Running Head Russian Economy Past, Present & Future Russian Ec.docx

Running Head: Russian Economy: Past, Present & Future
Russian Economy: Past, Present & Future
11
By [Name of Student]
Course
Professor
[Name of Institution]
November 04, 2018
Question 1:
INTERMEDIATE INPUTS
1. -----------SOURCES-------- ------REQUIRED BY---
----- -----FINAL USE------------------
Output
Stocks
Imports

Coal
Steel
Machinery
Consumption
Exports
Imports
Coal (tons)
975
10
0
10
500
50
50
100
210
Steel (tons)
2,000
0
20
200
400
1,000
300
100
20
Machinery
100
5
5
20
40
10
20
10
10

Consumer goods
340
10
20
0
0
0
100
100
230
The table shows the 4-sector input-out table of the Soviet
economy in 1951.
Does a balance exist? Discuss which sector/s you believe may
not be in balance and why (50-75 words)

The given input-output model depicts an imbalance. The output
of coal, steel and machinery, as well as the consumer goods
were in sufficient, but their final consumption was at the lowest
level. The reason behind this maladministration, is the fickle
economic policy of the government, which forced the
agricultural farmers to work into the industries, and maximize
the output, while the available resources were minimum. The
concentration towards industrialization by ignoring the
agricultural field ruined the whole mechanism.
What options does Gosplan have to bring the system into
balance? Which options would be appropriate for each sector
that might not currently be balanced? How will this bring about
balance? Justify your choice of action. (100-150 words)
Soviet economy was managed by Gosplan, the State Planning
Commission, responsible for drawing economic policy based on
the input of the market and its advisors
1950s is considered to be a most successful period after NEP,
when national income grew as much as 9 percent annually.
Prices generally went down.
The major fault came through, was the falsification of presented
data to the actual planners and policy makers.
There was a drastic expansion in the output of the consumer
goods associated with agricultural in the past (Denton, 1968),
but the post war period and the destruction of the cities, debris
everywhere urged the Gosplan to forcefully minimize the
agricultural farming and maximize the reconstruction and the
industrialization of the country, which ultimately became the
major mistake. The Gosplan should have focused on the
agricultural, while tried its utmost effort on the exports of coal,
steel and the machinery. And should have stabilized the
production of the consumer goods, as per requirements.
Discuss five of the chief drawbacks to the system of central
planning that was in place in the Soviet Union from 1935 -
1965. (250 words)

The central planning system of Soviet Union, usually called
"material balance planning" which was to balance the total
output with the total input, and by this way, there was an
equitable of distribution of resources, and eliminate the waste.
Although the system looks pretty better for the general public,
the flaws that it carried made it a failed attempt. The
management of information was dealt very badly, in fact, the
macro level information was gathered by the high-class
bureaucrats. It was estimated that nearly twenty thousand
different commodities were included in the balance sheets, and
gathering data and balancing all into one place simultaneously
was a tricky problem, and the time consuming too. If it would
have been today when we are living in the technological era, it
might have been successful, but without having such
sophisticated technological methodology, it looks awesome.
Besides that, it was the responsibility of the Gosplan to
negotiate with the local manufacturers and regional
administrations to check the demand and supply, and advise
them, for the correct direction in order to meet the goals. That
happened to be a failed attempt, since covering the vast area
and holding the data, and negotiating at the upper and lower
levels makes no sense when there were no proper
communication tools. Here was the basic problem emerged in
the materials balance mechanism.
The gap between the manufacturers, businessmen, owners of
farms and mines became widened and the high expectations of
the Gosplan to achieve the maximum goals in the minimum
resources were become a history and ruined the economy badly.
From 1950 to 1955, official statistics underestimated the rates
of real growth.
Similarly, as much we dig out the economic history of soviet,
we see these differences in data produced by the TsSU and the
data actually prevails.
d. The Turk stream project is supposed to replace the South
Stream project. Outline this project:

Who are the players?
Where is the pipeline supposed to go?
You may have to do a Google search to find a map to show the
class. Be ready to cue up the map and show the plans
What is Russia’s strategy in pushing through this deal? How
does it enhance Russia’s influence?
What would be the geopolitical ramifications?
The South Stream was a Russian natural gas pipeline project
that aimed to transport natural gas to Bulgaria through the
Black Sea, and to Austria through Serbia, Hungary, and
Slovenia. The project could not be sustained due to the
opposition of the European Union since it was not in
compliance with European Union competition and energy
legislation.
The Russian Government had to cancel the project in 2014,
although the construction of the onshore facilities started in
2012. The obstacles from Bulgaria, the European Union and its
sanctions of Russia, and the 2014 Crimean crisis urged Russia
to withdraw from the project.
The South Stream Project Map
Ultimately, the Russian government signed an agreement with
Turkey and began the construction of the TurkStream gas
pipeline project in May 2017 that would transport that natural
gas from Russia to Turkey.
The TurkStream project will not only generate revenue for
Russia but also verify its diplomatic position in the region,
strategically.
2. In his 90 minute lecture, “International Partnership in
Russia,” James Henderson, Oxford Institute for Energy Studies,
https://youtu.be/G-xjBh1HGjk (this is a 90 minute video)

IOC - international oil company
James Henderson, discussed the Russian oil market, its
consumption, and besides that the overall energy policy of the
Russian government. Russain invasion in Ukraine opened a
myriad of discussion over its future and surrounding politics,
especially by the European countries. The revisiting thinking of
European countries also affected the energy sector.
Big Energy giants Shell, Exxon Mobil, BP, and Total are the
few which are making their space in Russia, besides other big
enterprises. The agreements vary different structures. The Shale
Oil Company will install the liquefied natural gas plant in
Vladivostok.
The British oil company, BP will work with the Russian oil
company Rosneft in the Volga Valley and the Ural Mountains.
Exxon Mobil will also be working there.
Russia has not limited itself to European countries, but it has
also signed few major MoU’s with Japan and China who will
work together in the exploration of various oil sites, besides
that India has also signed a big MoU with Russia in the Energy
sector. The energy sector is not confined to the drilling and
exploration of oil and gas but also the other renewable energy
resources which benefit both countries.
Henderson believes that the emergence of Russia as a strong
economic power has subdued the big oil companies to seek their
future in the Russian land. The ongoing energy crisis around the
world also urging countries to come forward and make bilateral
agreements that benefit both the countries. The Russian
influence in the region and a strong economy is compelling the
big oil companies to invest in the oil and gas sector of Russia.
3. This question deals with Blank and Kim’s discussion of
Russia’s “economic warfare.” The primary thesis seems to be
stated in the Introduction: “Energy policies operate constantly
as a major weapon in Russia’s national security strategy and are
often utilized together with the other elements of Russia’s

political warfare to consolidate the Putin regime’s domestic
power and authority, obtain a neo-imperial sphere of influence
in the governments of the former Soviet borderlands and
Eastern Europe, and fracture European cohesion and
integration.”
Russia under the leadership of Vladimir Putin has been trying to
achieve it consolidated position since the breakup of former the
Soviet Union. In continuing its major theory, Russia invaded
Ukraine and seized Crimea to capture the natural resources.
Furthermore, Russia put forth two theories in the
implementation of its warfare strategy. one is to regain the
control of old captured areas and seize the power, and secondly,
do not allow any European country or even another country to
make any relationship with these countries, that might be a part
of Russia. Russia assumes that the natural resources in its
neighboring countries which were part of Soviet Union, are still
a lost property of Russian government, and it the responsibility
of the present regime to capture all those resources including
the oil and gas. Although, sometimes the war is called a
political war for maintaining the supremacy of Russia over its
neighboring countries, and sometimes it is called the economic
war that urged Russia to make its economy stronger since the
reason for the break-up of former the Soviet Union was more
economic than the political. Furthermore, sometimes, the recent
Russian warfare strategies are called energy war, since Russian
believe that Energy would be the sole issue in the future that
could urge the countries to fight with each other. The same
strategic options are seen in the Balkans and Gazprom. Russia
not only wants to intensify its relations with neighboring
countries but domestically it has suppressed every movement
which might encounter the government and Russian interests.
4. Oskarsson and Yetiv’s 2013 article discusses Russia’s
interest and involvement in the Middle East. Briefly discuss

