Skip to main content

Curb Russian aggression with energy independence

By Peter Morici
March 13, 2014 -- Updated 2159 GMT (0559 HKT)
SLOVYANSK, UKRAINE: "Welcome to Balaclavistan! This happy chap wouldn't say if he's Crimean, Russian or Ukrainian." - CNN's Christian Streib. Follow Christian on Instagram at <a href='http://instagram.com/christianstreibcnn' target='_blank'>instagram.com/christianstreibcnn</a>. SLOVYANSK, UKRAINE: "Welcome to Balaclavistan! This happy chap wouldn't say if he's Crimean, Russian or Ukrainian." - CNN's Christian Streib. Follow Christian on Instagram at instagram.com/christianstreibcnn.
HIDE CAPTION
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Ukraine, captured by CNN Teams on assignment.
Crisis in Ukraine, captured by CNN Teams on assignment.
Crisis in Ukraine, captured by CNN Teams on assignment.
Crisis in Ukraine, captured by CNN Teams on assignment.
Crisis in Ukraine, captured by CNN Teams on assignment.
Crisis in Ukraine, captured by CNN Teams on assignment.
Crisis in Ukraine, captured by CNN Teams on assignment.
Crisis in Ukraine, captured by CNN Teams on assignment.
Ukraine Crisis captured by CNN Teams
Crisis in Ukraine, captured by CNN Teams on assignment.
Ukraine crisis captured by CNN Teams
Ukraine Crisis captured by CNN Teams
Ukraine Crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine Crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Crisis in Ukraine, captured by CNN Teams on assignment.
Crisis in Ukraine, captured by CNN Teams on assignment.
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Ukraine crisis captured by CNN Teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Ukraine crisis captured by CNN Teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
Crisis in Crimea and Ukraine, captured by CNN teams
<<
<
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
>
>>
STORY HIGHLIGHTS
  • Peter Morici: Russia will not cede control of the Crimea any time soon
  • Morici: Near time, Russia has upper hand since it supplies Europe with energy
  • He says Europe must move quickly to develop its own gas and oil industries
  • Morici: Russia's aggressive policies won't go away unless Europe gets more leverage

Editor's note: Peter Morici is an economist and professor at the Smith School of Business, University of Maryland. He tweets @pmorici1

(CNN) -- Russia will not cede control of the Crimea any time soon.

Western saber-rattling would prove hollow: NATO has insufficient forces in the region to challenge Russian control and economic sanctions are not likely to work. Paranoia about Western threats to its security incline Russians to endure great costs to assert the "sphere of privileged interest" Vladimir Putin claims regarding former Soviet Republics now outside the Russian Federation.

Near term, Russia holds the cards. It supplies Europe with about 30% of its natural gas, or 8% of its energy overall. While that gas can be replaced, Europe can't change course overnight.

Peter Morici
Peter Morici

Europe has substantial shale deposits that France, Germany and several others have chosen not to develop. Exploiting shale deposits, building more nuclear plants and solar facilities, importing more oil and gas from North America and the Middle East, and building infrastructure to effectively deploy those resources would take several years.

Longer term, Russia has much more to lose. Since the end of the Cold War, Russia has become acutely dependent on Western markets to drive its economy, but it has not fundamentally modernized its industries or its geopolitical thinking about the West.

Oil and gas account for roughly 70% of Russian exports, and it sends the West significant amounts of aluminum and other metals. But Russia's manufacturing sector as a whole remains profoundly inefficient and uncompetitive, and the country relies on the West for sophisticated financial services and a broad range of technology and consumer products.

Crony capitalism and the dominance of billionaire oligarchs squeeze out small entrepreneurs that drive so much innovation and progress in the West. The Russian Federation depends on the petroleum industry for 50% of its revenue.

Some leaving Crimea ahead of referendum
Many average Russians support Putin

If Europe finds substitutes for its oil and gas, Russia simply would not be able to pay for the Western products it has become accustomed to buying. Moscow won't be able to finance its military and foreign adventures, or pay for the extensive patronage system that has kept Vladimir Putin in power since 1999.

The oligarchs would be a lot poorer and much less able to enjoy penthouses in New York and ski retreats in Colorado. However, most Russians would rather risk becoming much poorer than relent to U.S. and European pressures, because of their ingrained fears about Western threats to their security.

With or without Putin at the helm, the West should not anchor policy on false notions it can change Moscow's thinking about the Ukraine or other former Soviet states by reasoning with its leaders or with threats to freeze assets, cut off trade and the like.

