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[Norm’s note: other articles by Alexander Mercouris can be found here]

The Importance Of The Cancellation Of South Stream


by Alexander Mercouris

The reaction to the cancellation of the Sound Stream project has been a wonder to behold and needs to be explained very carefully.In order to understand what has happened it is first necessary to go back to the way Russian-European relations were developing in the 1990s.Briefly, at that period, the assumption was that Russia would become the great supplier of energy and raw materials to Europe. This was the period of Europe’s great “rush for gas” as the Europeans looked forward to unlimited and unending Russian supplies. It was the increase in the role of Russian gas in the European energy mix which made it possible for Europe to run down its coal industry and cut its carbon emissions and bully and lecture everyone else to do the same.

However the Europeans did not envisage that Russia would just supply them with energy. Rather they always supposed this energy would be extracted for them in Russia by Western energy companies. This after all is the pattern in most of the developing world. The EU calls this “energy security” – a euphemism for the extraction of energy in other countries by its own companies under its own control.

It never happened that way. Though the Russian oil industry was privatised it mostly remained in Russian hands. After Putin came to power in 2000 the trend towards privatisation in the oil industry was reversed. One of the major reasons for western anger at the arrest of Khodorkovsky and the closure of Yukos and the transfer of its assets to the state oil company Rosneft was precisely because is reversed this trend of privatisation in the oil industry.

In the gas industry the process of privatisation never really got started. Gas export continued to be controlled byGazprom, maintaining its position as astate owned monopoly gas exporter. Since Putin came to power Gazprom’s position as astate owned Russian monopoly has been made fully secure.Much of the anger that exists in the west towards Putin can be explained by European and western resentment . . .

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via The Vineyard of the Saker: The Importance Of The Cancellation Of South Stream.