Russia’s current interest and involvement in the energy sector
of Iran, Iraq, and Saudi Arabia, Qatar, and the UAE (250 words)
Katerina Oskarsson (2013) chiefly pointed out the relationship
of the Russian Government with the Middle Eastern regimes.
Following the Afghanistan and Iraq war, Russia tried utmost to
enter the Middle East and warm up the cold relations with
energy.
The bad diplomatic relations of Iran with the United States of
America always push Iran towards Russia, the former
superpower. Russia is the main trading partner of Iran, which
reflects in the multibillion-dollar trade partnerships, and the
construction of the Bushehr nuclear power plant with a cost of
$1.2 billion. But, Iran's bad relations with the Gulf countries is
a constant headache for Russia. Although, Russia has always
tried to enter the Gulf markets but did not receive a warm
welcome.
Russia is overwhelmingly shaking hands with the Saudi Arabia,
UAE, Qatar, and Iraq in the energy sector and there are myriad
small, medium and large scale nuclear, electricity and other
energy projects are underway between Russia and the Gulf
countries.
Saudi Arabia signed a MoU with Russia in 2010 that would
cater to the rising electricity demands of Saudi Arabia in the
future. The UAE also signed the agreements with the Russian
government over the construction of a nuclear reactor.
Concerning the Energy partnerships, Putin once said: "On the
face of it, it seems that we are rivals, but considering the
world's growing demand for energy, that is not so." Not only
Russia, but Gulf countries are also urged to make healthy
relations with Russia, and the energy sector is the basic hand-
shaking tool of restoring relations. (Katerina Oskarsson, 2013)

References
Denton, F. G. (1968). A recent soviet study of economic growth
1951–63. Soviet Studies, 19(04).
Katerina Oskarsson, S. A. (2013). Russia and the Persian Gulf:
Trade, Energy, and Interdependence. Middle East Journal.
Stephen Bierman, Anna Shiryaevskaya (2009). "Russia,
Slovenia Sign South Stream Gas Pipe Accord".
Anatoly Medetsky (2010). "Croatia Agrees to Join South
Stream". The Moscow Times.
Marja Novak (2009). "Slovenia to sign South Stream deal on
Saturday". Reuters.
Page 1 of 6
Microsoft Excel Project

Purpose
The purpose of this assignment is for students to demonstrate
proficiency in Microsoft Excel by creating
a spreadsheet that will be used to manage their own personal
budget. Please note that you do not have
to include actual values for your income and expenses; you can
make up values, but they should be
realistic.
Before attempting to design the spreadsheet in Microsoft Excel,
students should search the Web for
sample personal budgets to learn how they might be organized
in a spreadsheet. We will not provide
samples of what the finished product will look like. A main
objective of this assignment is to
demonstrate how to properly organize data in an Excel
spreadsheet. Microsoft Office Help, online
resources, and your instructors can help to provide proper
guidance.
Content Requirements
The spreadsheet should contain, in a logical format, the
following information.
1. The first part of the spreadsheet should show your income
each month, for a 12-month period,

that comes from all income sources. An example is below:
Income Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct. Nov.
Dec.
Employer $440 $400 $500 $560 $440 $550 $250 $390 $500
$440 $550 $300
Interest $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2 $2
Parental
Assistance
$100 $100 $100 $100 $100 $100 $100 $100 $100 $100 $100
$100
2. In a new row at the bottom of your income information,
include a row that will display the total
income per month
3. In a new column on the right side of your income
information, include a column that will display
the total income per category
4. The second part of the spreadsheet should show your
estimated mandatory expenses each
month, for a 12-month period. There should be some varying
values, so you do not end up with
all of the same values for every month, in every category.
Mandatory expenses might include

rent or house payments, grocery bills, utilities, and car
payments, but not necessarily anything
related to entertainment. An example is below:
Expenses Jan. Feb. Mar. Apr. May June July Aug. Sep. Oct.
Nov. Dec.
Rent $500 $500 $500 $500 $500 $500 $500 $500 $500 $500
$500 $500
Car Pymt. $170 $170 $170 $170 $170 $170 $170 $170 $170
$170 $170 $170
Utilities $60 $60 $60 $60 $60 $90 $90 $90 $90 $60 $60 $60
Cell Phone $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50 $50
Groceries $50 $60 $45 $50 $65 $50 $45 $50 $50 $50 $80 $80
5. In a new row at the bottom of your expense information,
include a row that displays the total
expenses per month. To receive credit for this step, you must
use an Excel formula or function
to calculate the total, which should automatically recalculate if
the values in the cells are
modified.
Page 2 of 6

6. In a new column on the right side of you expense
information, include a column that will display
the total expense per category.
7. The third area on your spreadsheet should consist of two
rows: the first row will show your 12-
month period, the second row will later use a formula to
calculate, for each month, how much
extra money you will have, or how much money you are short.
This is your net income after
your mandatory expenses
8. The fourth area to your Excel spreadsheet, which will look
similar to your area showing your
mandatory expenses, that shows optional expenses. Optional
expenses might include categories
such as entertainment, dining out, and contributions to your
savings and/or other investments.
There should be some varying values, so you do not end up with
all of the same values for every
month, in every category. Include a total row and total column,
similar to what you did for your
income and expenses. In this area of your spreadsheet, you only
should budget what you have
available to spend. For example in the previous step if you

found you have $200 extra one
month, you only should spend up to $200 in optional expenses
9. The last area will need to have two rows: the first row will
show your 12-month period, the
second row will later use a formula to calculate, for each month,
your month left over after all
mandatory and optional expenses so that you can see how much
extra money you might have
(or the money you are short) at the end of the year.
Technical Requirements
In addition to meeting the content requirements for this
assignment, you also will need to demonstrate
your proficiency of Microsoft Excel by applying the following
formatting. Please note that you should
not perform any calculations manually; if a cell should contain
a calculated value, use a function or
formula to calculate that value. The technical instructions are
intended to be completed in order.
Budget” instead of “Sheet1.” Also,
change the tab color to one of your choosing
n your worksheet. Change the
font, font size, font color, and fill

color from the default values, and then Merge & Center the cell
across the top of the worksheet
worksheet to identify the
information. For example for the table displaying the income,
you might insert a row above the
table containing text that reads, “Monthly Income” to identify
the information. This text also
should be formatted using a different font, font color, and font
size from the default so that it
stands out
areas, use an Excel formula or
function to calculate all of the total rows (calculating the total
for each month) and total
columns (calculating the total for each category).
o All total cells must include cell references in the formula. The
total should automatically
update if you change any of the values included in the formula
to
calculate how much extra money
you will have, or how much money you will be short (Income –
Mandatory Expenses)

of 6
or function to calculate how much
money you will have (or if you are short) at the end of the year
(Income – Mandatory Expenses –
Optional Expenses)
contents in the column (nothing should
be cut off or displaying unnecessary symbols, and columns
shouldn’t be so wide that there is a
lot of blank space in each cell)
Number Format
formatting to each cell in this area. You
should use the Conditional Formatting feature, and not manually
format each cell based on its
value.
o The font color should be green if the value in the cell is
greater than zero

o The font color should be green if the value is equal to zero
o The font color should be red if the value in the cell is less
than zero.
o All three formats should be applied to all cells, as they should
automatically change font
color if the values are modified.
ble showing your
mandatory monthly expenses) that
use Excel functions to calculate the following using your
mandatory monthly expense totals:
o The total from the month where the mandatory monthly
expenses are the lowest
o The total from the month where the mandatory monthly
expenses are the highest
o The average amount of money you spend on mandatory
expenses in a 12-month period
(both charts should display side-
by-side on the same, new worksheet):
o The first chart should be a 3-D Column Chart that shows the
income you receive each
month. The horizontal axis should display the Months, and the
vertical axis should

display the dollar values. Include an appropriate chart title and
data labels. Each column
in the chart should be formatted as a different color. An
example is below (your chart
does not need to look exactly like this; the purpose of this
sample chart is to help clarify
the instruction):
Page 4 of 6
o The second chart should be a pie chart depicting your
mandatory expenses. The whole
pie should represent the total amount you spend in mandatory
expenses during the 12-
month period, and each slice will represent the total monthly
expense for each
category. If you have five categories of mandatory expenses,
then your pie chart will
have five slices. Include a descriptive chart title and legend.
The legend should display
below the pie chart. Display data labels for each slice, and
position them for best fit. An