Unless the West can impose significant costs on Russia for its aggressive policies, reduce Europe's vulnerability to a natural gas embargo and curtail Moscow's financial resources, it can count on Russia asserting military power when its leaders perceive threats to Russian interests in neighboring states.

Joint efforts with the Europeans are essential. An across-the-board U.S.-European freeze on assets would be foolhardy. Russia could easily retaliate against U.S. and European investments in petroleum, autos, banking, and other sectors. However, targeted visa restrictions on travel to the United States and Europe, and limited freezes on access to the bank accounts and real estate assets, for the Russian political and military leaders responsible for the Crimean invasion would send a clear and poignant message.

Europeans should move quickly and decisively to develop their own natural gas and other alternatives. Eliminating dependence on Russian gas might not end Russia's paranoia -- in fact it could feed it -- but it would at least deprive Moscow of its ability to threaten Europeans with embargoes and neighboring states with military actions.

Russians could try to sell more natural gas in Asia, but those prospects are limited. Already, Russian oil producers simply burn off huge amounts of gas they can't sell in Europe.

The United States should not quickly volunteer to send Europe liquefied natural gas. France, Germany and several other European countries have shunned the environmental risks of developing shale gas and nuclear power. The United States should insist Europeans share the environmental risks

The high cost of liquefying and shipping U.S. gas to Europe requires that Europe also develop its own resources to fully unyoke itself from dependence on Russia and limit their strategic vulnerability.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

The opinions expressed in this commentary are solely those of Peter Morici.

ADVERTISEMENT
Part of complete coverage on
October 30, 2014 -- Updated 1539 GMT (2339 HKT)
Mike Downey says the Giants and the Royals both lived through long title droughts. What teams are waiting for a win?
October 30, 2014 -- Updated 1832 GMT (0232 HKT)
Mel Robbins says if a man wants to talk to a woman on the street, he should follow 3 basic rules.
October 29, 2014 -- Updated 2103 GMT (0503 HKT)
Peter Bergen and David Sterman say more terrorism plots are disrupted by families than by NSA surveillance.
October 29, 2014 -- Updated 2125 GMT (0525 HKT)
Time magazine has clearly kicked up a hornet's nest with its downright insulting cover headlined "Rotten Apples," says Donna Brazile.
October 29, 2014 -- Updated 2055 GMT (0455 HKT)
Leroy Chiao says the failure of the launch is painful but won't stop the trend toward commercializing space.
October 29, 2014 -- Updated 1145 GMT (1945 HKT)
Timothy Stanley: Though Jeb Bush has something to offer, another Bush-Clinton race would be a step backward.
October 28, 2014 -- Updated 1237 GMT (2037 HKT)
Errol Louis says forced to choose between narrow political advantage and the public good, the governors showed they are willing to take the easy way out over Ebola.
October 27, 2014 -- Updated 1803 GMT (0203 HKT)
Eric Liu says with our family and friends and neighbors, each one of us must decide what kind of civilization we expect in the United States. It's our responsibility to set tone and standards, with our laws and norms
October 27, 2014 -- Updated 1145 GMT (1945 HKT)
Sally Kohn says the UNC report highlights how some colleges exploit student athletes while offering little in return
October 26, 2014 -- Updated 1904 GMT (0304 HKT)
Terrorists don't represent Islam, but Muslims must step up efforts to counter some of the bigotry within the world of Islam, says Fareed Zakaria
October 24, 2014 -- Updated 1302 GMT (2102 HKT)
Scott Yates says extending Daylight Saving Time could save energy, reduce heart attacks and get you more sleep
October 27, 2014 -- Updated 0032 GMT (0832 HKT)
Reza Aslan says the interplay between beliefs and actions is a lot more complicated than critics of Islam portray
October 27, 2014 -- Updated 1119 GMT (1919 HKT)
Julian Zelizer says control of the Senate will be decided by a few close contests
October 24, 2014 -- Updated 1212 GMT (2012 HKT)
The response of some U.S. institutions that should know better to Ebola has been anything but inspiring, writes Idris Ayodeji Bello.
October 21, 2014 -- Updated 1312 GMT (2112 HKT)
Sigrid Fry-Revere says the National Organ Transplant Act has caused more Americans to die waiting for an organ than died in both World Wars, Korea, Vietnam, Afghanistan and Iraq
ADVERTISEMENT