Russia’s strategic move to use energy as a bargaining tactic serves its strategic interest well at present. This created a new fissure among the European countries over the nature of energy engagement with Russia. However, the sanctions imposed by the West are taking a heavy toll on Russia’s domestic economy. If the war prolongs, it may aggravate the global geopolitical crisis.
While the Russia-Ukraine war is in full swing, causing heavy causalities to both sides simultaneously, there is a growing apprehension that this war might lead to a World War-like situation. This thesis of World War III is gaining greater acceptance among strategic analysts and policymakers because of its spillover effect on global geopolitics.
At the same time, the kind of military support Ukraine is getting from the West shows there will be further escalation of the war. This war is a prestige issue for the West because they consider Russia under President Vladimir Putin as one of the major obstacles to establishing liberal Western order in global geopolitics. On the other hand, for Russia, this war is a decisive battle for its survival as a Eurasian power and an aspiring “European Power”. At the same time, Russian policymakers understand that the geopolitical goal of “Greater Eurasia” can be realised only when Russia annexes Ukraine, thus making Russia a “European power”. Since Peter the Great, achieving the status of a “European Power” has been a major strategic obsession for Russia.
While Russia and the West are not seeing eye to eye towards each other, poor Ukraine is suffering. Thus it can be stated that Ukraine is the new battleground for both Russia and the West. The recent US President Joe Biden’s visit to Ukraine on Monday and his promise to provide military and financial assistance to the tune of $50 billion is considered part of his exercise to strengthen the North Atlantic Treaty Organization (NATO). It will further escalate the war. Russia also responded to Biden’s visit when Putin in his address on Tuesday strongly criticised the United States and NATO for the present crisis.
Putin stated, “The United States and NATO have started an impudent development of Ukrainian territory as a theatre of potential military operations. Their regular joint exercises are anti-Russian...Ukraine is home to NATO training missions which are, in fact, foreign military bases.”
It appears that there is going to be a further escalation of war between Russia and Ukraine. One may not rule out a potential World War III if NATO directly intervenes in the war. Similarly, Russia has also moved out from the START Treaty, thus signaling a hardliner posture against the West.
Though these developments are strategic in nature, they are going to have a major impact on both security of Eurasia as well as the world. Nonetheless, the immediate repercussion could be on energy security and aggravation of the food crisis at the global level. The new strategic development may also prolong the Russia-Ukraine war. This, in fact, create a unique crisis situation for energy securitisation. Russia may also use its energy resources and control over foodgrain as a tactical weapon to influence global geopolitics.
It may be recalled here that while war is in full swing between the two Slavic brotherly countries, the repercussions are being felt in regional and global geopolitics. To a great extent, this is quite alarming for the global community. The impact is not only on Russia and Ukraine but is also experienced by all the post-Soviet countries and adjacent European countries.
The war has manifold impact on the energy securitisation process. Another issue that needs to be kept in mind is that the war is causing energy insecurity and accentuating the food crisis, thus aggravating the humanitarian crisis on a larger scale. The problem of supply securitisation of both foodgrains and energy from Russia and Ukraine was further compounded by the fact that both the ports of Odessa and Mariupol are under the War Zone. Similarly, the major arteries of energy and food supplies from Russia and Ukraine, namely the Black Sea, Mediterranean Sea and the Sea of Azov, are also coming under the influence of the present war between Russia and Ukraine.
It is a known fact that Ukraine used to act as a major transit route for Russian energy to Europe. Thus, a major supply disruption occurred with the onset of war, adversely affecting Europe’s energy security. However, it must be highlighted that it is not only the European economy affected because of the Russia-Ukraine war but the global energy supply has also been disrupted. At the same time, the War is also proving to be a blessing in disguise for the slumbered global energy market reeling under the impact of the Covid-19 recession.