example is below (your chart does not need to look exactly like
this; the purpose of this
sample chart is to help clarify the instruction):
$0
$200
$400
$600
$800
$1,000
$1,200I
n
c
o
m
e
A
m
o

u
n
t Month
Monthly Income
$6,000.00
$2,040.00
$840.00
$600.00
Mandatory Expenses
Rent Car Pymt. Utilities Groceries
Page 5 of 6
chart to “Charts”, and set the tab
color to something other than the default (make sure the tab
color is also different than the
“Monthly Budget” tab)
your income, mandatory expenses,
and optional expenses (these should be three separate tables),

use Excel to apply a Table Style.
Then for each table, remove the data filters
total rows and columns, then manually
bold the values in all total rows and columns
k that do not contain
any data or information.
workbook is free of spelling and
grammatical errors
name appears in the Author property
(if it does not, change it), and that the title of this spreadsheet
appears in the Title property
Submission Guidelines
It is important for students to pay close attention to the
submission guidelines in order to receive full
credit for this assignment.
(where LastNameFirstName should be
replaced with your last and first name)

attach properly to the email message.
e file to Blackboard.
Important Notes
minute problems on your end will not
be an excuse for missing a deadline
assignments, we will run them through an
automated process to check for plagiarism. Any violations or
any plagiarism will result in a zero
on this assignment and possible further disciplinary action by
the College. It is better to miss
turning in an assignment (or to turn in an incomplete
assignment) and receive a lower grade
than to risk going through a Student Conduct review process
own risk. If the Mac version does not
allow you to perform certain steps outlined in this document,
you will lose points for those steps
-mail your instructors with any questions
Rubric

Criteria Available Points
Create a title for your worksheet , merge and center it 3
Page 6 of 6
Label the five areas of your worksheet, modify font size, color,
fill color 3
Create three tables of your income, mandatory expenses and
optional expenses 9
Apply a Table Style to each table and remove data filters 3
Bold the total rows and columns 3
Use the Accounting Number Format for all values using the $
sign 3
Includes rows showing your income for 12 months 6
Use an excel formula or function to calculate the total income 3
Includes rows showing your varying expenses for 12 months 6
Use an excel formula or function to calculate the total expenses
3
Use a formula or function to calculate the total of each expense
category 3
Calculate your monthly net income (loss) using an excel

formula 3
Create an area showing optional expenses varying only up to the
amount of your
net income
6
Use an excel formula to calculate your money left over after
optional expenses 3
Format your final net income (loss) with all 3 conditional
formatting. Green text
(>= 0) and Red (< 0)
6
Using an excel formula calculate the amount of money you
spend during the
month where the mandatory expenses are the lowest
4
Using an excel formula calculate the amount of money you
spend during the
month where the mandatory expenses are the highest
4
Using an excel formula calculate the average amount of money
you spend during
the 12 month period
4
Create a 3D Column Chart showing your monthly income with

title and data
labels. Each column should have a different color
8
Create a Pie Chart showing the Mandatory expenses by category
with title and
the legend be located at the bottom of the chart
8
Change the worksheet tab to Monthly Budget and add a tab
color 3
Rename the second worksheet to Charts and add a tab color 3
Deleted any additional worksheets 3
Assignment not covering the instructed topic -100
Total Points 100
Excel Exercise 1
Student GPA Calculator
Open a new excel document. Save the file as [your initials]
GPACalculation.
1. Add a table with following columns – ID, Course Name, No.
of Credits, Letter Grade,

Grade Points, Quality Points.
2. Create title for worksheet. Center and merge it.
3. Enter at least five courses in this table with grade earned and
number of credits.
4. Use VLOOKUP to take the letter grade for the first course
and look up the Grade Points
in the second column of the lookup table. Use absolute
referencing; then fill and copy to
look up the grade points for each course. Please use following
lookup table for this –
Letter
Grade
Grade
Points
A 4
B 3
C 2
D 1
F 0

5. Multiply the Grade Points by the Credits to get the Quality
Points for each course.
6. Next two rows in this table should display the total of
Number of Credits and total
Grade points. You need to use AutoSum to find these two.
7. Compute the GPA by dividing the total Quality Points by the
total number of credits
and display it as Cumulative GPA in the next row. This
completes the table.
8. Name the worksheet GPA and add a tab color.
9. Save the file and submit it through blackboard.
Katerina Oskarsson (2013) chiefly pointed out the relationship
of the Russian Government with the Middle Eastern regimes.
Following the Afghanistan and Iraq war, Russia tried utmost to
enter the Middle East and warm up the cold relations with
energy.
The bad diplomatic relations of Iran with the United States of
America always push Iran towards Russia, the former
superpower. Russia is the main trading partner of Iran, which
reflects in the multibillion-dollar trade partnerships, and the
construction of the Bushehr nuclear power plant with a cost of
$1.2 billion. But, Iran's bad relations with the Gulf countries is
a constant headache for Russia. Although, Russia has always
tried to enter the Gulf markets but did not receive a warm
welcome.
Russia is overwhelmingly shaking hands with the Saudi Arabia,
UAE, Qatar, and Iraq in the energy sector and there are myriad
small, medium and large scale nuclear, electricity and other

energy projects are underway between Russia and the Gulf
countries.
Saudi Arabia signed a MoU with Russia in 2010 that would
cater to the rising electricity demands of Saudi Arabia in the
future. The UAE also signed the agreements with the Russian
government over the construction of a nuclear reactor.
Concerning the Energy partnerships, Putin once said: "On the
face of it, it seems that we are rivals, but considering the
world's growing demand for energy, that is not so." Not only
Russia, but Gulf countries are also urged to make healthy
relations with Russia, and the energy sector is the basic hand-
shaking tool of restoring relations. (Katerina Oskarsson, 2013)
The president of Russia is considered the head of the state and
the government, while the prime minister serves as his deputy
(the equivalent of a Vice President in the United States of
America). They are co-heads of the government, and they both
belong to the same political party – United Russia (though
Putin ran as an independent in 2018).
The president of Russia has a central role in the government’s
political system. The president mainly influences the executive
branch’s activities. He also appoints the prime minister and
other members of the government, chairs the cabinet’s meetings,
and gives orders to his deputy and other members regarding
governance. He can also revoke any act or law passed by the
government.

Russian Prime Minister Dmitry Medvedev (left) with Russian
President Vladimir Putin (right)
“Russia needs to radically overhaul its administrative and
judicial systems and embrace new technology otherwise
economic stagnation could threaten its security, Vladimir
Putin’s chief adviser on economic reform has warned.
Alexei Kudrin, the former finance minister, was asked by Mr
Putin last year to come up with a new strategy for economic
policymaking for the next term, following the president’s
planned re-election next year.
Outlining his plans on Friday, Mr Kudrin said: “We have come
to face the problem that Russia has fallen behind
technologically in the world. That, in my view, is the most
serious challenge we face in the coming 10 to 15 years.”
Financial Times, Jan 13, 2017
Alexei Kudrin
Kudrin…
“We will struggle with diminishing defense potential and
threats to national sovereignty if we don’t become a
technological power. Even military experts say that
technological challenges facing Russia are bigger than
geopolitical and military ones,” Mr Kudrin said.
“Our entire foreign policy should be subordinated to the task of
technological development.”
Russia is popularly known as the world’s second largest natural
gas producer and the 3rd largest oil producer. The country has a

large number of major oil and gas companies. Most of the top
oil companies in Russia have continued to maintain significant
downstream and upstream gas and oil operations. This includes
retail service stations, exploration and production divisions and
petroleum refineries.
This is the largest oil company in Russia. Reports show that the
company produced around 1.5 billion barrels of oil in the year
2014. Besides, the company is also ranked as the 3rd largest
natural gas company in the world with a production of more
than 347 million barrels of oil equivalent.
The company’s market capitalization is around $38.7 billion
which automatically makes it the highest valued gas and oil
company. Rosneft operates 13 refineries in the country and has
shown tremendous interest in around seven refineries based in
Eastern and Western Europe. The company maintains
exploration and production operation in countries such as
Canada, Vietnam, USA, Norway and Brazil, among others.
Rosneft has been the leading supplier of jet fuel in Russia.
Rosneft
Lukoil
The company is the 2nd largest oil and gas producer in the
country. In 2014, Lukoil produced almost 707 million barrels of
oil. Its Natural gas production is estimated to be more than 90
million BOE* every year. Its Market Capitalization is valued at

