Russia Review | September 2021

Overview

• Russia flexes oil and gas muscle
• Retaining the initiative on Afghanistan
• Parliamentary elections show public apathy​​​​​​​​​​​

Russia flexes oil and gas muscle

About a couple of months ago, the Russian media bristled at President Biden’s comment that President Putin was in “real trouble”, because of an economy “that has nuclear weapons and oil wealth and nothing else”. As the summer wore on, Russia fortuitously found itself in a position where it could leverage its oil (and gas) wealth to aggravate or alleviate the pain of much wealthier economies.

A conjunction of circumstances contributed to supply shortages that drove natural gas prices in Europe to extraordinarily high levels. Among these were depletion of stored reserves due to an extended winter, inadequate solar and wind energy generation due to inclement weather and underinvestment in storage and transport infrastructure, as countries prepared to transition to cleaner energy. These factors coincided with a post-pandemic demand surge in Asia, which lapped up liquefied natural gas (LNG) supplies that could have met some of Europe’s needs. Consequently, the focus was sharply on Russia and its near-monopoly gas producer, Gazprom. Gazprom said it had fulfilled all its long-term contractual obligations with European importers; this was also confirmed by the importers. At the same time, Russia could have, but did not, profit from the elevated prices by making more gas available on the spot market. Part of the reason was probably that Russia was first filling up its own storage reserves, but the motivation may also have been to let the European market experience some uncertainty.

This provoked allegations from the European Commission and some countries that Russia was using gas as a geopolitical weapon. The Russian retort was that it was Europe that had geopolitical motivations. Over the years, Gazprom has been wanting European consumers to lock in more long-term supply contracts, but the latter had preferred to buy from the spot market instead, in order not to increase dependence on Russia. The long-standing objection to the Nordstream 2 (NS2) Russia-Germany gas pipeline also stemmed from political, rather than economic, considerations. It is the shortest supply route and claims to incorporate technology for the best energy efficiency and the lowest carbon footprint. The opposition comes principally from Ukraine, which fears not only a diminution of transit revenues from the pipelines passing through it, but also a dilution of EU’s support in its political issues with Russia, once its importance as a gas transit country diminishes. Other countries have opposed NS2 for the same reason, but also to create their own alternative import capacities, whose viability would be impacted by NS2. Twelve eastern and central European countries located between the Baltic, Black and Adriatic Seas, have grouped together in the “Three Seas Initiative” to set up LNG import facilities. The US, which has denounced NS2 as a geopolitical project, has supported this Initiative, including through its CAATSA legislation, which envisages sanctions against companies involved in the maintenance or development of Russia’s energy export pipelines. Increasing US LNG exports to Europe is explicitly stated as one of the motivations for CAATSA.

President Putin’s eventual announcement that Russia could consider releasing more gas for Europe had an immediate salutary impact on gas prices. But allegations of geopolitical intent were revived when a Russian minister said the gas situation would be eased considerably if the German authorities were to fast-track the clearances to operationalize NS2. The construction of the pipeline is complete and the US (in a major gesture towards Germany) has waived sanctions, but a German regulatory authority is now examining it for compliance with EU energy directives.

More Russian gas on the spot market may provide temporary price relief, but is unlikely to fully address the current shortages or settle longer-term questions on Europe’s gas imports from Russia. Europe’s ambitious “Green deal” envisages increasingly replacing fossil fuels with renewables, but capacities in the latter are not growing fast enough, as the experience of this year has shown. At the same time, this objective discourages fresh investment in fuel import infrastructure (including LNG terminals). Europe’s dependence on Russian gas will, therefore, remain a talking point. The argument that this gives Russia a geopolitical hold over Europe will continue to be made, though its merit is questionable. About one-third of Europe’s gas imports are from Russia; this figure has risen to as high as 40 per cent in some years. Alternatives in the form of LNG are more expensive. For Russia, fossil fuels and their derivatives constitute about 50 per cent of its exports. Spurning the amortized investments of a network of pipelines, liquifying the gas and finding alternative customers would be difficult and expensive for both buyer and seller. The dependence is, therefore, bi-directional: the prospect of a mutually assured disruption should, therefore sustain an equilibrium of supplies. It is now forgotten that the first Nordstream pipeline (NS1) was, in fact, motivated in large part by the desire (on the part of both Germany and Russia) to insulate gas supplies from the impact of Russia-Ukraine spats. Before NS1, 80 per cent of Russia's gas exports to Europe transited Ukraine; with NS1 and the recently-opened Black Sea pipeline to Turkey, this figure has already dropped to less than half that proportion.

