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November 11, 2010 |  8 comments |  Print  Your Opinion  

Climate Change a Catalyst for a New Beginning

Matthias Conrad: Russia’s top security priority is the need to adapt to socio‐economic challenges that will be aggravated by the effects of climate change. The West with Germany playing a leading role should engage in bilateral cooperation with Moscow and intensify energy interdependence.

The characteristic trait of our epoch is its distinct globalized nature. Political, economic and cultural interdependence erodes national boundaries and renders the isolation of societies increasingly impossible. The global economic crisis and threats stemming from climate change reveal the truly supranational character of today’s challenges. However, when it comes to the troubled relationship between Russia and the West, striking anachronisms prevail. In fact, virtually every major bone of contention since the demise of the Soviet Union can be framed in the categories of the Westphalian Nation State paradigm, 19th century inspired great power fantasies, and Cold War policies of containment.

Firstly, for Russia, the US‐led interventions in former Yugoslavia and Iraq constituted a severe breach of Westphalian principles of state sovereignty and illustrated vividly the threat that emanated from a unipolar state system under US hegemony. Secondly, Washington’s interference in Moscow’s alleged sphere of influence by enlarging NATO or spreading “color revolutions” brought back memories of the 19th century “Great Game” in Eurasia. Thirdly, fierce quarrels over the deployment of missile defense in Eastern Europe were interpreted as a frightening relapse to the Cold War logic of deterrence.

For the West, “neo-Czarist Russia” (Robert D. Kaplan) has become a difficult partner during Putin’s presidency. Apart from the above‐mentioned conflicts, increasingly authoritarian policies on the domestic level, endemic corruption and a regulatory environment ever more hostile to foreign investment in Russia have mirrored the tendencies of the Soviet State. In its foreign policy, Russia has displayed an eagerness to balance US hegemony. Conflict over gas supplies with Ukraine were seen as ultimate proof of the reckless use of energy resources for political objectives. The Russo‐Georgian war revealed “paranoid, aggressive impulses that had surfaced in earlier times in Russian history", as Condoleezza Rice quipped. In short, it seemed as if past epochs had powerfully cast their shadows on the beginning of the 21st century.

Russia Awoken by Climate Change

It was remarkable, however, how quickly both sides found the “reset button”. Since then, former divergences have been replaced by the emphasis of common goals and an impressive record of successful cooperation. Non‐proliferation of nuclear weapons, the fight against international terrorism, piracy and drug trafficking are only a few such examples. Ironically, it seems that Russia and the West had a harder time leaving the 20th century behind than in entering the 21st century together by confronting “new threats” cooperatively. Going beyond the nation state is imperative in tackling these global threats, as they are likely to challenge the capacities of national governments in an unprecedented manner.

The threats for Russia emanating from climate change are a case in point. This year’s devastating wildfires are likely to have only been a foretaste of eco‐catastrophes that will haunt Russia in the future. According to the World Bank, climate change constitutes an “enormous threat to Russia” that will have fatal economic and ecological consequences. The energy sector is especially worrisome: As 75% of the oil‐ and 93% of the gas production is located in areas of permafrost, global warming will seriously damage pipeline infrastructure and do great harm to Russia’s economic lifeline. In this sense, climate change constitutes one of the biggest challenges for Russian national security.

This challenge becomes even more daunting when we consider the state of Russia’s economy: Moscow lost US‐$ 210 billion in currency reserves between August 2008 and February 2009. In the same period, Russia’s GDP plummeted 13.5%. The lack of investment in the energy sector in the past decade has led to a decrease of 5.2% in oil exports. To counteract these hardships, Russia has drafted its “Energy Strategy until 2030”. The long‐term goal is to make Russia independent from fossil fuels and to embrace nuclear and renewable energy. As President Medvedev urged, Russia needs more than ever “the modernization and technical update of the entire sphere of production. This is a matter of survival of our country.” Thus, Russia’s top security priority at the beginning of the 21st century is to adapt to socio‐economic challenges that will be aggravated by the effects of climate change. Modernizing the excessively inefficient energy sector is the only lever available to achieve this goal. However, it is no secret that Moscow relies heavily on external expertise and massive foreign investment for this endeavor.