27.7 billion dollars.
The company operates in 12 different countries across the
Middle East, Africa and Europe. Besides, Lukoil runs power
generation facilities as well as gasoline service stations in
Russia, USA and Europe. The Company’s petrochemical and
refining operations include six refineries in Russia as well as
five refineries in Europe and New Zealand.
*Typically 5,800 cubic feet of natural gas or 58 CCF are
equivalent to one BOE. The USGS gives a figure of 6,000 cubic
feet (170 cubic meters) of typical natural gas. A commonly used
multiple of the BOE is the kilo barrel of oil equivalent (kboe or
kBOE), which is 1,000BOE.
Gazprom Neft
The company produced approximately 482 million barrels of oil
in 2014 and 104 million BOE Natural gas.
Gazprom runs four refineries in Russia and one refinery in
Belarus.
Gazprom Neft is one of the subsidiaries of Gazprom – a Russian
energy giant. Gazprom holds more than 95% of its shares, while
the government holds 50% of Gazprom’s outstanding shares.
Gazprom Neft has production operation in Russia, Venezuela,
Iraq and other countries. Its market capitalization is around
$10.5 billion.
Joint ventures

Gazprom – Nord Stream 2
http://www.dw.com/en/nord-stream-2-financing-takes-shape/a-
38568823
April 24, 2017
http://www.dw.com/en/german-mps-call-for-clarification-on-
contentious-russian-gas-pipeline-nord-stream-2/a-42655495
February 21, 2018
https://youtu.be/F-vWQLzi53I
Financial Times – March 1, 2018
- Henry Foy in Moscow and Ed Crooks in New York
“ExxonMobil is abandoning most of its joint ventures with
Rosneft, walking away from a partnership promising big new
projects in areas including the Arctic and the Black Sea that
were once important growth prospects but have been hit by US
sanctions. The US energy group said in its annual 10-K filing to
the Securities and Exchange Commission late on Wednesday
that it had decided to give up the ventures in 2017 and expected
to withdraw formally this year, leaving the Russian state-
controlled oil group to work alone. Some of the agreements
called for Exxon to carry out exploration by 2020-23, and the
decision to walk away is an implicit admission that the company
was unlikely to be able to make enough progress to meet those
deadlines.”

Exxon & Rosneft
“Exxon and Rosneft struck a series of agreements that were
reported to entail investments of as much as $500bn in
exploration projects in the Russian Arctic, shale oilfields in
Siberia and deep water in the Black Sea. Rosneft said on
Thursday that the projects had reserves of 12.3bn tons of oil and
15.2tn cubic meters of gas.
The partnership, formed after the collapse of a similar deal
between Rosneft and BP, was seen as a strategic coup for Rex
Tillerson, then chief executive of Exxon and now* US secretary
of state.”
*fired by
Trump 3/2018
Joint Ventures with Japanese
“The establishment of a joint venture is a practical step aimed at
implementing previously reached agreements on the
development of cooperation within the framework of the
Russian-Japanese investment platform, whose aim is to attract
Japanese capital to projects in the advanced development zones
(ASEZ) and the Free Port of Vladivostok (SPV).
The joint venture will become a “single window” for Japanese
investors and provide comprehensive support to the Japanese
business, including information support, business planning,
interaction with state authorities at all stages of the
implementation of projects: from obtaining the status of ASEZ
or FPV resident to commissioning new enterprises.
These joint initiatives are aimed at the introduction of modern

and efficient technologies, import substitution and products
export. In particular, Japanese investors are interested in
building medical centers, woodworking enterprises and building
materials factories as well as in expanding the capacities of
existing agricultural complexes in the Russian Far East.
“I am sure that the Russian-Japanese investment platform will
become part of the unique ecosystem created by the state for
investors in the Russian Far East. Having such a strong
international partner as JBIC* will allow us to involve its
extensive business relations and attract additional private
capital from Japan to the projects in the zones of advanced
development and free port of Vladivostok”, FEBRDF CEO
Alexei Chekunkov said.
*The Japan Bank for International Cooperation (JBIC) is a
public financial institution owned by the Japanese government.
Joint venture sets model for China-Russia cooperation in energy
field
Xinhua | Updated: 2017-07-03 11:16
MOSCOW — On the vast east European plain 1,200 kilometers
east of Moscow, lines of pumping machines stand on the green
grassland. It is the location of Udmurtia Petroleum Corp
(UDM), an energy joint venture between Russia and China.
The UDM was bought out by China Petroleum and Chemical
Corp, also known as Sinopec, and Russian oil giant Rosneft in
August 2006.
Rosneft took a 51 percent stake and Sinopec 49 percent in the

UDM, which is China's first and only oil field project in
production in Russia.
Located in Udmurtia, a republic in western Russia, the UDM is
the republic's largest oil corporation, with 32 oil fields and a
daily production capacity of 17,000 metric tons.
Russia became China’s largest supplier of crude oil on an
annual basis in 2016, dislodging Saudi Arabia from the position
it had held every year since 2001 (except for 2007 when Angola
occupied the number one slot). Russia will almost certainly
remain a major oil supplier to China for at least the next decade
for reasons of infrastructure, supply deals and politics.
Pipeline Construction: Over the past decade, Russia and China
developed the pipeline infrastructure necessary to deliver large
volumes of crude to China.
Long-term Supply Contracts: China and Russia also inked two
long-term supply agreements, both of which were partially
motivated by Russian energy companies’ need for cash.
Emergence of New Chinese Buyers: In 2015, Beijing granted
China’s independent refineries, most of which are located in
Shandong province, direct access to imported crude. This
change in policy essentially created a new country’s worth of
crude oil import demand. Russia quickly became a popular
crude supplier to the independent refineries because the short
transit distance from Kozmino (compared to Persian Gulf ports)
Russian Crude Oil Production – 2008 - 18

Exports of crude oil and petroleum products represented nearly
70% of total Russian petroleum liquids production in 2016.
Russia’s oil and natural gas industry is a key component of
Russia’s economy, with revenues from oil and natural gas
activities—including exports—making up 36% of Russia’s
federal budget revenues.
Crude oil trade is important to both Russia and Europe: about
70% of Russia’s crude oil exports in 2016 went to European
countries, particularly the Netherlands, Germany, Poland, and
Belarus. Similarly, Russian imports provided more than one-
third of the total crude oil imported to European members of the
Organization for Economic Cooperation and Development.
Outside of Europe, China was the largest recipient of Russia’s
2016 crude oil exports, receiving 953,000 b/d, or about 18%, of
Russia’s total crude oil exports. Russia was the largest supplier
of crude oil to China in 2016, surpassing Saudi Arabia for the
first time on an annual basis.
Crude Oil Prices – 20 year perspective
The current price of WTI crude oil as of March 13, 2018 is
$60.91 per barrel.