The severe energy crisis the global community has been confronting over the years is aptly captured by the recently concluded Ministerial Conference Meeting, which took place in Mid-February 2023, organised by the International Energy Agency (IEA). The conference took a common position that the “one-year war between Russia and Ukraine had a catastrophic impact on global energy market”. Some of the major issues the conference discussed were “price volatility”, “mitigating energy crisis”, and addressing measures so that similar crises may not occur. In this regard, it is pertinent to highlight that the eruption of war suddenly increased oil prices at the international market. As a result, oil prices crossed $100 in the international market. As per the IEA study, it was hovering around $105-50 during February-December 2022.
The same is the case of rise in prices of gas in the international market. As reported in August 2022, gas prices in the European market rose to 338 Euro per megawatt-hour. Though the prices are stabilising now and falling below 50 Euros after a record surge in the European market.
Thus there are four major inferences one can infer regarding the price volatility of energy in the context of war between Russia and Ukraine. These elements provide impetus to the geopolitics of energy security in a broader framework. These are:
1) war affected Russia’s energy supply to the international market along with the European countries;
2) the war brought out the significance of transit countries in the energy securitization process;
3) the war has also paved the way for emergence of new players for supplying energy as well as new markets for the energy export countries;
4) the war has also brought out food crisis at the forefront. In fact, both energy and food crises are going on side by side in the present context.
To a greater extent, all these developments can be attributed to the present strategic impasse caused by the war. As per the European Council report, in 2021, the European Union (EU) imported around “83 per cent of gas”. However, the war has put EU countries to a sense of energy vulnerability. Similarly, because of the onset of the war, Russia, which used to derive major chunk of revenue by exporting energy, has also suffered a lot.
As per the report of EIA, in 2021, Russia earned around 45 per cent of revenue from export of energy. Thus war has adversely affected both Russia and European countries. Another interesting thing having a larger repercussion for global geopolitics is that the EU’s energy war with Russia brought out was fraught within the EU countries. In their recent joint meeting, France and Germany took a position with EU countries on the issue of war against Russia. The same was reflected at a joint meeting between German Chancellor Olaf Scholz and France’s President Emmanuel Macron who agreed to adopt a joint stand with the EU and provide defense aid.
However, there is a bit of simmering discontent within the EU. For instance, Germany and France took contrary positions at the height of the energy crisis in August 2022 which affected the cohesion of the bloc. For example, both these countries are pretty vocal about exempting energy sector of Russia from sanctions. This is a fact which created much heartburn within the EU. It is also true that Russian energy is the lifeline for Germany. The disruption of the energy supply crippled the German economy. The same is the case for other European economies.
Though these EU countries weathered away the energy crisis by importing from Qatar, Norway, and the United States, the cost was too high, putting them in a difficult situation. It is a fact that Germany initiated measures to reduce energy consumption, but this arrangement cannot be sustainable in the long term. It has also been reported that Germany is even mulling over using nuclear power plants to ensure energy security. The same is also for other European countries.
What is alarming is that the energy crisis is taking a heavy toll and Europe is facing a massive humanitarian crisis. Since energy is closely linked to economic activities, there is a concern emanating from various quarters that it may contribute to a recession in the European market in the long run. European countries already spend huge amounts of money to tide over the energy crisis. As per a report published in Quartz, Germany spent around 7.5 per cent, Britain about 6.1 per cent and France around 3.7 per cent, and Italy about 5.6 per cent of their respective GDP to tide over energy crisis.
The additional expenditure by the respective European countries put the European economy in a recession when it started to recover after the post-pandemic era. One may add here that it is not just the European countries suffering due to the present war between Russia and Ukraine. The impact can be seen in other parts of the world.
Though African continent is a major supplier of oil and gas to the international market, the Russia-Ukraine War has put few African countries in a difficult situation, like South Africa which is keen to buy Russian oil. Over the years, Russia has also been an active player in the energy exploration, particularly in the Northern Africa. However, the recent sanctions on Russia will adversely affect Russian energy industries’ engagement in the North African energy sector. Notably, the renewed focus on African energy sector and greater rush to tap the energy sector of Africa will flare up geopolitical competition.
