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Putin Isn't Crazy, He's Ruthless

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ALEXEI NIKOLSKY via Getty Images
ALEXEI NIKOLSKY via Getty Images

Speculation about President Vladimir Putin proliferates. Does he want to occupy Ukraine? Has he gone too far by arming and training Russian mercenaries who shot down the Malaysian Air jet with 298 passengers? Why is he thumbing his nose at global outrage and more sanctions? What will stop him?

Such questions miss the mark.

Putin has been executing the same business/geopolitical model for years aimed at guaranteeing his natural gas monopoly in Europe and keeping out rivals.

Ukraine is his latest victim because it ousted his puppet, Victor Yanukovych, and also because its huge oil and gas reserves could eventually make Ukraine a competitor for European customers.

Russia has controlled Ukraine since it declared independence in 1991, mostly through corruption. But in 2005, the populace staged the 2005 Orange Revolution and the 2013-14 Maidan uprising rose up against and finally expelled Yanukovych. But their victory became defeat because Putin changed tactics by shifting from managing a Ukrainian kleptocracy to engineering a fake insurrection in parts of the country to turn its resource base into a no-go zone.

The facts are that Putin is not erratic or crazy, but is rational and predictable.
Ukraine is a victim -- and Europe does nothing because winter looms and Putin can turn the heat on or off. His aim is not popularity; he has three objectives:

• The permanent establishment of Russia's natural gas monopoly in Europe. This requires the destruction of all potential competition such as shale gas development or making Ukraine's eastern energy fields, and Crimea's well-endowed offshore, off limits. (Corollary to this is Russia's collusion with Iran, with its huge gas reserves, that amounts to co-opting a potential competitor.)

• The destruction or blockage of any pipeline that would bring gas from Central Asia or the Caspian Region, or Ukraine, into Europe.

• The establishment and enforcement of a Russian pipeline monopoly. Plans are to bypass the Ukrainian gas pipeline system in favor of three all-Russian routes: the so-called "South Stream" route that will cross the Black Sea from Russia to Europe; the "North Stream" that crosses the Barents Sea from Russia to Northern Germany and the existing Yamal-Europe line from Russia to Germany.

That's Putin's strategy, and has been for years. Only his tactics change.

To Europe, a pipeline monopoly will be disastrous. Russia will be able to raise prices at will, break contracts or provide preferred terms to regions that are cooperative and, conversely, punish those that are not. This will undermine European energy security unless the 28 countries form a united front -- and they cannot even agree on sanctions over Ukraine.

Here's how he has punished those standing in his way:

• In the winters of 2004 and 2006, Russia's Gazprom severely cut gas supplies to Belorussia and the country has become compliant.

• In the winters of 2006 and 2009, Russia's Gazprom cut gas supplies to Ukraine and the European Union.

• In July 2006, Russia cut off oil supplies to Lithuania as a "revenge action" for selling an oil refinery to Poles rather than Russians.

• In January 2003, Russia cut off oil supplies to Latvia as a "revenge action" for discrimination policies against its Russian minority.

• In 2006, Russia blocked oil from Kazakhstan to Lithuania to stop Kazakhstan from buying a Lithuanian oil refinery.

• In 2008, Russia invaded Georgia, and annexed two regions, on the pretext that the country was not treating its Russian minority properly. This warfare blocked the building of an alternative gas pipeline from Azerbaijan and Turkmenistan via Georgia and Turkey directly to Europe.

• In 2014, Russian snipers murdered Ukrainian protesters, annexed Crimea and unleashed mercenaries or special agents to stir up trouble in resource-rich regions.

Moscow is now mustering troops and a naval fleet to threaten the Trans-Caspian Gas Pipeline, planned to take gas from Azerbaijan and Turkmenistan through a corner of Georgia to a Turkish port in the East Mediterranean. It's not even going to Europe but Russia aims to halt its construction.

"The Trans-Caspian Gas Pipeline for gas supply to the EU is under risk of Russian attack," Michael Gonchar, President of the Center for Global Studies in Kiev, said in a recent high-level presentation in Europe.

The facts are that Putin is not erratic or crazy, but is rational and predictable. He knows the West is divided and he is executing his plan like the KGB officer that he is. He wants total control over Europe's gas markets, and accompanying influence, and has done, and will do, whatever it takes to achieve this.

So far, that includes tampering with democracies, corrupting judges, demolishing regions, supporting terrorism, turning a blind eye to missile attacks by secret agents using his weapons, corrupting politicians, keeping the world off balance, remaining unapologetic, flouting international law or treaties and ridiculing threats.

This is Pact Putinia and we all had better get used to it.

Diane Francis covered the Orange Revolution in 2005 for The National Post and is a founder and member of the Advisory Board of the Canadian-Ukrainian Chamber of Commerce.

This article first appeared in the National Posthttp://business.financialpost.com/2014/07/25/pax-putinia-how-russias-gas-plan-will-unfold/

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