Russia-Ukraine – Energy Conflict

Author: John Pino

The transportation of energy, such as oil and natural gas, is a source of contention between Russia and Ukraine. The energy relationship between Russia and Ukraine affects all states in the region, both directly and indirectly. However, the Russo-Ukrainian energy issue is a symptom, not a cause, of the tensions that stem from several underlying problems.

Resource Scarcity and Soft Power Shifts

Natural resource scarcity in Ukraine augments Russian soft power (i.e. political power or corporate influence with energy transport). This can embolden the Russian government to initiate aggressive economic policies. These policies cause political tension between Russia, Ukraine, and, subsequently, the European Union.1 The Russian gas company Gazprom dictates which transnational companies it does business with. Gazprom’s counterpart in Ukraine is RosUkrEnergo, which it does not count as a reliable associate.2 Some Ukrainian politicians have suspected Russia of imperialistic motives since the 1990s.3 Economic policies continue to be a touchy subject in former Soviet republics. Energy distribution causes consumer-countries (re: Ukraine), rightly or wrongly, constantly to suspect Russia of socioeconomic imperialism.4

External Demographic Pressures and Nationalism

Demographic pressures abound in Russia. The birth rate is negative and the population is shrinking yearly. It has only just stabilized.5 This demographic crisis exacerbates a so-called Russian national identity crisis. The identity crisis, as some scholars contend, arises from former Soviet citizens of differing ethnic origins now living in wholly different countries. It is the difference between being citizens of a country (“civic” Russians) and people of a nation (“ethnic” Russians).6 Some experts hold that the manifestation of nationalism (“ethnic”) versus patriotism (“civic”) aggravates the identity crisis.7 For example, some Russians living in eastern Ukraine still think of themselves as Russian, not Ukrainian. Nationalism and patriotism became blurred in this situation, because Russians living in Ukraine (Russo-Ukrainians) feel nationalistically Russian—the mother-nationality of the USSR.8 They do not identify themselves as Ukrainian, because they have no incentive to (i.e., the Ukrainian government is not the preferred institution of governance for this group). This introduces problems (i.e., nationalism) into Ukrainian politics. The clash between Russophile holdouts and equally antagonistic ethno-centric Ukrainians underscores current Ukrainian politics.9 The Russian government attempts to influence Ukraine when Moscow enacts any nationalistic (i.e., anti-Ukrainian) policies.10 Energy policy often falls into this category.

Internal Demographic Pressures and Socio-Economic Tensions

Even within Russia itself, there are numerous ethnic groups—such as Tatars and Yakuts, among others—that do not define themselves as “Russian.” This can produce social friction within domestic politics and economics if perceived resource exploitation occurs. For example, Yakutia is the most mineral-rich Russian region (regarding gold, diamonds, and natural gas).11 If the government uses the majority of these resource dividends on infrastructure in European Russia, Yakutia will think this unfair. The socio-economic and geographical bias creates social friction.12

Even though the former Soviet socialist republics are no longer in a centralized political union, Russia maintains close relationships with each. In the former USSR, the republics were interdependent regarding energy, and Russia plans on keeping it that way today.13 Russia is active in its “near abroad,” partly because it worries about its own energy security. It sees attempts to subvert its energy monopolies as a direct threat to its national security.14 This may cause tension with its neighbors. For example, Ukraine became extremely apprehensive when Russia invaded Georgia and occupied the enclaves of South Ossetia and Abkhazia15 ; this occupation continues today. When Russia issued Russian passports to former Soviet citizens living outside Russia, this caused some Ukrainian politicians to think that Russia’s idea of its rightful territory extends beyond its borders.16 Such an assessment is reinforced when the Russian government actively backs political separatist movements by ethnic minorities in these now sovereign states (i.e., Ossetians in Georgia). Furthermore, European governments might construe Russian energy policies as aggressive. Indeed, the diversification of energy routes to northern and southern Europe (circumventing Ukraine) causes concern that Russia is determined to use energy as political leverage, regardless of Ukrainian acquiescence.17

Organized Crime

With such a large land border encompassing so many different groups, Russia remains a hotbed of organized crime and corruption. Since the rise of the oligarchs during the ‘90s, corruption continues to be pervasive.18 Russian leaders, up until President Dmitri Medvedev’s 2008 election, tacitly permitted criminal operations and activities, because of the revenue that these networks brought into the country.19 The Putin government justified government takeovers of Russian companies by alleging that these companies were participating in organized crime. For instance, the Kremlin acted as though Mikhail Khodorkovsky, former owner of Yukos, threatened Russia’s security by relinquishing control of valuable petroleum reserves to Western stakeholders.20 The Kremlin subsequently declared Yukos bankrupt.