Russia also participated in the OPEC plus decision to stick to the originally agreed production increase of 400,000 barrels per day in November, despite the burgeoning demand. This decision pushed up oil prices.   

In a new initiative for energy security, ten EU countries, led by France, have now proposed that the European Union should recognize nuclear power as a low-carbon energy source, as an element in the Union’s thrust for climate neutrality. The proposal points out that renewables alone cannot deliver the required capacities and asserts that the recent surge in energy prices underlines the urgency for energy independence. One might note in this regard that about one-third of the uranium fuel for the EU’s nuclear power plants comes from Russia; and about 15 per cent more from mines in Kazakhstan, in which Russia has substantial investment.  Moreover, Russia today accounts for about one-third of global capacity for uranium conversion (yellow cake to uranium hexafluoride) and about half of global enrichment capacity (uranium hexafluoride to fuel). This dependence for nuclear fuel is not quite like being captive to supplies from a pipeline; nevertheless, if the EU were to reverse its present course and launch an ambitious nuclear power development programme, including (as suggested by France) with small modular reactors to produce green hydrogen, its demand for uranium fuel would grow significantly. On current projections of enrichment capacity (by the World Nuclear Association), Russia and China together would have between 65 and 70 per cent of global enrichment capacity by 2030 – not necessarily a reassuring scenario for Europe’s energy independence.  

Retaining the initiative on Afghanistan

Russia continued to busily engage with the situation in Afghanistan and the challenges from it. Its Foreign Ministry continued to echo international calls for an inclusive government, safeguarding the interests of all ethnic and political groups in the country.  It said that Special Presidential Envoy Zamir Kabulov was using his communication channels with the Taliban leaders to encourage them to “finish the national reconciliation process” by “eventually establishing an inclusive government”.

The Russians have been suggesting that the “extended troika” of the US, Russia, China and Pakistan (that worked from 2019 onwards to bring the Taliban into the mainstream of Afghan politics, through a stage-managed “intra-Afghan” dialogue) could again be revived to negotiate an inclusive political settlement with the Taliban. While the US does not seem to have responded as yet to this approach, the special envoys of Russia, China and Pakistan were invited to Kabul, where they were said (by the Russian MFA) to have had in-depth and constructive discussions with the Taliban government on inclusiveness, human rights, friendly economic relations with foreign countries, including neighbours, and ensuring the unity and territorial integrity of Afghanistan.  The fight against terrorism and drug trafficking was also emphasized. The MFA release added that the Taliban “emphasized the responsible role of the three countries in strengthening peace and security in Afghanistan”. 

The impression that Russia wants to put out is that its activism in facilitating US/NATO troop withdrawal has created Taliban goodwill for it that could be used to promote fulfilment of international expectations. It has sought to consolidate this goodwill by demonstrating to the Taliban its efforts to promote its acceptability to the international community. The Russian abstention on UN Security Council resolution 2593 of August 30 was one example. The head of an influential Russian think tank associated with its Foreign Ministry recently explained the considerations behind the abstention: (a) Russia felt the resolution was too harsh on the Taliban, without adequately highlighting the threats from ISIS, ETIM and other terrorist groups; (b) It is not desirable to push the Taliban too hard, since this may promote more hard line elements that would be much worse; (c) The resolution should have indicated some pathway to unblocking Afghan accounts frozen in the US and Europe, to alleviate the economic and social hardships being faced by the Afghan population; and (d) An excessive emphasis on departure of qualified technical personnel encourages an exodus that would deprive Afghanistan of the human resources required for its economic reconstruction. In short, the world should cajole, rather than coerce, the Taliban into compromise. Russian officials, like those of the US, have also been open in acknowledging the importance of Pakistan for influencing the Taliban.

On a parallel track, Russia seeks to bolster defences against the influx of terror groups, drugs and radical Islam into Central Asia and the Caucasus, as well as against Western efforts to use Central Asia, either as a staging post for Afghan operations or a holding area for Afghan refugees. President Putin used the BRICS, SCO and CSTO summits, as well as a joint SCO-CSTO meeting to warn strongly of the potential threats to regional and global security. He suggested that the SCO-Afghanistan Contact Group could be relaunched, and that the Regional Anti-Terrorist Structure of SCO reinforced with experts on money laundering, terrorist financing and WMD proliferation. The summit of the Central Asian security alliance, CSTO, discussed rapid response mechanisms to military threats from Afghanistan and a joint SCO-CSTO meeting discussed coordination of approaches of the two groupings (bringing India, Pakistan, China and Uzbekistan into the loop).

