A Third Perspective
Turning crisis into opportunity
This past Sunday, Ukrainian citizens living in Crimea, Ukraine's southeast peninsula, voted to break away from their country and join Russia. Under the auspices of armed Russian soldiers, Crimean citizens cast their ballot in a hurried referendum. If this sounds illegitimate, irregular or illegal to you, rest assured, it is. A quick (albeit oversimplified) analogy exists in the form of Arizona holding a vote to join Mexico, assuming that Arizona was forcefully occupied by Mexican troops.
If you are confused as to how the situation in Ukraine led to this, fear not: here's a brief synopsis. Instead of entering into an auspicious economic agreement with the European Union that would have facilitated lucrative trade relations and a closer connection to the West, ex-Ukrainian President Viktor Yanukovych chose to accept a decidedly inferior arrangement with Russia-only after receiving billions of dollars in debt-relief from Russian President Vladimir Putin. Witnessing what they correctly believed to be Cold War era bully tactics, Ukrainian citizens began to peacefully protest in Kiev and other cities.
In what can be described as a dictator-esque paroxysm, President Yanukovych reacted to these developments by violently cracking down on protesters, restricting personal freedoms and installing a curfew. Rather than quell the unrest (surprise, surprise), these actions exacerbated tension within Ukraine, particularly between the western Ukrainians who wanted a closer relationship with Europe and the eastern Ukrainians that elected Yanukovych and generally favor Russia. A maelstrom of civil unrest gripped Kiev in the months that followed, with protests turning into riots and riots morphing into a countrywide revolution. Eventually Yanukovych was forced to abscond to Russia.
This more or less brings us to the present. Over the past few weeks President Putin has ordered thousands of Russian troops into Crimea under the guise of protecting ethnic Russians (the majority in Crimea) from "ultra-nationalist" Ukrainians, and has threatened to do the same in mainland Ukraine. Crimean authorities then "voluntarily" put forward a referendum that gave citizens the option of joining the Russian Federation. The voters predictably acquiesced.
President Obama and many European leaders have deemed Russia's actions a gross violation of both Ukrainian sovereignty and international law, but Putin has remained defiant. On Tuesday, the United States and European Union announced sanctions, visa bans and asset freezes against top Russian officials, primarily those close to Putin. The Russian president, however, confirmed the annexation of Crimea and continues to thumb his nose at the international community, condemning what he calls "Western hypocrisy." In the midst of this imbroglio, however, lies an opportunity. Putin's aggressive moves have presented the United States with a chance to undermine, his political future and end Russia's expansionist tendencies in the long term.
The West now has substantial justification to implement broad and unrelenting economic sanctions against Russia, the focus of which must be on oil and natural gas. Russia's economy is in poor shape; not only is it overwhelmingly reliant on gas exports, but foreign investment has gradually evaporated due to chronic government corruption, its currency continues to devaluate (resulting in an inflationary spiral), and its main stock index has experienced a stomach-dropping free fall in recent weeks. This leaves Gazprom, Russia›s government-controlled oil monopoly, as one of the country's last sources of economic power. Yet there is even more bad news: Gazprom's global market share has fallen from 360 billion in 2007 to 77 billion in 2013.
Unfortunately, Russia still provides around 30 percent of Europe's oil and natural gas. This means that the U.S. needs to get European countries on board, especially Germany, if economic sanctions are going to be effective. Conversely, European leaders understand that their citizens, not Americans, would be the victims of gas and petrol price hikes. It's not difficult, therefore, to appreciate why Angela Merkel would be reluctant to join an economic crusade against Germany's largest gas supplier.
But the U.S. has a trump card, indeed the reason why Gazprom's market share has tumbled so dramatically. New drilling methods, spurred by technological innovation, have wrought a shale gas revolution in America. U.S. companies can now reach pockets of natural gas that were previously thought inaccessible ("fracking") and this has resulted in an abundant supply. Exxon Mobile's chief economist, among others, predicts that the U.S. will achieve complete energy self-sufficiency by 2020-and possibly even earlier. The Obama Administration must recognize this development for what it is: a geopolitical weapon.
By expediting the approval of natural gas exports and subsidizing companies that supply Europe, the U.S. could mitigate Europe's initial gas shock as well as share the burden of imposing sanctions. Building the infrastructure needed to meet this additional demand will take time, but so will Putin's territorial ambitions.
Destroying Putin's gas leverage opens a variety of diplomatic options. Without a show of economic force, however, diplomatic efforts will repeatedly fall on deaf ears and Russia will have no incentive to stop its encroachment. In an editorial addressed to the American people last September, written at the height of the Syrian crisis, Putin emphatically stated: "Under current international law, force is permitted only in self-defense or by the decision of the Security Council. Anything else is unacceptable ... and would constitute an act of aggression." With an economy in shambles and civil unrest at the door, Putin may be inclined to embrace his former reasoning. Or, better yet, Russian citizens may be inclined to oust him in the same manner as Yanukovych-a kleptocrat whose time had come.
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