Europe

By Ariel Cohen

Despite the raging economic crisis and collapse of oil prices, Russiacontinues to push its global diplomatic offensive, which has overt anti-American overtones. At the end of November, President Dmitry Medvedev paid a week-long visit to Latin America  The trip demonstratedRussia’s growing strategic reach and political clout in a region considered a U.S. sphere of influence.

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WASHINGTON, Dec. 12 (UPI) -- Russian generals have long felt they should be the ones to set military policy. They have trouble accepting civilian authority -- be it from President Dmitry Medvedev or Defense Minister Anatoly Serdyukov. They derisively describe the minister as a former furniture salesman and tax man, yet Serdyukov knows where the brass keep their money.

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By Ariel Cohen

WASHINGTON, Dec. 1 (UPI) -- The Arctic Ocean is quickly re-emerging as a strategic area where vital U.S. interests are at stake. The geopolitical and geo-economic importance of the arctic region is rising rapidly, and its mineral wealth will likely transform the region into a booming economic frontier in the 21st century.

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By Ariel Cohen

WASHINGTON, Dec. 11 (UPI) -- Implementing military reform is a challenging task for Russian generals. Understanding what’s going on is daunting for outside observers. Moscow’s military leaders seem to think that the best way to proceed is to keep their dirty laundry out of public view.

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By Ariel Cohen

WASHINGTON, Nov. 21 (UPI) -- The resumption of Cold War-style patrols and increased naval presence in the Arctic Ocean by the Russian navy and air force is in keeping with the Russian Federation’s more forward posture of recent years.

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By Ariel Cohen

The day after Barack Obama won the 2008 U.S. presidential election, Russian President Dmitry Medvedev announced the first real test for the U.S. President-elect. In his State of the Federation speech, Medvedev threatened to station Iskander short-range nuclear-capable missiles in the Kaliningrad exclave if the U.S. proceeds with deploying anti-missile defense systems in Poland and the Czech Republic.

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By Ariel Cohen and Lajos Szaszdi

WASHINGTON, Nov. 6 (UPI) -- The arctic is quickly re-emerging as a strategic area where vital U.S. interests are at stake. The geopolitical and geo-economic importance of the arctic region is rising rapidly, and its mineral wealth will likely transform the region into a booming economic frontier in the 21st century.

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By Ariel Cohen

Until Russia can revitalize its naval forces to a much larger degree, its deployments to the Mediterranean contribute more to symbolic and diplomatic activity than being a viable military counterweight to NATO in the region. Yet the Black Sea Fleet in the Med is a significant show of force and a diplomatic irritant and a potential threat to shipping in the Suez Canal and to America’s ally Israel.

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By Ariel Cohen

The fifth annual Valdai Club meeting took place against the backdrop of the conflict in the Caucasus and Russia’s recognition of the secessionist republics Abkhazia and South Ossetia. The Valdai Club, of which this author is a member, brings together policy experts and journalists fromRussia and the world for discussions with the Russian leadership.

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Ariel Cohen

On Aug. 8, Russia decided to rewrite the rules of post-World War II European security. It repudiated the Helsinki Pact of 1975, which recognized the sanctity of borders in Europe, and violated the sovereignty and territorial integrity of NATO aspirant Georgia, whose troops had attacked South Ossetia the day before. In the process, Russia also tore up its own peacekeeping mandate in South Ossetia and Abkhazia.

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By Ariel Cohen

While all the facts of last week’s Russian-Georgian war are not clear, enough information--including eyewitness accounts--has been reported in the media to draw initial conclusions about the performance of Russian military forces and the implications of these operations for U.S. defense policies. Unquestionably, the war is a reminder that "conventional" military operations as an instrument of modern combat are far from obsolete.

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By Ariel Cohen

Moscow remains deaf to pleas from Washington and European capitals to cease aggression against its neighbor, Georgia. Last week, as the Olympic Games opened, the tragic and ominous conflict between Georgia and Russia erupted. On Thursday, August 7, South Ossetian separatists, supported by Moscow, escalated their machine gun and mortar fire attacks against neighboring Georgian villages.

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By Ariel Cohen

Alexander Solzhenitsyn (1918–2008) was a titan of 20th century Russian literature and politics. He survived the Stalinist purges, World War II, eight years in the Gulag, Communist denunciation, and even a battle with cancer. After spending 18 years exiled in America, he made a triumphant return to his homeland.

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By Ariel Cohen

July 2008 will mark a momentous month in the history of Russian business. This is when Sergey Chemezov, a close associate of Prime Minister Vladimir Putin, consolidated control over 426 additional enterprises that are now a part of the Russian Technologies (Rostechnologii) empire. A global, state-owned Russian weapons-and-metals holding has been born.

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By Ariel Cohen

In the last few days, Moscow has beefed up its "peacekeeping force" in the breakaway Abkhazia on the Black Sea, claiming it is protecting Russian citizens, who are the majority population of Abkhazia. Furthermore, Russian troops are amassing on the de-facto Abkhazia-Georgia border. The Caucasus may be on the brink of a war. At the same time, Russia has accused Georgia of planning to invade Abkhazia, accusations that sound distinctly hollow under the circumstances.

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By Ariel Cohen‍

Russian President Vladimir Putin began a two-day visit to Libya on April 16, the first by a Russian president to the formerly shunned country. The event was hailed by Libya’s veteran leader Moammar Gadhafi as "historic, strategic and very important." Gadhafi further stated "…given that we are both producers of gas and oil, we will work together to defend our interests."

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By Ariel Cohen

This coming weekend, Presidents George W. Bush and Vladimir Putin will meet for their final summit, to be held in the Russian resort of Sochi on the Black Sea at Putin’s invitation. This will mark the end of an era in a complicated relationship. The question is: Will the two leaders leave the scene while U.S.-Russian relations are at their lowest point since the Cold War, or will they attempt to rescue them?

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By Ariel Cohen

Central Asia is a major area of concern for US intelligence agencies, according to an annual threat assessment presented recently by Director of National Intelligence Michael McConnell.

McConnell discussed the Annual Threat Assessment -- a document representing the consensus view of 16 US intelligence agencies that covers all global security threats facing Washington -- with US senators on February 5. While Iraq remains an enduring source of concern, the reviving Islamic radical/terrorist threat in Afghanistan and in the tribal areas of Pakistan topped the list of security worries.

"We have seen an influx of new Western recruits into the tribal areas since mid-2006," McConnell told members of the Senate Intelligence Committee. "We assess that al Qaeda’s homeland plotting is likely to continue to focus on prominent political, economic and infrastructure targets designed to produce mass casualties, visually dramatic destruction, significant economic aftershocks, and/or fear among the population."

The Assessment warns that Islamic activism may grow in Central Asia as a result of mounting social and economic discontent. In Uzbekistan, a weaker economy and rising prices for commodities are a potential source of trouble for President Islam Karimov’s authoritarian-minded administration. While Kyrgyzstan and Tajikistan remain stable, Turkmenistan is beginning to open up after years of self-imposed isolation, and it has made improvements in human rights. Yet, unfortunately the Assessment disregards both regime fragility and growing external meddling in the region.

On Russia, the Threat Assessment drops plentiful hints that US-Russian relations stand to become more confrontational in the coming year. It mentions the Kremlin’s aims to dominate the main oil and gas land distribution networks to Europe and East Asia. Energy has become an instrument of Russian power in terms of its foreign policy and international economic relations, the threat assessment states.

The Report mentions the gradual resurgence of Russia’s military forces in terms of better training, more units with higher rates of readiness, military exercises conducted more frequently, and a higher number of strategic bomber patrols over the Arctic, Atlantic, and Pacific Oceans.

The Assessment does not dwell at length on Russia’s aspirations to alter the global economic architecture, and to do away with the Western-dominated post-Bretton Woods system. Russian leader Vladimir Putin called for just that in the 2007 St. Petersburg economic summit. Russia, Iran, Venezuela and other energy producers are moving away from the US dollar as the principal currency of settling energy accounts.

Meanwhile, the Threat Assessment views Iran with caution, in particular the country’s nuclear program. In a report released February 22, the International Atomic Energy Agency expressed concern about Iran’s ability to build nuclear weapons. The Threat Assessment states that Iran is developing and deploying longer range ballistic missiles with the capability to carry a nuclear warhead. The report does not mention, however, the close links between Iran and Russia regarding the development of the Iranian ballistic missile program. According to the London Daily Telegraph, Russia since 2003 has been supplying ballistic missile technology, including missile production capabilities, and technical assistance by Russian engineers.

Iran is also continuing efforts to enhance its ability to enrich uranium, ostensibly for civilian purposes but with the potential for making nuclear weapons. McConnell has reported that Iran may achieve the technical capability to produce enough highly enriched uranium (HEU) for a nuclear weapon within a few years.

While the intelligence community is certain that Iran stopped in 2003 its secret work to design a nuclear weapon and to enrich uranium for military purposes, it can’t be certain if Iran has restarted these activities. But there is no doubt that Iran has the scientific know-how, the technical capacity, and the industrial capability to develop nuclear weapons at some future point, McConnell said. A lot of this know-how came from Russia.

Moscow, for example, is building for Iran a $1-billion nuclear reactor in Bushehr. The US State Department has accused Iran of using the Bushehr project as a cover for a weapons program. There are also media reports that Iran is either negotiating the purchase of, or has already acquired S-300 long-range surface-to-air (SAM) missile systems. These SAM systems would be deployed to defend the Bushehr nuclear power plant and other key sites like the Natanz nuclear enrichment facility, analysts believe.

Iran also has a chemical weapons program, and it is engaged in research on biological weapons. Teheran’s development of a ballistic missile arsenal and its acquisition of anti-ship cruise missiles are intended to serve as a strategic deterrent in the Persian Gulf, especially at the Strait of Hormuz. Iran would be capable of closing the Strait, and thereby cause considerable disruption to oil exports, in the event of a conflict. In addition, US bases and naval forces in the region would face a serious tactical threat. Iran’s arsenal could also be used to intimidate its neighbors into "withholding support for US policy."

Tehran’s development of longer-range ballistic missiles with the capacity to reach Europe might also to deter NATO countries from permitting US military forces to use bases on their territory during a potential US-Iranian clash. A significant reason why Russia might be assisting Iran’s ballistic missile and nuclear programs could be to support Tehran’s deterrence capability, thereby intimidating NATO countries that host US bases.

Russia and Iran also have similar views on using energy as a geopolitical tool, with both expressing interest in establishing a natural gas cartel, along the lines of OPEC. Such an entity would aim to challenge the established international economic system, dominated by Western industrialized countries.

While the Threat Assessment is sober-minded on many points, it avoids one obvious conclusion involving Russia’s strategic intentions; by re-emphasizing military and economic power, and challenging the West, Moscow, aided and abetted by Teheran, is seeking to change the post-Communist balance of power in Europe, the Middle East, and in the world at large, and is challenging American post-Cold War hegemony. Whether it will succeed or not is a different question. It’s also up in the air whether American policy makers sufficiently comprehend the Kremlin’s capabilities and intentions, and, if they do, whether they can muster the political will that can help frustrate Russian plans.

Lajos Szaszdi, Ph.D., has contributed to the production of this article.

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By Ariel Cohen

Last December Russian President Vladimir Putin chose Dmitry Medvedev, a first deputy prime minister, to succeed him in the country’s presidency. March 2 presidential elections are anti-climactic, as they are going to ratify this choice, and as Mr. Medvedev is the only candidate likely to win.

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By Ariel Cohen

As Yogi Berra once said, “This is déjà vu all over again.” On May 9, heavy military equipment will once again roll down Moscow’s Red Square for the Victory Day military parade. Tanks, missiles, and 6,000 troops will be joined overhead by Su-27 and MiG-29 fighter aircraft and military helicopters. The last time Moscow saw such a display of military hardware on Red Square was November 1990, before the collapse of the Soviet Union.

The world should take notice of Russia’s increasing militarism. The parade is designed to generate nostalgia among the Russian people and to signal U.S., NATO, and Russia’s neighbors that Russia’s power is back. Most importantly, it illustrates President Vladimir Putin’s emphasis on the military and security services at the expense of modern, democratic institutions.

Putin has justified Russia’s rebuilding of its military muscle in the recent speech to the State Council. Putin claimed that the new arms race has been triggered “by the world’s most developed countries” – a clear reference to the U.S. and the West. Russia’s forthcoming rearmament is not caused by Russia but brought upon it by its adversaries, Putin said. In response to this alleged challenge to Russia’s security, the Kremlin plans to produce and deploy in the next years new weapons claimed to be as good as or even better than its Western equivalents. Research and development in revolutionary biological, nano-, and information technologies with military applications will continue. Putin also wants a new defense strategy for the Russian Armed Forces, and the formation of an “innovative army” based on more professional and better trained servicemen.

What the Parade Means

President Vladimir Putin’s government is reaffirming the central role that the military and the security services play as pillars of the Russian state. This is yet another indication from the Kremlin that the so-called “power” ministries and agencies are the bedrocks of the Russian Federation—as opposed to democracy, an open society, a multiparty system, free media, fair elections, constitutional liberties, and the separation of powers.

The parade is a signal to the world and to the Russian people that the armed forces matter again, after a decade or so of decay following the collapse of the Soviet state. Strategically, the display of newly-built weapon systems—like the road-mobile Topol-M intercontinental ballistic missiles (ICBMs), S-300 mobile long-range surface-to-air missiles (SAMs), bombers, and fighters—are intended to show that the Russian military is resurging with modern, or modernized, arms. This is a hallmark of Putin’s new Russia and a revival of the Soviet and czarist tradition of showing off the country’s military prowess.

To the Russian people, the parade will convey a sense of national pride and security in the face of external threats. First, it will mark the USSR’s heroic moment: victory in “The Great Patriotic War” (1941-1945), in which more than 25 million Soviet citizens were sacrificed—millions of them brutally murdered by the Nazis. Second, the Kremlin wants to resurrect the popular belief that Russia is a great power, which lost credence after the demise of the Soviet Union.

In essence, the parade is another sign that the Russian government is going “back to the future.” It wants to return the military—as well as other instruments of state power, from oil and gas exports to secret police and a subservient judiciary—to the forefront in 21st century Russian policy. While doing so, it is disregarding modern means of governance: popular participation, democratic politics, free press, and the rule of law by independent judiciary.

Putin’s Nostalgia

Almost three years ago, Putin said, “We should acknowledge that the collapse of the Soviet Union was a major geopolitical disaster of the century.” Clearly, the USSR was Putin’s country. During his career as a KGB officer, he cultivated a sense of duty and loyalty to the state (and to the “guild” of espionage officers) that made the USSR’s collapse, in his words, “the greatest geo-political catastrophe of the 20th century.”.

Since becoming president, his nostalgia for the Soviet past has manifested in the re-adoption of symbols from the Communist period. When that period ended, President Boris Yeltsin resurrected national symbols from the czarist pre-revolutionary period, including the tricolor Russian national flag, the imperial double-headed eagle on the state coat of arms and the hats of military officers, the 19th century-style gala uniforms of the Kremlin guard, and the adoption by the armed forces and security services of patron saints.

Under President Putin, these symbols have been complemented by the communist Red Star, which appears on military hardware such as tanks and aircraft; the re-adoption of Stalin’s Soviet anthem tune  as the music for the Russia’s national anthem in 2000; the use of “comrade” as a form of address within the military and security services; and the placement of a bronze bust of Felix Dzerzhinsky in the courtyard of the Internal Affairs Ministry in Moscow in 2005. Dzerzhinsky was the founder of Lenin’s dreaded secret police, the Cheka, and was responsible for arresting, exiling, torturing, and executing countless victims. Moreover, Putin appears to be particularly fond of commemorating every December 20 as Security Services Workers’ Day, or Chekist Day, recalling the day in 1917 when “Iron Felix” founded the Cheka, the predecessor of Stalin’s NKVD, the KGB, and today’s FSB.

Allegedly, the coexistence of czarist and Soviet symbols is a way to connect Russia’s present and past. According to a spokesman for the Moscow Patriarchate, the use of both symbols means that “the continuity of all Russian history is restored and demonstrated.” Of course, the actions of Putin’s government show that this continuity is not limited to symbols. Putin also demonstrates his intent to restore the state’s historically central role in managing the politics, media, and economy in Russia.

