis in Ukraine, Europe once again tasted the glimpses of potential consequences when Russia stopped selling additional gas as it had in the past. The very next month, the International Energy Agency was quick to accuse Russia of trying to destabilise European energy security. 

With Nord Stream 2 becoming functional, the main worry of the two transit countries was that that it would deprive them of billions of dollars in annual transit fees, resulting in heavy losses in the annual revenue. 

It is interesting to note that in 2019, the total demand of the 27 members of the EU for natural gas peaked at 390 billion cubic metres (bcm). In the same year, Russian gas supplies to these 27 EU members also peaked at 168 bcm or say 43% of the total EU natural gas consumption. However, due to the strong EU climate policy, the demand is unlikely to reach that level again. 

In 2021, the anticipated Russian natural gas exports to the EU stood at 135 bcm. With Nord Stream 2 getting functional, it was estimated that out of the annual Russian gas supply of 135 bcm, nearly 110 bcm, that is 81%, would have gone through both the Nord Stream pipelines.

Window of opportunity for US and Ukraine 

The operationalisation of the pipeline in Nord Stream2, thus, would have been devastating for Ukraine. In fact, to summarise, Nord Stream 2 is seen as Russia’s most daring attempt to break up the EU. Russia has always been making efforts to form an alliance with Germany and Austria as well as with the Netherlands and Belgium against Eastern and Northern Europe.

Germany’s minister of Economy and Energy had made a very clear statement in October 2015 that the Nord Stream 2 project was in their interest and they would continue to pursue it to finality. This reported remark, coming just weeks after the announcement of Nord Stream 2 in mid-2015, did not leave any doubt that Germany considered it as its geopolitical project. Germany stood to gain US$2 billion as transit fees every year. 

In January this year alone, while in the middle of this whole crisis, Russia signed energy agreements with Hungary as well to further incentivised Germany and Austria with potentially lucrative transit fees which could come from such an agreement between Russia and Hungary.

With the completion of the construction of Nord Stream 2 in September 2021, the US realised that it had only a small window of opportunity before the pipeline got operationalised and it loses the EU’s energy markets completely to Russian influence. Russia would no longer need Ukrainian transit pipelines to meet nearly 80% of its European energy supply obligations. 

And thus, America would lose a trump card it had held since 2014 when the Obama administration staged a coup d’état and installed a pro-West far-right militia-run regime in Kyiv in a completely unconstitutional election process. 

The critics of Nord Stream 2 within EU politics said that Moscow would use the pipeline to arm-twist Europe in order to meet Russian geo-political goals. They expressed concerns that the project had not been ring-fenced by German and Russian partners from geo-political concerns.

Thus, if the US or its artificially installed regime in Kyiv made any bold manoeuvres against Russia, then Moscow would find itself trapped and unable to shut off the EU’s gas exports as it will then give anti-Russian politicians within the EU an excuse to completely shelve the Nord Stream 2 project. Thus, Russia is without any leverage in this situation as it desperately needed the completed Nord Stream 2.

Reasons behind ongoing manoeuvres 

As to what these “bold manoeuvres” may be, one can only make a guess from the actions of Russia and the US rather than their words. With Moscow declaring separatist regions of Luhansk and Donetsk as being recognised as independent countries, Russia believes that Kyiv has been planning to use this window of opportunity to mount a military offensive to re-take these separatist regions and unilaterally try to break the agreements made under the Minsk Accord.

Russian troops thus moved into the Donbass region on 24 February to deter Kyiv from launching an offensive against the breakaway states. The Russian military also carried out a series of precision strikes, taking out Ukrainian military infrastructure and air defence systems.

Russia may have finally decided to take this drastic step since the US has already responded to the Russian declaration of 22 February 2022 by pressuring their German counterparts to stall the operationalisation process of the Nord Stream 2 project. 

Let us not be fooled by all the war and invasion rhetoric in the media, as this was the goal of the US all along. We need to understand that the crisis between Russia and Ukraine is a manufactured one to sabotage ties between Russia and Germany, particularly the lucrative energy partnership which had been blossoming between the two for the past couple of decades.

The goal behind the media propaganda blitz by the Western media has been to essentially isolate and vilify Russia on the international stage, stop it from building deeper ties with Europe, paint it as an out-of-control rogue state and continue to expand the presence of Nato eastwards, closer and closer to Russian borders.

Besides the above-mentioned goals, the pressure created through the rhetoric of Western media and arm twisting from the US has finally succeeded in mustering enough political will within the EU to stall the progress on Nord stream 2 project altogether. 

So, it seems the Americans have come out on top, and have successfully managed to achieve their objective of reducing the European energy market’s dependence on Russian oil and gas, even when it could turn out to be a costly option for European countries, especially Germany. – The Economic Times (India).

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