New Cold War with Russia Over Oil and Gas

A new Cold War is under way, but unlike the conflict of the Reagan era it is not a fight for military supremacy but rather for gaining control, directly or through commercial proxy, of energy resources.

At the heart of this new conflict are Western attempts to diffuse Russian President Vladimir Putin's drive to transform his country into a new oil and gas superpower with vast bargaining power with the European Community. Russia is already the world's eighth largest producer of crude oil and the first of natural gas.

Most recently, UK authorities blamed Russian intelligence for the assassination of Alexander Litvinenko, a former KGB spy, who had accused Vladimir Putin of leading an autocratic, murderous and corrupt government. Litvinenko was a figure in the struggle between the Putin government and Russian oligarchs (whom Western powers favor) for the country's most prized possessions -- the oil and gas fields controlled by the Russian oil companies, the state-controlled Gazprom and the privately held Yukos.

Litvinenko's assassination nearly coincided with the signing of a commercial agreement between Gazprom and ENI-Italy's largest energy conglomerate -- for the distribution of natural gas to Western Europe. The first of its kind, the agreement would allow Gazprom to operate independently under the supervision of the Italian partner, which would be tantamount to the Russian giant selling its product directly to consumers in Western Europe, bypassing EU's regulatory constraints.

Western powers have come to despise what they see as Russia's heavy-handed form of capitalism, as in the case of mining rights to the Arctic sea floor, which is believed to hold vast oil reserves. According to Moscow, under the newly operating United Nations Convention on the Law of the Sea, more than 50 percent of those submerged resources belong to Russia. This assertion has compelled other powers -- such as Denmark, Norway, Canada and Iceland -- to stake their own claims to some of the same underwater territories. The controversy is leading to an increased militarization of the Arctic, with Russian battleships often confronting the vessels of oil developers and Western navies.

"Putin has decided to make a huge energy superpower out of Russia and there's almost nothing that can stop him," says Robert Hueber, an analyst at the Centre for Security and International Studies. "Unless something slows him down, there's no way for the West to prevent him from putting his hands on some of the most prized resources of the planet."

Although China's higher profile in Africa is providing cause for concern to the United States and its allies, it is Russia that generates their strongest reactions. They believe Russia is using its energy clout for geopolitical gains, especially in the regions that were once under the Soviet control but are now independent countries.


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