Russia’s Military Resurgence

The public display of Russia’s military might reaffirms the power of that centuries-old Eurasian Leviathan, the Russian state. Russia’s resurgence is not limited to military parades, but includes military deployments and maneuvers, as well as the procurement of weapon systems. Last year, Putin ordered a resumption of regular patrols of strategic bombers deep into the Atlantic and Pacific airspace, from which they can launch cruise missiles against the United States. The already frequent ballistic missile test launches are set to double in the years ahead. The Strategic Missile Forces are deploying silo-based, mobile, and ship-based Topol-M, Bulava, and RSM-54 Sineva ICBMs. The Russian Navy is scheduled to commission the first of a new class of ballistic missile submarines this year. Moreover, on January 21–23, for the first time in 15 years, the Russian Navy staged a large-scale exercise in the Bay of Biscay, which included its sole aircraft carrier, the Admiral Kuznetsov, a guided missile cruiser, and strategic bombers, together with air-refueling tankers and airborne early-warning aircraft.

Conclusion

The announced rearmament, the parade, global maneuvers, and new weapon systems are designed to make others respect Russia as well as deter NATO and the U.S., which is viewed by Putin as a hegemonic superpower seeking to harm Russia. Russia wants to send the signal that it again has the military means to counter both perceived strategic threats, such as the U.S. missile defense system, and conventional military challenges such as NATO expansion and the West’s superior air power. The fanfare communicates Russian intentions to change the global “correlation of forces” in Moscow’s favor and signals Russia’s neighbors to do its bidding and not to challenge its security or its interests.

Russia is back on the world stage with all the attributes of power, including wealth and military might, for all to see. The next Administration will have its hands full dealing with resurgent Moscow.

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By Ariel Cohen

Russia lags behind the United States in aerospace research and development. It has yet to produce decent competitors to America’s two new, fifth-generation fighter jets, the Lockheed Martin (NYSE:LMT) F-35 Lightning Joint Strike Fighter and the Lockheed Martin/Boeing F-22 Raptor.

The main Russian rivals to the Lockheed Martin F-35 Lightnings are the Mikoyan-Gurevich MiG-35 (NATO designation Fulcrum F) and the Sukhoi Su-35 (NATO designation Flanker). The Mikoyan-Gurevich MiG-35 is an upgrade of the MiG-29M/M2 and the MiG-29OVT. Both are fourth-generation jets.

The Russian government has been eagerly selling the Sukhoi fighter jets to its friends, so these aircraft are likely to be found in areas where the potential for conflict is greatest, while financing development of the fifth-generation fighter from these export revenues.

Russian analysts like to note that the Lockheed Martin F-35 Lightning JSF, with a maximum speed of only 1,200 mph, is slower than both the Sukhoi Su-35 Flanker -- maximum speed 1,680 mph -- and the MiG-35 Fulcrum -- maximum speed 1,587 mph. The Lockheed Martin F-35 Lightning’s range of 1,320 miles is below the Sukhoi Su-35 Flanker’s range of 2,260 miles as well.

While these measures make the Lockheed Martin F-35 Lightning Joint Strike Fighter seem inferior, they are actually fully consistent with its projected mission: F-35s are designed to operate in tandem with Lockheed Martin/Boeing F-22 Raptors, which would clear the way for F-35s in real combat.

Moreover, the Lockheed Martin F-35 Lightning JSF’s reported service ceiling of around 57,000 feet is superior to the Mikoyan-Gurevich MiG-35 Fulcrum’s 56,000 feet and the Sukhoi Su-35 Flanker’s 55,000 feet. The Lockheed Martin F-35 Lightning JSF also claims a significant advantage in maneuverability because of its smaller size, advanced materials and lightweight construction.

On the record, Russian defense officials insist their Sukhoi and Mikoyan-Gurevich MiG fighters can stand up to their American rivals. But a Russian Defense Ministry expert, who spoke on condition of anonymity, told Pravda.ru that Russia "patches" its fourth-generation modifications to extend their lifespan, while most of its fifth-generation fighter program has largely remained on paper.

In fact, statistics are only the broadest indicators of an aircraft’s performance. Combat performance analysis includes maneuverability, stealth, tactics, training, avionics, situation awareness, weapons, countermeasures, interoperability and supportability as major factors.

Stealth is a major discriminator between a 5G fighter like the Lockheed Martin F-35 Lightning Joint Strike Fighter and "Gen 4 plus plus" competitors like the Mikoyan-Gurevich MiG-35 Fulcrum and the Sukhoi Su-35 Flanker that are essentially modernizations of their respective progenitors, the Mikoyan-Gurevich MiG-29 and the Sukhoi Su-27. No operational Soviet or Russian stealth aircraft has ever been reported to have entered service.

A U.S. analyst who requested anonymity said that while the Russians have some good specific system technologies, their ability to effectively integrate them often lags behind that of the West, and the Lockheed Martin F-35 Lightning Joint Strike Fighter takes integration of off-board intelligence to a step well beyond proven Russian capabilities.

"From the time of the collapse of the Soviet Union until crude oil prices recently rose to $100 per barrel, the ability of Russian aircraft designers to transition their advanced scientific knowledge through RDT&E (research, development, test and evaluation) into production-ready systems has been restricted, with funding available almost solely from sales of its legacy 4th Gen MiG-29 and Su-27 fighters to other countries," the analyst said.

With oil prices collapsing, the challenges of serial production of advanced aerospace weapons systems remains, while the Russian highly skilled military space and aviation industry labor force is pushing 60 -- beyond the life expectancy of an average Russian male.

Sukhoi Su-30 fighters bought by China and India were more advanced than those in Russian air force service, which were procured only in small quantities. Progress in completing the production development of the PAK-FA T-50, Russia’s first 5G fighter design, remains dependent on Indian funding.

While notable improvements have been made in the reliability and supportability of Russian aircraft systems, they still fall far short of Western standards. This is particularly true of aircraft engines.

Russia has a long way to go to catch up with the United States in the prestigious new generation fighter competition. Only domestic politics, such as in Europe; declining economic fortunes of potential partners; and high production costs of the Lockheed Martin F-35 Lightning Joint Strike Fighter may slow down its triumphant march.

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by Ariel Cohen

Dmitry Medvedev’s  endorsement as a presidential candidate by four pro-Putin political parties and by Vladimir Putin himself ends months of rumors in Moscow. Medvedev’s appeal to Putin, asking him to serve as a prime minister after the March presidential elections, confirms not only that Putin will play a pivotal role in Russian politics after he steps down but that he will remain the number one politician of Russia for years to come.

Putin is most likely to be a "super prime minister," with responsibilities over foreign, security, and defense policy. It is possible that after the March elections, Medvedev will transfer control of all or some of these branches to Prime Minister Putin.

Medvedev, a Putin protégé, is perceived as a weak bureaucratic player and will require Prime Minister Putin’s support as he consolidates power in the brutal world of Russia’s politics and oligarchic struggles. In contrast to Putin and other KGB veterans, Medvedev is soft-spoken and bookish. Having been focused on domestic politics and policy, Medvedev lacks experience in foreign policy and national security and may depend on Putin’s advice and support in these areas.

Who Is Medvedev?

Dmitry Medvedev, 42, first deputy prime minister and Putin’s former chief of staff, is the son of a Leningrad (St. Petersburg) professor. He has been a corporate lawyer and a law professor. In 1989, he joined the team of the late St. Petersburg pro-democracy mayor (and law professor) Anatoly Sobchak, at the height of Mikhail Gorbachev’s glasnost and perestroika reforms. Sobchak was Putin’s mentor. When elected, Medvedev will be the youngest Soviet or Russian leader since the 28-year-old Nicholas II’s accession to the throne in 1896.

Putin has deliberately chosen as a successor a person he can rely on and trust, while he remains the number one Russian politician. He has worked with Medvedev for the last 17 years, starting in the St. Petersburg city hall, where Putin was the deputy mayor in charge of foreign relations and Medvedev a legal advisor. The two struck a fast friendship and partnership, and Medvedev served as Putin’s campaign manager in his Kremlin-orchestrated presidential bid in 2000.

Medvedev became the chairman of Russian energy giant Gazprom and presidential administration chief in 2003--but many insiders say that Putin was still calling the shots in Gazprom. In 2005, Medvedev moved from the Kremlin into Putin’s cabinet, where he supervised "national projects," including health, education, housing, food production, and demography.

The projects are funded from Russia’s energy windfall profits.

Medvedev is known for his classical liberal rhetoric in an era of increasingly harsh nationalist, anti-Western, and anti-democratic pronouncements. For example, he has openly admitted that Russia is facing the problems of excessive dependence on natural resource exports, corruption, and a declining population.

Despite being the chairman of the second-largest state-owned corporation in the world, he appears to criticize the Kremlin’s preferred economic model of state-held companies, preferring private ownership. He said in a recent interview that the state should get involved in economy "only where it was needed." He recently said that "Gazprom will not be able to ’digest’ all of Russia’s energy resources...and thank God for that. Otherwise Gazprom would become the ministry of energy, and we have been trying to pedal away from this...."

Medvedev also said that laws limiting foreigners’ access to Russia’s "strategic" economic sectors, such as energy and natural resources, should be "clear, [and] balanced, and answer practical issues." So far, however, draft legislation on strategic sectors has been murky, and the Duma has delayed the vote.

Medvedev has expressed rhetorical support for a multi-party system based on large, stable parties, while decrying the chaos of the 1990s in Russia. He rejected the usual Russian adjectives when speaking of democracy, such as "controlled" or "sovereign." Yet, he is a part of the administration that cracked down on Yukos Oil Company, kicked Royal Dutch Shell from a lucrative Sakhalin energy project, bought up and shut up almost all opposition media, and conducted the most unfair and unfree elections in Russia since 1991. Mr. Medvedev will have a hard time proving his democratic credentials by opposing the siloviki, divesting the state from media control, and allowing unhindered political activities--an almost impossible task.

Guarantees of Succession

Just as Putin secured the late President Boris Yeltsin’s retirement by granting him a pardon from prosecution and guaranteeing his and his family’s safety and security, Medvedev is doing the same to win Putin’s endorsement. But there is more: He also guarantees Putin’s future political role for years to come by giving him the prime ministership. After the March presidential elections, Putin will stay on the scene as prime minister and the hailed "National Leader," a new and undefined position. This means that Russia is moving further away from constitutional democracy and the rule of law.

The Medvedev appointment also means that Putin and Medvedev have cut a deal with the powerful siloviki ("men of power"), which includes the secret police generals who supervise the security services and the armed forces. These men wanted Putin to stay as president in order to keep their powerful posts at the top of the national bureaucracy and lucrative positions as the heads of state-owned energy and arms-trading companies. They also are the main power behind Russia’s anti-American and anti-Western policy. Their influence is not likely to vanish, as Putin remains prime minister and shares many of their anti-American positions and Medvedev will depend on their support.

Energy Geopolitics

Medvedev is the chairman of Gazprom, the state-owned energy giant with market capitalization of $345 billion, which supplies over 30 percent of Europe’s gas needs. Russia has announced that its strategic goal is to reach capitalization of $1 trillion in seven to ten years, making Gazprom the largest company on Earth. Russia will not be able to accomplish this by permanently alienating its energy customers in Europe and elsewhere, so Russia’s confrontational foreign policy will be somewhat limited by the nature of its energy exports. Yet Medvedev announced that Russia will not sell subsidized gas to its neighbors and presided over the cut-offs of gas supply to Ukraine, Georgia, and Belarus.

The New Broom

The rule of thumb is that each regime in Russia is very different from its predecessor. There are discontinuities in each. Thus, Gorbachev’s reign was different than Brezhnev’s, Yeltsin’s was different than Gorbachev’s, and Putin’s rule is different than Yeltsin’s. Gorbachev, Yeltsin, and Putin all "campaigned" as the antitheses of their predecessors. Medvedev, on the other hand, is Putin’s "official" heir and will find it impossible to shed his boss’s control and vision even if he wants to.

First, there are personal promises to keep, especially as far as Putin’s prime ministership and other personnel issues are concerned and especially in the first presidential term. Second, Medvedev, lacking a KGB, military, or other security service background, may have a hard time establishing his control over the levers of power and, therefore, need Putin’s continued support.

But even if Medvedev ever, for some reason, stands on his own two feet, he must remember that public opinion in Russia and the USSR has always been unenthusiastic--to say the least--toward weak leaders: Nicholas II, Georgii Malenkov, Nikita Khrushchev, Mikhail Gorbachev, and Boris Yeltsin all are viewed with disdain by the majority of Russians, while "strong leaders" such as Peter the Great, Catherine the Great, Alexander II and III, Putin, and even the monstrous Joseph Stalin and bumbling Brezhnev are viewed by many in a positive light. To succeed, Medvedev will need to show his mettle.

U.S.-Russian Agenda Cannot Be Delayed

The Medvedev-Putin transition should not slow down the work on the complex U.S.-Russian agenda. It requires that the two countries return to business after the dust of transition settles in the two countries in early 2009 or even before.

U.S.-Russian relations today are at an all-time low. The bilateral agenda includes the fight against proliferation of weapons of mass destruction, U.S. anti-ballistic missile deployment in Europe, restraining Iran’s nuclear program, energy security, building democratic institutions in Russia, and many other issues.

The Bush Administration should give the Putin-Medvedev administration at least a 100-day grace period after Medvedev’s inauguration--until September 2008--to sort out the transition. In the meantime, the U.S. should lay the groundwork for engaging Russia on important issues, for the benefit of the next U.S. President. Specifically, the U.S. should press forward with the next round of sanctions on Iran in the U.N. Security Council, where the Russian vote is crucial, and continue discussions over the Kosovo independence and negotiations on deployment of the missile defense interceptors in Europe.

Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation

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Russia"s foreign policy assertiveness, funded by revenues from natural resources, makes many believe that a new energy empire is on the rise. The country today is ruled by post-Soviet security and military elites that have internalized the jingoistic values of the Russian Empire and the Soviet Union. These elites view the outside world almost exclusively through the lens of economic and military might. They also use foreign policy as a tool to buttress domestic sup­port and to foster a perception that Russia is sur­rounded by enemies at a time when its democratic legitimacy is deteriorating.

Despite its projected might, the Kremlin is not capable of dealing with some of Russia"s critical demo­graphic, social, economic, and political vulnerabili­ties. These flaws may well challenge the current sense of stability in Russia, especially after the 2007-2008 election cycle or if the economy deteriorates.

As the proverb states, "Russia is never as strong as she appears, and never as weak as she appears."[1] Rus­sian President Vladimir Putin modified this proverb in a May 2002 speech: "Russia was never as strong as it wanted to be and never as weak as it was thought to be."[2] Russia"s strengths made the authorities and the public believe that their country is still a great power, yet Russia"s many weaknesses limit its ability to act as one. Continuing state weakness combined with an increasingly bold foreign policy is a recipe for imperial overreach and systemic breakdown.[3]

For over a decade, the Russian authorities have failed to provide a coherent and modern nation-building ideology or to overcome Russia"s nostal­gia for its lost empire. Most telling was Putin"s statement in April 2005 that the collapse of the Soviet Union was "the greatest geopolitical catas­trophe of the twentieth century."[4] Rhetorical out­breaks reflect the Kremlin"s failure to confine itself to solving pragmatic tasks and its attempts to fill the post-Soviet ideological vacuum with a mix of the Soviet anthem, the imperial coat of arms, and the tsarist flag.[5]

Because domestic factors are increasingly driving Russia"s foreign policy, Russia"s internal weaknesses cannot be easily dismissed. To play the global role it claims for itself, Russia needs to put together a complex system of economic, technological, and social resources, but not all of these are easily within its grasp.

Both Congress and the Administration need to understand that Russia is resurging as an assertive autonomous international actor. However, as long as Iraq, Iran, and the war on terrorism continue to top Washington"s agenda, it is not in America"s stra­tegic interest to challenge Russia openly. Rather, the U.S. should staunchly defend its national interests and involve Russia in resolving international crises when possible.