The president of Russia is considered the head of the state and
the government, while the prime minister serves as his deputy
(the equivalent of a Vice President in the United States of
America). They are co-heads of the government, and they both
belong to the same political party – United Russia (though
Putin ran as an independent in 2018).
The president of Russia has a central role in the government’s
political system. The president mainly influences the executive
branch’s activities. He also appoints the prime minister and
other members of the government, chairs the cabinet’s meetings,
and gives orders to his deputy and other members regarding
governance. He can also revoke any act or law passed by the
government.
Russian Prime Minister Dmitry Medvedev (left) with Russian
President Vladimir Putin (right)
“Russia needs to radically overhaul its administrative and
judicial systems and embrace new technology otherwise
economic stagnation could threaten its security, Vladimir
Putin’s chief adviser on economic reform has warned.
Alexei Kudrin, the former finance minister, was asked by Mr
Putin last year to come up with a new strategy for economic
policymaking for the next term, following the president’s
planned re-election next year.
Outlining his plans on Friday, Mr Kudrin said: “We have come

to face the problem that Russia has fallen behind
technologically in the world. That, in my view, is the most
serious challenge we face in the coming 10 to 15 years.”
Financial Times, Jan 13, 2017
Alexei Kudrin
Kudrin…
“We will struggle with diminishing defense potential and
threats to national sovereignty if we don’t become a
technological power. Even military experts say that
technological challenges facing Russia are bigger than
geopolitical and military ones,” Mr Kudrin said.
“Our entire foreign policy should be subordinated to the task of
technological development.”
Russia is popularly known as the world’s second largest natural
gas producer and the 3rd largest oil producer. The country has a
large number of major oil and gas companies. Most of the top
oil companies in Russia have continued to maintain significant
downstream and upstream gas and oil operations. This includes
retail service stations, exploration and production divisions and
petroleum refineries.
This is the largest oil company in Russia. Reports show that the
company produced around 1.5 billion barrels of oil in the year
2014. Besides, the company is also ranked as the 3rd largest

natural gas company in the world with a production of more
than 347 million barrels of oil equivalent.
The company’s market capitalization is around $38.7 billion
which automatically makes it the highest valued gas and oil
company. Rosneft operates 13 refineries in the country and has
shown tremendous interest in around seven refineries based in
Eastern and Western Europe. The company maintains
exploration and production operation in countries such as
Canada, Vietnam, USA, Norway and Brazil, among others.
Rosneft has been the leading supplier of jet fuel in Russia.
Rosneft
Lukoil
The company is the 2nd largest oil and gas producer in the
country. In 2014, Lukoil produced almost 707 million barrels of
oil. Its Natural gas production is estimated to be more than 90
million BOE* every year. Its Market Capitalization is valued at
27.7 billion dollars.
The company operates in 12 different countries across the
Middle East, Africa and Europe. Besides, Lukoil runs power
generation facilities as well as gasoline service stations in
Russia, USA and Europe. The Company’s petrochemical and
refining operations include six refineries in Russia as well as
five refineries in Europe and New Zealand.
*Typically 5,800 cubic feet of natural gas or 58 CCF are
equivalent to one BOE. The USGS gives a figure of 6,000 cubic
feet (170 cubic meters) of typical natural gas. A commonly used
multiple of the BOE is the kilo barrel of oil equivalent (kboe or
kBOE), which is 1,000BOE.

Gazprom Neft
The company produced approximately 482 million barrels of oil
in 2014 and 104 million BOE Natural gas.
Gazprom runs four refineries in Russia and one refinery in
Belarus.
Gazprom Neft is one of the subsidiaries of Gazprom – a Russian
energy giant. Gazprom holds more than 95% of its shares, while
the government holds 50% of Gazprom’s outstanding shares.
Gazprom Neft has production operation in Russia, Venezuela,
Iraq and other countries. Its market capitalization is around
$10.5 billion.
Joint ventures
Gazprom – Nord Stream 2
http://www.dw.com/en/nord-stream-2-financing-takes-shape/a-
38568823
April 24, 2017
http://www.dw.com/en/german-mps-call-for-clarification-on-
contentious-russian-gas-pipeline-nord-stream-2/a-42655495
February 21, 2018

https://youtu.be/F-vWQLzi53I
Financial Times – March 1, 2018
- Henry Foy in Moscow and Ed Crooks in New York
“ExxonMobil is abandoning most of its joint ventures with
Rosneft, walking away from a partnership promising big new
projects in areas including the Arctic and the Black Sea that
were once important growth prospects but have been hit by US
sanctions. The US energy group said in its annual 10-K filing to
the Securities and Exchange Commission late on Wednesday
that it had decided to give up the ventures in 2017 and expected
to withdraw formally this year, leaving the Russian state-
controlled oil group to work alone. Some of the agreements
called for Exxon to carry out exploration by 2020-23, and the
decision to walk away is an implicit admission that the company
was unlikely to be able to make enough progress to meet those
deadlines.”
Exxon & Rosneft
“Exxon and Rosneft struck a series of agreements that were
reported to entail investments of as much as $500bn in
exploration projects in the Russian Arctic, shale oilfields in
Siberia and deep water in the Black Sea. Rosneft said on
Thursday that the projects had reserves of 12.3bn tons of oil and
15.2tn cubic meters of gas.
The partnership, formed after the collapse of a similar deal
between Rosneft and BP, was seen as a strategic coup for Rex
Tillerson, then chief executive of Exxon and now* US secretary

of state.”
*fired by
Trump 3/2018
Joint Ventures with Japanese
“The establishment of a joint venture is a practical step aimed at
implementing previously reached agreements on the
development of cooperation within the framework of the
Russian-Japanese investment platform, whose aim is to attract
Japanese capital to projects in the advanced development zones
(ASEZ) and the Free Port of Vladivostok (SPV).
The joint venture will become a “single window” for Japanese
investors and provide comprehensive support to the Japanese
business, including information support, business planning,
interaction with state authorities at all stages of the
implementation of projects: from obtaining the status of ASEZ
or FPV resident to commissioning new enterprises.
These joint initiatives are aimed at the introduction of modern
and efficient technologies, import substitution and products
export. In particular, Japanese investors are interested in
building medical centers, woodworking enterprises and building
materials factories as well as in expanding the capacities of
existing agricultural complexes in the Russian Far East.
“I am sure that the Russian-Japanese investment platform will
become part of the unique ecosystem created by the state for
investors in the Russian Far East. Having such a strong
international partner as JBIC* will allow us to involve its
extensive business relations and attract additional private
capital from Japan to the projects in the zones of advanced
development and free port of Vladivostok”, FEBRDF CEO

Alexei Chekunkov said.
*The Japan Bank for International Cooperation (JBIC) is a
public financial institution owned by the Japanese government.
Joint venture sets model for China-Russia cooperation in energy
field
Xinhua | Updated: 2017-07-03 11:16
MOSCOW — On the vast east European plain 1,200 kilometers
east of Moscow, lines of pumping machines stand on the green
grassland. It is the location of Udmurtia Petroleum Corp
(UDM), an energy joint venture between Russia and China.
The UDM was bought out by China Petroleum and Chemical
Corp, also known as Sinopec, and Russian oil giant Rosneft in
August 2006.
Rosneft took a 51 percent stake and Sinopec 49 percent in the
UDM, which is China's first and only oil field project in
production in Russia.
Located in Udmurtia, a republic in western Russia, the UDM is
the republic's largest oil corporation, with 32 oil fields and a
daily production capacity of 17,000 metric tons.

Russia became China’s largest supplier of crude oil on an
annual basis in 2016, dislodging Saudi Arabia from the position
it had held every year since 2001 (except for 2007 when Angola
occupied the number one slot). Russia will almost certainly
remain a major oil supplier to China for at least the next decade
for reasons of infrastructure, supply deals and politics.
Pipeline Construction: Over the past decade, Russia and China
developed the pipeline infrastructure necessary to deliver large
volumes of crude to China.
Long-term Supply Contracts: China and Russia also inked two
long-term supply agreements, both of which were partially
motivated by Russian energy companies’ need for cash.
Emergence of New Chinese Buyers: In 2015, Beijing granted
China’s independent refineries, most of which are located in
Shandong province, direct access to imported crude. This
change in policy essentially created a new country’s worth of
crude oil import demand. Russia quickly became a popular
crude supplier to the independent refineries because the short
transit distance from Kozmino (compared to Persian Gulf ports)
Russian Crude Oil Production – 2008 - 18
Exports of crude oil and petroleum products represented nearly
70% of total Russian petroleum liquids production in 2016.
Russia’s oil and natural gas industry is a key component of
Russia’s economy, with revenues from oil and natural gas
activities—including exports—making up 36% of Russia’s
federal budget revenues.
Crude oil trade is important to both Russia and Europe: about

