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Monday, May 07, 2018

Riding the Dragon

Russia is making a big mistake with their energy "weapon."

This is funny:

Since the start of 2018, Russia's pipeline crude oil exports to China have been growing, while its seaborne shipments to Europe have been falling.

At the beginning of this year, Russia doubled the capacity of pipeline exports to China, where it has been the top oil supplier for more than a year after overtaking OPEC's top exporter and de facto leader Saudi Arabia last year.

While Russia is trying to get a bigger chunk of the fast-growing Chinese oil market, it is doing so at the expense of its number-one oil customer, Europe.

Russia has long hoped to use their energy exports to Europe to extort cooperation from Europe that doesn't want to freeze in the winter if Russia shuts off the energy.

Perhaps Russia sees American energy exports and the potential of European fracking as reducing Russia's leverage in Europe.

And Russia's wars in Europe (Georgia and Ukraine) plus hostility toward NATO make European cooperation less likely, especially with America more interested in confronting Russia to deter them in Europe.

By shifting energy exports to China, does Russia hope to have the same leverage against China?

But a weak European NATO and a distant America were unlikely to be able to do anything about Russian energy extortion and so is a poor model for a China policy.

Although adding nukes to face China might be Russia's answer to that China option to seize Russia's Far East.

A nearby China with growing military and economic power, and claims against Russian territory that Russia gained control of in the 19th century at the expense of China, might not think that submission to Russian energy extortion is their only alternative, eh?