Specifically, the U.S. should:

Continue to negotiate and cooperate with Russia on matters of mutual concern in security and non-proliferation;

Promote Russia"s integration into the global economy, particularly the rule-based World Trade Organization (WTO) regime;

Provide technical assistance on pressing health care issues, such as the HIV/AIDS and tuberculo­sis epidemics, cardiovascular diseases, cancer, and health care management;

Increase support for civil society groups work­ing to advance media independence, rule of law, political liberalization, and tolerance in Russia;

Reach out to the Russian people through a com­prehensive public diplomacy strategy to debunk the myth of inherent American hostility toward Russia; and

Establish a comprehensive multidisciplinary project to monitor the stability, security, and health of Russia"s society and economy and how they influence Russian foreign policy.

Demographic Catastrophe

The great-power ambitions of Moscow"s current elites cannot be realized without ample, developed, and highly skilled human resources. Since the 1980s, however, Russia has experienced dramatic declines in population, fertility, and life expectancy combined with increases in mortality and disease rates, including a rise in the rates of HIV/AIDS and tuberculosis infection.

From 1995 to mid-2007, Russia"s total popula­tion dropped by 6.5 million people, down to 142 million--a decline of almost 4.4 percent.[6] Such a drop typically is the result of war or mass emigra­tion, but it is occurring in a largely peaceful Russia that has a growing economy and positive immigra­tion rate. Russia"s population is the world"s ninth-largest but is projected to drop to 128.5 million by 2025 and 109.4 million by 2050.[7]

Because of the low birthrate and the high mortal­ity rate, Russia is losing an average of 700,000 peo­ple per year. In 2006, the mortality rate was 15.2 deaths per 1,000 people, and the birthrate was just 10.4 births per 1,000 people. While the birthrate is low compared to other industrial states, the death rate, particularly among working-age males, is astonishing. Life expectancy for Russian males is only 59 years, five years below what it was 40 years ago and 13 years lower than the life expectancy of Russian women--one of the largest gaps in the world.[8] The current solution of stimulating births by paying over $4,000 per baby may create a hered­itary welfare problem where there now is none and encourage growth among both Russia"s Muslim population and its urban and rural poor.

The incidence of cardiovascular disease and can­cer in the Russian population is among the highest in the world and accounts for the surge in Russian mortality rates. External (preventable) causes, such as accidents, account for 15 percent of deaths.[9] Even with fewer cars per capita than other indus­trial states, the number of deaths in traffic-related accidents per 100,000 people is higher in Russia than in other industrialized countries. Homicide deaths reached 30,000 in 2006, equaling the num­ber of deaths from accidental alcohol poisoning, but even more died from suicide.[10] Heavy alcoholism also helps to explain the high rates of heart disease. Many Russian men seem to choose lifestyles with dire health consequences.

Deadly Epidemics. Russia is suffering from epi­demics of HIV/AIDS, assorted other sexually trans­mitted diseases, and tuberculosis. The HIV infection rate is growing faster in Russia than in any other country outside of Sub-Saharan Africa.[11] An esti­mated 1.3 million (1.1 percent) Russian adults are already infected.[12] AIDS-related deaths are hard to measure, partly because of Russia"s tuberculosis epi­demic. According to the World Heath Organization, almost 150 people per 100,000 in Russia are infected with tuberculosis.[13]

The vast majority of HIV infections in Russia are associated with intravenous drug use, which is widespread among young people.[14] According to some estimates, nearly 2 million Russians (1.96 per­cent) inject drugs.[15] A Russian drug control official has predicted that the total number of drug users will grow from over 4 million to over 35 million by 2014.[16]This dramatic rise is fueled by cheap opiate narcotics from Afghanistan and Central Asia[17]and by domestically produced synthetic drugs.

Ethnic Changes. Central Asia is also a source of Muslim migrants. While the numbers and health of Russia"s ethnic Slavs and Orthodox Christians con­tinue to decline, Russia"s Muslim population is growing, rapidly transforming the ethnic makeup of Russian society.

Fertility and birthrates are much higher among Muslim ethnic groups than among ethnic Slavs. In 2006, predominantly Muslim regions had the highest population growth rates: 1.79 percent in Chechnya, 1.16 percent in Ingushetia, and 0.65 percent in Dagestan. The national average was -0.37 percent.[18]

Since 1989, Russia"s Muslim population has increased by 40 percent, rising to 20 million-25 million. Moscow"s Muslim population of about 2.5 million is the largest of all European cities. Muslims could make up a majority of Russia"s conscript army by 2015 and one-fifth of the population by 2020.[19]

This has drastic political, cultural, and ideological implications for Russia. Ethnic Russians feel uneasy as the prevailing ethnically based notion of the Rus­sian national identity is being challenged. The changing ethnic makeup of Russian society and the growing radicalization of Islam fuel ethnic tensions among Russian citizens.

Implications of the Demographic Decline. These demographic shifts are already affecting Rus­sia"s ability to project power. The Russian military is failing to meet its recruitment targets because of a declining pool of fit conscripts and their semi-legal efforts to avoid the draft.[20] Some demographers predict that in just nine years--by 2016--the pool of conscripts will be half Muslim.[21] It is also not clear that a majority Muslim, non-ethnic Russian army will willingly take on missions to carry the Russian flag forward either in the "near abroad" (the 14 other former Soviet republics) or elsewhere.

In addition, the workforce will further shrink in size and quality. (See Chart 1.) The population is diseased, aging, and dying. In many countries, immigration has helped to mitigate the economic effects of population decline. In Russia, most immi­grants are from Central Asian former Soviet repub­lics and increasingly from China and Afghanistan. Yet, as growing xenophobia and racism in Russia suggest, ethnic Russians mostly disapprove of non-Slavic immigration.

The Russian government is unable to address the lingering health and demographic crisis. In 2004, health care spending reached a low of 6 percent of gross domestic product (GDP).[22]In 2007, Russia intends to spend $10.2 billion[23] on President Putin"s "national priority projects," but so far, this funding has failed to improve Russia"s collapsed public health sector. (See Table 1.)

Ideologies and Tensions Within Russian Society

Russian society is unhealthy not only physically, but also ideologically. Russia"s history and legacy provide context for its current trends.

From its beginnings in the 14th and 15th centu­ries, Russian imperial development was driven by muscular external aggrandizement and a lack of domestic accountability. In the mid-16th century, Ivan IV (Ivan the Terrible) annexed new territories with significant Muslim Tatar populations, and Russia emerged as a multiethnic, multi-faith state, although dominated by Russian Orthodoxy. Its ideologists viewed Muscovy, nicknamed "The Third Rome," as the heir to the Byzantine Empire, which was destroyed by the Ottomans in 1453. On the domestic side, the lasting model of the omnip­otent state ruled by the czar produced generations of people who crave authority and value stability above freedom.

Since the 17th century, any moves to open Rus­sia to the West have been followed by internal reactions and aggressive expansionism. By the 19th century, Westernizers who favored European ways were opposed by Slavophiles who courted foreign Slavs, appealed to the Russian Orthodox heritage, hailed political autarky, and denounced the West as an enemy.[24] Slavophile principles were simplified and adapted by Russian ethnic nationalists. Eurasianists called for the creation of a new Russian super-ethnos from the Baltic Sea to the Pacific Ocean, including Central Asia, by amalgamating Slavs and Turks. Throughout 75 years of Soviet rule, these ideological divisions among Westernizers, imperialist Eurasianists, and ethnocentric and Christian Orthodox Russophiles has persisted in Russian foreign policy.

Ideological Vacuum. After the collapse of the Soviet Union, Westernizers appeared to be ascen­dant, but only for a short time. The creation of the independent Russian Federation in 1991 was the first attempt to construct a modern Russian nation-state. Under President Boris Yeltsin, the Kremlin tried to organize a multiethnic society into a non-imperial nation-state, but without a coherent ideol­ogy or state-building strategy. By the end of Yeltsin"s term, the barely reformed post-Soviet elites were beginning to reject Western liberal models because of Russia"s domestic economic meltdown and diminished international influence.

For over a decade, Moscow has failed to articu­late Russia"s new ideology clearly. Many among the Russian political elite believe that ideas mean noth­ing in world politics and that only pure national interests matter.[25]

Putin"s United Russia party is sending a mix of "distinctly non-ideological"[26] messages for the "har­monious coexistence" of a market economy and a strong state while trying to blur the difference between Russian ethnicity and Russophone cultural orientation. The key liberal parties, Yabloko and the Union of Right Forces, have failed to gain sufficient support and are victims of political infighting. The Liberal Democratic Party of Russia and Rodina (motherland) have stuck to xenophobic slogans. Today, the major political parties are ready to use xenophobic sentiments to some degree as a means to garner popularity among voters and to justify Russia"s cantankerous foreign policy.[27]

The Kremlin"s current ideology has its roots in statism, authoritarianism, and great-power jingoism but with strong elements of capitalism. It is eerily reminiscent of the late Romanov empire but with­out its strong liberal opposition streak. As was the case after the 1905 revolution, the extremes of the ideological spectrum--ultranationalists, jingoists, and national-Bolsheviks--are heard loud and clear in public debate, while liberal voices are being hushed. The rule of law is severely lacking. The Russian experience suggests that after centuries of authoritarianism, there are no simple answers in the process of moving away from statist government involvement in politics and economic policy dic­tated by a "strong hand."

Official Patriotism. The Kremlin is trying to imbue Russia"s youth with statist, patriotic, and religious ideas through the official national patri­otic education program in schools. The Kremlin-backed parties have created youth units somewhat reminiscent of Komsomol (Communist Union of Youth), the youth wing of the Communist Party of the Soviet Union. In 2005, the Kremlin endorsed the creation of the Nashi (Ours) youth move­ment to prepare a loyal mob to act against possible public protesters.

Under Putin"s guidance, high school history text­books have been rewritten. The new texts view Josef Stalin"s cruelty through the lens of strong leadership in a long line of autocrats going back to the czars. Russian history, it is said, at times demands tyranny to build a great nation.[28] The textbooks also link U.S. global "hegemony" to that of the Third Reich and compare the mass murder of Soviet citizens by their government to the U.S. using the atomic bomb against Japan during World War II.[29]

Critics warn that such an ideological historiogra­phy encourages "collective amnesia" and promotes nationalism. A recent poll showed that a substantial part of Russian youth hold positive or ambivalent views of Stalin and his legacy. The majority of respondents considered the Soviet collapse a trag­edy, as Putin expressed in 2005, and two-thirds saw the U.S. as a rival and an enemy.[30] Such distorted perception of history is inherently anti-democratic.

National Identity Crises. A drummed-upforeign threat is being used to foster national solidarity, which is otherwise threatened by ethnic diversity.In a multi­ethnic state, the discrepancy between an individual"s ethnic and political-civil identity is dangerous. Rus­sian leaders have only recently started to employ the terms "rossiyskaya natsiya" (Russian nation) or "rossiyskiy narod" (Russian people) to denote the country"s diverse population.[31]

The difficulties of defining Russia"s national identity are exemplified in the use of the termsrusskie (ethnic Russians, who are descendants of eastern Slavs) and rossiyane (Russian citizens, regardless of ethnicity). Russia"s ultranationalist movements focus on the former, while most of Rus­sia"s ethnic minorities identify themselves with the latter. Now, however, Russian-speaking persons outside of Russia"s borders can be declared russkie and protected, whether they ask for it or not. Such an identity crisis hinders the formation of a multi­ethnic, multi-faith nation as a foundation for a nation-state.[32]

While the Putin administration and Putin"s United Russia party tolerate and integrate representatives of numerous ethnic groups, staunch nationalists claim that ethnic Russians, the dominant ethnicity, should be the legitimate masters of the state. In an increas­ingly multiethnic Russia, however, ethnic Russian nationalism cannot play a unifying role, as it usually takes the form of the exclusionary ideology of ethnic Russian, Slavic, or Russian Orthodox superiority. The question remains whether the Russian elites are inter­nationalist enough to rebuild a great power empire void of ethnocentric ideologies.

Xenophobia and Ethnic Nationalism. The ex­tremist movements and ideologies present an addi­tional set of challenges for the Kremlin and Russian society. Previously somewhat suppressed by Soviet authorities, ethnic nationalism and extremism have reemerged in modern Russia.

Racism and xenophobia are on the rise. Freedom House has reported on government and social dis­crimination and harassment of ethnic minorities, particularly against people from the Caucasus and Central Asia, as well as people from the rest of Asia and Africa, and an increase in racially motivated attacks by extremist groups.[33] In August 2007, 55 percent of the population sympathized with the slo­gan "Russia for [ethnic] Russians," while 57 percent believed the authorities should limit the inflow of immigrants.[34] According to the Sova Center, which tracks ultranationalist activity in Russia, there were 520 racist attacks, including 54 murders, in 2006.[35] (See Table 2.)

The main extremist movements are worth noting. Eurasianism, represented by the notorious neo-fascist Alexander Dugin, emphasizes Russia"s unique fate and inherent hostility toward the West. Dugin flirts with Christian Orthodoxy and promotes Rus­sian imperialism and extreme anti-Americanism. He opposes democracy and supports Vladimir Putin, "an irreplaceable leader," whose obligation to leave office in 2008 is "the greatest political problem for today"s Russia."[36] Dugin is a frequent guest on state television, which raises concerns about the main­streaming of fascism in Russia.[37]

Other ultranationalist movements, some favor­ing the Russian Orthodox Church and some anti-Christian, peddle racial hate and violence.

The Nationalist-Patriotic Front "Pamyat" (memory) was set up in 1987 to "lead Russian people to the spiritual and national revival" with slogans blending fascism with autocratic monarchy. Many analysts allege that Pamyat was a KGB front. Its activists have since spread to other extremist groups, and the movement has lost its prominence.

Russian National Unity (RNE) originated from Pamyat and promotes ethnic nationalism and outright Nazism mixed with aggressive anti-lib­eralism and anti-Semitism. It functioned as a political party in the early 1990s but has since stagnated and splintered into other groups.

The Nationalist-Bolshevik Party (NBP), led by the notorious Eduard Limonov, is culturally pro-Soviet and nationalistic and seeks the "protection of the Russian population in the former Soviet territory," often through overt hooliganism. Par­adoxically, it is now part of world chess cham­pion Garry Kasparov"s Other Russia movement, which draws support from democratic and lib­eral circles.

The Movement Against Illegal Immigration (DPNI) is a violent, ultranationalist, anti-immi­grant group led by Alexander Belov, a former Pamyat spokesman, that emerged in 2002 in response to the clashes between "native residents and raging immigrants."[38] In June 2007, the DPNI announced the formation of People"s Self-Defense groups to "unite native citizens for orga­nized resistance to any aggressive actions of criminal migrants."[39] The DPNI and People"s Union were at the core of the march on National Unity Day, a newly proclaimed national holiday on November 4 that commemorates the expul­sion of the Catholic Polish invaders in 1612 and replaces celebration of the Communist October Revolution of 1917.

Russian March is a neo-Nazi affair, which this year featured screaming skinheads, a white-clad young ladies" drummer band, and a keynote appearance by Preston Wiginton, a Texas white supremacist.[40]

This looks like the beginning of a new tradition: On November 4, 2005, National Unity Day, ex­tremist groups marched under the slogan "Russia for Russians" and Nazi symbols. In 2006, Russian March was banned in major Russian cities, but smaller protests occurred illegally.[41]

Racist aggression erupted in August 2006 when a deadly bomb was thrown at a Moscow produce market frequented by Azeri traders and again dur­ing the September 2006 riots in Kondopoga, a town in northern Russia. Putin has denounced the "semi-gangs, some of them ethnic," that control produce markets in Russian cities and has called for regula­tions to protect "the native population." The mar­kets are a source of tension because they are staffed mainly by non-Slavic migrants. In 2007, immigra­tion policy was changed to ease labor immigration rules in all sectors except the markets, where foreign labor was banned in April 2007. All Kondopoga attackers received suspended court sentences. Today, an estimated 8 million to 12 million migrants are working in Russia illegally.[42]

Fortunately, anti-migrant organizations in Russia are not yet electable parties. The fragmentation and internal struggle among nationalist-patriot factions compromise the very idea of Russian ethnic unity and push away potential allies. However, Slavs do not pose the only threats to Russia"s internal cohesion.

