As energy prices rose over the last 4 years, so did Russia’s desire to once again become a major player in world politics. This time, however, the country could actually afford to do so because the huge amounts of capital the sale of oil and gas provided to its government. The new found money allowed Russia to start expanding their military once again, and it also provided them a means of purchasing (for lack of better words) it’s way into situations. Think of it as a pay for play.
Now that energy prices are falling, and the demand for oil and natural gas is low in Europe (and in the world in general at this moment) Russia finds that all may not be as positive as they had previously expected. In order to counteract the decline in energy and the credit crisis, Russia has devalued their current – the rouble – 9 times. This has the potential to cause inflation/hyperinflation if energy prices to not improve, not to mention that fact that it also can wipe out the savings of the average Russian citizen.
Russia is vulnerable simply because their empire is built on natural resources. They have no major industry to speak of, no goods that are produced and consumed on a mass world wide scale, so what is the country to do when their base is threatened? Use it as a weapon – be it for self-preservation or aggression.
If you take note, Russia is talking about cutting off natural gas supplies to the Ukraine once again. The last time this took place was in 2006. Both sides have their own version of what is taking place. Russia says the Ukraine is expecting unrealistic prices and that they pay off their debt. The Ukraine says they’ve paid their debts and believes the cost of gas it too high.
I am not saying Russia is in the wrong, just imagine if Russia was acting with purely political interests in mind. “We don’t like the President you chose, ok, we are shutting off your supply to gas.” or “You didn’t vote in our favor during the last session of the UN, your oil transfers now will come in at 10% of what you were previously getting” all suddenly become possible tools within their power.
Not a big deal, you may be thinking – wrong. Russia provides roughly 25% of the EUs natural gas. If it wanted to make life difficult as an act of aggression or self-preservation, it could do so really quickly.
This is the power Russia truly has. Unless the EU takes steps to prevent dependence on Russia, they run the risk of being help at Russia mercy. I hope that someone in Europe is paying attention to this…
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