Crime operations cross borders that were not present 20 years ago. Some in the Ukrainian government are anxious about the connections that Russian-sponsored crime has in Ukraine’s economy.21 For example, Semyon Mogilevich (although born in Ukraine) was a major Russian organized crime figure involved in the Ukrainian oil and natural gas sectors.22 He was an alleged partner in RosUkrEnergo and used the company as a front to sell oil and natural gas illegally in Ukraine.23 He is also wanted by the FBI for investment fraud in Canada.24 Mogilevich is an example of how Russian white-collar, organized crime transcends industries and borders, especially between Russia and Ukraine.

Conclusion

In spite of the improvements in the Russia-Ukraine relationship, energy production and transport remain major sources of potential antagonism between the two countries.

For example, if Ukraine wants to break free of attempts at perceived Russian economic control, it must reform itself from within. At present, the Yanukovich government claims that it is implementing reforms in the gas-trading industry, but others in Ukraine (i.e., opposition leader Yulia Tymoshenko) disagree.25 Playing by Russia’s rules only propagates the political paternalism and corruption that buttress energy politics. Ukraine should strive to focus more on political efficiency and less on ideology. Trying to play Russia against the E.U. and vice versa does nothing to help its relationship with either entity. Ukraine remains a major, common link between Russia and the E.U. when it comes to energy transport and will be held responsible by both for any problems that arise in energy supply.

For now, Russia has endemic Cold War paradigms present in its governmental structure. The Communist Party is the second most popular party in modern Russia; additionally, former KGB agents hold some of the highest places in Russia’s current government and control much of the energy sector. Moreover, the two countries have high levels of governmental corruption. These factors inhibit the development and maintenance of a consistent energy policy between the two – something that is not only in their own interest but also in the interest of the European Union.

 

  1. Lucian, Kim and Torrey Clark. “Gazprom Cuts Gas Shipments to Ukraine.” The International Herald Tribune. March 3, 2008. <http://www.iht.com/articles/2008/03/03/business/gazprom.php>
  2. Ibid.
  3. Donaldson, Robert and Joseph Nogee. The Foreign Policy of Russia: Changing Systems, Enduring Interests.
  4. Ibid.
  5. BBC News. “Russia sees first population growth in 15 years.” January 19, 2010. http://news.bbc.co.uk/2/hi/8468185.stm
  6. Tsygankov, Andrei P., Russia’s Foreign Policy: Change and Continuity in National Identity. Oxford, UK. Rowman and Littlefield Publishers, Inc. 2006. 76-77.
  7. Szporluk, Roman. Russia, Ukraine, and the Breakup of the Soviet Union. Stanford, CA. Hoover Institution Press. 2000. 73.
  8. Ibid.
  9. Motyl, Alexander J. Dilemmas of Independence: Ukraine After Totalitarianism. New York, NY. Council on Foreign Relations Press. 1993. 10.
  10. Balmaceda, Margarita M. On the Edge: Ukrainian-Central European-Russian Security Triangle. Budapest, Hungary. Central European University Press. 2000. 8.
  11. Minorities at Risk Project, Assessment for Yakut in Russia, 31 December 2003. accessed 29 January 2010. http://www.unhcr.org/refworld/docid/469f3acac.html. accessed 29 January 2010.
  12. Ibid.
  13. Donaldson, Robert H and Nogee, Joseph L. The Foreign Policy of Russia: Changing Systems, Enduring Interests. Armonk, NY. M.E. Sharpe, Inc. 2005. 192.
  14. Mankoff, Jeffrey. Russian Foreign Policy: The Return of Great Power Politics. Lanham, MD. Rowman and Littlefield Publishers, Inc. 2009. 309.
  15. “Ukraine Government collapses over Georgia War.” Times Online. September 17, 2008. Accessed January 29, 2010. http://www.timesonline.co.uk/tol/news/world/europe/article4765539.ece.
  16. Ibid.
  17. Mankoff. 179.
  18. Organization and Structure: Russian Organized Crime. Accessed January 29, 2010. http://www.fas.org/irp/world/para/docs/rusorg3.htm.
  19. Organization and Structure: Russian Organized Crime. Accessed January 29, 2010. http://www.fas.org/irp/world/para/docs/rusorg3.htm.
  20. Donaldson. 177.
  21. Shelley, Louise I. “Organized Crime and Corruption in Ukraine: Impediments to the Development of a Free Market Economy.” Taken from: Demokratizatsiya, by High Beam Research. September 22, 1998. Accessed January 29, 2010. http://www.highbeam.com/doc/1G1-53588053.html.
  22. Buribayev, Aydar. “Russia Frees Crime Boss Wanted by U.S.” Reuters. July 27, 2009. Accessed on January 29, 2010. http://www.reuters.com/article/idUSTRE56Q0JT20090727.
  23. FBI. October 2009. Accessed January 29, 2010. http://www.fbi.gov/wanted/topten/fugitives/mogilevich_s.htm.
  24. Ibid.
  25. “Viktor Iudorum.” The Economist. September 16, 2010. Accessed on October 4, 2010. http://www.economist.com/node/17046645.