Radicalization of Russia"s Muslims. The Krem­lin faces a growing challenge in dealing with Mus­lim communities. While most Muslims in Russia are indigenous peoples of multiethnic Russia, the distinction between immigrants and citizens is often blurred in xenophobic discourse. Many Russians associate Islam with extremists, and their anti-Islamic prejudice is growing. At the same time, many recognize the more moderate nature of Tatar and Bashkir Islam. As Russia"s Muslim population grows and interest in the religion surges, its members become vulnerable to extremist ideas, even in currently moderate areas.

Proponents of radical Islam have their own expansionist and often violent agendas. Radicalism spreads in many regions because of local griev­ances--including Stalinist persecution and ethnic cleansing, poverty, and corruption--and radicaliz­ing foreign Islamic influences. Since 1991, Russia"s Muslims have been exposed to the ideas of Islamic fundamentalism, reinforced by intensive foreign penetration through education, propaganda, and financing.[43] The total number of mosques in Russia has increased from 300 in 1991 to 4,000 in 2001 to over 8,000 in 2007.[44] Private foundations in Saudi Arabia and other Persian Gulf states have financed the construction of many mosques and have sent clerics to run them. Often, foreign clerics rejected traditional local Hanafi and Shaf"i schools of Islam and preached Salafi Islam and Wahhabisim, previ­ously unknown in Russia. Although the new prac­tices appear stricter and more radical, they continue to gain in popularity.

No accurate estimates of the strength of radical Islamists in Russia are available. As Alexey Malash­enko of the Carnegie Moscow Center has written:

An entire mythology has developed around it, created by forces within the state, jour­nalists, and the Islamists themselves. All of them, albeit for different reasons, tend to exaggerate the power of the Islamists.[45]

The authorities inflate the power of the adver­sary, while the Islamists elevate their own self-image to gain influence and attract funds. Lacking a basic understanding of Islam and its practices, the Krem­lin fails both to realize the dangers of radical Islam and to provide a coherent policy response.

The political influence of Russia"s Muslims will, however, remain limited by their cultural, ethnic, and religious divisions. The diversity of Russia"s Muslims presents both a challenge and an opportu­nity for the Kremlin.[46] It needs to work carefully to limit the spread of potentially violent radicalism without alienating the rest of the Muslim commu­nity. This is a significant challenge in a country in which national identity is still malleable.

The Role of the State. The nexus of the Krem­lin"s rhetoric, its efforts to revive national pride based on tsarist and Soviet symbols, and the hate on Russia"s streets constitute a potential source of insta­bility. Government rhetoric often hovers in the grey area between sometimes exaggerated national pride and paranoid nationalism.[47] Experts believe the Kremlin is deliberately tolerating extremism to cul­tivate an "enemy within," positioning the Kremlin as Russia"s only defense against it. Radical activists, in turn, interpret the government"s appeals for "strong Russia" as a virtual license to attack.[48]

From the pogroms of the 19th century to the intermittent Soviet racism of the 20th century, Rus­sian rulers have tried to manipulate nationalism to serve their own ends.[49] Unlike the earlier "external threats," such as imperialism or Zionism, the cur­rent "enemy" is homegrown.

The presentation of xenophobia in the Kremlin-controlled media also remains ambiguous. While primitive xenophobia and outright racism are con­demned, anti-Western, anti-Turkic, anti-Muslim, and even anti-Georgian or anti-Ukrainian stereotypes dominate the mainstream media. Increasingly crude and intense rhetoric depicts the U.S. as a "wrongdoer" and an adversary of Russian civilization.[50]

Russia"s anti-extremism laws are applied selec­tively, and critics fear that they may be used to per­secute the political opposition and undesirable civil society groups.[51] In the penal code, extremism is vaguely defined[52] and even includes slandering a government official in the performance of his duties.[53] The 2006 amendment to the election law aimed at keeping extremists out of elected offices could also be used to disqualify rivals of the Krem­lin unfairly.[54]

At the same time, the justice and law enforce­ment systems have been slow to recognize actual racist crimes and often classify them as mere "hoo­liganism." Many policemen are involved in harass­ing ethnic groups. In 2006, Amnesty International reported that the Russian "government is shirking its responsibilities" and failing to respond to the shocking regularity of racist attacks.[55]

Followers of both radical ethnic nationalism and Islamism in Russia inspire those who oppose the current state and are willing to shatter it in order to remake it in their own images. Inability to address these domestic tensions and imperial nostalgia among the pro-Kremlin elite are shaping Russia"s sometimes aggressive international behavior. The question remains: Are the state and its institutions capable of opposing extremism?

Governance: Managed Democracy

Russia looks strong, but its political institutions are weak and fragile. The Kremlin, while retaining the trappings of democratic procedures and cere­monies, essentially curtails the development of a democratic regime. The Russian government has a hyperactive presidential system and pliant state institutions, including the legislature and the judi­ciary. The executive branch manipulates political expression by strictly controlling the mass media, the political opposition, and civil society. Political freedom has mostly been replaced by the competi­tion of bureaucratic and oligarchic clans.[56] Weak­ened institutions have no independent legitimacy[57] and fail to provide institutional stability.

In the Economist Intelligence Unit"s Democracy Index, Russia ranks 102nd among 167 states sur­veyed.[58] Given its trend of curtailing civil liberties, Russia could be further downgraded after what is likely to be a flawed 2007-2008 election cycle in which election observers from the Organisation for Security and Co-operation in Europe were denied entry visas. With President Putin leading the United Russia Party in December 2007, the real power may stay with him regardless of his job description.

Ensuring Desired Electoral Outcomes. It is said that in a democracy, electoral rules are clear while the outcome is uncertain. In Russia, the out­come is certain while the rules are unclear. The Kremlin tailors the electoral system to ensure the desired outcome.

This consolidation of power through electoral change is best exemplified by the 2005 abolition of the direct election of regional governors. Under this "reform," the Russian president appoints the regional governors, who are then confirmed by their respective regional legislatures. As a result, gover­nors are no longer accountable to their constituents. Similarly, majority parliamentary districts have been replaced with proportional representation from party lists, with parties required to receive at least 7 percent of the vote to win any seats.

This severed the link between the voters and their representatives and concentrated the "man­ageable" political elite in Moscow. The reforms, in other words, have again turned Russia into a cen­tralized state.

The option to reject all candidates on the ballot and the minimum voter turnout threshold have been eliminated from the election law. A minimum turnout of 25 percent was required in the 2003 Duma election for an election to be valid. Critics say that this effort to neutralize voter apathy as a poten­tial factor in the elections is just the latest step by the Kremlin to control the political process before the key 2007 and 2008 elections.[59] Many Russians had resorted to "passive protest" by not voting--turn­outs of 30 percent were common[60]--or by voting against all candidates in the elections that did not offer real alternatives.

In 2007, for the first time, all members of the Russian State Duma will be elected by proportional representation. Banned from forming electoral blocs, smaller opposition parties have little chance of overcoming the 7 percent threshold.[61] Thus, the 2007 legislature is expected to have a large Kremlin-loyal majority in both Houses, comprised of the United Russia Parties led by President Putin and possibly Vladimir Zhirinovsky"s Liberal Democratic Party. The pro-Putin social democratic Just Russia party and the Communists may be the designated opposition if they manage to clear the 7 percent bar­rier. Just as after the 2003 Duma elections, when United Russia gained over a two-thirds majority, the parliament will serve mostly as a rubber stamp for executive branch decisions.

In the 2004 presidential election, Putin, the incumbent, won 71.4 percent of the vote in the first round. For the upcoming March 2008 presidential election, Putin is expected to name his successor. In September 2007, 40 percent of Russians were likely to vote for the anonymous candidate nominated by Putin, and 51 percent were likely to name him as the politician they trust.[62] Recently, Putin has talked of five possible presidential nominees[63]--including previously obscure Prime Minister Viktor Zubkov and two well-positioned First Vice-Premiers, Sergey Ivanov and Dmitriy Medvedev--thereby maintain­ing intrigue and his own influence over events.

The elections have put great assets at stake, exac­erbating internal frictions over power and property. A class of high-ranking officials has emerged. These new members of the elite manage, but do not for­mally own, Russia"s strategic industries on behalf of the state. They are extremely wealthy and influen­tial, but they also depend on their access to power. This means that the stakes for the 2008 elections are very high. Public offices, control over business, and even basic freedoms are at stake.

Taming the Media and Civil Society. Media outlets, owned or controlled by the state, are used as tools in shaping the desired public opinion. Sev­eral remaining radio stations, on-line sources, and the remaining printed media that are still critical of the Kremlin are under constant pressure from the authorities. Since 2000, 13 journalists have been killed, and none of these cases has resulted in a conviction.[64]

Since 2003, the government has taken control of all of the television networks, directly or through the state-owned entities. Notably, Ekho Moskvy radio station and Kommersantnewspaper, the two relatively independent outlets, are owned by state energy giant Gazprom and a Gazprom subsidiary, respectively. An estimated 27.8 million Russians (25 percent of the population) have Internet access,[65] making the Internet the main alternative information source and a medium for the opposi­tion"s mobilization.

Russia"s "managed democracy" constrains the civil space and limits public debate. Russian nongovern­mental organizations (NGOs), particularly those that receive foreign funding, have been under state pres­sure since a 2006 law imposed strict registration and reporting requirements. According to Russian human rights activists, Russia now has political prisoners convicted of criminal offenses in the absence of "polit­ical paragraphs" in the penal code.[66]

Rise of Bureaucracy and Red Tape. Critics say that many long-overdue administrative reforms have not been implemented under the Putin admin­istration and that the quality of governance has deteriorated. As one veteran critic puts it, "Russia remains one of the most criminalized, corrupt, and bureaucratic countries in the world."[67]

Russian official data testify that government bureaucracy has grown steadily. It has increased by 40 percent since 2001 and now totals 1.57 million fed­eral and local government employees[68]--roughly equal to the size of Soviet bureaucracy. Thus, Russia"s bureaucratic ratio to general population has more than doubled since 1991 because its population is less than half the size of the population of the Soviet Union in 1991. Independent experts estimate Russian bureaucracy, including municipal-level officials, at 3.5 million[69]--more than twice the official number.

Civil service salaries are dramatically higher than the average nationwide wages, and civil service pres­tige is also on the rise. Yet the quality of Russian bureaucracy remains low. A recent World Bank study of government effectiveness placed Russia in the lowest quartile of the 212 countries surveyed, based on its performance in such key areas as rule of law and control of corruption.[70] Graft, inertia, and negligence remain typical of Russia"s bureaucracy. State expansion into the private sector worries inves­tors, slows down the economy, and fuels corruption.

The remarkable intertwining of Russia"s bureau­cratic and business elites illustrates the ruling elite"s unsurpassed economic power. For example:

The Financial Times reported in 2006 that 11 members of the presidential administration chaired six state companies and held 12 state directorships and that 15 senior government officials held six chairmanships and 24 other board seats.[71]

The long list of senior officials serving on boards of major companies starts with the two First Deputy Prime Ministers: Dmitriy Medvedev, chairman of Gazprom, and Sergey Ivanov, who oversees the military-industrial complex and state holdings in aircraft, shipbuilding, and nuclear industries.

Igor Sechin, Putin"s Deputy Chief of Staff, chairs Rosneft, Russia"s largest state-run oil company.

Viktor Ivanov, Putin"s top aide, heads the board of directors of Almaz-Antei, the country"s key defense producer, and the board of directors of Aeroflot, the national airline.

Alexey Gromov, the President"s Press Secretary, sits on the board of Channel One, Russia"s main television channel.

The Economy: Commodity Dependence and State Intervention

Banking on its energy revenues, Russia has man­aged to avoid painful economic restructuring and diversification beyond the natural resource sectors. The growth of the Russian economy is due mainly to exports of raw materials (oil, natural gas, and metals). After seven years of economic growth, Rus­sia remains heavily dependent on energy exports and is vulnerable to fluctuations in global commod­ity prices. The International Monetary Fund and the World Bank estimate that:

[I]n 2005 the oil and gas sector represented around 20 percent of the country"s GDP, gen­erated more than 60 percent of its export revenues (64 percent in 2007), and accounted for 30 percent of all foreign direct investment (FDI) in the country.[72]

President Putin has offered an action plan for Russia to diversify away from reliance on energy and natural resources and to become one of the world"s leading economies. His vision of Russian economic development entails growing high-tech industries, a strong service sector, and a state boost for "national champions" in key industries--vertically integrated state-owned or state-controlled global companies capable of competing with foreign corporations. However, it is not clear that Russia is emerging as a diversified globally competitive economy, given Russian commodities" competitive advantage and the Kremlin"s preference for economic regulation.

The Kremlin has steadily increased the state-con­trolled share of the economy. The European Bank for Reconstruction and Development reported that the public sector"s share of the economy increased from 30 percent to 35 percent in 2005. The state"s share of major blue chip companies has quadrupled between 2004 and 2007. The state has also come to play a significant role in mergers and acquisitions. According to KPMG, two transactions--the increase in the state share of Gazprom from 38 percent to 51 percent and Gazprom"s purchase of Sibneft-- totaled $20.21 billion and accounted for half of the value of all Russian mergers and acquisitions in 2005.[73]

Although leading officials have explicitly rejected state capitalism as a model for Russia, the Kremlin is pushing to consolidate state assets in many domes­tic industries. The leaders in state intervention are the military-industrial complex and the civilian nuclear sector, which are under state command and control.

Moreover, these influential industries need inter­national instability to increase sales. The USSR and Russia at times have sold weapons to both sides in a conflict, such as to Iran and Iraq in 1980s. Russian experts are fond of saying that weapons exports cre­ate allies. "Civilian" nuclear reactors are often pre­cursors of a military nuclear program, as is the case with Iran, to which Russia sold the Bushehr reactor and is planning to sell up to five more units.

Putin envisages the state not as the great rena­tionalizer, but as the biggest shareholder in a newly privatized society.[74] The oil and gas sector has a built-in interest in keeping the Middle East unstable and oil prices high. The industry is notorious for evictions of foreign corporations and internal own­ership consolidation by state giant Gazprom. Con­solidation of strategic assets under state control is often presented to the public as restoration of national property illicitly acquired in the mid-1990s by corrupt oligarchs at deeply discounted prices. This was the stated justification for Rosneft"s 2004 acquisition of Yuganskneftegaz, the key production unit of forcibly bankrupted Yukos.

The Kremlin is also increasing its shares of the aerospace, weapons production, nuclear industry, shipbuilding, shipping, and automotive sectors. This often involves regrouping industry assets into "national champions" through acquisition of privately owned assets by major state holdings. Needless to say, the state is employing multiple administrative levers to avoid paying market prices for these acquisitions.

At the opening of the 2007 economic forum in St. Petersburg, First Deputy Prime Minister Sergey Ivanov cited state holdings as an example of innova­tive economic development. On paper, such public corporations are assigned ambitious projects such as developing nanotechnology, tripling national ship­building capacity, and promoting Russia"s civilian aircraft industry to serve 10 percent of the world market by 2020.[75] In practice, these sectors are inter­nationally uncompetitive and have demonstrated limited effectiveness even in import substitution.

Experts say that "Kremlin Inc.,"[76] a set of strate­gic industries under state control and managed by high-ranking officials, ensures the revival of the mil­itary-industrial complex once enjoyed by the Soviet Union. Such massive economic power in the state"s hands, multiplied by the oil-fueled budgetary sur­plus, could lead to a new round of massive Russian rearmament.

The Kremlin"s insistence on the legitimacy of mercantilism, which limits Western business to minority stakes in the natural resources sector, neg­atively affects the U.S.-Russian economic agenda. The pattern of government takeovers of businesses is increasing the political risk of doing business in Russia and driving away much-needed investment. Although foreign investment in Russia topped $150 billion in 2006[77] and has exceeded $70 billion in the first seven months of 2007, experts say these levels are relatively low for a country with a massive and obsolete infrastructure and an economy grow­ing at 6.7 percent annually.[78]

The investment ratio is just over half of what is needed to sustain high growth. Foreign investment will remain much lower than is needed until Russia improves its corporate governance and creates a more welcoming investment environment.[79]

What the U.S. Should Do

Congress and the Administration should under­stand that Russia is resurging as an assertive auton­omous international actor poised to challenge American leadership, particularly in Central Asia, the Caucasus, Eastern Europe, and the Middle East. It is also likely that Russia will conduct forays into the Western Hemisphere, particularly via Venezuela and its satellites, such as Bolivia and Ecuador, as well as Cuba.