70% of Russia’s crude oil exports in 2016 went to European
countries, particularly the Netherlands, Germany, Poland, and
Belarus. Similarly, Russian imports provided more than one-
third of the total crude oil imported to European members of the
Organization for Economic Cooperation and Development.
Outside of Europe, China was the largest recipient of Russia’s
2016 crude oil exports, receiving 953,000 b/d, or about 18%, of
Russia’s total crude oil exports. Russia was the largest supplier
of crude oil to China in 2016, surpassing Saudi Arabia for the
first time on an annual basis.
Crude Oil Prices – 20 year perspective
The current price of WTI crude oil as of March 13, 2018 is
$60.91 per barrel.
Assignment IV – The Soviet Command Economy & Russia
Today
This assignment is due no later than Sunday, Nov. 4 at 11:59
p.m.
Use the Blackboard Drop Box to submit your papers
Answer questions. In your answers, signal to me that you are
consulting the assigned articles and lectures by using the
informal citation (Smith, p. xx) or (Gedeon, PPT, 10/1)
INTERMEDIATE INPUTS

1. -----------SOURCES-------- ------REQUIRED BY---
----- -----FINAL USE------------------
Output
Stocks
Imports
Coal
Steel
Machinery
Consumption
Exports
Imports
Coal (tons)
975
10
0
10
500
50
50
100
210
Steel (tons)
2,000
0
20
200
400
1,000
300
100
20
Machinery
100
5
5

20
40
10
20
10
10
Consumer goods
340
10
20
0
0
0
100
100
230

The table shows the 4-sector input-out table of the Soviet
economy in 1951.
a. Does a balance exist? Discuss which sector/s you believe
may not be in balance and why (50-75 words)
b. What options does Gosplan have to bring the system into
balance? Which options would be appropriate for each sector
that might not currently be balanced? How will this bring about
balance? Justify your choice of action. (100-150 words)
c. Discuss five of the chief drawbacks to the system of central
planning that was in place in the Soviet Union from 1935 -
1965. (250 words)
d. Why does Kornai argue that paternalism softens budget
constraints? Why is the existence of soft budget constraints of
concern to Kornai?
2. In his 90 minute lecture, “International Partnership in
Russia,” James Henderson, Oxford Institute for Energy Studies,
https://youtu.be/G-xjBh1HGjk (this is a 90 minute video)
IOC - international oil company (350 words)
a. Which Western foreign gas and oil companies are doing
business in Russia? What is the nature of the partnership? Be
specific. What are the deals?
b. What is the Eastern partnership? Explain Russia’s
engagement with China and Japan.
c. What are the core projects for the present through 2050?
d. Review Henderson’s analysis of the business climate,
investment challenges, ownership and operational decision
making that foreign firms face when partnering with Russia.
What does he say are the motivations by the foreign companies
to enter into deals with Russia? Provide comments and
examples from Henderson’s talk.

3. This question deals with Blank and Kim’s discussion of
Russia’s “economic warfare.” (250-350 words)
a. The primary thesis seems to be stated in the Introduction:
“Energy policies operate constantly as a major weapon in
Russia’s national security strategy and are often utilized
together with the other elements of Russia’s political warfare to
consolidate the Putin regime’s domestic power and authority,
obtain a neo-imperial sphere of influence in the governments of
the former Soviet borderlands and Eastern Europe, and fracture
European cohesion and integration.”
· What are the various policies and ways in which this warfare
is or could be staged? What are the goals of the warfare—what
is Russia trying to accomplish domestically and globally?
· In the energy field, specifically how is this warfare carried
out?
b. Where are Blank and Kim going with their comments on p.
23, “Thus we see a conscious policy of state support for
monopolizing gas flows in particular into the Balkans, acquiring
downstream assets there and in the rest of Europe, and then
branching out into other industries and the acquisition of
economic-political influence over these states.”
· Monopolizing how? Explain how this fits into the major
thesis of the argument that Russia is staging economic warfare
· What are downstream assets? In particular, which downstream
assets is Russia busy acquiring? What and where?
· In what other industries is Russia planning to branch out?
Where?
· What role is Gazprom playing in the Balkan strategy
c. The Turkstream project is supposed to replace the South
Stream project. Outline this project:
· Who are the players?
· Where is the pipeline supposed to go?
· You may have to do a Google search to find a map to show the
class. Be ready to cue up the map and show the plans
· What is Russia’s strategy in pushing through this deal? How

does it enhance Russia’s influence?
· What would be the geopolitical ramifications?
4. Oskarsson and Yetiv’s 2013 article discusses Russia’s
interest and involvement in the Middle East. Briefly discuss
Russia’s current interest and involvement in the energy sector
of Iran, Iraq, and Saudi Arabia, Quatar, and the UAE (250
words)
Economic Warfare a la Russe: The Energy Weapon and Russian
National Security Strategy
Author(s): Stephen Blank and Younkyoo Kim
Source: The Journal of East Asian Affairs, Vol. 30, No. 1
(Spring/Summer 2016), pp. 1-39
Published by: Institute for National Security Strategy
Stable URL: http://www.jstor.org/stable/43829408
Accessed: 17-01-2017 11:21 UTC
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Economic Warfare a la Russe:
The Energy Weapon and Russian National
Security Strategy
Abstract
Some studies have already been done on the energy factor in
Russian foreign
policy during the Ukrainian crisis of 2006 and 2009. Energy
affairs at a global
and regional level have changed. We examine how Russia has
used energy as an
instrument of foreign policy in the context of the US shale
revolution, the new
Ukrainian crisis, and low oil prices in Europe, Eurasia, Central

and Eastern Europe,
the Middle East, and Asia. The goal of this article is to
examine how Russia is using
energy as a foreign policy instrument in the context of the US
shale revolution, the
Ukrainian crisis and low oil prices in 2010-2015. Russia energy
weapon resembles a
Swiss army knife that simultaneously cuts in many directions,
at home, in the CIS,
and in Eastern and Central Europe, and the Asia-Pacific. This
war holds lessons for
the West who must wage its own contemporary economic wars.
It is important
to understand that while energy policy as a form of economic
warfare can be and
generally is deployed autonomously, Moscow often uses
economic warfare in
conjunction with military force, arms sales, or to achieve some
strategic goals.
Keywords: Russian Foreign Policy, Energy Affair, Economic
Warfare, Strategic
Goals
ECONOMIC WARFARE A LA RUSSE: THE ENERGY
WEAPON AND RUSSIAN NATIONAL SECURITY

STRATEGY 1
2017 11:21:13 UTC
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INTRODUCTION
Recently General Phillip Breedlove, Supreme Allied
Commander
Europe(SACEUR), cited Russia's military and economic
coercion
directed against its neighbors.1 Breedlove rightly singled out
eco-
nomic coercion because on a daily basis Russia's energy
network
is its most constantly operating factor of coercion or of
leverage in
Eurasia. Energy policies operate constantly as a major weapon
in
Russia's national security strategy and are often utilized
together
with the other elements of Russia's political warfare to
consolidate
the Putin regime's domestic power and authority, obtain a neo-
im-
perial sphere of influence in the governments of the former
Soviet

borderlands and Eastern Europe, and fracture European
cohesion
and integration.
It is equally important to grasp that this form of warfare con-
tinues into the present and in tandem with military operations
as
in Ukraine.2 Upon invading Ukraine, Moscow immediately
seized
Ukrainian energy platforms in the Black Sea and Crimea and
has
continued to expropriate Ukrainian oil jacks and facilities there
through 2015 to drill for oil and gas in Ukraine's marine
econom-
ic zone.3 Moscow is also waging a consistent energy war either
to isolate Ukraine from European sources of energy and render
it wholly dependent on Russian gas and oil. The Nordstreanm II
1 Clifton Parker, "NATO Commander calls for recalibration in
Europe", www.http://news.
stanford.edu/thedish/2015/ll/09/nato-commander-calls-for-
recalibration-in-europe/
November 9, 2015.
2 Michael Ruehle and JulijusGrubliauskas, "Energy as a tool of
hybrid warfare", in

