On Monday 14 March at Corpus Christi College, Cambridge, Prof Nick Butler (KCL) delivered a 'Nightmare Series' lecture, in which he discussed the consequences for Europe of a geopolitically motivated Russian zero-supply gas disruption. Jānis Kažociņš, National Security Adviser to the President, Republic of Latvia, acted as respondent.
This event was kindly sponsored by Absolute Strategy Research.
Tony Barber, Europe Editor of the Financial Times, wrote the following piece on the event (original here):
Under what circumstances might Russia cut off gas deliveries to Europe for a prolonged period of time, and what might be the consequences? Such a scenario may seem too absurd to contemplate. Russia depends heavily on energy exports to Europe and likes to be known as a reliable supplier. Even in the gas crises of 2006 and 2009, the Russians did not go so far. Why would Moscow do something that, on the face of things, would harm its own interests more than it would advance them?
All this was the topic of a fascinating lecture and discussion I attended this week at Corpus Christi college, Cambridge University, organised by the historian Brendan Simms and his Forum on Geopolitics. The underlying premise of this event was that people in government, business and academia have an obligation to consider “nightmare scenarios”, however improbable. After all, geopolitical events are inherently unpredictable.
The main speaker was Nick Butler, familiar to Financial Times readers as the writer of a regular blog on energy issues. A former BP executive and British government adviser, he has a deep knowledge of the Russian economy, its energy sector and the forces that shape the Kremlin’s foreign policy.
Butler’s starting point was that low world energy prices are seriously squeezing the Russian economy.
Moscow’s attempts to compensate for declining European gas demand by ramping up exports to China have so far got nowhere. Imagine, then, a “nightmare scenario” in which Vladimir Putin, Russia’s president, reacted to these pressures by launching a foreign policy adventure similar to the 2008 war against Georgia, the 2014 annexation of Crimea and the recent intervention in Syria’s civil war. What might he do, and how would the west respond?
Butler suggested that Putin might rekindle the separatist conflict in Ukraine’s south-eastern Donbas region. This might trigger reinforced western economic and other sanctions against Russia. Putin might then cut off gas supplies to Europe.
Were this to happen, the disruption to the economies of western Europe – even Germany, the main importer of Russian gas – would not be particularly severe, Butler thought. It might be worse in some of the EU’s central and eastern European member-states, but it would still be manageable.
The country to suffer the most would be Ukraine, where territories under the Kiev government’s control would be vulnerable to a Russian and Donbas separatist squeeze on coal and electricity as well as gas supplies. Kiev might declare a two-day working week to save energy (memories here of the 1974 three-day week in the UK!). Ukraine would plunge towards economic collapse, and huge numbers of Ukrainians might flee westwards into Poland, Germany and beyond – as refugees from Syria and elsewhere are doing now.
At this point, the British, French and German governments, for which migration is the most neuralgic of issues, would be ready for a deal with Putin. The US would denounce Russia’s destabilisation of Ukraine, but it would be clear to Putin and his advisers that Washington would never use military force on Ukraine’s behalf.
So the crisis might end, Butler said, in a deal struck largely on Russian terms. Ukraine would be turned into an officially neutral state, but its leadership would be Russian-oriented or Russian-tolerated. The Donbas would be quasi-independent.
For its part, Europe would have to sign a new, long-term energy supply contract with Russia. It would commit the Europeans to buying large quantities of gas for 25 years at a fixed price 20 per cent above prevailing market levels, Butler speculated.
As the former BP man stressed at the outset, he was not saying any of this was likely to happen. But if Brendan Simms invites you to paint a nightmare geopolitical scenario, then that is what you paint.
For my part, I thought it was a compelling argument that, if a nightmare were to erupt, it would erupt out of a combination of three factors – a) Russia’s energy problems; b) the conflict over Ukraine’s future; and, most importantly, c) Europe’s recognition that Russia, however truculent a partner, cannot in the end be denied a place in the European geopolitical and economic order.
This event was very kindly supported by Absolute Strategy Research.
Further events in the series will be announced in due course. To register interest, please email Dr Maeve Ryan.