However, as long as Iraq, Iran, and the war on terrorism remain high on the U.S. agenda, it is not in America"s strategic interest to pick a major fight with Russia, exacerbate differences unnecessarily, or respond tit-for-tat to each provocation. Rather, the U.S. should staunchly defend its national interests and, when possible, involve Russia in resolving international crises.

In view of pressing demands elsewhere, it is understandable that U.S. assistance to Russian democracy and civil society has been limited. In fis­cal year (FY) 2006, of $949.3 million budgeted by all U.S. government agencies for assistance pro­grams in Russia, democracy programs accounted for only $45.2 million, $23.6 million was spent on social reform, and security and law enforcement aid accounted for $860 million.[80]

The Department of State and the National Endowment for Democracy (NED) may need to explore more creative ways to reach their objectives. The total NED budget has grown from $59 million in FY 2005 to $74 million in FY 2006 but was cut in FY 2007 to $50 million despite the Bush Adminis­tration"s request for $80 million.[81]

The U.S. should establish strategic goals and objectives and pursue greater engagement with the remnants of Russian civil society. Specifically, the U.S. should:

Continue to negotiate and cooperate with Rus­sia on matters of mutual concern in the areas of security and nonproliferation. Moscow and Washington have common interests in prevent­ing a new arms race and renegotiating the Strate­gic Arms Reduction Treaty (START), which is up for renewal in 2009, and the Intermediate-Range Nuclear Forces (INF) Treaty, which is in force indefinitely. Moscow and Washington should seek common ground in opposing the spread of intermediate-range missiles and weapons of mass destruction, nuclear proliferation, and illicit drug and arms trafficking.

The U.S. and Russia should also expand cooper­ation in civilian nuclear energy, space explora­tion, and fighting the spread of radical Islam. The U.S. should clarify that Iran"s nuclear arsenal will be even more detrimental to Russia"s security than to U.S. security and should work to limit Russian arms sales to Iran, Syria, and Venezuela. The Defense Department should continue the Coop­erative Threat Reduction of Russia"s strategic arse­nals under Nunn-Lugar funding.

Promote Russia"s integration into the global economy, particularly the rule-based WTO regime. Russia"s increasing role in the global marketplace will further expose it to economic liberalism, freedom of travel, and the free exchange of ideas. The Bush Administration should ask Congress to take the long-overdue step of "graduating" Russia from the Jackson- Vanik Amendment, which bars Russia from enjoying Permanent Normal Trade Relations (NPTR) with the United States. This amendment was overtaken by events over a decade and a half ago when Russia fully liberalized Jewish emigra­tion from the country, as demanded by the Jack­son-Vanik Amendment.

At the same time, the U.S. and its European allies should insist that Russia open its natural resources sectors, including energy, to Western investors. The U.S. Trade Representative and U.S. Department of Commerce should cooper­ate with their European counterparts to ensure a level playing field for American and other West­ern companies operating in Russia. If Russia fails to cooperate, the U.S., Japan, and European countries should review the flow of technology and investment to the Russian energy sector. The U.S. should also strive to create an Energy Consumers" Club with China, India, Japan, and Europe to balance the power of OPEC and other energy superpowers, such as Russia.

Provide technical medical assistance. Russia could benefit significantly from assistance in combating the HIV/AIDS and tuberculosis epi­demics, improving prevention and treatment for cardiovascular diseases and cancer, improving health care management, and dealing with other pressing health issues. The U.S. State Depart­ment should encourage such activities, which would offer new business opportunities for the American health care sector. The U.S. needs to demonstrate to the Russian elites that it has much to offer in their areas of concern.

Increase support for civil society groups working to advance media independence, rule of law, political liberalization, and tolerance in Russia.Russia is a signatory to the Helsinki 1975 Final Act and to the 1991 Moscow Docu­ment. Thus, Russian domestic behavior is sub­ject to these obligations. In particular, the National Endowment for Democracy and other U.S.-funded NGOs should provide greater sup­port to Russian NGOs fighting ethnic hatred and working to memorialize Stalin"s victims and the mass crimes committed under his regime. Inter­net-based projects should be emphasized as they facilitate public access to alternative sources of information that the Russian state has had diffi­culty controlling or shutting down.

Constantly and steadily reach out to the Rus­sian people through a comprehensive public diplomacy strategy to debunk the myth of inherent American hostility toward Russia. The U.S. should expand its public diplomacy efforts via the Internet, international broadcasting under the Broadcasting Board of Governors, and professional and academic exchange programs. These programs should emphasize improving business relations and the investment environ­ment, as well as cultivating ethnic and religious tolerance in Russian society, thus helping to pre­vent further radicalization and alienation of mar­ginalized groups. For FY 2008, Congress should also fund the long-delayed reorganization of U.S. Russian-language international broadcasting.

Establish a multidisciplinary monitoring project, through the U.S. government or a con­sortium of preeminent think tanks with the par­ticipation of top U.S. and international scholars, to scrutinize the dynamics of domestic stability, the security and health of Russia"s society and economy, and how they influence Russian domestic and foreign policy.

Conclusion

Russia"s foreign policy is still driven by former Soviet military and security elites who view Russia as the direct heir to the autocratic Russian Empire and the Soviet Union and who cherish Russia"s self-appointed role as America"s principal counterbal­ance on the world stage.[82] The lack of institutional checks and balances on the executive branch pre­vents the public airing of differences on foreign and security policy and makes it difficult for sober heads to voice their opposition to truculent foreign policy.

The Russian state is being progressively weak­ened by negative demographic trends, including alcoholism, HIV/AIDS, tuberculosis, and the result­ing decline in life expectancy. The alienation of Muslims and other ethnic groups is leading to an increase in xenophobia and violence and to further Islamic radicalization and deepening divisions in Russian society.

While Russia has become more assertive interna­tionally, its domestic policies have become more authoritarian, and state intervention in the econ­omy has become excessive. U.S.-Russian bilateral relations are at their lowest since the end of the Cold War, and many trends in Russian foreign policy are justifiably disturbing.

U.S. officials should develop a comprehensive strategy to serve America"s objectives, keeping in mind the significant internal vulnerabilities of the Russian state. The U.S. cannot afford to "lose" Rus­sia while Russia is involved in protracted conflicts in the Caucasus and is influencing the situation in Central Asia, in the Middle East, and throughout the Muslim world. Meanwhile, Russia"s cooperation is essential to restraining and reversing Iran"s quest for nuclear weapons. Although Russian elites may not always recognize it, Russia can ill afford to "lose" the West, especially in view of Moscow"s lack of stra­tegic allies and the looming power of China.

The U.S. government should address Russia"s adverse domestic trends through a sustained Amer­ican effort both to reach out to the Russian public, business sector, and intellectual community and to support the empowerment of the remnants of free media and civil society. To be a partner, Moscow needs to behave responsibly along its periphery and in the Middle East, Venezuela, and other key regions and countries. At the same time, some important areas of bilateral relations should remain open to cooperation, and the U.S. government should do its best to encourage and sustain dialogue with its Russian counterparts.

Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. The author wishes to thank Yevgeny Volk, Ph.D., Coordinator of The Heritage Foun­dation"s Moscow Office, for providing valuable comments on this paper. Heritage intern Olena Krychevska also contributed to the production of this paper.

[1]Encyclopaedia Britannica Online, s.v., "Russia," at www.britannica.com/eb/article-9109504/Russia (November 5, 2007).

[2]Mark N. Katz, "Is Russia Strong or Weak," SpaceWar, July 10, 2006, atwww.spacewar.com/reports/Is_Russia_Strong_Or_Weak_999.html (August 23, 2007).

[3]Alexander Motyl, "Ukraine and Russia: Divergent Political Paths," openDemocracy, August 17, 2006, at http://opendemocracy.net/democracy-ukraine/russia_ukraine_3830.jsp (August 25, 2007).

[4]Robert Fulford, "Putin"s ‘Managed Democracy,"" The Financial Post (Canada), July 15, 2006.

[5]BBC News, "European Press Review: Russia in Shock," June 11, 2002, athttp://news.bbc.co.uk/2/low/europe/2037530.stm (July 30, 2007).

[6]Ekaterina Scherbakova, "Demograficheskie itogi 2006 goda" [Demographic results of 2006], Demoscope Weekly, March 5- 18, 2007, athttp://demoscope.ru/weekly/2007/0279/barom01.php (July 20, 2007); Russian Federal State Statistics Service, "Chislennost naseleniya" [Total acts of violence], atwww.gks.ru/free_doc/2007/b07_11/05-01.htm (July 20, 2007); and Population Reference Bureau, "2007 World Population Data Sheet," August 2007, atwww.prb.org/pdf07/07WPDS_Eng.pdf (September 14, 2007).

[7]Ibid.

[8]"Russian Health and Demography: A Sickness of the Soul," The Economist, September 7, 2006, at www.economist.com/world/europe/PrinterFriendly.cfm?story_id=7891259 (July 20, 2007).

[9]Russian Federal Statistics Service, "Key Mortality Indicators," atwww.gks.ru/free_doc/2007/b07_11/05-07.htm (July 20, 2007).

[10]Russian Federal Statistics Service, "Koeffitsienty smertnosti po osnovnym klassam prichin smerti" [Mortality rates for main causes of death], atwww.gks.ru/free_doc/2007/b07_11/05-07.htm (July 20, 2007), and Organisation for Economic Co-operation and Development, OECD Economic Surveys: Russian Federation, 2006, athttp://puck.sourceoecd.org/upload/1006171e.pdf (August 20, 2007).

[11]UNAIDS, "2006 Report on the Global AIDS Epidemic," May 2006, atwww.unaids.org/en/HIV_data/2006GlobalReport/default.asp (September 13, 2007).

[12]Guy Faulconbridge, "Russia Warns of AIDS Epidemic, 1.3 mln with HIV," Reuters, May 15, 2007, at www.reuters.com/article/healthNews/idUSL1546187520070515 (July 27, 2007).

[13]World Health Organization, WHO Statistical Information System, "Core Health Indicators," 2007, atwww.who.int/whosis/database/core/core_select_process.cfm (September 10, 2007).

[14]Yale University, Center for Interdisciplinary Research on AIDS, "Epidemiology of HIV/AIDS in Russia," 2007, athttp://cira.med.yale.edu/international/russiaepid.html (September 12, 2007).

[15]James Magee, "HIV Prevention, Harm Reduction, and Injecting Drug Use," AVERT, updated August 31, 2007, at www.avert.org/injecting.htm (September 12, 2007).

[16]"In Sad Tally, Russia Counts More Than 4 Million Addicts," Pravda, February 20, 2004, at http://newsfromrussia.com/main/2004/02/20/52421.html (September 12, 2007).

[17]Human Rights Watch, "Lessons Not Learned: Human Rights Abuses and HIV/AIDS in the Russian Federation," Vol. 16, No. 5(D) (April 2004), p. 16, athttp://hrw.org/reports/2004/russia0404/russia0404.pdf (October 31, 2007).

[18]Scherbakova, "Demograficheskie itogi 2006 goda."

[19]Michael Mainville, "Russia Has a Muslim Dilemma: Ethnic Russians Hostile to Muslims," San Francisco Chronicle, November 19, 2006, at http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/11/19/MNGJGMFUVG1.DTL (July 25, 2007).

[20]Judyth Twigg, "National Security Implications of Russia"s Health and Demographic Crisis," Center for Strategic and International Studies PONARS Policy Memo No. 360, February 4, 2005, at www.csis.org/media/csis/pubs/pm_0360.pdf (August 15, 2007).

[21]Judyth Twigg, "Differential Demographics: Russia"s Muslim and Slavic Populations," Center for Strategic and International Studies PONARS Policy Memo No. 388, December 5, 2005, at www.csis.org/media/csis/pubs/pm_0388.pdf (August 15, 2007).

[22]World Health Organization, "Core Health Indicators."

[23]RIA Novosti, "Russia to Raise National Project Spending 12% to $10 bln in 2007," August 23, 2007, at http://en.rian.ru/russia/20070823/73753727.html (September 14, 2007).

[24]Encyclopædia Britannica Online, s.v., "Slavophile," 2007, atwww.britannica.com/eb/article-9068172 (August 23, 2007).

[25]Konstantin Eggert, "Amerika v poiskakh Rossii, Rossiya v poiskakh sebya" [America is in search of Russia, Russia is in search of herself], BBC News, July 4, 2007, athttp://news.bbc.co.uk/go/pr/fr/-/hi/russian/russia/newsid_6271000/6271308.stm (August 24, 2007).

[26]Peter Lavelle, "Russia: Unified Russia"s ‘Ideology-Lite,"" Radio Free Europe/Radio Liberty, December 2, 2005, at www.rferl.org/featuresarticle/2005/12/9e265611-7d9e-4fce-81d8-240d54115271.html (August 24, 2007).

[27]Galina Kozhevnikova and Alexander Verkhovsky, "Posevnaya na polyane russkogo natsionalizma" [Sowing the field of Russian nationalism], Sova Center, July 27, 2007, athttp://xeno.sova-center.ru/29481C8/96A2F47 (August 15, 2007).

[28]Andrew E. Kramer, "New Russian History: Yes, People Died, But...," International Herald Tribune, August 15, 2007, atwww.iht.com/articles/2007/08/15/news/letter.php (August 20, 2007).

[29]Mark H. Teeter, "The Matter with History," The Moscow Times, July 16, 2007, atwww.themoscowtimes.com/stories/2007/07/16/007.html (August 20, 2007).

[30]Reuters, "Russian Youth: Stalin Good, Migrants Must Go: Poll," July 25, 2007, atwww.reuters.com/article/worldNews/idUSL2559010520070725?feedType=RSS&rpc=22&sp=true (July 30, 2007).

[31]Valery Tishkov, "Self-Determination of the Russian Nation," International Trends, Vol. 3, Issue 2(8) (May-August 2005), at www.intertrends.ru/seven_e.htm (September 13, 2007).

[32]Ramazan Abdulatipov, "Sozdanie rossiiskoi natsii: proekt dlya XXI veka" [Creation of the Russian nation: Project for the XXI century], Rossiiskaya Gazeta, August 28, 2003, atwww.rg.ru/2003/08/28/Sozdanierossijskojnatsii.html (August 23, 2007).

[33]Freedom House, Freedom in the World: Country Reports, s.v. "Russia," 2007 ed., atwww.freedomhouse.org/template.cfm?page=22&country=7258&year=2007 (August 25, 2007).

[34]Levada Center, "Natzionalizm i ksenofobiya" [Nationalism and xenophobia], August 29, 2007, at www.levada.ru/press/2007082901.html (September 15, 2007).

[35]Galina Kozhevnikova, "Radikalnii natsionalizm v Rossii i protivodeistvie emu v 2006 godu" [Radical nationalism in Russia and counteraction to it in 2006], Sova Center, January 4, 2007, at http://xeno.sova-center.ru/29481C8/8F76150 (July 30, 2007).

[36]Boris Reitschuster, "After Putin Is the Same As Before Putin," InoPressa, September 14, 2007, at www.inopressa.ru/focus/2007/09/17/12:04:33/putin (September 16, 2007).

[37]Andreas Umland, "‘Neoevraziistvo", vopros o russkom fashizme i rossiiskii politicheskii diskurs" [‘Neoeurasianism," the issue of Russian fascism and Russian political discourse],Zerkalo Nedeli,No. 48(627), December 16-22, 2006, at www.zn.ua/1000/1600/55389 (July 25, 2007).

[38]Dvizhenie Protiv Nelegalnoi Immigratsii, "O dvizhenii" [About the movement], atwww.dpni.org/about/o_dvizheni (September 17, 2007).

[39]Dvizhenie Protiv Nelegalnoi Immigratsii, Sluzhba Informatsii, "Vstupai v narodnuyu camooboronu DPNI!" [Join DPNI"s people"s self defense!], June 26, 2007, athttp://dpni.org/articles/novosti_dp/2802 (October 31, 2007).

[40]Natalya Krainova, Kevin O"Flynn, and Nabi Abdullaev, "Racist Chants Undercut Day of Unity," The Moscow Times, November 6, 2007, p. 1, atwww.themoscowtimes.com/stories/2007/11/06/002.html (November 7, 2007).