Beefing up of military capacities of the Central Asian countries has received special attention. This has included bilateral and trilateral military exercises with Uzbekistan and Tajikistan and offers of new Russian weaponry to Uzbekistan and Turkmenistan. As the US gives special attention to Uzbekistan, Russia has intensified efforts to attract that country back into the CSTO (which it left in 2012). The Uzbek President recently participated in a CSTO summit as an invited guest, but the Uzbek government has parried suggestions that this is a precursor to re-joining CSTO. Nevertheless, Russia will probably try to exploit the uncertain Afghan situation to consolidate security cooperation with Uzbekistan and “neutral” Turkmenistan, and reinforce the already strong cooperation with the other “stans”.

It may be noted that, though virtually every major country has routinely called for an inclusive government in Afghanistan, the only multilateral statement that incorporates this expectation is the Dushanbe declaration from the SCO summit: “it is critical to have an inclusive government in Afghanistan, with representatives from all ethnic, religious and political groups of Afghan society”. The UNSC resolution mentions upholding human rights of minorities, but calls only for the participation of women in an inclusive political settlement. The Quad and the Modi-Biden joint statements, as well as the BRICS New Delhi declaration all emphasize the human rights of minority groups, not their inclusion in a political settlement. Tajikistan has been vocal in its demand for an inclusive government in Kabul; it may therefore have insisted on this insertion in the Dushanbe declaration. The rest of the world appears to have taken the pragmatic approach of not demanding what may not be achievable.

Parliamentary elections show public apathy

The general elections to the Russian State Duma (lower house of parliament) and 39 (of the 85) regional legislative assemblies were conducted through a combination of in-person and digital (online) voting.

The results were in line with expectations: low voter turnout and a comfortable majority for the “ruling” party. President Putin’s United Russia (UR) party received about 50 percent of the popular vote (slightly lower than the 54 per cent it received in 2016) and took 126 out of the 225 seats decided by proportional representation. Of the remaining 225 seats determined by the first-past-the-post system, UR received 198. In total, with 324 seats of the total of 450, UR has well over the two-thirds majority needed to pass constitutional amendments. This is, of course, an academic point, since few Duma members of any political hue have voted against constitutional amendments, which are normally suggested by the President. For the record, the Russian Communist Party was second in the popular vote with about 19 percent (57 seats) and will be the main opposition party. A new political party, with new faces, and appropriately called New People, made its debut, garnering just over the threshold figure of 5 per cent and therefore 13 seats in the Duma.

The opposition politician Alexei Navalny remains in prison and was not eligible to stand. His party is not registered and organizations associated with him have been declared foreign agents or extremist organizations. It has been alleged that those suspected of sympathising with his movement have also been disqualified for one reason or another. Navalny’s organization had devised a “smart voting” app that guided voters to defeat establishment candidates by tactically voting for the best-placed alternative candidates. This app had apparently been used with some success in local elections in the Far East. The Russian government moved to block this initiative, asking Apple and Google to remove this app from their play stores. Local platforms like Yandex had already done so. For good measure, the US Ambassador to Russia was summoned by the MFA and told that US internet platforms’ interference in Russia’s internal affairs was “categorically unacceptable”. In the event, both Google and Apple took down the apps just before the elections, persuaded (according to western media reports) also by the apparent threat of felony charges against their local employees and termination of their operations in Russia. You tube and Twitter were similarly pressurized to delete content featuring Navalny and Google removed thousands of links from search results.

Alexei Navalny is the best-known Russian opposition politician in the West. His alleged poisoning in September 2020, his evacuation to Germany and the declaration that he had been poisoned by a nerve agent of the Novichok family, provoked a spate of sanctions against Russia from the US and Europe. Russia has denied the poisoning, complained that neither the German authorities or the OPCW had shared any test results, and most recently pounced on discrepancies in the OPCW’s reporting of the case, to cast doubt on the German findings of poison. Immediately on Navalny’s return to Russia after recovery, he was arrested for a technical offence.

