The role of energy in shaping Russia’s regional strategies

Energy, and in particular oil and natural gas, have played a crucial role in shaping the foreign and economic policies of the Russian Federation since the collapse of the Soviet Union in 1991. As the world’s largest producer of natural gas and the second largest producer of oil, Russia’s economy is heavily dependent on energy exports. This dependence has shaped Russia’s strategic interests in its immediate neighborhood and relations with Europe and Asia.

This article will provide an overview of how Russia has leveraged its role as an energy superpower to pursue its interests in the post-Soviet space, Europe, Central Asia, and the Asia-Pacific region. It will detail how Russia uses its energy resources as both a foreign policy tool and an economic lever to maintain influence over other states. The article will also analyze the strengths and limitations of Russia’s energy-focused strategies and assess their effectiveness in advancing the country’s regional interests.

Post-Soviet Space

Following the collapse of the Soviet Union, Russia sought to maintain influence over the former Soviet republics through economic and political ties. As the primary successor state, Russia wanted to prevent the former Soviet countries from integrating with the West and joining Western-led organizations like NATO and the EU. One of the main ways Russia maintained sway was through its vast energy infrastructure left over from the Soviet era.

Most of the post-Soviet states remained dependent on Russian energy, with pipelines transporting oil and natural gas from Russia to the rest of the region. This gave Russia leverage over these countries, as it could raise prices or cut off energy supplies if states acted against Russian interests. For example, in the 1990s and 2000s, Russia allegedly cut off energy supplies to Ukraine, Moldova, Georgia, and Belarus during periods of political tensions or disputes over prices.

Russia also used energy to entice states to join Russian-led economic and political groupings it hoped would counter Western influence. Most notably, Russia persuaded Kazakhstan and Belarus to join the Eurasian Economic Union (EAEU) in 2014/2015 through promises of lower gas prices and other economic incentives. Russia’s connections with and leverage over neighboring energy-importing states has allowed it to slow down or hinder their integration with NATO and the EU.

However, Russia’s use of the “energy weapon” has limits. Some states took steps to reduce dependence on Russian energy through new pipelines, developing their own resources, and diversifying their energy mix with renewables. Ukraine and the Baltics in particular have moved away from reliance on Russian gas. Russia’s gas disputes with Ukraine in the 2000s and 2010s pushed the EU to pursue alternate pipeline routes like Nord Stream and TurkStream to bypass Ukraine. And the need to prevent future disruptions motivated projects for liquefied natural gas (LNG) terminals on the Baltic coast.

Russia retains significant energy influence over former Soviet states, but its ability to wield this influence has declined as states take measures to diversify. Nonetheless, energy politics will continue shaping Russia’s relations with its western neighbors.

Europe

Beyond the former Soviet states, energy is a key basis for Russia’s relationship with Europe. As the largest supplier of Europe’s natural gas, Russia has actively leveraged its role as an energy provider to gain economic and political influence in Europe. Approximately 40% of the EU’s natural gas imports come from Russia, and this dependence has shaped Russia’srelations with European states for decades.

Initially after the collapse of the USSR, Russia sought to reliably supply Europe with natural gas through new pipelines and projects. This aimed to not only make profits for Russia’s energy companies but also to foster economic interdependence that would encourage Europe to cooperate with Russia politically.

But starting in the 2000s, Russia also began using its energy exports as a coercive tool, especially during disputes with transit states like Ukraine. Russia was accused of politically motivated pipeline shutdowns and price hikes that cost European countries billions in lost GDP. These disruptions highlighted Europe’s vulnerable dependence on Russian energy.

Consequently, Europe has sought to diversify away from Russian gas through new pipelines that avoid Ukraine, increasing LNG imports, using more renewables, and planning a phase-out of Russian oil and gas. Germany cancelled the Nord Stream 2 gas pipeline that would have increased imports of Russian gas after Russia’s invasion of Ukraine in 2022.

For its part, Russia uses pipeline projects like Nord Stream and TurkStream to undermine EU unity by signing lucrative deals with key states like Germany. It tries to keep Europe dependent by stressing the reliability of Russian energy and the cost-effectiveness of its pipelines. But Russia’s reliability as an energy partner has suffered due to its willingness to use energy coercively for political ends.

Russia’s use of energy as a tool of influence has complicated its relationship with Europe. While both sides benefit economically from the energy trade, political tensions obstruct cooperation. Europe’s pursuit of energy security through diversification limits Russia’s political leverage. But Russia still uses its role as an energy superpower to pressure European states and undermine EU interests where possible.