[41]Claire Bigg, "Russia: Counterrally to Defy Ultranationalist March," Radio Free Europe/Radio Liberty, November 3, 2006, at www.rferl.org/featuresarticle/2006/11/b08c1e9c-99ff-4203-897b-bf38073f079f.html (July 30, 2007).

[42]"Immigrants in Russia: Market Forces," The Economist, January 18, 2007, atwww.economist.com/world/europe/displaystory.cfm?story_id=8562029 (August 23, 2007).

[43]Alexey Malashenko, "The Situation Inside Russia," Bitterlemons-international, Vol. 4, Edition 13 (April 6, 2006), at www.bitterlemons-international.org/inside.php?id=516 (October 31, 2007).

[44]Dmitry Gorenburg, "Russia"s Muslims: A Growing Challenge for Moscow," Center for Strategic and International Studies PONARS Policy Memo No. 421, December 8, 2006, atwww.csis.org/media/csis/pubs/pm_0388.pdf (August 15, 2007).

[45]Malashenko, "The Situation Inside Russia."

[46]Gorenburg, "Russia"s Muslims."

[47]"Russian Xenophobia," The Economist, February 17, 2005.

[48]Yuri Zarakhovich, "Inside Russia"s Racism Problem," Time, August 23, 2006, atwww.time.com/time/nation/article/0,8599,1304096,00.html (August 23, 2007).

[49]"Russian Nationalism," The Economist, May 11, 2006.

[50]Umland, "‘Neoevraziistvo", vopros o russkom fashizme i rossiiskii politicheskii diskurs."

[51]Press release, "OSCE Media Freedom Representative Asks Russian Authorities to Review Extremism Laws," Organization for Security and Cooperation in Europe, July 27, 2007, at www.osce.org/item/25791.html (July 30, 2007). For example, Putin critic Andrei Piontkovsky is on trial for "extremism" due to his anti-Kremlin books Unloved Country andFor the Motherland! For Abramovich! Fire! The Kremlin claims that the books incite violence against Russians, Americans, and Jews. Piontkovsky joked that this is the first time the Kremlin has looked out for Americans.

[52]Kozhevnikova and Verkhovsky, "Posivnaya no polyane russkogo natsionalizma."

[53]Freedom House, Freedom in the World.

[54]Press release, "OSCE Media Freedom Representative Asks Russian Authorities to Review Extremism Laws."

[55]Zarakhovich, "Inside Russia"s Racism Problem."

[56]Human Rights in Russia, "Managed Democracy Is a Straight Road to Dictatorship and Fascism," at www.hro.org/ngo/discuss/march.htm (September 17, 2007; unavailable November 5, 2007).

[57]Nikolai Petrov, "From Managed Democracy to Sovereign Democracy: Putin"s Regime Evolution in 2005," Center for Strategic and International Studies PONARS Policy Memo No. 396, December 14, 2005, at www.csis.org/media/csis/pubs/pm_0396.pdf (September 19, 2007).

[58]Laza Kekic, "The World in 2007: Democracy Index," Economist Intelligence Unit, 2007, at www.economist.com/media/pdf/DEMOCRACY_INDEX_2007_v3.pdf (August 10, 2007).

[59]Associated Press, "Russia Scraps Election Turnout Threshold," The Washington Post, December 7, 2006, at www.washingtonpost.com/wp-dyn/content/article/2006/12/07/AR2006120701106.html (September 15, 2007).

[60]Petrov, "From Managed Democracy to Sovereign Democracy."

[61]Russian Federation, "Federalnii zakon o byborakh deputatov gosudarstvennoi dumy federalnogo sobranniya rossiiskoi federatsii [Federal law on the election of deputies to the state duma of the federal assembly of the Russian Federation], May 18, 2005, No. 51-F3, atwww.cikrf.ru/cikrf/law/2/zakon_51.jsp (September 18, 2007).

[62]Levada Center, "Vybory 2008" [Elections 2008], at www.levada.ru/vybory2008.html(September 19, 2007); "Prezident: Odobrenie i doverie" [President: Approval and trust], atwww.levada.ru/prezident.html (September 19, 2007); and "Reitingi doveriya" [Trust ratings], September 2007, at www.levada.ru/polotiki0907.html (October 31, 2007).

[63]C. J. Chivers, "Putin Sees ‘Real Choice" in Election," International Herald Tribune, September 14, 2007, at www.iht.com/articles/2007/09/15/europe/15russia.php (September 15, 2007).

[64]Freedom House, Freedom in the World.

[65]Public Opinion Foundation, "The Internet in Russia/Russia on the Internet," Population Poll, 19th Release, Spring 2007, published June 23, 2007, athttp://bd.english.fom.ru/report/map/projects/ocherk/eint0702 (August 23, 2007).

[66]Moscow Helsinki Group, "Politzaklychennye putinskoi Rossii" [Political prisoners of Putin"s Russia], 2004, at www.mhg.ru/publications/4D61A27 (July 29, 2007).

[67]"Russia Under Putin: The Making of a Neo-KGB State," The Economist, August 23, 2007, at www.economist.com/world/displaystory.cfm?story_id=9682621 (September 18, 2007).

[68]Nikolaus von Twickel, "Red Tape Reaching Its Soviet Heights," The Moscow Times, August 7, 2007, at www.themoscowtimes.com/stories/2007/08/07/001.html (November 7, 2007).

[69]Ibid.

[70]The World Bank, "Country Data Report for Russia, 1996-2006," athttp://info.worldbank.org/governance/wgi2007/pdf/c187.pdf (September 15, 2007).

[71]Neil Buckley and Arkady Ostrovsky, "Back in Business--How Putin"s Allies Are Turning Russia into a Corporate State," Financial Times, June 19, 2006, atwww.ft.com/cms/s/0/d776a916-ff2f-11da-84f3-0000779e2340.html (September 20, 2007).

[72]U.S. Department of Energy, Energy Information Administration, "Country Analysis Briefs: Russia," April 2007, at www.eia.doe.gov/emeu/cabs/Russia/Background.html (September 20, 2007).

[73]Buckley and Ostrovsky, "Back in Business."

[74]Nick Paton Walsh, "Meet the Chief Exec of Kremlin Inc...," The Guardian, July 6, 2005, at www.guardian.co.uk/russia/article/0,2763,1522191,00.html (September 20, 2007).

[75]RIA Novosti, "Russia Among Top 5 in Terms of GDP by 2020--Ivanov," June 9, 2007, athttp://en.rian.ru/russia/20070609/66970013.html (September 20, 2007).

[76]Walsh, "Meet the Chief Exec of Kremlin Inc..."

[77]RIA Novosti, "Russia Among Top 5 in Terms of GDP by 2020."

[78]American Chamber of Commerce in Russia, "The Economy and Investment Climate in Russia," April 6, 2007, at www.amcham.ru/publications/investment_reports/ir2006 (July 17, 2007).

[79]Keith Bush, "Russian Economic Survey," U.S.-Russia Business Council, May 2007, atwww.usrbc.org/pics/File/EconSurvey/SurveyMay2007.pdf (July 17, 2007).

[80]U.S. Department of State, Bureau of European and Eurasian Affairs, "U.S. Assistance to Russia--Fiscal Year 2006," May 11, 2006, at www.state.gov/p/eur/rls/fs/66166.htm (August 20, 2007).

[81]U.S. Department of State, Bureau of Resource Management, "FY 2007 Budget in Brief: Related Appropriations," February 6, 2006, atwww.state.gov/s/d/rm/rls/bib/2007/html/60316.htm (August 20, 2007).

[82]Ariel Cohen, "How to Confront Russia"s Anti-American Foreign Policy," Heritage Foundation Backgrounder No. 2048, June 27, 2007, atwww.heritage.org/Research/RussiaandEurasia/bg2048.cfm.

‍

by Ariel Cohen

Russia is consolidating its grip on oil and gas—the economic lifeblood of Europe. Moscow is pursuing a comprehensive strategy that could increase Europe"s political and economic dependence on Russian energy. Such dependence could negatively affect trans­atlantic relations, common values, goals, strategic objectives, and security policies. Without a policy dialogue and coordination between Washington and European capitals, Europe"s strategic drift away from the United States will continue unabated.

In the meantime, European energy security policy is in disarray. Despite British Prime Minister Tony Blair"s call for a common European energy policy in an October 2005 speech to the European Parliament,[1]  European countries have rushed to secure their own energy interests in lieu of a more coordinated approach. In the spring and summer of 2007, Austria, Italy, and Hungary negotiated separate deals with the Russian energy giant Gazprom. These deals may undermine the EU"s Nabucco project, which aims to bring Caspian gas to the heart of Europe via Bulgaria, Romania, Hungary, and into Austria.

On paper, the European Union is invested in energy security. At the 2007 spring summit in Brus­sels, EU members outlined an action plan on energy security for 2007–2009. First, to ensure security of supply, the EU needs to "diversif[y]…energy sources and transport routes, and better systems for respond­ing to crises."[2]  Second, the EU should promote inter­national energy policy by "negotiating a new treaty framework for energy co-operation with Russia, and improving relations with energy-rich countries in Central Asia and North Africa." The EU also pro­claims that it wants to improve its ability to manage supply crises, to expand the energy grid connecting European countries, and to improve the functioning of the internal energy market.[3]

In practice, some European countries depend heavily on energy imports and are highly vulnerable to global energy shocks. The EU is the world"s larg­est importer of oil and gas. It imports 82 percent of its oil and 57 percent of its gas. Imports are pro­jected to rise to 93 percent of its oil and 84 percent of its gas over the next 25 years.[4]

With Russia consolidating its control of Euro­pean and Central Asian energy, and in view of Europe"s dependence on the Persian Gulf, Europe desperately needs to cooperate on energy security. Europe and the U.S. should work together to miti­gate the adverse effects of Europe"s strategic depen­dence on Russia. In particular, the U.S. should:

• Work with key European governments to address vulnerabilities that result from overreliance on a single oligopolistic energy supplier—Russia. They should encourage development of EU-wide nat­ural gas reserves, increase the consumption of liquefied natural gas, and expand the nuclear, coal, and renewable energy sectors.
• Support diversification of energy transportation routes in Eurasia, especially oil and gas pipelines that link Central Asian producers to European markets, bypassing Russia.
• Continue efforts to bring Russia into full compli­ance with the Energy Charter to increase predict­ability and transparency in energy markets.

Energy Dependence on Russia

Europe is hungry for energy. In 2006, the 25 EU members consumed 1,722.8 million tons of oil equivalent (mtoe). Nearly two-thirds came from hydrocarbons: 706.3 million tons of oil (14.9 million barrels per day) and 420.6 mtoe (476.4 billion cubic meters) of natural gas. The remain­ing 34.6 percent came from coal, nuclear, and renewable sources.[5]

EU energy security already depends heavily on Russia. The EU imports almost half of its natural gas and 30 percent of its oil from Russia.[6]  Eastern Europe consumes even higher percentages of Rus­sian gas. Table 1 shows the major European recipi­ents of Russian natural gas exports, ranked from most dependent to least dependent.

In 2006, oil imports from Russia and Central Asia reached 5.9 million barrels per day (290.8 mil­lion tons). Russia also supplied some 132 billion cubic meters (bcm) of natural gas.[7]  Rising demand indicates that Europe"s dependence on Russian energy will continue to grow.

Russia has the largest proven natural gas reserves (1,688 trillion cubic feet) and the seventh-largest proven oil reserves (60.0 billion to 74.4 bil­lion barrels) in the world,[8]  and large areas of east­ern Siberia and the Arctic are still unexplored. Total Russian net oil exports reached 7 million barrels per day in 2006.[9]  Chart 1 and Chart 2 show the current and projected increased levels of Russian oil and gas exports.

Russian Energy Strategy and Tactics

Russia"s energy strategy seeks to make Europe increasingly dependent on Russian oil and gas. The Kremlin has advanced this strategy through a series of policies. It creates dependency by locking in demand with energy importers, consolidating the supply of oil and gas by signing long-term contracts with Central Asian energy producers, and securing control of strategic energy infrastructure in Europe and Eurasia. This includes extending the Gazprom monopoly and attempting to create an OPEC-style gas cartel.[10]  At the August 2007 summit of the Shanghai Cooperation Organization, the presidents of Kazakhstan and Russia called for establishment of an "Asian energy club" to expand energy ties among the member states, including creation of a unified energy infrastructure to serve as the basis for a common energy market.[11]

Locking in Demand. Russia is attempting to lock in demand by signing long-term bilateral and multilateral contracts with European countries. Moscow prefers to deal with the EU member states separately rather than as a group so that Russia can price-discriminate among its customers, charg­ing each country as close to its full paying poten­tial as possible.

Gazprom has negotiated long-term supply con­tracts with most Western European countries, including France, Germany, Italy, and Austria. Rus­sia has contracted for portions of Central and East­ern European demand that are much greater than that of Western Europe. Newer EU members, such as Slovakia, Bulgaria, and the Czech Republic, are almost entirely dependent on Russian gas.

More recently, during President Vladimir Putin"s May 2007 visit to Austria, the Austrian government agreed to a major deal with Gazprom. OMV, a par­tially state-owned Austrian energy company, signed a long-term gas import deal with Gazprom.[12]  Under the agreement, Gazprom subsidiaries GWH and CentrexEurope Energy and Gas will begin to deliver gas directly to Austrian consumers in 2008. Current imports from Russia account for approxi­mately 70 percent of Austrian gas consumption.[13]  Gazprom is scheduled to deliver 6.8 bcm of gas in 2007 and 9 bcm in 2009.[14]  This agreement would practically integrate Austria"s gas transit and storage networks (existing and planned) into Gazprom"s expanding network of dependencies.

Moreover, Gazprom intends to use Austria as a transit corridor to capture other EU markets. It is planning to develop a Central European Gas Hub and Gas Transit Management Center, the largest in continental Europe, at Baumgarten near Vienna.[15]  In July 2007, OMV announced its intent to take over MOL, a private Hungarian energy company, which will further strengthen Russia"s grip on Euro­pean energy infrastructure.

Locking in Supply. Russia"s second tactic is to lock in supply by consolidating its control of strate­gic energy infrastructure, most notably pipelines, throughout Europe and Eurasia. Rus­sia is using outright ownership and joint ventures to control supply, sale, and distribution of natural gas and is buying up major energy infrastruc­ture, such as pipelines, refineries, electric grids, and ports.

In 2002, Russian state-owned Transneft attempted to gain control of the Mazeikiu Nafta refinery in Lithua­nia and the Ventspils oil-export ter­minal in Latvia. When the two governments refused to sell their stakes to Transneft, Moscow sharply cut oil deliveries, forcing Ventspils to obtain oil by rail.[16]  Russian pursuit of the Lithuanian refinery was cut short when the Polish company PKN Orlen bought the refinery in 2006,[17]  but Moscow is still pursuing the Latvian terminal. As recently as May 2007, a top Ventspils executive said that "the company was prepared to take on a strategic Russian investor."[18]

As of 2004, Gazprom had in­vested $2.6 billion in 23 major joint ventures, including buying a 50 per­cent stake in Slovrusgaz in Slovakia, 48 percent of Europol Gaz in Poland, and 30.6 percent of Eesti Gaas in Es­tonia. [19]   Russia is also buying up stra­tegic infrastructure companies in Georgia, Hungary, and Ukraine.[20]  In 1998, Gazprom took over shares of Topenergy, a Bulgarian company dealing with commercial distribu­tion of gas.[21]

Russia is also aggressively consoli­dating its control of European pipe­lines. The Kremlin has actively opposed Western-controlled pipeline projects directly linking Eurasian energy-producing countries to Euro­pean markets, such as the Baku– Tbilisi–Ceyhan oil pipeline and the Baku–Erzurum gas pipeline.

Earlier in 2003, German Chancel­lor Gerhard Schroeder and President Putin agreed to build a Nord Stream pipeline to supply Germany with Russian gas. The pipeline will cross the Baltic Sea and bypass Ukraine, Belarus, and Poland. (See Map 1.) It will have an annual capacity of 27.5 bcm of gas and is expected to become operational by 2010. Gazprom owns 51 percent of the North Euro­pean Gas Pipeline Company, which was created to build the pipeline"s underwater section.[22]  This pipeline will further tie European energy security to the Kremlin.

