Streetwise Professor

February 11, 2008

Further From Russia, Closer to God?

Filed under: Energy,Politics,Russia — The Professor @ 10:25 am

Or, if not God, Europe, the US, and China. Stephen Blank reports favorable developments from Turkmenistan. According to Blank, Turkmen President Berdymukhamedov is playin’ the Russians in the gas game. Realizing (it’s about time!) that he has tremendous leverage due to Gazprom’s junkie-like dependence on his country’s gas, Berdymukhamedov is playing hardball with the Russians, opening channels to China; Blank also suggests that this presents a major strategic opening for the EU and the US.

Importantly, Blank points out that Russia will face problems regardless of whether Turkmenistan has much gas or little. (The actual amount of gas there is a major mystery to outsiders.) If it has a lot, Turkmenistan will have the ability to deal with China and put gas in a Transcaspian pipeline that would undercut Russia’s dominance in European and Asian markets. If it has a little, Russia will be unable to meet its burgeoning domestic demand and its large export commitments.

This is good news, and helps ease some of the angst I felt after Putin’s apparent triumphs in the Caspian region last year. It all goes to show that unlike post-holiday sales, when it comes to this part of the world, No Deal is Final! Negotiations never end, and every announced contract is just another act in a drama with no end. Opportunism is the name of the game, and every shift of fortune leads to a new battle between contracting partners over how to divide the pie.

That said, it should also be recognized that the contrast between the despond of spring ’07 and the optimism of winter ’08 is a reminder that we understand very little of what goes on in that part of the world. We glimpse only the dimmest shadows cast by combatants in a dark and distant arena. We see the announcements–what we are supposed to see–but cannot discern most of what goes on. The bribes, the threats, the shifting alliances. This signal-to-noise ratio is low, so our mood should not shift too much in response to this announcement or that.

We should also put things into a broader context. I have often noted that Putin and the Russians are greatly, greatly exaggerating Russia’s military strength and prowess. Bob Amsterdam has repeatedly emphasized the Russian propensity for “premature contractualization”–the announcement of deals that never transpire, a practice that I have analogized to vaporware. In his piece, Blank notes that “Russia is very good at playing the bluffing game.”

That is, Russia’s talk far exceeds its capacity to walk. Through aggressiveness and bold talk Putin has achieved much more than the objective “correlation of forces” would suggest is possible. Calling some of these bluffs could very well demonstrate that the Tsar has no clothes. Inasmuch as the current Russian government depends crucially on maintaining an aura of strength and dominance, public rebuffs in the energy or geopolitical spheres would deeply shake it, and threaten Russia’s brittle stability.

I have no expectation whatsoever that Europe will call any bluffs anytime soon, and a lame duck administration in the midst of a contentious election season is unlikely to either. However, a year from now, things may be very different, especially if John McCain becomes US president.

One last thing. Stephen Blank is becoming one of my favorite commentators on Russia. He is a regular participant in the Russia Profile Weekly Expert Panel, and the one I am most likely to agree with.

Given that my views on Russia pundits seems to be nearly perfectly, negatively correlated with those of some of my doughty commentors, I suspect that my endorsement of Dr. Blank (a Chicago guy to boot!) will unleash a barrage of criticism–so, open fire, guys! And I mean that in all sincerity. Although, given the aforementioned negative correlation, it is unlikely that I will agree with your assessment of Dr. Blank, I do enjoy hearing all sides, and do learn things from your comments that help me calibrate my reading.

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