The current war is also adversely impacting the Asia-Pacific energy market, particularly for countries like Japan and South Korea, which import substantial energy to meet their domestic requirement. Both these countries are keen on putting sanctions on Russia but quite skeptical about imposing sanctions on its energy sector. This is because both Japan and South Korea import a substantial amount of energy from Russia. At the same time, they have also invested heavily in Russia's Siberian and Far East energy sectors. As reported, despite being a Western ally against Russia in the month of August 2022, both Japan and Russia signed energy to deal with regard to Sakhalin 2 project. This demonstrates that, like Germany and France, Japan, though overtly in the Western alliance, remains keen to rejuvenate its relations, especially in the energy spheres.
On the other hand, the major gainer of the Russia-Ukraine war is China. Because of the Western sanctions and to tame them, Russia is increasing its energy supplies to China. During January- October 2022, Russia supplied 72 million tons of oil as per the data released by Russian oil giant Rosneft. This is a growth of 9.5 per cent in comparison to 2021.
Similarly, Russia supplied around 22 billion cubic meter of gas in 2022 to China. As reported, Russia is planning a new pipeline project known as Power of Siberia 2 gas pipeline through Mongolia to augment the energy export to China which will start in 2024. Along with this, the electricity supply from Russia to China grew by 33 per cent. At the same time, Russia exported 53 million tons of coal to China between January-October 2022. In fact, Putin just after the imposition of sanctions by the Western countries on Russia proclaimed “Pivot to Asia” strategy. Under this policy, Putin tried to forge a greater partnership with Asian countries in terms of energy export to escape from the Western sanctions.
The ongoing war between Russia and Ukraine is a growing challenge to global energy insecurity, causing rowing food insecurity in different parts of the world. The disruption of supply of foodgrains and fertilisers to the international market from Russia and Ukraine pose a significant challenge to global food insecurity. As per the Food and Agricultural Report (FAO) 2022, Russia and Ukraine supply around 30 per cent of wheat . However, the war disrupted the same.
Similarly, the FAO study further highlights that both Russia and Ukraine’s share in world’s sunflower oil market is around 78 per cent. In terms of maize also, Ukraine contributes around 16 per cent and Russia around 3 per cent to the international market as per the FAO study. In addition, Russia is a major supplier of fertilisers to the international market. The sanctions on Russia, along with the disruption of food and fertiliser supply to the international market due to war is aggravating the global food crisis and causing hardship to the common people. Thus, it is quite naïve to say that the Russia-Ukraine war has no global repercussions.
One of the major factors hindering movement of foodgrains and fertilizers is the disruption of supply chain in the Black Sea and Mediterranean Sea due to war and excessive militarisation in this part of the world. The supply disruption is thus aggravating food crisis in both Africa and Europe. As per a study by European Parliament, the Middle East and North African region used to receive around 50 per cent of cereals from both the countries. At the same time the same study highlights that Eastern Africa receives around 90 per cent —72 per cent from Russia and 18 per cent from Ukraine— of cereals from the two countries. Similarly, EU along with energy crisis is also confronting the food crisis largely due to the ongoing war.
The EU parliament’s study also acknowledges the fact that Europe is facing massive fertiliser crisis due to the ongoing war. Since both Russia and Belarus are major source of fertiliser for EU, the supply disruption will aggravate the agricultural production and will have an impact on overall food security. At the global level, a United Nations study suggests that around 75 million to 95 million people will face “extreme poverty” due to the current war and the pandemic effect.
It is a fact that energy revenue contributes significantly to Russia's national economy. As per the statistical data of the International Energy Agency, the energy sector of Russia in 2021 contributed around 45 per cent of the federal budget.
It is a fact that Russia became a major global power largely due to the contribution of its oil and gas sector. However, the Russian energy sector has been hit by slump in the international market due to pandemic along with the present sanctions by the Western countries. This is putting a significant impact on Russian economy at domestic spheres. As per World Bank, in 2021, Russia’s GDP growth rate was around 4.7 per cent. However, the sanction imposed on Russia put further impact on Russia. In 2022, the economic growth rate was at a paltry 2.9 per cent as per the official report of Federal Statistical Agency of Russia. If there is no waiver of sanctions in 2023, the Russian economy may face a further downturn.