In February 2007, Ukrainian Prime Minister Viktor Yanukovych abandoned a project to extend the Odessa–Brody pipeline into Poland to pump Caspian oil outside of Russian control. The new plan would pump Russian oil into the Druzhba pipeline"s Slovak section, Transpetrol, which will soon be under Russian control. Loss of Transpetrol will make Slovakia and Hungary fully dependent on Russian oil.[23]

The Burgas–Alexandroupolis oil pipeline will be the first Russian-controlled pipeline on EU terri­tory.[24]  In March 2007, Russia signed an agreement with Bulgaria and Greece to construct the oil pipe­line bypassing the Turkish-controlled Bosporus Strait. It will have a capacity of 35 million metric tons of oil per year. Russian companies Transneft, Gazpromneft, and Rosneft will control 51 per­cent of the pipeline. Bulgaria and Greece will con­trol the rest.[25]  This pipeline will allow Russia to bypass the Bosporus chokepoint while maintain­ing control of oil transit. Russia is planning to build the second Bosporus bypass from a Turkish port on the Black Sea (such as Samsun or Trabzon) to the Mediterranean.[26]

As of March 2007, Hungary preferred to cooper­ate with Gazprom to extend the existing Russian– Turkish Blue Stream gas pipeline into EU territory through Bulgaria, Romania, Hungary, and Aus­tria.[27]  However, a more recent Russian–Italian South Stream pipeline agreement would partly replace the proposed Blue Stream extension.

At a May 2007 summit in the Turkmen port city of Turkmenbashi, Russia, Turkmenistan, and Kaza­khstan agreed to build the Prikaspiiski gas pipeline to carry gas from Turkmenistan to Russia via Kaza­khstan.[28]  The deal thwarts U.S. and EU plans for a trans-Caspian pipeline that would have delivered Turkmen gas across the Caspian Sea via Turkey and would have enabled Central Asian exporters to cir­cumvent Russian-controlled routes.[29]

Derailing Competition. On June 23, 2007, Gaz­prom and Italy"s ENI signed a memorandum of understanding to build the South Stream gas pipe­line from Russia to Italy. This pipeline will have a capacity of 30 bcm per year and will run across the Black Sea from Russia to Bulgaria, bypassing both Ukraine and Turkey. From Bulgaria, the pipeline could run either southwest via Greece and the Adri­atic Sea to southern Italy or northwest via Romania, Hungary or Austria, and Slovenia to northern Italy. Through ENI, Gazprom has gained access to Italian distribution systems and consumers.[30]

The South Stream pipeline will increase EU dependence on Russian energy and compete directly with the Nabucco gas pipeline project backed by the EU and U.S. The Nabucco pipeline was expected to transport gas from the Caspian basin to Europe via Turkey, Bulgaria, Romania, Hungary, and Austria, benefiting all 27 EU member countries.[31]  However, its chances are shrinking as Gazprom is building up influence in Europe and reaching agreements on alternative routes. South Stream also rivals the proposed extension of the EU-backed Baku–Erzurum gas pipeline via Turkey, either connecting to the Nabucco pipeline or con­tinuing on to Greece and Italy.

In mid-July 2007, in response to South Stream"s bypass of Turkey, Ankara reached an agreement with Tehran to receive some 30 bcm per year of Ira­nian and Turkmen natural gas (via Iran) for domes­tic use or for transport further west to Europe. The deal envisages constructing two separate gas pipe­lines across Turkey, as well as developing three gas fields in Iran"s giant South Pars field, and a reported investment of $3.5 billion.[32]  On July 26, Italy, Greece, and Turkey signed a deal to import Caspian and Middle Eastern gas to Italy via Greece and Tur­key. The project will include an enlarged Turkish gas network; a Turkey–Greece link (the IGT pipeline with a capacity of 11.5 bcm per year, to become operational in 2007); and a Greece–Italy link (the IGI pipeline with a capacity of 8 bcm per year, to be completed by the end of 2012).[33]

The U.S. is concerned about increased energy links between Turkey and Iran at a time when Washington is seeking to isolate Iran internationally because of its nuclear program and efforts to desta­bilize Iraq. The U.S. Congress is considering an amendment (H.R. 957) to the Iran Sanctions Act of 1996 to expand and clarify the entities subject to sanctions.[34]  According to the bill, sanctions could be imposed on foreign companies that invest more than $20 million in Iran"s oil and gas sector. This amendment would pit U.S. foreign policy objectives against Europe"s energy needs and put Iran in com­petition with Russian energy exports to Europe. However, increased dependence on Iranian energy brings even greater economic and geopolitical vul­nerabilities and could be detrimental to Europe"s, including Turkey"s, transatlantic alliances.

External Consolidation. The Kremlin is also con­solidating its control of oil and gas supplies through­out Eurasia, particularly by signing long-term exploration and supply agreements with Turkmeni­stan, Uzbekistan, and Kazakhstan to preempt inde­pendent export arrangements with the West. These agreements defeat the EU"s major goals of avoiding strategic dependence and diversifying supply.

Turkmenistan is a good example of this policy. A 2003 agreement set the price for 2003–2006 gas deliveries from Turkmenistan to Russia at $44 per 1,000 cubic meters.[35]  An October 2006 agreement commits all current Turkmen gas production to Russia and raises the price to $100 per 1,000 cubic meters, ensuring Russian control over regional energy flow.[36]

Uzbekistan remains an important source of gas for Russia. In January 2007, a Gazprom subsidiary started exploring and developing several gas depos­its in northwestern Uzbekistan. Russia"s agreement with Uzbekistan gives the subsidiary a five-year exploration license and the exclusive right to export the gas.[37]  President Putin and Uzbek President Islam Karimov have signed an agreement awarding exploration and development rights to Gazprom for 35 years.[38]

Internal Consolidation. Moscow is acting to consolidate Russia"s oil and gas sector in the hands of government-controlled entities. The Kremlin is also pushing major international energy corpora­tions out of the Russian energy sector. Russian Min­ister of Natural Resources Yuri Trutnev announced in February 2005 that Moscow intends to keep Western firms from bidding on mining and drilling licenses for major natural resources.[39]

The Kremlin amalgamated the Yukos oil com­pany into its state-owned flagship after bankrupting the company with inflated tax bills in 2003. In 2005, Yukos chairman Mikhail Khodorkovsky was sentenced to nine years after a 19-month pretrial detention and conviction on six charges, including personal and corporate tax evasion and fraud.[40]

Royal Dutch Shell has been pushed out of a major Russian energy project. In 2006, under pres­sure from the Kremlin for alleged environmental breaches, Shell announced the sale of its majority stake in Sakhalin-2 oil and gas fields off Sakhalin Island to Gazprom.

The last major Russian independent oil com­pany, LUKoil, is gradually coming under the Krem­lin"s control. On March 6, 2007, LUKoil chairman Vagit Alekperov announced a joint venture between LUKoil and Gazpromneft, a Gazprom subsidiary, to develop future oil projects, with Gazpromneft own­ing 51 percent of the venture.[41]

Most recently, BP was evicted from the lucrative Kovytka gas field in eastern Siberia. TNK–BP joint venture was unable to meet the Kremlin"s production quotas because Gazprom refused to develop any export pipelines. After officials threatened to cancel the license and the courts refused to intervene, TNK–BP sold its 62.9 percent stake in Kovytka to Gazprom at a fraction of its market value.[42]

Domestic consolidation of Russia"s oil and gas industry under the Kremlin"s direct ownership or control increases Moscow"s ability to use energy as a foreign policy tool. These major takeovers and evic­tions further limit the opportunities for foreign investment in and technology transfer to the Rus­sian energy sector. They signal the return of statist economic policies and a major departure from mar­ket liberalization.

A Gas OPEC. Most important, Russia is stealth­ily and steadily developing a cartel to control the price and output of natural gas—a gas OPEC. This cartel will include the world"s major gas producers: Argentina, Bolivia, Venezuela, Iran, and Qatar.

During his February 2007 visit to Qatar, Presi­dent Putin called the gas OPEC "an interesting idea."[43]  In Doha, Russia initiated the creation of a high-level group to "research" gas pricing and develop methodologies using gas pricing models. An unnamed "high ranking member of the Russian delegation" told RIA Novosti that "as the gas market undergoes globalization, certainly such an organiza­tion [a gas cartel] will appear and is necessary."[44]

For Europe, dependence on such a cartel would be worse than dependence on OPEC, because Rus­sia has direct national interests with regard to Europe: preventing NATO expansion and deploy­ment of anti–ballistic missile defenses, fostering division between Europe and the United States, and regaining more comprehensive control of the post-Soviet space.

Trends in European Energy Security

In evaluating what this Russian energy strat­egy means for Europe, there are three important considerations.

First, European energy consumption and import dependency are rising. In 2030, the EU is expected to consume 15 percent more energy than it con­sumed in 2000, with consumption stabilizing after 2020.[45]  Europe will generally meet its increased energy needs with natural gas and renewables. Demand for natural gas is projected to grow con­siderably through 2030, increasing to 140 mtoe per year over 2000 levels. Oil will remain the most important fuel, but with minimal projected growth in consumption. After a slight decrease, solid fuels are projected to return almost to the current level by 2030 due to high oil and gas prices and the nuclear phaseout in some EU member states.[46]  (See Chart 3.)

European energy production is declining sharply, particularly in hydrocarbons, solid fuels, and nuclear energy. Between 2000 and 2030, the production of European oil, gas, and solid fuels is expected to decline by 73 percent, 59 percent, and 41 percent, respectively, but production of renewables should more than double. Altogether, Euro­pean production in 2030 will be 25 percent below 2000 levels.[47]

By 2030, because of growing energy demand and declining domestic production, Europe will rely on imports for two-thirds of its energy needs. Dependence on imported oil will remain extremely high, reaching 94 percent in 2030. Dependence on imported gas will rise from about 50 percent today to 84 percent in 2030, and imports of solid fuels are projected to reach 59 percent in 2030.[48]

Second, European energy supply routes remain concentrated. Before 1999, about 95 percent of Russian natural gas exports outside of the former Soviet republics transited Ukrainian territory.[49]  Since then, Russia has initiated a number of projects to diversify gas transmission routes. As of 2006, however, 80 percent of Russia"s gas exports to Europe still passed through Ukraine.[50]

Third, European leaders are partly responsible for growing gas demand. Europe, led by Germany and the United Kingdom, has made a conscious choice to rely on gas as its main new source of energy at a time when domestic supplies are declining. Europe has encouraged the construction of gas-fired plants, feeding the demand for more gas.[51]

Implications for European Energy Security

These developments have dire implications for European energy security.

First, Europe should expect higher prices in the coming decades, especially because its supply is becoming concentrated in Russian hands. Moscow has already demonstrated its willingness to raise oil and gas prices and to use energy as a foreign policy tool, as recent incidents in the Baltic States, Ukraine, Azerbaijan, Belarus, and Georgia have clearly shown.

Second, Europe should expect increasing disrup­tions of its energy supply. The long and intense cold wave in 2006 increased Russian demand for gas and strained Gazprom"s delivery capability.[52]  Another cold wave could knock refineries and pipelines off-line. Such disruptions would impose economic costs and could cost lives.

In the future, because of insufficient production, Russia may be unable to satisfy Europe"s growing demand for gas. Output from Gazprom"s three giant fields in West Siberia, which account for three-quarters of its production, is declining by 6 percent to 7 percent per year, and the output from a gas field brought on-line in 2001 has already peaked.[53]  Gazprom has decided to develop a field on the Yamal peninsula, but it will take years for that field to start producing.

Gazprom has been reluctant to invest in new fields. Many hopes are connected to exploration of the Shtokman gas field, which is over 550 kilome­ters offshore in the Barents Sea and under 300 meters of water.[54]  After many delays, Gazprom reconsidered its decision to "go it alone" and on July 13, 2007, signed a framework agreement with France"s Total for the first phase of Shtokman devel­opment. However, under the agreement, Gazprom retains full ownership rights to the gas through its subsidiary Sevmorneftegaz.[55]

Gazprom"s choice of a partner was politically mo­tivated, and it took a phone conversation between French President Nicolas Sarkozy and Russian Pres­ident Putin to clinch the deal. Total is cash rich but has no experience working in Arctic conditions.[56]  The chances that this joint venture will succeed are unclear. In late October 2007, recognizing that it cannot launch Shtokman even with Total, Gazprom sold another 24 percent of the project to StatoilHy­dro, a Norwegian state-controlled company, which reportedly will pay $800 million for its stake.[57]

Meanwhile, Russia"s own demand for gas is growing by over 2 percent per year. Comparing Russia"s uncertain supply with Europe"s growing demand, a senior European Commission official estimated that the EU"s annual energy needs will increase by 200 million metric tons of gas by 2020, while Russia envisions expanding its gas exports by just 50 million metric tons.[58]  In this scenario, even Russia may be unable to meet European demand.[59]

Policy Implications for the United States

From the American perspective, growing Euro­pean dependence on energy from and infrastructure owned by Russia is a negative geopolitical trend. The Kremlin has demonstrated its readiness to use energy as a political tool. Russia"s assertive Cold War–like posture is a growing concern for Washington.

It is in the U.S. strategic interest to mitigate Europe"s dependence on Russian energy. The Krem­lin will likely use Europe"s dependence to promote its largely anti-American foreign policy agenda. This would significantly limit the maneuvering space available to America"s European allies, forcing them to choose between an affordable and stable energy supply and siding with the U.S. on some key issues.

In general, greater stability, security, and rule of law in energy-exporting states would ensure that oil and gas remain readily available, ample, affordable, and safe. To achieve these goals, the U.S. govern­ment should:

• Work with key European governments to address vulnerabilities that result from over­reliance on Russia. Only a concerted response by European nations can result in the formula­tion and implemention of an effective and realistic policy on energy security vis-à-vis Rus­sia. For example, the European Commission"s Gas Coordination Group could facilitate inter­governmental coordination in natural gas. The U.S. should:
• Support the development of European joint and national natural gas reserves to increase preparedness to weather short-term and medium-term interruptions of the gas supply;
• Encourage European leaders to consider increasing use of liquefied natural gas consumption, which is a more flexible delivery system in terms of geography and infrastructure;
• Encourage Europe to increase its use of nuclear, coal, and renewable energy; and
• Work with European governments to apply anti-monopoly legislation to Russian gov­ernment-owned companies if Moscow con­tinues to deny upstream access to Western companies.
• Support diversification of energy transporta­tion routes in Eurasia, specifically the construc­tion of oil and gas pipelines linking Kazakhstan and/or Turkmenistan to Europe across the Cas­pian Sea; pipelines connecting the Baku–Tbilisi– Ceyhan oil pipeline and the Baku–Erzerum gas pipeline; and a gas pipeline to link Azerbaijan and Central Asian producers to Southern Euro­pean markets via the proposed Nabucco pipe­line. The U.S. should work with European countries and Turkey to prevent increased Euro­pean dependence on Russian and Iranian gas through the South Stream gas pipeline project.
• Continue efforts to bring Russia into full com­pliance with the Energy Charter.Russia has signed the charter but has not ratified it. Ratifica­tion and compliance would increase Moscow"s predictability and transparency in energy mar­kets and attract foreign investments. The U.S. and Europe should discourage Russia from using politically motivated pricing schemes and monopolistic practices.

Conclusion

Many European countries depend heavily on energy imports and are highly vulnerable to global energy shocks. If current trends prevail, the Kremlin could translate its energy monopoly into untenable foreign and security policy influence in Europe to the detriment of European–American relations.

In particular, Russia is seeking recognition of its predominant role in the post-Soviet space and East­ern Europe, as the latest crisis around missile de­fense deployment in Poland and Czech Republic has demonstrated. This will affect the geopolitical issues important to the U.S., such as NATO expan­sion to Ukraine and Georgia, ballistic missile de­fense, Kosovo, and U.S. and European influence in the post-Soviet space.

At a minimum, the U.S. and Europe should work to support new transit lines that bypass Russia, and European countries should cooperate strategically to ensure their longer-term energy security. It is essential that the U.S. and its Euro­pean allies combine their efforts in finding and implementing innovative ways to reduce energy dependence on Russia.

