9 Star Hotel

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Excerpt: The Hyperborder in a Globalized World

Energy Wars: The Russia-Ukraine Gas Dispute and Russia’s Rise To the Global Energy Elite

9 Star Hotel -Hyperborder - Energy MapRussian gas pipelines course all over Europe

The present day’s global economy is dependent on limited energy resources, specifically on fossil fuels. The peak oil phenomenon — the point at which half of the planet’s oil reserves are expended and subsequently go into immediate decline — is looming, and soon will no longer be able to meet the ever-growing demand. Absent the rapid development of alternative fuel sources, the consequences of this imminent event will lead to price increases with an ensuing economic recession, and more ominously wars over control of the precious commodity. Experts in the field are not only unnerved by the dwindling amount of the global economy’s fundamental fuel; the fact that the reserves are concentrated in the hands of countries whose political stability is in doubt and/or whose agenda is not pro-West is of deep concern.24

The recent emergence of a new “global energy elite” will likely put the Western nations of the world in an unprecedented position of vulnerability, as the industrialized, energy-consuming nature of their economies rely on consistent access to oil and natural gas, resources that are predominantly controlled by political actors who are not the West’s unconditional allies. The case of Russia provides an apt example of this unfolding shift of power. In the advent of its largely unanticipated comeback from years in economic and political struggle in the aftermath of the fall of the Soviet Union, the Kremlin has made concerted and successful efforts to create a strategic position of power for itself in the global economy as the planet’s chief source of natural gas. With 28 percent of the world’s gas reserves located within Russia’s boundaries, and estimates projecting that within two decades the country will be the provider of 50 percent of Western Europe’s gas needs, the global political arena should be prepared for the potential ascendancy of Russia to its former superpower status.25 That is the acknowledged intention of the country’s current president, Vladimir Putin, who prior to entering the presidency wrote that the key to Russia’s rehabilitation of its “former might” was to capitalize on its role as provider of natural resources.26 The recent dispute with the government of Ukraine — which contrary to Russia’s wishes is turning toward the West and may seek to join the European Union — exposed Russia’s potential to use its gas reserves as leverage for enhancing geopolitical power and maintaining its traditional sphere of influence. On January 1, 2006, Russia’s state-controlled Gazprom — which is the world’s commanding gas extractor and the third largest corporation on the planet — cut off the gas supply to Ukraine, and effectively to that of Western Europe, which receives a majority of the energy source via Ukraine’s pipeline system. The move — meant to pressure Ukraine into paying world market prices for the commodity and end a barter system where Russia exchanged gas for use of its neighbor’s pipes — sent the European Union into a near panic and confirmed the region’s dependency on Gazprom’s product delivery, as it discovered that alternatives in the immediate and medium future are essentially not economical.27

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24. Michael Hirsh, “The Energy Wars: The Rise of a New Global Energy Elite Means High Oil and Gas Prices Are Here to Stay,” Newsweek (May 3, 2006).
25. Ibid. Gary J. Schmitt, “Energy Security, National Security, and Natural Gas,” American Enterprise Institute for Public Policy Research, April 2006, (accessed Sept. 7, 2006).
26. Gabe Collins, “Russia’s Energy Weapon,” Global Events Magazine (May 4, 2006), http://www.geostrategymap.com/docf_Guest_May04_2006.htm, (link no longer available).
27. The American Friends Service Committee, “North American Free Trade Agreement (NAFTA),” (accessed Sept. 7, 2006).