Engines of Interdependence

This opens up a considerable window of opportunity for reconciling Russia and the West. For various reasons, Germany is in an ideal position to push‐start this endeavor and to serve as transmission belt for the goal of greater reconciliation. Politically, Russia strongly prefers bilateral relations with EU or NATO member states to cooperation with these organizations as a whole. From an economic perspective, Germany is by far the most important of Russia’s Western partners and should be used as a potent lever. As the following charts illustrate, intensified cooperation in the field of energy efficiency could not only yield significant economic gains for both countries, but also contribute to the improvement of Russia’s disastrous ecological balance sheet.

Germany’s energetic balance sheet (fig. 1) lends powerful evidence to two claims. Firstly, it shows the great potential which stems from the modernization of primary energy use resulting in a significant reduction of CO2 emissions. Secondly, the chart strongly refutes the argument that a reduced output of CO2 comes at the price of economic decline – quite to the contrary if we compare the widening gap between the two graphs. Figure 2 indicates how badly Russia’s crisis‐ridden economy needs to reduce its gigantic energy inefficiency. Given that on a global scale, Russia ranks third in terms of CO2 output per capita and emits in comparison with Germany almost ten times the amount of carbon dioxide for every GDP unit produced, it is obvious that economic incentives for cooperation abound – with potentially enormous effects on Russia’s ecological footprint.

Again, engaging Russia through bilateral cooperation and intensifying energy interdependence is to be seen as a first vantage point to foster closer economic and political ties. The objective should be to establish a very stable, pragmatic, and in that sense somewhat modest foundation for mutually beneficial cooperation. As the history of European integration suggests – and this applies equally for Russia and the West, sustainable reconciliation, political, economic and cultural rapprochement has to commence with pragmatic steps. Only then can a grander vision be drawn – one that does not risk ending on the verge of collapse as was the case less than twenty years after the fall of the Iron Curtain in Europe.

Russia and the West: A New Beginning

Russia is not willing to settle for a role as the West’s junior partner. The Russo‐Georgian war has unmistakably shown that the self‐image as the great Eurasian power is too deeply engrained in the Russian mindset. However, once the smoke had cleared, Russia and the West quickly realized that common challenges and the existing degree of interdependence did not allow for a long interruption of cooperative efforts.

However, the stalemate in negotiations with the EU, the inefficiency of the NATO‐Russia Council, the deadlock on the Energy Charter Treaty and unanswered calls for Medvedev’s new European security architecture indicate that the existing framework did not live up to its expectations; to some extent, because they were not devised on equal terms and certainly not mutually beneficial. Thus, a new start is needed – but we do not have to start from scratch.

The “reset button” has shown that every crisis reveals potential for change. Change in the relationship between Russia and the West has to begin with pragmatic steps of mutually beneficial cooperation which would establish a foundation for more sustainable integrative efforts. Germany is the bilateral linchpin in this endeavor. Bilateralism is the necessary first step in a grander strategy for sustainable integration between Russia and the West.

In the long run, increased interdependence in the energy sector will pay off on a multilateral, European scale and ultimately spill over to other institutions and policy fields. The result would be increasing interdependence in the Russo‐Western relationship. This will be facilitated by an increasingly comprehensive understanding of related issues such as energy efficiency, energy security, climate protection and market integration within Europe and to a lesser extent in Russia.

A revised Energy Charter Treaty (ECT) should be the first outcome in shaping a multilateral institution that fosters mutually beneficial reintegration of Russia and the West in the spirit of visionary pragmatism. It must be remembered that similar pragmatic considerations brought together six nations in Western Europe in 1950 to form the European Coal and Steel Community (ECSC). The rest is history, as they say. In fact, a remarkable success story in terms of sustainable reconciliation.

Matthias Conrad is a student of Environmental Engineering at the Free University of Berlin.

This article is shortlisted for atlantic-community.org's student competition "Ideas with Impact: Policy Workshop 2010" sponsored by the U.S. Mission to Germany.

Read the other shortlisted articles in the category "Russia and the West" here.  

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Benjamin  Hanke

November 11, 2010

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Dear Matthias,

the idea of likening the first steps of European integration through forming an energy community – then only coal (and nuclear power) – to a rapprochement between Russia and the West by creating a new kind of energy community – now working towards more sustainable sources – greatly appeals to me. It is correct that the best and perhaps only incentive for a top-down policy change is a need identified by pragmatically minded people. I do not doubt that this description is true of the current Russian government. Moscow has recognized the need to adapt and, based on that, plotted out a new long-term course.

