RUSSIA SEES SCO AS POTENTIAL ENERGY CARTEL

Facing mounting Western accusations of aggressive behavior in the energy sector, Moscow is turning eastward in search of more friendly energy partners. One potential source is the Shanghai Cooperation Organization (SCO).

Alexander Lukin, director of the Center of East Asian and SCO Studies of the Moscow State Institute of Foreign Relations, told Kazakhstan Today that the Russian Foreign Ministry is developing a plan to establish an energy club consisting of SCO members.

Kazakh Deputy Foreign Minister Kairat Abdrakhmanov reportedly agreed that the idea is “a very important proposition that is currently under discussion.” Many countries, “including SCO member states,” prioritize energy diplomacy, Abdrakhmanov added (Kazakhstan Today, November 30).

The idea of an SCO energy grouping surfaced earlier this year. In May participants at the SCO summit discussed a number of regional initiatives, including a Russian proposal to create a regional “energy club.” Theoretically, such a club could become a truly global grouping if it allowed states with observer status in the organization — India, Pakistan, Iran, and Mongolia — to become full members. However, the SCO summit did not announce any concrete plans regarding the would-be energy club.

But now Moscow seems to view the SCO-based energy alliance as a potential strategy to counter Western pressure. Russian officials have made little secret that Moscow regards Western accusations of energy blackmail as mounting political pressure aimed at isolating Russia. The NATO summit in Riga demonstrated that the alliance intended to press Russia on energy issues, said Mikhail Margelov, chairman of the international affairs committee of the Federation Council, the upper house of the Russian parliament. Russia has already declined to comply with Western demands by refusing to ratify the Energy Charter and moving ahead with the North European sub-sea gas pipeline route, he pointed out (Interfax, November 30).

Moscow appeared to be wary of the energy discussions at the NATO summit in Riga, particularly a speech by Richard Lugar, chairman of the U.S. Senate Foreign Relations Committee, who called for NATO’s protection of allied countries’ energy security (see EDM, December 1). Lugar’s warnings of the potential use of energy as a weapon, and his suggestion to treat “aggressive energy suspension” as an armed attack on an allied country, equal to an attack against all according to the NATO Charter’s Article 5, inevitably made the Kremlin nervous.

But although Lugar made clear that Russian policies were the main source of such concern, the Kremlin’s response was somewhat muted. Russian Foreign Minister Sergei Lavrov just warned against attempts to discuss energy security issues without Moscow. “I do not think that attempts to do this without Russia could be useful or promote energy security,” he commented after the Riga meeting. Lavrov suggested that long-term energy security should be based on mutual respect and recognition of the legitimate interests of suppliers, consumers, and transit countries (RIA-Novosti, November 29).

Russian pundits also voiced hope that Lugar’s suggestions would not materialize, arguing that energy wars against Russia would create economic losses for the West. Sergei Markov, head of the Moscow-based Institute for Political Studies, said Russia was not waging energy wars but only trying to improve its trade levels. He claimed that the West had convinced some former Soviet republics to distance themselves from Russia, while simultaneously promising them continued Russian cheap energy supplies. “But now that Russia is raising its energy prices, and the West became alarmed,” Markov said.

Other experts also argued that NATO’s possible response was unlikely to involve any immediate action. Agvan Mikaelyan, deputy head of the FinEkspertiza consultancy, said that there would be no political or economic sanctions by NATO against Russia. Moscow was only protecting its national interests (Novye izvestiya, November 29).

However, some Russian media outlets commented that Moscow’s quest for energy allies in the East could bring limited results because of diminished Russian energy clout in Central Asia. Russia’s energy holdings in Kazakhstan and the rest of Central Asia are weakening, while China is boosting its already strong foothold in the region’s oil and gas sector, Nezavisimaya gazeta daily commented (Nezavisimaya gazeta, November 29).

Russia’s energy retreat from Central Asia is inevitable, said Valery Nesterov, an analyst with Troika Dialog brokerage. “Central Asian countries are no longer dependent on Moscow, and Kazakhstan is not inclined to view its northern neighbor as the main transit country for its oil and gas,” he said (Nezavisimaya gazeta, November 29). Thus Russian observers appear to doubt whether Russia’s potential energy allies within the SCO could be equally interested in establishing a formal grouping.

Therefore, Russia’s renewed talk of an SCO-based energy cartel appeared to come as a reaction to Western accusations of energy aggression. However, Moscow seemingly struggled to convince even domestic media and analysts that such moves to establish the SCO-based energy organization could serve as a sufficient deterrent to NATO pressure on energy issues.