Russian Energy Policy in the Middle East.

• Author: Barmin, Yury

Soviet Energy Overtures to the Middle East

Despite the USSR's abundance of energy resources, historically this factor has not been the dominant one in the country's foreign policy Traditionally driven by ideology and often lacking in pragmatism, Soviet foreign policy has typically attempted to counter Western "imperialistic" expansion, with the Middle East being the primary battleground for ideological face-offs. With regional states leaning toward one or the other of the political camps during the Cold War, the USSR's strategy in the Middle East focused on winning the allegiance of local elites, and although various instruments were employed, energy was rarely one of them.

The "pre-oil era" in the Middle East was marked by paradoxical political developments that seem nearly impossible today For instance, the communist Soviet Union enjoyed a warm relationship with the Kingdom of Hejaz and Nejd, and became the first state to recognize it, while Moscow's envoy to the Kingdom, Karim Khakimov, was a personal friend of its founder Ibn Saud. Soviet-Saudi relations turned sour after Khakimov was executed in Moscow, which happened two months before the discovery of the largest deposit of oil in the world in March 1938 in Saudi Arabia. Arguably, had the Soviets not killed their sole link to the Saudi King and by extension to his gigantic oil wealth, the Middle East might well look very different today.

Competition with Western firms for oil concessions first in Saudi Arabia and later elsewhere in the Gulf was impossible due to both the nature of the Soviet state-owned planned economy and the lack of proper technology. Moreover, it was not until after the Second World War that the Soviet Union started realizing the export potential of its own oil industry. During the Cold War, the irony of the Soviet policy in the Middle East was that the monarchies that welcomed Western energy giants had no interest in dealing with the Soviet Union, while the autocratic states, some of which were essentially Soviet clients, nationalized their own energy industries.

However, it would be incorrect to argue that there is no linkage between Soviet energy policy and the Middle East. The oil embargo imposed by the Organization of Arab Petroleum Exporting Countries in 1973 is evidence of that. A response to the U.S. support for Israel during the Yom Kippur War, the oil exports embargo led to an oil glut and saw crude prices jump from $3/barrel to $12/barrel. This rapid political decision by the Arab states led Moscow to fundamentally reassess its own energy policy.

After the end of the Second World War, despite its modest oil production rates, the Soviet Union took the responsibility of supplying the countries of the Warsaw Pact with energy. For the purpose of pumping oil to Hungary, Czechoslovakia, Poland and East Germany, the Soviet Union constructed an oil pipeline called Druzhba (Friendship). The oil crisis of 1973 marks the moment when this policy changed. Following the imposition of the oil embargo, the Soviet Union with its vast energy resources came into the spotlight as a potential source of energy for Western Europe. Moscow and OPEC launched a round of talks aimed at getting Soviet energy policy aligned with that of the Arab oil-exporting states. However alluring the opportunity to blackmail the West may have been, the Soviet Union chose a more pragmatic path and came to replace Arab oil exports in Europe; after all, unlike the Warsaw Pact states, Western Europe was ready to pay U.S. dollars for oil imports. (1) The 1973 oil crisis marked an expansion of Soviet energy exports to Western Europe but also signified increased competition with the Gulf States for a share of the global energy markets. Because the Soviet Union was producing oil en masse and the Soviet system kept labor costs low, Russia was able to sell its crude at prices almost 50 percent lower than oil from the Middle East. (2)

Although the embargo was over by March 1974, it solidified a new status quo in the energy market that resulted in the Soviet Union becoming the worlds largest oil producer by 1980. (3) The oil crisis only amplified the political tensions that existed between Moscow and oil-producing states in the Middle East. The 1979 revolution in Iran did not create a friendly dynamic between Moscow and Tehran, while the Saudi-Soviet relations had remained poisoned ever since Karim Khakimov's execution in Moscow.

Emboldened by its extraordinary surge in energy wealth, the Soviet Union embarked on an ambitious foreign policy by the end of the 1970s, which was a contributing factor to the invasion of Afghanistan in December 1979. (4) Western academia saw this development to a large extent through the lens of the growing importance of the Gulf region in the West's energy equation. Based in southwest Afghanistan, Soviet military aircraft could reach the chokepoint in the Strait of Hormuz (that back in the early 80s transported 40 percent of the Western oil supply) within hours and disrupt the flow of cargo vessels. (5) Seen from the Gulf, the Soviet invasion of Afghanistan was the first step in a wider plan of taking over the Gulf's energy resources and gaining full control over the global oil supply market.

In the late 70s, the oil factor began to manifest itself in international relations giving birth to a new term: energy diplomacy While the USSR was not the economic partner the Middle East was looking for, it used its abundant energy resources as a factor of economic pressure. Cheap Soviet oil and later natural gas became the backbone of the formation of the socialist bloc. Through the export of energy resources and the construction of dozens of the world's largest energy infrastructure projects, the USSR exerted a tremendous influence on the policies not only of the socialist bloc in Eastern Europe but also on Algeria, Angola, Egypt, Iraq, Syria, Yemen and Libya. The most well-known example of how the Soviet Union invested in large infrastructure projects is the construction of...