One of the myths propagated by the advocates of the free market system is that the end of the Cold War, coinciding with the advent of globalization and neoliberal policies, entailed the harmonious world economic economic integration. Therefore, there is no need for a global power struggle for minerals and energy and no need to carve out spheres of influence that are reminiscent of the Cold War. This is not entirely true, especially considering that 85% of energy in the world emanates from oil, natural gas and coal that represents security and stability for countries that produce it and those that consume it. When it comes to the ongoing struggle for strategic raw materials and energy, the US, China, Russia, northwest Europe and Japan, as well as regional (Middle East, Latin America, and Central Asia) energy producers, geopolitics plays a significant role behind the economics of energy.
In the early 21st century, we are experiencing a new global power struggle for spheres of influence, in many cases with energy as a catalyst. For example, the bloody civil war in Syria has not only the elements of the old East-West power struggle for spheres of influence, but energy as a catalyst in its midst, directly involving Syria and indirectly Russia, Iran, US, EU and Israel that has been trying to insert itself in the lucrative natural gas market, always with the assistance of the US.
One area that the power struggle has been especially prominent in the last two decades in the domain of natural gas where the US has used its political, military and economic influence to secure resources and to undermine its rivals, especially Russia and Iran, which are the number one and number two natural gas producers in the world - global production is at 175 million cubic meters and Russia's share is at 45 million, while Iran's is at 27 million, thus an immense slice of the global share concentrated in just two countries.
Although the US share of production is currently at 6 million cu. m., the US has the potential of overtaking Russia by 2017-18, largely because of deposits in a number of states, from North Dakota to the southern states. In addition, the US also has untapped oil potential that could make it even less dependent on the Middle East, and permit the price manipulation of natural gas and oil to undercut rivals like Russia and Iran whose political, economic and military power rests on energy exports.
Lower energy prices would make the US much more competitive, while undercutting its rivals producing energy as well as those consuming it. Russia energy giant Gazprom, and the entire energy field that accounts for half of Russia's budgetary revenues, has allowed President Putin to become an powerful "Tsarist-style" leader at home, while affording him foreign policy leverage with EU, China, former Soviet republics and the Balkans. The US challenge has meant a decline in gas prices, and falling revenues of more than a quarter from the highs of 2010-11. This has actually benefited recessionary EU that is Russia's largest customer. The goal is even greater control of natural gas in pro-West hands and less in those of Russia and Iran.
From the Clinton administration to the present (2013), the US and its EU partners have been pursuing an encirclement policy toward Russia and Iran, a policy comparable to the encirclement policy that France, UK and Russia were pursuing toward the German Empire from 1890 to 1914, at least as far as the German nationalists were concerned. The key to the encirclement policy is not just Iraq and Afghanistan, but the natural gas resources of Central Asia.
While the US argues that it is merely interested in combating terrorism and promoting "freedom and democracy" in Central Asia, the primary goal is strategic. Considering that the US has been supporting some of the most authoritarian regimes in the region, regimes that are among the most corrupt in the world, the "freedom and democracy" argument does not work as well as the "war on terror" argument. The problem of the US in the Central Asia republics is that they are Muslim and the people do not fail to notice the US backed Arab Spring movements to help install pro-neoliberal regimes, and at the same time it is willing to cooperate with authoritarian Asian governments for economic and geopolitical considerations.
Although the US denies there is a power struggle for energy sources, and that there is a race for spheres of influence in Central Asia where Russia and Iran feel encircled, the reality is that in the last two decades the US and the larger EU countries have used Western multinational corporations to corner the energy market for economic and geopolitical reasons. Naturally, arms sales to energy producers have also been a part of the deal.
Championing the central Asian republics as their protector from Russia and to some extent China and Iran, the US has been using natural gas reserves development as a catalyst to carving out spheres of influence as part of a larger containment policy, while insisting that Russia is the one with imperialistic intentions toward its energy producing neighbors - Turkmenistan, Uzbekistan, and Kazakhstan. At the same time, the US has allied itself with energy-producer Azerbaijan to undercut the role of Iran.