Central Asia

As the heir to the Soviet Union’s centralized energy infrastructure, Russia retains considerable influence over the energy-rich states of Central Asia – Kazakhstan, Uzbekistan, Turkmenistan, Kyrgyzstan, and Tajikistan. These countries rely on Soviet-era pipelines to export their oil and natural gas through Russia.

For instance, over 80% of Kazakhstan’s oil exports flow through the Caspian Pipeline Consortium’s pipeline to Russia’s Black Sea coast. Russia has leverage over Central Asia’s exports due to the lack of alternate pipeline routes. The region also imports Russian gas, oil, and electricity to meet domestic needs.

Moscow has utilized its position as the gateway for Central Asian energy exports to project political influence in the region. It plays a balancing game of rewarding energy cooperation through low prices while penalizing steps that undermine its interests. For example, Russia provided a $2 billion loan to Kyrgyzstan in 2015, but also periodically raises tariffs and imposes trade restrictions against states growing closer to the West.

However, Russia’s energy dominance is declining as China’s economic influence grows in Central Asia. China has become the main destination for Turkmenistan’s gas exports through new pipelines that broke Russia’s monopoly. China is also financing oil and gas pipelines from the region to the Chinese coast, creating new export routes that circumvent Russia. But Russia retains the upper hand in Kazakhstan and other states that still rely heavily on its Soviet-built pipelines.

Though no longer the sole arbiter of Central Asian energy flows, Russia uses its remaining leverage to hinder states from fully integrating with the West or partnering too closely with China. Control over energy exports remains Russia’s main source of influence in the region. But alternate routes may gradually reduce this dominance.

Asia-Pacific

Turning to the Asia-Pacific, Russia has used energy diplomacy to expand cooperation with the fast-growing economies of the region, chiefly China, Japan, and South Korea. Russia’s main strategy focuses on exporting oil and gas to key Asian partners. This builds mutual economic interests and gives Russia political inroads.

Russia currently exports over 15% of its oil and 5% of its natural gas to China, making China an important energy partner. Russia leveraged energy deals to improve often strained relations with China after the fall of the USSR. Major oil and gas pipelines now link the countries. The Power of Siberia pipeline that opened in 2019 transports gas from eastern Russia to northern China. Russia uses these energy projects to keep ties with China constructive, gain investment, and balance against perceived US hegemony in Asia.

Meanwhile, Japan relies on liquefied natural gas (LNG) imports from Russia’s Far East island of Sakhalin. Russia’s LNG exports to Japan increased after the 2011 Fukushima nuclear disaster increased Japan’s demand for gas. South Korea is also a top destination for Russia’s LNG. Moscow leverages these energy ties to attract infrastructure investment and technology partnerships with Tokyo and Seoul. Energy exports help Moscow maintain diplomatic, economic, and security cooperation with these US allies despite tensions over issues like North Korea.

However, Russia’s hopes of becoming Asia’s major energy supplier face challenges. China, Japan and South Korea still import most of their energy needs from the Middle East. The Power of Siberia 2 pipeline from western Russia to China has stalled over pricing disputes. US ally Japan faces pressure to reduce energy ties with Russia over Ukraine. And renewable energy promises to curb fossil fuel demand in Asia long-term. For now Russia uses energy partnership possibilities to manage key relationships in Asia. But its future position as an Asian energy power remains uncertain.

Conclusion

In conclusion, energy resources have profoundly shaped Russia’s foreign policy strategies towards states in its immediate neighborhood and key economic partners in Europe and Asia. Exporting oil and natural gas promotes Russia’s economic interests through revenue and trade. It also provides political levers to maintain influence over post-Soviet states, Europe’s energy security, cooperation with China, and relations with other Asian powers.

Yet the effectiveness of these energy-based strategies has limits. Former Soviet states are reducing their dependence, and new pipelines circumvent Russian leverage. Europe is intent on diversifying supplies through alternate routes and clean energy. And Asian states have alternate fossil fuel suppliers. While Russia will remain an energy power, using this power to achieve its regional goals will likely become more difficult over time. Energy interdependence can be a double-edged sword.

Nonetheless, analyzing Russian energy strategies provides vital insights into the calculations behind Russian foreign policy. As a key Russian economic interest, energy drives many of Moscow’s regional initiatives and partnerships. Appreciating energy’s role will be essential for properly understanding and responding to Russian actions on the world stage in the coming decades.

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