Putin to West: Go Frack Yourself

Putin to West: Go Frack Yourself

Vladimir Putin and Gerhard Schroeder visit a Gazprom compressor station, 2011 (Gazprom)

By the time Crimeans went to the polls yesterday, it was clear that their referendum on secession added little more than rhetorical flourish to a military and political fait accompli. With over 95 percent of those polled voting to join Russia—and the option to preserve the peninsula’s current status within Ukraine conspicuously absent from the ballot—the Russian reconquista in Crimea has all but triumphed. Now, all eyes are on the Russian-leaning strongholds of eastern Ukraine, including Kharkiv and Donetsk, where clashes between pro- and anti-Russian demonstrators have already lead to several deaths. Russian and Ukrainian troops are reported to be massing on both sides of the border.

On the eve of Sunday’s referendum, meanwhile, Russian troops made their first move beyond the Crimean peninsula, seizing a natural gas terminal in the town of Strelkovoye, which lies on a thin sandbar just opposite Crimea’s northeastern coast. This latest provocation serves as a reminder of the critical role that disputes over natural gas have played in the mounting East-West tensions over Ukraine. The country depends on Gazprom, Russia’s state gas monopoly, for 60 percent of its gas, and discounts on that gas were a key component of the $15 billion aid package Russia offered Ukraine in December. Moscow canceled the discounts earlier this month following the ouster of Viktor Yanukovych, boosting its leverage over Ukraine’s already fragile economy.

Of course, the crisis threatens not only Ukraine’s gas supply but much of Europe’s, with some 53 percent of the gas that the EU imports from Russia flowing through Ukrainian pipelines. According to the U.S. Department of Energy, Russian imports account for only 16 percent of European gas consumption altogether, but for many in Europe, the current crisis has brought back unpleasant memories of gas cutoffs in 2006, 2008, and 2009, when tensions between Ukraine and Russia left scores of homes without heat in the middle of winter.

Ukraine gas pipelines

Leading U.S. politicians have been quick to condemn Putin’s hard bargaining. “Russia is a gas station masquerading as a country,” John McCain told CNN’s Candy Crowley on Sunday after returning from a trip to Kiev. But several of McCain’s colleagues in Congress, both Republican and Democratic, are eager to emulate Russia’s brand of “gas station” diplomacy. With oil and gas industry lobbyists behind them, a contingent spearheaded by House Speaker John Boehner has translated the threat of European gas shortages into an opportunity—not only to flex some crude foreign policy muscle in the face of broader diplomatic helplessness, but to boost American fossil fuel profits.

“One immediate step the president can and should take,” Boehner said, “is to dramatically expedite the approval of U.S. exports of natural gas. . . . The U.S. Department of Energy’s excruciatingly slow approval process amounts to a de facto ban on American natural gas exports that Vladimir Putin has happily exploited to finance his geopolitical goals.”

As a policy prescription, Boehner’s argument is ludicrous in the short term—first of all because, no matter how much red tape the Obama administration cuts, liquefied natural gas (LNG) export terminals will not come on line for another year at the very least. Furthermore, as Brenda Shaffer writes in Foreign Affairs,

North American LNG, after liquefaction, transit, and regasification, would cost at least double the price of Russian gas in eastern Europe’s pipelines. And that gas is already prohibitively expensive: In recent years, the high price tag has driven down gas consumption and led to a boost in coal use. In other words, LNG from the United States is no real competition for pipeline gas out of Russia.

Putin is not about to be beaten at his own game; as a diplomatic strategy, expanding U.S. gas exports remains a pipe dream.

Still, leading media outlets including the New York Times have taken Boehner’s argument seriously, and fellow lawmakers have rushed to answer his call—or, perhaps more to the point, the call of U.S. fossil fuel lobbyists. In the past three weeks, members of Congress have introduced no fewer than six bills aiming to speed permits for LNG exports, as Paul Blumenthal and Christinia Wilkie note in the Huffington Post. Paul Ryan suggested that the White House respond to the crisis in Ukraine by approving the Keystone XL pipeline, as a “signal that America is open for energy business.” Firebrand Rand Paul added that he would like to see “drilling in every conceivable place.”

The gas industry is thrilled. “We certainly like the fact that the Ukraine has essentially elevated the debate over the LNG exports,” said Marty Durbin, CEO of America’s Natural Gas Alliance. Indeed, whether U.S. gas ends up in Ukraine or not, exports could mean a dramatic increase in profits for American gas companies, whose rapid expansion of shale production—through the technique best known as hydrofracking—has led to a domestic gas glut and correspondingly low prices (in other words, reduced profits).

For now, the notion that U.S. exports could match Russia’s gas supply in Europe remains far-fetched. But European leaders are not holding out for the American gas, nor is the U.S. fossil fuel industry twiddling its thumbs waiting for export terminals to come on line. Last November, when the Euromaidan uprising began, the Ukrainian government had already signed a fifty-year shale drilling deal with Chevron, which aims to invest up to $10 billion in fracking operations in the west of the country.

In Poland, too, the Ukrainian crisis has served as a pretext for an aggressive pro-fracking push. The first commercial shale well in Poland is set to begin production this year; up to thirty more are in the works. And last week, the Polish government ruled that all fracking operations would be tax-free until 2020.

Yet Poland’s efforts to frack its way to energy independence have met significant grassroots opposition. Polish farmers have repeatedly blocked Chevron drilling expeditions  and vowed to protect their land by any means necessary—including, it seems, Molotov cocktails. Will Poland’s new frack-friendly legislation be enough to overcome them?

Whatever battles may lie ahead, the Ukraine crisis card has given U.S. fossil fuel interests a major boost at home and abroad, making them one of the few winners in the “new Cold War” so far. Between fracking, IMF austerity, and Russian occupation, Ukraine’s revolutionaries have brought their country into a tangle that few of them, surely, envisioned, and they still have quite a struggle ahead if they hope to achieve any semblance of genuine democracy in their country. If Europe and the United States hope to support this effort, they would do better to come to the negotiating table with some bona fide aid than with the demands of financiers and fossil fuel companies.

The U.S. Senate passed a Ukraine aid bill last week that includes $1 billion in loan guarantees through the IMF and an increase in U.S. contributions to the IMF overall, while the House has nixed the latter portion of the aid bill (Boehner claims the increased IMF quota has “nothing to do with Ukraine“). The IMF itself promises to finish a review of its aid proposal by Friday to decide whether it will ease up on some of the demands it normally attaches to its loan guarantees and undertake a more generous refinancing of Ukraine’s national debt.

Meanwhile, if Ukraine’s revolt (and its unintended consequences) yield any lesson for environmentalists, it is that we must collaborate internationally to drown out the gas industry’s mantra of “energy independence” and carry our vision of energy democracy to the front lines of today’s popular movements—from the fields of  Poland and Pennsylvania to the Maidans of the world and beyond.

Colin Kinniburgh is an assistant editor at Dissent. This article was published in collaboration with System Change, Not Climate Change.

For more questionable reactions to the crisis in Ukraine, see Katie J.M. Baker’s “Risk, Rated X: Geopolitics and the Pickup Game.” 

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