My old friend John Westwood of Douglas Westwood Limited in the United Kingdom recently released a white paper discussing the upcoming US presidential election, energy and the global economy. The paper is a first-rate ramble through many of the problems, particularly energy related problems, that afflict the current age and an equally reasoned discourse on the impact the US presidential elections might have on those problems and the global economy.

One thing in particular tickled my few remaining gray cells. John noted, when discussing the increasing importance of gas in the global energy mix, “natural gas suffers from an excess of political interference and no more so than in Russia, the world’s second largest reserve holder. Its state gas company, Gazprom, supplies Europe with some 25% of its natural gas and has become ‘a giant aware of its own power.’ Just closing the valves on three pipelines can now achieve more than all of Russia’s investment in nuclear weapons did — virtually switch off the European economy.”

Then, as John tells it, “just last Saturday, it became clear that Gazprom was making a major play for Nigeria’s natural gas reserves by offering much better deals than China, India, Europe and America. What might be next? At present Nigeria is one of America’s largest oil suppliers. West Africa is the Port of Houston’s largest trade partner. As Henry Kissinger said a couple of years ago, ‘The Great Game is again in play.’”

Indeed, it appears so John. But with an interesting twist. Look back with me to 1985 and the ascension of Mikhail Gorbachev to leadership of the Union of Soviet Socialist Republics (USSR). Gorbachev inherited a mess. The economy had not managed positive growth in nearly a decade. The posturing and military build up of the first four years of President Ronald Reagan’s regime had forced the Soviets into a desperate program of catch up, one they could not afford. Trying to maintain regional hegemony in its outlaying provinces and in its areas of influence in the face of western incursions, primarily through use of force, had further impoverished the USSR. The same pressures had forced the military and political system into disarray. If, as many historians have concluded, Reagan and his western allies had set out to bankrupt the Soviets by constant pressure and intense militarization, they managed brilliantly especially when abetted by growing lethargy in the country and mounting local opposition within the outlaying states.

Gorbachev tried, and tried valiantly, to save the situation through the introduction of economic reform under perestroika and social reform through glasnost. Unfortunately, it was too little too late. The plans failed and Gorbachev lost his grip on the country. In 1991, the Union of Soviet Socialists Republics ceased to exist.

Imagine now a younger Vladimir Putin watching that same disintegration of the Soviet Union through economic pressure backed by increasing militarism whilst at the same time watching Soviet militarized aggression fail miserably in places like Afghanistan. He must surely have learned something, taken something away from the disintegration of the USSR. It seems he did — the notion that economic warfare might work better than conventional warfare.

The recent activities outlined by John would indicate this is true. Putin has now reassembled most of the state-owned energy infrastructure and is firmly in control of the apparatus of oil (we must not forget that Russia is a major oil producing power also) and gas supply. With potential surpassed only by that of the Middle East, Russia will be a key player in the energy supply mix for some time to come. Choosing to use this power to exercise an amount of international control would not be a leap of faith or logic. In fact, I would think it absolutely certain that Putin would play the oil and gas card early in any disagreement to create a certain amount of economic chaos and dislocation, especially with his European neighbors. He has, after all, seen its effect.

Were Ronald Reagan still alive, Putin would, I am sure, be happy to beat him with his own club at some point.

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