Ariel Cohen, Ph.D., is Senior Research Fellow in Russian and Eurasian Studies and International Energy Security in the Douglas and Sarah Allison Center for Foreign Policy Studies, a division of the Kathryn and Shelby Cullom Davis Institute for International Studies, at The Heritage Foundation. Olena Krychevska, a Heritage Foundation intern, contributed to the production of this paper.

Endnotes:

[1]  Her Majesty"s Stationery Office, "PM speech to the EU Parliament in Strasbourg," October 26, 2005,www.number-10.gov.uk/output/Page8384.asp (October 15, 2007).

[2]  BBC News, "Q&A: EU Energy Plans," March 9, 2007, at http://news.bbc.co.uk/2/hi/europe/4783996.stm (May 31, 2007).

[3]  Ibid.

[4]  Associated Press, "‘Low-Carbon Economy" Proposed for Europe," MSNBC, January 10, 2007, atwww.msnbc.msn.com/id/16560106 (August 27, 2007).

[5]  BP, "BP Statistical Review of World Energy," June 2007, pp. 11–12, 27–28, and 41, atwww.bp.com/productlanding.do?
categoryId=6848&contentId=7033471   (August 20, 2007).

[6]  Ahto Lobjakas, "Russia: EU Maintains Codependent Energy Relationship," Radio Free Europe/Radio Liberty, May 11, 2006, at www.rferl.org/featuresarticle/2006/05/ff605d50
-df88-46a9-9f0f-86b88350d1c1.html  (August 20, 2007).

[7]  BP, "BP Statistical Review of World Energy," pp. 20 and 30.

[8]  Ibid., pp. 6 and 22, and estimates from BP Statistical Review and Oil & Gas Journal, reported in U.S. Department of Energy, Energy Information Administration, "World Proved Reserves of Oil and Natural Gas, Most Recent Estimates," January 9, 2007, at www.eia.doe.gov/emeu/international/reserves.html  (August 20, 2007).

[9]  U.S. Department of Energy, Energy Information Administration, "Russia," Country Analysis Brief, April 2007, p. 4, at www.eia.doe.gov/emeu/cabs/Russia/pdf.pdf   (August 20, 2007).

[10]  Ariel Cohen, "Gas OPEC: A Stealthy Cartel Emerges," Heritage Foundation WebMemo No. 1423, April 12, 2007, at www.heritage.org/Research/EnergyandEnvironment/wm1423.cfm.

[11]  Peter Fedynsky, "Shanghai Cooperation Organization Seeks to Expand Energy and Security Influence," Voice of America, August 16, 2007, at www.voanews.com/english/2007-08-16-voa9.cfm  (August 20, 2007).

[12]  Judy Dempsey, "In Hungary, an Energy Battle with Russian Overtones," International Herald Tribune, August 9, 2007, at www.iht.com/articles/2007/08/09/bloomberg/energy.php  (August 15, 2007).

[13]  BP, "Statistical Review of World Energy," pp. 27 and 30.

[14]  Vladimir Socor, "Gazprom Achieves an Anschluss of Austria," Jamestown Foundation Eurasia Daily Monitor, May 29, 2007, at http://jamestown.org/edm/article.php?
article_id=2372192  (August 26, 2007).

[15]  Vladimir Socor, "Gazprom Takeover in Hungary Looms Behind Possible OMV Takeover," Jamestown Foundation Eurasia Daily Monitor, July 25, 2007, at www.jamestown.org/edm/article.php?article_id=2372317 (August 15, 2007).

[16]  Judy Dempsey, "Poland Supports Purchase of Refinery," International Herald Tribune, October 31, 2006, atwww.iht.com/articles/2006/10/31/business/orlen.php (May 31, 2007).

[17]  RIA Novosti, "PKN Orlen, Mazeikiu Nafta to Complete Deal in Nov.," September 27, 2006, athttp://en.rian.ru/world/20060927/54311008.html (May 31, 2007).

[18]  "Ventspils Nafta Ready to Cooperate with Russia," The Baltic Times, May 2, 2007, atwww.baltictimes.com/news/articles/17809   (May 31, 2007).

[19] Judy Dempsey, "Russia Casts Energy Web over East Europe," International Herald Tribune, October 1, 2004, at www.iht.com/articles/2004/10/01/energy_ed3_.php (August 20, 2007).

[20] Ariel Cohen, "Russia: Kremlin Takeover of the Russian Oil Industry?" Capitalism Magazine, April 21, 2005, at www.capmag.com/article.asp?ID=4196.

[21] Dempsey, "Russia Casts Energy Web over East Europe."

[22] Press release, "Nord Stream: The New Gas Supply Route to Europe," Nord Stream, July 20, 2007, atwww.nord-stream.com/uploads/media/
Nord_Stream_Press_Release_Background_info_eng.pdf (August 21, 2007), and Nord Stream, "Company," atwww.nord-stream.com/company.html?&L=0  (August 21, 2007).

[23] Vladimir Socor, "Slovak Detour Would Defeat Odessa–Brody Oil Transport Project," Jamestown FoundationEurasia Daily Monitor, February 28, 2007, at www.jamestown.org/edm/article.php?article_id=2371953  (August 20, 2007).

[24] "A Bear at the Throat," The Economist, April 12, 2007, atwww.economist.com/world/europe/displaystory.cfm?
story_id=9009041  (August 20, 2007).

[25] RIA Novosti, "Russia, Bulgaria, Greece Sign Balkan Pipeline Deal," March 15, 2007, athttp://en.rian.ru/russia/20070315/62048590.html (August 21, 2007).

[26] Ariel Cohen, "The National Security Consequences of Oil Dependency," Heritage Foundation Lecture No. 1021, May 14, 2007, at www.heritage.org/Research/NationalSecurity/hl1021.cfm.

[27] Judy Dempsey, "Hungary Chooses Gazprom over EU," International Herald Tribune, March 12, 2007, atwww.iht.com/articles/2007/03/12/news/hungary.php (August 15, 2007).

[28] BBC News, "Russia Clinches Gas Pipeline Deal," May 12, 2007, at http://news.bbc.co.uk/2/hi/asia-pacific/6649169.stm  (May 31, 2007).

[29] Sergei Blagov, "Russia Celebrates Its Central Asian Energy Coup," EurasiaNet, May 16, 2007, atwww.eurasianet.org/departments/insight/articles/eav051607.shtml (August 21, 2007).

[30] Vladimir Socor, "South Stream: Gazprom"s New Mega Project," Jamestown Foundation Eurasia Daily Monitor, June 25, 2007, at www.jamestown.org/edm/article.php?article_id=2372249  (August 15, 2007).

[31] Nabucco Gas Pipeline International GmbH, "Project Description," at www.nabucco-pipeline.com/project/project-description-
pipeline-route/index.html  (August 21, 2007).

[32] Breffni O"Rourke, "Turkey/Iran: Gas Deal Marks New Stage in Energy Cooperation," Radio Free Europe/Radio Liberty, July 19, 2007, at www.rferl.org/featuresarticle/2007/07/
4875C449-63C9-4724-B9B9-6AAD1CAF4BEF.html  (August 16, 2007).

[33] AFX News, "Italy, Greece, Turkey Sign Gas Transit Deal; Pipelines to Start by 2012—Edison," Forbes, July 26, 2007, at www.forbes.com/business/feeds/afx/2007/07/26/afx3955664.html  (August 16, 2007).

[34] GovTrack.us, "H.R. 957—110th Congress: To Amend the Iran Sanctions Act of 1996 to Expand and Clarify the Entities Against Which Sanctions May Be Imposed," at www.govtrack.us/congress/bill.xpd?
bill=h110-957&tab=summary  (August 26, 2007).

[35] Vladimir Socor, "Caspian Gas and European Energy Security," Jamestown Foundation Eurasia Daily Monitor, March 10, 2005, at www.jamestown.org/downloads/Transcript_caspian031005.pdf (May 25, 2007).

[36] Asia News, "Turkmenistan Raises Gas Prices by 50 Percent, Russia Pays," September 7, 2006, atwww.asianews.it/index.php?l=en&art=7152  (May 31, 2007).

[37] Vladimir Socor, "Uzbek Gas Output, Export Set to Grow Under Russian Monopoly Control," Jamestown Foundation Eurasia Daily Monitor, February 22, 2007, at http://jamestown.org/edm/article.php?article
_id=2371933  (May 31, 2007).

[38] Socor, "Caspian Gas and European Energy Security."

[39] Cohen, "Russia: Kremlin Takeover of the Russian Oil Industry?"

[40] C. J. Chivers and Erin Arvedlund, "Russian Oil Tycoon Is Convicted and Sentenced to 9 Years in Jail," The New York Times, May 31, 2005, at www.nytimes.com/2005/05/31/international/europe/
31cnd-russia.html  (October 23, 2007).

[41] Cohen, "The National Security Consequences of Oil Dependency."

[42] "Russian Arm Twisting," The Economist, June 22, 2007, atwww.economist.com/world/europe/displaystory.cfm?story_
id=9390152  (August 13, 2007).

[43] Cohen, "Gas OPEC."

[44] Ibid.

[45] European Commission, Directorate-General for Energy and Transport, European Energy and Transport: Trends to 2030— Update 2005, 2006, at http://ec.europa.eu/dgs/energy_transport/figures/trends_2030_
update_2005/energy_transport_trends_2030_update_2005_en.pdf  (August 27, 2007).

[46] Ibid.

[47] Ibid.

[48] Ibid.

[49] German Economic Team in Belarus, "Belarus As a Gas Transit Country," Research Center for the Institute of Privatization and Management, March 2004, at www.ipm.by/pdf/pp304e.pdf  (August 27, 2007).

[50] Daniel Kimmage, "Turkmenistan: The Achilles" Heel of European Energy Security," Radio Free Europe/Radio Liberty, June 30, 2006, at www.rferl.org/featuresarticle/2006/06/d07bcab3
-c72d-4eaa-a1eb-456b146c0859.html  (August 25, 2007).

[51] Jérôme Guillet, "Don"t Blame Gazprom for Europe"s Energy Crunch," Foreign Policy, February 2007, atwww.foreignpolicy.com/story/cms.php?story_id=3696 (May 25, 2007).

[52] Ibid.

[53]  "A Bear at the Throat."

[54]  Gazprom, "Shtokman Project," at www.gazprom.com/eng/articles/article21712.shtml  (August 22, 2007).

[55]  Vladimir Socor, "The Shtokman Gas Deal: An Initial Assessment of Its Implications," Jamestown FoundationEurasia Daily Monitor, July 17, 2007, at http://jamestown.org/edm/article.php?article_id=2372294  (August 15, 2007).

[56]  Marina Pustilnik, "LNG Politics," The Moscow News, July 19, 2007, athttp://mnweekly.ru/business/20070719/55262808.html   (August 15, 2007).

[57]  AFX News, "Oslo Shares Close Higher, Led Up by REC, Yara; Fred Olsen Energy Lower," Forbes, October 26, 2007, at www.forbes.com/markets/feeds/afx/2007/10/26/afx4267300.html  (October 26, 2007).

[58]  Lobjakas, "Russia: EU Maintains Codependent Energy Relationship."

[59]  "A Bear at the Throat."

U.S. Strategy in the Black Sea Region

12-13-2006

U.S. interests in the Black Sea area—energy transit, security, counterterrorism, proliferation of weap­ons of mass destruction (WMD), and the traffic in drugs, weapons, and people—have taken on par­ticular significance since 9/11. The Black Sea basin is a strategic region bordering the Greater Middle East and a key transit route for Caspian oil. The U.S. needs a comprehensive regional policy to protect American interests and security.

The Black Sea Nexus. The Black Sea region is a patchwork of overlapping civilizations and spheres of influence. Bulgaria and Romania are members of NATO and, as of January 1, 2007, members of the European Union (EU). Ukraine is caught between the West and Russia. Georgia leans toward the West but borders on Russia"s soft underbelly. Turkey and Russia vacillate between East and West, pulled in different directions by national interests and national pride. The Black Sea"s six littoral states (Bulgaria, Romania, Ukraine, Russia, Georgia, and Turkey) are tentatively beginning to construct a regional identity just as foreign powers and outside forces are searching for footholds in their vicinity. The region is geopolitically significant precisely because it is a nexus of cultures, international trade (both legal and illicit), ideas, and influences.

Oil and gas from Central Asia and the Middle East move along Black Sea shipping lanes and pipe­lines to Europe and other points west. These same shipping lanes are used for the traffic in narcotics, persons (including terrorists), conventional weap­ons, and WMD components. The Black Sea region can be a launching platform for military, recon­struction, and stabilization operations in Afghani­stan, Iraq, and possibly Iran, as well as for the protection of energy shipping lanes between the Caspian region and Western markets. It is also Europe"s new southeastern border. Thus, both the EU and the United States have strong interests in safeguarding the movement of some goods, pre­venting the movement of others, and maintaining a presence in the Black Sea region.

The U.S. presence currently has the support of Bulgaria and Romania, but U.S. relations with Rus­sia, Turkey, and Ukraine are on shaky ground. Nei­ther Turkey nor Russia supported U.S. operations in Iraq, and relations with both countries have taken a downturn ever since then. Ukraine has adopted a more pro-Russian stance since Prime Minister Viktor Yanukovich took office. Georgia is under severe economic and political pressure from Russia and preoccupied with internal conflicts and is thus ill-equipped to act as a strong U.S. ally. This tangled web of interests and alliances and the recent rapprochement of Russia and Turkey, which has anti-American implications, may hamper U.S. activities in the area.

What the U.S. Should Do. To maintain a pres­ence in the region, the Bush Administration should pursue a realistic strategy to enhance the security and stability of the Black Sea region. Specifically, the U.S. should:

• Coordinate U.S. and EU foreign policy in the region, especially in regard to the European Neighborhood Policy; increase NATO coopera­tion with non-NATO countries through the Partnership for Peace by offering technical and training assistance in security areas; and strengthen bilateral military ties with Ukraine.
• Conduct trilateral military exchanges and con­sultations (Bulgaria–Romania–Turkey) to assuage Turkey"s concerns about losing its dominant posi­tion in the Black Sea basin to the growing influ­ence of the U.S.
• Encourage the littoral states, specifically Bul­garia and Romania, to take the lead in multilat­eral regional organizations and initiatives, such as the Organization of the Black Sea Economic Cooperation, which aim to improve regional security and stability. Where appropriate, the U.S. should request member or observer status.
• Contribute to existing regional security struc­tures as either a participant or an observer. This could include providing crucial technical intel­ligence capabilities, airlift, and other specialty capacities. These structures could also be in­cluded in NATO military and disaster pre­paredness exercises to improve interoperability.
• Strengthen U.S. alliances with Bulgaria and Romania and provide assistance in the military, emergency preparedness, and technological train­ing of Romanian and Bulgarian forces in missions that are relevant to the U.S. presence there.
• Urge Russia to lift sanctions against Georgia and push for renewed multilateral talks over the resolution of Georgia"s "frozen conflicts," using the Organization for Security and Co-operation in Europe and the U.N."s Friends of Georgia Group. The U.S. should also promote replacing Russian/CIS peacekeepers in Abkha­zia and South Ossetia with an international peacekeeping force.
• Expand bilateral trade agreements with the Black Sea states, with special emphasis on investments in infrastructure for the transport of oil and gas from the Caspian region to Europe and in energy security.

Conclusion. Despite the obvious importance of such current foreign policy issues as Iraq, Afghani­stan, Iran, and North Korea, the U.S. would be unwise to concentrate on these concerns to the exclusion of all others. Shoring up alliances and improving relations with states in strategic areas bordering on main theaters of operation, such as the Greater Middle East, is of the utmost impor­tance in developing future geopolitical arrange­ments, enhancing strategic stability, and assuring military egress and resupply.

Given the current state of U.S. relations with Tur­key and Russia, the only way for the U.S. to main­tain and strengthen its footholds in the Black Sea is to develop cooperation across a broad spectrum of issues of common interest and mutual concern. The U.S. needs to learn to tread lightly, offering support where possible and backing off where nec­essary. This is not an impossible balance to achieve. If successful, it could be used as a model for cementing the U.S. presence in other strategic areas, such as Central Asia. It is time for the U.S. to launch a coordinated policy effort in the Black Sea area to gain support for addressing some of the most pressing issues of the decade: the rise of Iran, WMD proliferation, cooperation in the global war on terrorism, and energy security.

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