Russia’s role in global politics is very unique. Russia is a great power, which in previous years has repeatedly demonstrated that it holds the capability to destabilise the international order. It’s recent build-up in Ukraine and arms sales and military engagements to build ties with countries in various parts of the world, especially the Middle East also proves its prowess. Its military strength is the main support of its great power claim. It has considerable capacity for what might be called “nuisance power” around its fringes and in cyberspace, but has few economic or ideological tools at its disposal.
The Russia-Ukraine conflict is currently under global focus. The recent move of Russia to move its military troops on the Ukraine border has resulted into a substantial surge in oil prices, which has put the US and the EU under pressure because Russia is the biggest exporter of oil to the EU, particularly Germany.
Western press is abuzz that Russia is about to invade Ukraine. Russia has denied this claim and said its troops have completed military exercises in Crimea and are now withdrawing back to their barracks. The US President and the EU General Secretary don’t agree with the Russian claim of de-escalation of its troops. These statements resulted in a rise in oil prices by 3.2 percent, $95 a barrel.
The statement of Robert Yawger, Vice President of Energy Futures at Mizuho Securities, endorsed the US President’s statement which worked as a catalyst to increase oil prices. Investors have been very sensitive to the risk that an invasion of Ukraine would disrupt Russia’s vast energy supplies at a time when global supply is already failing to keep up with demand.
Russia is the second largest oil producer and sends 35 percent of its natural gas supply to the EU. A large amount of that supply goes through Ukraine. The US has already started preparing for an alternative energy supply to Europe in case Russia invades Ukraine.
Meanwhile, the EU is considering an increase in the number of battle groups to militarily counter the Russian invasion if it happens. There are already four battle groups in Estonia, Latvia, Lithuania, and Poland. The UK, Canada, Germany and the US are leading these battle groups.
Russia is threatened from the eastward expansion of Europe and has thus been keeping Ukraine away from getting entry into the EU. President Putin wants Ukraine to abandon its western course and look towards Russia. But this desire of Russia does not seem to be working so far. Russia’s seizure of Crimea and its role in the conflict in Donbas has claimed more than 13,000 lives, till date.
Ukraine is sandwiched between the EU’s rapprochement and Russian demands. The eastern provinces of Ukraine are already under Russian influence. The EU has the potential to ignite a movement as was done in 2014; a revolution of dignity.
In 2005, Ukraine witnessed a revolution as well. On both occasions, the Ukrainian people rejected the supremacy of Russia and desired to join the EU. Russia responded by annexing Crimea and supporting separatists in the south-eastern provinces of Donetsk and Luhansk in Ukraine.
The history of this region goes back to 1200 years when Ukraine, Russia and Belarus were born on the banks of the Dnieper River, in Kievan Rus, a medieval superpower which included a huge chunk of Eastern Europe. The Russian President claims Ukraine as part of the Russian civilisation but Ukrainians reject this claim.
The US administration and the European Union have asked other countries such as Qatar and Japan to help provide extra liquefied natural gas (LNG) shipments. The US has already stated that if Russia attacked Ukraine, sanctions will be imposed on Russia. For several months now, Russian gas flows to Europe have been lower than usual. Most of this supply comes through pipelines including Yamal-Europe, which crosses Belarus and Poland to Germany, and Nord Stream 1, which goes directly to Germany via Ukraine. The Russian troop movement might be a pressure tactic for approval of Nord Stream 2. Russia’s Nord Stream 2 natural gas pipeline will increase Russia’s natural gas export capacity directly to Germany, bypassing Ukraine, Poland, and other transit states. Pipeline construction is complete, but it requires certification from German regulators before it becomes operational.
The US is not supportive of this arrangement against the wishes of Germany and it has resulted in a delay in the operation of Nord Stream 2, which lies alongside the Nord Stream 1 pipeline. Nord Stream 2 will enhance the capacity of the Nord Stream system, from 55 billion cubic meters (BCM) to 110 BCM per year. The pipeline is owned by the Russian state-owned energy company, Gazprom. About half of the cost is financed by five European companies: Engie, OMV, Shell, Uniper, and Wintershall. Nord Stream 2 will provide leverage to Russia over European energy security, which is not acceptable to the US.
Though China is equally affected due to a rise in oil prices, it has opted to remain silent due to its strong ties with Russia. Russia and China have good relations and common interests. The common interests of both countries look towards weakening the across-Atlantic partnership, countering US soft power, undermining European togetherness and challenging US hegemony. It is an alliance of convenience. Both countries have heavily but cautiously invested in each other. China and Russia don’t interfere with each other’s interests on regional issues.
So, it is a series of actions and reactions to have strategic leverage in the structuring of the new world order. Russia may not invade Ukraine, but OPEC sure has invaded the global economy through an increase in oil prices. It is not the first time that OPEC is using oil prices for political gains. These global decisions affect the domestic political environment and result in inflation which comes to affect the life of the general public.