Because the US and the West pay a higher price for natural gas than Russia, while trying to link gas pipelines from the Central Asian republics to Europe (bypassing Iran) and China, Moscow and Teheran see Western conspiracy for hegemonic influence in the area. The Western strategy undermines Iran and Russia that have repeatedly argued the US and EU are engaged in neo-imperial relationship with Central Asian energy producers with the ultimate goal of undercutting Russia and Iran economically and geopolitically.
Besides Russia and Iran, China views the US neo-imperialist strategy involving natural gas as a
threat to its vital interests, although China has an inter-dependent relationship with the US
and needs it as much as Russia needs EU markets. The Trans-Caspian Gas Pipeline involving
Azerbaijan and Kazakhstan was one in which the US and EU had an active hand,
especially in the South Caucasus Pipeline that would deliver gas through Turkey and onto to Europe.
Although the justification for the pipeline was to keep prices competitive, the real goal
was to undercut Russia and Iran, both of which objected to the pipeline for it would cause
irreparable environmental damage to their respective countries and the entire region.
In May 2007, Russia countered with the Central Asian gas pipeline that would provide gas
to Europe from Kazakhstan, Turkmenistan and Russia.
In the last five years, Germany (RWE) and Austria have (Nabucco) become heavily
involved in pipeline construction projects in Central Asia with the Caspian Sea
as the main source. Standing to benefit from the construction of pipelines going West,
Turkey sided with the US and EU, partly for geo-strategic considerations - once again weapons
sales were part of the deal - given that it has been heavily involved in the Syrian rebel movement against
the Assad regime backed by Russia and Iran. Turkey however, complained that it was left out
in the Cypriot exploration for natural gas - where the US backed Israeli and European companies
- as well as impending Greek exploration for gas and oil in the Aegean Sea.
The most glaring example that natural gas in the Near East and Central Asia became an
obvious play of spheres of influence was the proposed pipeline originating in Azerbaijan
and going through Turkey, onto Greece, Albania and winding up in Italy.
This project has a curious history, given that Russia was interested in a southbound pipeline
that would supply the Balkans and heading toward Europe through Greece.
The US vehemently objected to the Russian pipeline on the grounds
that Balkan and EU dependence on gas would make it vulnerable to political blackmail and allow
Moscow the upper hand diplomatically.
This is where the Central Asian gas supply plays a role,although the region hardly competes with
Russia that has immense known reserves. There are unconfirmed reports that because Russia depends
on Europe as a customer for its natural gas, and because it is not interested in worsening its already
delicate relations with Washington, Moscow struck a deal with the Western powers about the gas
pipeline from Central Asia (Caspian) intended to supply Europe; a deal that apparently conceded
Syria to Russia as a traditional sphere of influence, regardless of what happens with Assad.
Obviously, in time of war, energy becomes very important and that is one reason for the politics of
natural gas. However, the game is more about political influence, containment strategy and
carving out spheres of influence between Russia, China and Iran.
The geopolitical significance of natural gas, and energy and minerals in general cannot be
underestimated any more than the economic one. What is important to understand today is that
the power struggle involving natural resources has not changed from
the era of New Imperialism (1880-1914), an era that led to the First World War.
While I am most definitely not suggesting war is around the corner, the contracting economic cycle
(2008-2013) has placed strains on both energy producers and consumers,
driving the competition into higher levels. At the same time, the US needs to show
something for the one trillion dollars it spent in wars in Iraq and Afghanistan.
Creating Central Asian energy spheres of influence, while containing Russia and Iran,
is a solid strategy. The only question is can the Central Asian regime hold? What if Arab Spring
(now Turkish Spring) spreads into the region and new alliances and alignments are forged that are