Guillaume Lasconjarias and Jeffrey A. Larsen, eds., NATO's
response to hybrid threats,
Foreword, General Philip M. Breedlove, Supreme Allied
Commander, Europe Brussels:
NATO Defense College, Forum Paper, 24, 2015, pp. 189-200.
3 "Ukraine to sue Russia for seizing Crimean oil, gas assets:
PM," Piatt's, May 14, 2014,
http://www.platts.com/latest-news/natural-gas/kiev/ukraine-to-
sue-russia-for-seizing-
crimean-oil-26788163; "Russia preparing to drill for oil in
Ukraine's marine economic
zone," Ukraine Today, December 16, 2015,
http://uatoday.tv/politics/russia-preparing-
to-drill-for-oil-in-ukraine-s-marine-economic-zone-
555179.html
2
2017 11:21:13 UTC
pipeline, discussed below is merely the latest example of such
eco-
nomic warfare. These seizures not only deprived Ukraine of
much
needed energy and potential revenues, Russia also can use
those
installations as a pretext for stationing warships into the Black
Sea

and then threatening Romanian and Bulgarian installations
and/or
territory. In addition Russia has thus taken control of Ukrainian
in-
frastructure, Ukraine's Chornomonaftogaz (Black Sea gas)
company
worth an estimated $1.2 Billion, over 2BCM of natural gas
storage
in Crimea, and acquired a huge maritime zone worth trillions of
dollars.4 By seizing the Donbass Moscow also took over most
of
Ukraine's coalfields and mines, the massive "Yuzovka" shale
gas
deposit area, and several underground gas storage sites and
transit
pipelines.
Thus Kyiv has been forced into ever-greater dependence on
external energy sources.5 And in providing gas to the Donbass
and trying to force Ukraine to pay for that gas shipped in lieu
of
Ukraine's previous contractual obligations, Russia forced
Ukraine

to pay for Russian gas even as it was invading Ukraine. This
repeats
the pattern in Moldova whereby Tiraspol, Moscow's client and
rump state in Transnistria refuses to pay for Russian gas,
allowing
Moscow to send bills to Chisinau, Moldova's capital, making it
in-
cur a debt of $4 Billion almost half of Moldova's GDP, and
obliging
it to subidize the Russian occupation of its territory. If this
scenario
repeats itself in Ukraine, it will be a textbook example of how
ener-
gy chains can be manipulated to exert economic pressure and
terri-
torial influence.6 However, these actions are only part of
Moscow's
overall continuing economic war against Ukraine and represent
merely the culmination to date of a campaign of economic
warfare
that included high tariffs, embargos, or delays of imports to
prevent
4 Ruehle and Grubliauskas, "Energy as a tool of hybrid
warfare", p. 191.

5 Ibid, p. 192.
6 Ibid., pp. 195-196.
STRATEGY 3
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5
Ukraine from signing an Association Agreement (DCFTA-Deep
and
Comprehensive Free Trade Agreement) with the EU in 2013
and
similar tactics against Moldova and Armenia for the same
purpose.7
It is important to understand that while energy policy as a form
of economic warfare can be and generally is deployed
autonomous-
ly, Moscow often uses economic warfare in conjunction with
mil-
itary force, arms sales, or to force the adoption of policies
favoring
Russian immigrants in the Baltic States. Moreover, Moscow
contin-
ues to use economic coercion as an instrument of warfare

against
its neighbors, e.g. the imposition of tariffs and excluson of
Ukraine
from the Eurasian Customs Union in December, 2015 because
it
refused to give up its Association Agreement with the European
Union and Russia's ongoing efforts to gain control over both
gas
flows through Ukraine and the distribution of Russian gas
within
Ukraine.8
RUSSIAN STYLE ECONOMIC WARFARE
Moscow habitually practices what experts have long since
called
economic warfare. But in Moscow's case the instruments of
econom-
ic warfare, including, but not exclusively comprising, energy,
trade,
investment opportunities and cutoffs, remittances, and attempts
to
enhance the Russian ruble while diminishing the role of the
dollar
are waged in tandem with a broader strategy of what must be
called

political warfare. The instruments of its strategy are military
force,
media penetration, intelligence penetration and subversion
abroad,
7 Ariel Cohen, "Eastern Europe's pivotal moment: Association
Agreement and Deep and
Comprehensive Free Trade Agreement (DCFTA) for the
European Union and the Eastern
Partnership", Testimony before the Europe and Eurasia
Subcommittee, Committee on
Foreign Relations, United States Senate, November 14, 2013,
pp.2-5.
8 Ruehle and Grubliauskas, pp. 189-200.
4
2017 11:21:13 UTC
unremitting information warfare to organize a lasting process
of
mass political-ideological manipulation, organized crime, and
the
use of the ethnic card - often but by no means exclusively
Russian
diaspora communities abroad.9 As noted above, Moscow

contin-
ues to deploy this weapon against Ukraine as well as other
former
Soviet republics but also as shown below against Europe as
well as
Ukraine in the case of the Nord Stream II pipeline.
Russia's use of the energy weapon, seen in a broader context, is
therefore but one manifestation of the broader and increasing
resort
by great powers to programs of action that can only be
described as
economic warfare. And economic warfare, especially by the
Great
Powers against more vulnerable governments, is a fundamental
fea-
ture of contemporary international conflict.10 The U.S. has
waged
extensive economic attacks on North Korea and terrorist
organiza-
tions as part of this trend.11 But while our concern here is
Russia,
U.S. actions have arguably amounted to a template that other
great

powers can use as well. While our primary concern has been to
isolate terrorists, Russia, as we shall see has turned these
weapons
and form of warfare in a different direction. And as we have
seen
and will see below economic warfare is now a prime instrument
in
Russia's (and other adversarial states') overall arsenal.12
This is warfare defined by the use of financial tools, pressure,
and
market forces to leverage the banking sector, private-sector
interests,
and foreign partners in order to isolate rogue actors from the
interna-
9 Stephen Blank, "The flight of the Red Phoenix: The historical
bases of Russian non-
linear warfare", Paper presented to the Conference on Hybrid
Warfare, Ft. Meade, Md.
December 7, 2015.
10 Mark Leonard, Connectivity wars , European Council on
Foreign Relations, December,
2015.
11 Juan C. Zarate, Treasury's war: The unleashing of a new era
of financial warfare{Ne'N
York: Public Affairs, 2013).
12 Ibid p.ll.

STRATEGY 5
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tional financial and commercial systems and eliminate their
funding
sources13
For example, Russia has sought to conduct analogous
operations
against the US.
In the summer of 2008, at the height of the financial crisis,
Russian
officials approached their Chinese counterparts with an
intriguing
proposal. The countries could band together to sell their
holdings in
the US housing giants Fannie Mae and Freddie Mac. These
govern-
ment-sponsored enterprises (GSEs) owned or guaranteed over
%5
trillion in residential mortgages and mortgage-backed
securities, ap-

proximately 50 percent of the total mortgage market. The GSEs
had
accumulated approximately $1.7 trillion in debt, hundreds of
billions
of which were owned by the Chinese government alone. With
the
United States still reeling from the financial crisis already
underway, a
coordinated Russian-Chinese sale of GSE holdings could force
the US
government to use its emergency authorities and spend massive
sums
to keep Fannie Mae and Freddie Mac alive. Such a move would
likely
exacerbate the global economic crisis, causing an even deeper
crisis
in confidence in the US financial systems and potentially a run
on the
dollar.14
This action and those described below are clearly signs of a co-
ordinated strategy of economic warfare against U.S. interests
and
those of its allies. Indeed Putin openly told his intelligence
services

in 2007 that they, "Must be able to swiftly and adequately
evaluate
changes in the international economic situation, understand the
consequences for the domestic economy, and more actively
protect
the economic interests of our companies abroad."15 Thus
Russia's in-
13 Ibid.
14 Ibid., p. 383.
15 Ibid., p. 388 quoted from, "Spy agency told to help
companies", St. Petersburg Times,
October 23, 2007.
6
2017 11:21:13 UTC
telligence agencies, many of whose alumni are the captains of
Rus-
sian business or who have infiltrated it, received a clear
mandate for
actions they had already taken and would take to conduct
economic

warfare abroad. Since then, as shown above, Russian officials
have
followed China's lead and sought to cooperate with China in its
assault against the dollar in ways that also include cyber-
strikes
against financial institutions.16
Russia's energy weapon resembles a Swiss army knife that si-
multaneously cuts in many directions, at home, in the CIS, and
in
Eastern and Central Europe. At home energy revenues are
essen-
tial elements of the state budget thus the stagnant price of
energy,
now at record lows (since 2009) contributes to a major
economic
slowdown and governmental budget crisis. Accordingly the
major
energy companies serve not only as a source of state revenue
but
also as a contemporary analogue of medieval tax farmers.17
While
this element of firms like Gazprom accentuate the abiding
medieval

features of Russian governance; they also reflect this
medievalism
because they are à major conduit of rents to the elite who are
al-
lowed this corruption in return for their service to the state, so
the
tax farmer analogy not only relates to energy firms' function
for the
state but also to their role as the motor force of the
contemporary
updating of the phenomenon of the Muscovite service state
where
property is held only in return for service and payment for that
ser-
vice derives from the control of those assets.18 Thus Russian
busi-
16 Zarate, Treasury's war, pp. 399-413.
17 In Medieval times tax farmers were state officials whose
task was to collect taxes.
But because of the scarcity of state revenues and to induce
them to serve they were
granted the right to a portion of those tax revenues as their own
income, i.e. as a
reward and incentive for state service.