However, for all the attention he gets in the West, Navalny’s popularity in Russia is a matter of some doubt. According to surveys by the Levada Centre – the only Russian polling agency recognized in the West as independent – Navalny’s support in Russia was at a 20% high in September 2020, when 50% of those polled disapproved of his activities. By June 2021, his support had dropped to 14% and disapproval ratings had reached 62%.  Levada Centre’s polling indicates that Navalny’s smart voting app may also not have the widespread impact that has been claimed for it: apparently 65% of Russians said they did not know anything about it and 16% said they had heard of it, but did not know what it was really about. Only 8% of respondents knew and supported the initiative. Considering all this, and the fact that President Putin’s approval ratings (according to the same agency) are uniformly above 60%, it may be reasonable to wonder why the Russian authorities go to such lengths to prevent Navalny from standing for elections. The response one gets (mostly off the record, though President Putin has hinted at it in some public statements) is that they believe he is supported and funded by western agencies working for regime change in Russia.

The traditional election observers from the Organization for Security and Cooperation in Europe (OSCE) did not turn up this time, claiming that the Russian authorities were imposing unacceptable restrictions. Images of ballot-stuffing and other irregularities circulated freely in the social media, but there was no independent verification of their authenticity. The election commission declared that most of the allegations were not sustainable. The digital voting procedure attracted criticism as enabling manipulation. The Communist party created a minor sensation by refusing to accept the results in a Moscow constituency, alleging that its comfortable majority in the ballot box had been overturned by a suspiciously large adverse result from the digital ballots.

After the elections, a spokesman of the EU said the elections had not been free and fair. The US State Department declared that conducive conditions did not exist for free and fair elections, since independent political figures had been marginalized. On its part, Russia’s Central Election Commission reported “an unprecedented number of cyber-attacks”, about half of them from US territory, to undermine the elections process.

In many ways, Duma elections are of limited significance, except as a general barometer of the public mood. Russia remains a strongly presidential republic, with the Kremlin determining the federal and regional legislative priorities, and exercising control over the appointment and functioning of the executive and judicial branches at the centre and in the regions. Regional political parties do not exist. The Kremlin nominates candidates for regional governors (corresponding to a state chief minister), who normally win election in their regions, but can be recalled whenever the President feels they are not performing their duties well. 

On the whole, it is not a model of liberal democracy that the West would advocate. But from the perspective of the occupant of the Kremlin, as he surveys the country’s enormous regional, ethnic and social diversities, the complex challenges on its periphery – an advancing NATO, restive Caucasus, turbulent Middle East, vulnerable Central Asia and assertive China – further aggravated by the acrimonious standoff with the West, a strictly managed federalism and Presidential legitimacy derived from a direct popular vote seem the most appropriate form of democracy to ensure the country’s sovereignty, regime security and territorial integrity.

 

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(The views expressed are personal)

The Author can be reached at raghavan.ps@gmail.com
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About the Author

Ambassador PS Raghavan

Former Indian Ambassador to Russia

Born in 1955, Ambassador Raghavan holds a B.Sc. (Honours) degree in Physics and a B.E. in Electronics & Communications Engineering. He joined the Indian Foreign Service in 1979. From 1979 to 2000, he had diplomatic assignments in USSR, Poland, United Kingdom, Vietnam and South Africa, interspersed with assignments in the Ministry of External Affairs (MEA) in New Delhi. From 2000 to 2004, he was Joint Secretary in the Indian Prime Minister's Office dealing with Foreign Affairs, Nuclear Energy, Space, Defence and National Security. Thereafter, he was Ambassador of India to Czech Republic (2004 - 2007) and to Ireland (2007 - 2011).

He was Chief Coordinator of the BRICS Summit in New Delhi (March 2012) and Special Envoy of the Government of India to Sudan and South Sudan (2012-13). Ambassador Raghavan conceptualized and piloted the creation of the Development Partnership Administration (DPA) in MEA, which implements and monitors India’s economic partnership programs in developing countries, with an annual budget of $1-1.5 billion. He headed DPA in 2012-13. From March 2013 to January 2014, he oversaw the functioning of the Administration, Security, Information Technology and other related Divisions of MEA. Since October 2013, he was also Secretary [Economic Relations] in MEA, steering India’s bilateral and multilateral external economic engagement. Ambassador Raghavan retired from the Indian Foreign Service in January 2016, after serving from 2014 as Ambassador of India to Russia. Since September 2016, he is Convenor of the National Security Advisory Board of the Government of India.

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