A closer look at the geopolitical repercussions of Russia-Ukraine war over the last one year demonstrates that there are major inferences one can draw in terms of energy securitisation. These are:
1. The war if it continues is going to have a major impact on global geopolitics and also brought out the question of looking at the question of energy security from a holistic perspective which includes food security also.
2. The war also brought out the fraught within the Western alliance, particularly within NATO over the nature of action on Russia. Countries like France, Italy, and Germany are keen to salvage their energy relations with Russia. However, they agree to joint action of NATO against Russia, but the domestic energy crisis and widespread resentment force them to pursue a softer stand towards Russia. In this regard, if the war continues further for a few months more, it is going to put too much economic pressure on EU countries to pay higher prices to both the US and Qatar energy.
3. A closer look at Russian policy posture, especially in the context of weaponisation of energy, is that Russia has succeeded to a greater extent. In this regard, it can be stated that though it is costing dearly to Russia in terms of financial implications, it has succeeded in putting a counter-pressure on EU countries.
4. The war has also brought out a fundamental shift in the global geopolitics, especially in the context of energy security. The present crisis has also brought out new opportunity for renewable energy. In this context, there is a need to bring out a new institutional arrangement under which energy considering its importance for global community may be exempted from sanctions. But at the same time, energy-producing countries also cannot use it as a coercive geopolitical weapon .
Some of these geopolitical developments arising out of the Russia-Ukraine war are having implications for India as well. This is a fact that India imports nearly 80 per cent of energy. Though West Asia used to be the traditional energy market for India, in recent years, India has diversified its energy market to Russia as well.
Over the years, India has also become a key player in the Russian energy market, particularly in its Siberia and Far East. Along with this, India also imports substantial amount of energy from Russia. The increase in the price of energy in the international market due to sanction on Russia has to a greater extent affected India’s quest for securing energy in the international market.
Similarly, as per statistical data, near about 85 per cent of defense equipment India imports from Russia. Thus sanctions on Russia provided India with a new form of challenge in securing energy and defense equipment. Despite sanctions, India and Russia bilateral trade during April-August 2022 reached $18.23 billion. According to recent statistical data from Vortexa, India and Russia’s energy trade reached a staggering high of 40 per cent during July-November 2022, rising further to 60 per cent in first half of January 2023. Similarly, despite sanctions, India is also importing record fertilizers from Russia. As per data, India imported fertilizers from Russia ofaround 2.15 million tons from April to October 2022.
Since the beginning of the war, India constantly advocating the need for “negotiation” and “dialogue”. India’s position on ending the war has been even appreciated by both Russia and Ukraine. It may be underlined that the UN Chief Antonio Guterres, US President Joe Biden, President Vladimir Putin of Russia and even Ukrainian President Voldomir Zelenskyy on number of occasions advocated the need for active role of India in resolving the war between Kyiv and Moscow.
It is high time that Russia and Ukraine listen to India’s advice and resolve their mutual disputes amicably.
While looking at the course of war, it can be stated that while the West is using encirclement of Russia through Ukraine as a tactical ploy, Russia is using energy as a strategic weapon to “coerce” the West —particularly the European countries— in the last one year.
Though the Russian economy is showing a sign of recession, Moscow’s move to use “Asia vector” to export energy particularly to India and China along with Japan to some extent to tide over the present financial crisis is a well-crafted geo-economic strategy on its part. However, one thing is certainly clear that if the war gets prolonged, the day is not far when one will be actually in the midst of a Third World War. This will aggravate further energy insecurity. The Second World War aggravated when Japan attacked the energy containers of Pearl Harbour of the US and Germany attacked the oil fields of Rumania as energy historian Daniel Yergin in his book The Prize highlights. If energy crisis prolongs, one cannot rule out that a similar situation may emerge which will be a reminiscence of Second World War.
(Nalin Kumar Mohapatra is Assistant Professor at Centre for Russian and Central Asian Studies, School of International Studies, Jawaharlal Nehru University. The views expressed are personal to the author.)