However, I do not see that the West, especially Germany, has likewise discerned a need to assist Russia in this new approach. In my opinion the existing energy interdependence already runs so deep, that Berlin and a few other European capitals are happy to have things remains as they are – or more precisely, change them on their end of the pipeline alone. While they are reliant on imports of Russian gas (and to a lesser degree, oil), so is Russia dependent on its exports of these natural resources. If one restricts the view to the policy sphere of economy alone – which, I argue (here and in my upcoming paper), Germany does – the current setup is advantageous as it is and any change a potential threat. Russia is thus unlikely to receive the foreign investments and expertise required to make the switch from the county you correctly identified as the partner theoretically most suitable for that role: Germany.

One might argue that Germany has an interest to help modernize the Russian energy industry in light of the potential threat to energy security posed by production bottlenecks and questions of the division of supply. I believe that the energy crises of recent years and the German government’s reaction to it have proven quite the contrary: Moscow, vulnerable in its dependence on the major economic partner in the West, has (successfully) done everything to alleviate the effects of the crises on Germany and the rest of Western Europe – with the countries in Eastern Europe and the Balkans paying the price. If anything, it has only motivated Berlin to assist Russia in securing and expanding the supply – the supply of the same old natural resources alone.

That’s why in my opinion, the key to real cooperation between the countries as partners, benefitting both sides, lies in a policy change of the German government. Only when it is able to see past its infatuation with economic policy above everything else will there be room for the reintegration – on a multitude of levels – of Russia and the West you are talking about in your last two paragraphs.

 
Philipp Johannes Große

November 11, 2010

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Matthias,

your article raises quite a few important issues from yet another perspective. Even if we can't measure the effects of climate change upfront, the potential high risks of climate change itself and the world's efforts in limiting it call for action in regard to Russia's economy.

1) You rightly point out Russia's need for foreign capital and know-how. In the past, large corporations and multi-national consortia have invested into large-scale projects, knowing they have political backing from their own and Russia's governments. To a certain degree, this has worked out. Still, doing business without recourse to independent courts, dependent on political goodwill at home and abroad, is inefficient. A profound modernization of Russia's economy can't be achieved this way. The alternative is private investment. But these funds (as well as equipment and intellectual property) will not be available to Russia as long as the legal system is not independent and self-serving bureaucrats interfer with private business. Consequently, more political liberty is precondition for developing a resilient Russian economy.

2) In my opinion, one fundamental reason for Russia's energy inefficiency (I think Belarus and Ukraine face similar problems) is the meddling of the state in energy markets. Energy is artificially low priced and keeps companies alive that would have been long gone under market conditions. Cheap energy may keep the general population happy but it makes the inevitable change harder than necessary. Without functioning energy markets there won't be incentives for energy conservation (an important policy goal, as you rightly point out), a problem Germany faces as well albeit to a lesser extent.

 
Matthias  Conrad

November 13, 2010

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Dear Benjamin,

thank you very much for your comments! It seems that we are all very much in favor of closer ties between Russia and the West although we might to some extent disagree on the appropriate means.

Let me just make two short statements on your comment:

1. You say that "the current setup is advantageous as it is and any change a potential threat" (for both, Russia and Germany, I assume?). I would argue that - quite to the contrary- the last two decades have shown that the current setup is highly dysfunctional in virtually every policy field. The recent conflicts in the sphere of energy (“gas wars”), security (Georgia, NATO enlargement etc.), business (TNK-BP) were in my view due to a setup that exhibits a disastrous potential for confrontation. It may be that Germany is better off than other countries in Europe because of its relatively solid economic relations with Russia– but that does not make it advantageous in the sense that it would be worth maintaining. Put shortly, there is much room for improvement of the institutional design in all policy fields that would ultimately prove much more advantageous than the current volatile setup.

2. The second point concerns your assessment that Moscow and Western Europe, especially Germany, have “ganged up” and alleviated the effects of the crisis while Eastern Europe and the Balkans paid the price.
It seemed to me that the gas conflicts to the contrary have significantly contributed to a “Europeanization” in terms of energy policy. I would say that gas conflict between Russia and Ukraine resulted in renewed efforts to diversify European energy imports (Nabucco), efforts to develop a common European energy policy, and a shift towards renewable energies (Desertec). All of this was done to reduce the European dependence on Russian energy supplies. Note that Russia has also turned to some extent; the strategic partnership with China lends stark evidence to this claim. In short, I would argue that the gas conflict has widened the gap between Russia and all of Europe - East and West alike.

