New Spheres of Influence: Russia and the West

Russia has been depicted by the West as backward looking.  Indeed, Moscow’s unique ‘sovereign democracy’ lacks the democratic legitimacy and credibility both at home and abroad to be earnestly accepted by Western governments as a progressive democratic government, and over the past twelve years Russia’s economy has been meticulously re-positioned under the heavy hand of the state.  However, as the West views Russia as backsliding into its defunct authoritarian, state-centered model, it is taking its eyes off of the trends that are defining the emerging “new world order.”

Russia’s re-emergence in the past decade has relied on leveraging its energy resources to rebuild the state, both in terms of domestic economic growth and bolstering its international relevance. Moscow’s state-centered approach to managing its strategic energy resources has elicited criticism from the West.  However, Russia’s energy supremacy is durable, at least from a resource base: when accounting for both oil and natural gas, Russia exports more hydrocarbons to world markets than Saudi Arabia and possesses by far the world’s largest proven reserves of natural gas – roughly 24%.  As natural gas becomes an increasingly important clean-burning energy and viable substitute for coal, oil and especially nuclear power sources, Moscow has rapidly re-emerged as an influential and assertive world player.

Just ask Europe. In 2006 and again in 2009, disputes over transit fees for natural gas between Russia and Ukraine rendered several European industries and households cut-off from natural gas supplies in the midst of winter. Backed by Washington, Europe subsequently threw its political and economic weight behind several natural gas pipeline projects designed to reduce European energy dependency on Russia.  However, by and large these Western led projects failed to materialize, often in embarrassing manner, while competing Russian-led projects prevailed. This further exposed Europe’s weakness and vulnerability to energy-rich Russia, as Europe has time and again proven incapable of breaking its energy dependency on Moscow.

Nevertheless, the West clings to its conventional thinking that the petro-state model employed by Moscow is a relic of the past, and is incompatible with today’s liberal world. In short, it is destined to self-destruct.  However, the reality is that state-owned National Oil Company’s (NOCs) such as Russia’s Gazprom and China’s CNOOC and Sinopec now control the vast majority of the world’s energy resources, and their dominance over Western Independent Oil Companies (IOCs) is only growing.  Russia’s Gazprom, for example, has proven far more efficient in recent years than Western firms at both procuring natural resources and delivering them to world markets. As a result, Gazprom’s economic and Moscow’s political influence in Europe has grown to uncomfortable levels, prompting the EU to pass half-baked legislation aimed at obstructing Gazprom’s dominant position in Europe. However, these measures suggest that the EU is playing defense rather than offense while Russia’s amasses geopolitical influence and moves further into Europe’s back yard.

Thus, as the West looks at Russia and accuses it of backsliding to an era-past – it may want to focus more on the realities of the era ahead. State capitalism is growing, and liberal democracy is waning.  As the shale gas boom in the United States is stifled by political infighting and special interests groups that have little to do with democracy, Russia is rebuilding a superpower on its natural gas reserves.  If the West continues to point its finger in the wrong direction, it risks soon be absorbed by Russia’s growing influence.