Natural gas: how it poisons politics

Natural gas has a uniquely corrupting influence on politics. Politicians hoping for an economic bonanza from the lifting of sanctions on Russia should bear this in mind.

Politicians pushing for a quick “deal” to solve Russia’s war on Ukraine in order to realise vague economic opportunities should be careful what they wish for. Lifting sanctions won’t necessarily help anyone – except Russia itself.

One of Russia’s major exports is natural gas. The problem, as I set out in my book Lessons in Diplomacy, is that this product has a unique ability to poison and corrupt politics. Here’s an excerpt from the book.

Natural gas: the most poisonous substance on earth

What is the most poisonous substance on Earth?

Step forward, natural gas. Not for its chemical properties, but for its noxious impact on politics and politicians.

The first Russian gas delivered to Western Europe arrived at Baumgarten, near Vienna, in 1969. In 2019, President Putin visited Austria to celebrate 50 years of exports.

As Russia extended its network of export pipelines after 1991, Russia hawks argued that European dependence on Russian natural gas could allow Moscow to build influence and put pressure on importing nations. Others argued, plausibly, that flows of gas and money could help integrate Russia into the global economy and political structures, to everyone’s benefit.

In January 2009 Russia cut gas supplies to Ukraine, over gas debts, prices and transit fees. Because gas for European markets transited Ukraine, the shutdown severed supplies to Slovakia, Bulgaria, Greece, Austria and others. Russia and Ukraine blamed each other for the crisis. ‘A lot of activity on gas, with Europe freezing as the result of Russia cutting off supplies,’ I wrote from Kyiv. ‘Exactly who has done most wrong is obscure, but Russia holds most of the cards and has been throwing its weight around.’

The dispute was a foretaste of controversy over the Nord Stream 1 and 2 pipelines, designed to bypass Ukraine, deprive it of transit fees, and deliver Russian gas directly to Germany and beyond. The US, and Central and East European countries, fought the project. Despite this, Nord Stream 1 opened in 2011, two years after the Ukraine gas crisis. Nord Stream 2 was completed in 2021 – only for Germany to suspend it two days before Russia’s 24 February 2022 invasion of Ukraine.

A casino in Moscow in 2005

The argument that integrating Russia into the global economy should make it a more normal country hasn’t worked. The problem is not that Russia can blackmail people. On the contrary: when Moscow cuts supplies, as it did again in 2022, it is effectively shouting from the rooftops that it is not a reliable supplier.

The real poison in gas is its corrupting effect on politics. Natural gas is less fungible than oil: it’s hard to turn on and off and tends to be transported through expensive pipelines under long-term contracts. The cash involved is so eye-popping that Western business types involved, and politicians close to them, develop an irresistible urge to go easy on Russia on everything from Crimea sanctions to condemning Russian assassinations at home and abroad. Donations by oligarchs thrill everyone from ancient universities to political parties, including in the UK. In fact, it’s not really the gas that’s poisonous. It’s the money. Many politicians are mesmerised by the whiff of billions – for their countries, their institutions – or sometimes themselves.

If gas corrupts, gas pipelines corrupt absolutely.

Making money out of Russia is hard

Another reason lifting sanctions on Russia won’t generate a bonanza for most people is that the government dominates business there. The rule of law is thin-to-non-existent, as western executives have found to their cost for decades. Western energy giants have an impressive record of operating in hostile environments. But even they have found operating in President Putin’s Russia near-impossible. Of course, if you get on the right side of the Russian leadership, you can make money. But you will always be operating at the whim of a few key politicians. This often does not end well.

Russia has launched two major wars against Ukraine in eight years: 2014-22 and 2022-now. It is not impossible that we will see a peace deal in the coming months. But this looks unlikely at present. If, under its current leadership, it launches future wars, it is likely once again to be the subject of sanctions. This, too, does not make Russia a comfortable place to do business.

What to do next

To find out more about the origin of Russia’s invasion of Ukraine, check out my book Lessons in Diplomacy. Chapter 5 (of 15) is titled: How to understand Putin’s war on Ukraine. Chapter 4, How (not) to introduce democracy, looks at how Russians’ experience of the 1990s paved the way for Putin.

You may also like to browse the Russia/Ukraine tab on this website. Thanks for reading.