Given that a significant level of energy interdependence will remain for the foreseeable future, it is imperative in my view to design an institutional setting that incorporates the interests of both sides. President Medvedev has tried to get the discussion on the Energy Charter Treaty (ECT) started again. It seems like a promising field for mutually beneficial cooperation - maybe the one where those mutual benefits are most obvious and thus foster consensus.
 
Matthias  Conrad

November 14, 2010

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Dear Philipp,

Many thanks to you as well for your comments!

I agree with the arguments you make. A successful modernization inarguably involves strengthening of the rule of law, reducing corruption (Russia ranks 154 of 178 countries in the Transparency International Corruption Index) and ensuring a stable political context that encourages FDI. I would nonetheless make the argument that this has to be a genuinely Russian process if it is to have lasting impact.

I would like to remind of Medvedev’s “Four I’s” speech that he delivered at the Krasnoyarsk Economic Forum in February 2008. He called for 1) an improvement of political institutions; 2) for an improvement of Russia’s infrastructure; 3) for innovation incentives and 4) for an influx of foreign direct investment.

Thus, Russia is aware of its deficits and willing to make changes – although it will take a while, as fundamental structural deficits are not likely to disappear over night. What role should the West play in this endeavor? In my view, it should be a stepping-stone (I could not find a better translation for “Steigbügelhalter”). Put differently: Add fuel - but do not get in the driver’s seat. Ultimately, this change has to come from within Russia, as external conditioning by the EU p. e. is likely to be met with resistance. In my opinion, modernization will come in different shapes all across the globe (cf. China, India, Brazil) – the West has to realize that it does not have a monopoly on the blue print for that.

Concerning your second point: I agree that the absurd inefficiency of the Russian energy sector is due to the meddling of the state. However, given the strategic importance of oil and gas for Russia, it is unlikely that another round of privatization of this sector will take place. The more so, because privatization had such devastating impact on the socio-economic wellbeing of the vast majority of the population in the 19990s. Here, again, I think we have to work with what we have.
 
Christopher  Connolly

November 15, 2010

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I appreciate your integration of climate change and energy security—topics all too often divorced from one other. Russia scored ‘Very Poor’ in the 2009 Climate Change Performance Index. That said, it is clear that Russia has room for improvement in energy efficiency—a fundamental contribution to decreasing greenhouse gases. However, I am pessimistic as to Russia’s activist role in combating global warming. Russia’s staggering economic growth during the Putin years was largely due to its oil and natural gas production and export. It has the largest known reserves of natural gas and is currently the biggest producer of oil. Considering the reduction of fossil fuel consumption is crucial in combatting global warming and Russian production of those commodities constitutes much of its economy, I doubt Russia will be a viable promotor of global warming initiatives that seek to curb consumption of its principal exports.
 
Viktor  Voksanaev

November 16, 2010

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Matthias,

I think that article is very accurately shows the problems of our country, and the prognosis of the situation - most accurately reflects the current trends of Russian economic development.
 
Matthias  Conrad

November 16, 2010

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Dear Christopher, dear Viktor

Thank you very much for your comments!

Christopher, I can be brief: I fully agree with you. The Soviet Union not too long ago boasted about producing huge amounts of CO2 - as ultimate proof for successful industrialization. Only a few years ago, political advisors in Moscow welcomed global warming because it enabled Russia to grow "bananas in SIberia"! Russia plays a very very passive role in international climate negotiations and indeed envisages boosting coal production in order to get on her feet again. In short, you are right, Russia will not be the engine for slowing down globbal warming.
But: I argue that the current situation offers enormous economic incentives for Russia to move in a direction that is compatible with this goal. Energy efficiency is imperative for both, reducing global warming as well as Russia's economic well-being. No doubt, Russia will use it fossile energy reserves as long as possible - still, making this more sustainable (gas is indeed a very clean energy source) seems highly desirable for both sides. In the long-term Russia has great potential for renewable energies as well (especially wind and hydro power). Russia will invest in those sectors if they are profitable, i. e. in her national interest. This coincides with a lot of the West's ambitions to cut significantly CO2 emissions. This is the window of opportunity that I talk about in my article.
 
Alexandra  Vasileva

November 17, 2010

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Dear Matthias,

I think you portray the issue of Russian-Western relations from a different perspective than anyone of us, and this definitely contributes to the fruitful discussion.

In your article you concentrate of the economic side of the relations and I am sure that in our joint policy memorandum we can combine your ideas with policy proposals from other policy areas, such as security, civil society and common neighbourhood.

We have had many discussions already, so I keep this comment brief - I just wanted to acknowledge your interesting ideas and innovative perspective.
 

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