18 Richard Hellie, 'The structure of Russian imperial history,"
History and Theory, 44,
2005, pp. 88-112; Peter Baker and Susan Glasser, Kremlin
rising: Vladimir Putin's Russia
and the end of revolution (New York: Scribner's, 2005), p. 417;
Steven Rosefielde,
Russia in the 21st century: the prodigal superpower
(Cambridge: Cambridge University
Press, 2004); Marshall T. Poe, The Russian moment in world
history( Princeton, NJ:
STRATEGY 7
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nesses have been pressured to organize, at their own expense so
called charitable funds to support the "special services"
(intelligence
agencies). 19 Moreover, by the end of 2011, Putin himself
admitted
that one of every two officials of energy companies is
connected
with other industries allowing for massive corruption.20
But beyond these considerations the dominance of energy in the
Russian economy consigns Russia to being primarily an
economy
organized for the export of commodities and raw materials.

This
has led several Russian not to mention Western analysts, to
empha-
size the correlation between this kind of economy and service
state
with imperial proclivities. Thus Andrei Zakharov writes,
"Imperial
statehood is the natural guise of a regime based on the export
of
raw materials."21
Princeton University Press, 2003); Stefan Hedlund, Russian
path dependence (London;
Routledge, 2005);Emil Pain, "Will Russia transform into a
nationalist empire", Russia
in Global Affairs3:2, April-June, 2005, pp. 71-80; Stephen
Kotkin, "It's Gogol again",
Paper Presented as part of the project The energy dimension in
Russian global strategy
(James A. Baker III Institute for Public Policy, Rice
University, Houston, 2004). These are
only a few of the authors who now see the vitality of the
Tsarist metaphor as a means
of explaining Putin's Russia; Richard Pipes, Russia under the
old regime (New York:
Scribner's 1975); Stephen Blank, Rosoboroneksport; Its place
in Russian defense and
arms sales policy (Carlisle Barracks, PA: Strategic Studies
Institute, US Army War College,

2007); Harley Balzer, "Confronting the global economy after
communism: Russia and
China compared", Paper Presented to the Annual Convention of
the International Studies
Association, Honolulu, Hawaii, March 1-5, 2005; Vladimir
Shlapentokh in Collaboration
with Joshua Woods, Contemporary Russia as a feudal society:
A new perspective on
the Post-Soviet era( New York: Palgrave Macmillan, 2007);
Vladimir Shlapentokh, "Early
feudalism-The best parallel for contemporary Russia", Euro-
Asia Studies ; XLVIII: 2, 1996,
pp. 391-411; Peter Stavrakis, State-building in Post-Soviet
Russia: The Chicago boys
and the decline of administrative capacity, Occasional Papers
of the Kennan Institute
for Advanced Russian Studies, No. 254, 1993; Peter Stavrakis,
"The Russian state in the
twenty-first century", Paper Presented to the VIII Annual
Strategy Conference of the U.S.
Army War College, Carlisle Barracks, Pa., April 22-24, 1997;
Eugene Huskey "The state-
legal administration and the politics of redundancy", Post-
Soviet Studies , 11:2, 1995, pp.
115-43.
19 Roman Shleynov, "A tribute of respect", Moscow, Novaya
Gazeta , in Russian June 1,
2009, FBIS SOV, June 1, 2009
20 Moscow, Interfax ; in English, December 19, 2011, FBIS
SOV, December 19, 2011

21 Emil Pain, "The political regime in Russia in the 2000s:
Special features, inherited and
acquired", Russian Social Sciences Review, Lll:6, November-
December, 2011, pp.64-65.
8
2017 11:21:13 UTC
Likewise, Russia's energy assets are vital to the enhancement
of
Russia's global power, influence, and standing. And the
government
openly recognizes those assets' role as a major instrument of
Rus-
sian foreign policy.22 As Roman Kupchinsky has written,
On February 4 [2009]Ukrayinska Pravda reported that Russian
Prime
Minister Vladimir Putin stated: "Russia enjoys vast energy and
min-
eral resources which serve as a base to develop its economy; as
an
instrument to implement domestic and foreign policy The role
of the

country on international energy markets determines, in many
ways,
its geopolitical influence." This thesis was not new, it found its
way
into the 2003 "Energy Strategy of Russia for the Period of up
to 2020"
which stated at the outset that: "Russia possesses great energy
resourc-
es... which is the basis of economic development and the
instrument
for carrying out internal and external policy." Putin's views
were in-
corporated into the security doctrine in a roundabout but
nonetheless
blunt manner. Paragraph 9 of the doctrine states: "The change
from
bloc confrontation to the principles of multi-vector diplomacy
and
the [natural] resources potential of Russia, along with the
pragmatic
policies of using them has expanded the possibilities of the
Russian
Federation to strengthen its influence on the world arena" In
other

words, Russia's energy resources were once again officially
acknowl-
edged to be tools of Russian foreign policy, or as some believe,
a lever
for blackmail. There was apparently no further reason for
denying the
obvious, and the authors of the [2009] security doctrine
decided to lay
out Russia's cards on the table.23
22MinisterstvoEnergetikiRossiiskoiFederatsii,
EnergeticheskaiaStrategiiaRossiina Period
do 2030 Goda [Russian Energy Strategy up to 2030], 2009,
http://www.minenergo.gov.
ru/activity/energostrategy/full.php?sphrase_id=268229;
MinisterstvoEnergetikiRossiisk
oiFederatsii, EnergeticheskaiaStrategiiaRossii Na Period do
2020 Goda, Moscow, 2003.
23 Roman Kupchinsky, "Energy and Russia's National Security
Strategy", The Progressive
Realist , May 19, 2009,
http://www.progressiverealist.org/blogpost/energy-and-russias-
national-security-strategy
STRATEGY 9
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At the same time due to the variegated situations of the energy

economy and that Russia confronts globally, the goals of
energy
policy vary according to regions' and countries' specific
features. In
the Far East, for example,
Ultimately, the political implications of Russia's Northeast
Asian en-
ergy policy are the reinforcement of the country's national
energy se-
curity vis-a-vis the reduction of its dependency on European
imports,
the expansion of the nation's influence through reinforced
energy co-
operation with Northeast Asian countries, and the economic
develop-
ment of East Siberia and the Far Eastern region through the
provision
of an alternative energy source for West Siberia.24
Clearly the Asian political situation is very different from what
Moscow sees in Eurasia (the former Soviet Union) and Europe
and
its policies vary accordingly as it makes no effort to subvert
the

Chinese, Japanese, or ROK governments.
In Eurasia, however, abundant evidence exists that Moscow has
used and continues to use energy as an instrument of
dominance in
the CIS as a whole and of leverage in Europe, either by
controlling
pipelines from Eurasia to Russia and then Europe or by
maximiz-
ing its control of gas supplies from Russia (including those
Central
Asian supplies) to Europe.25 Indeed this strategy also obliges
Russia
to pursue an openly neo-colonial policy in Central Asia and
even to
subsidize Central Asian gas production during times of
depressed
gas prices in order to ensure that only Russia or China but not
Eu-
24 Ji Won Yun, "International cooperation for the construction
of Soyth Korea - North
Korea - Russia pipeline natural gas (PNG): Effectiveness and
restrictions", Journal of East
Asian Affairs, 39:1, Spring/Summer, 2015, pp. 80-81.

25 BertilNygren, "Putin's use of natural gas to reintegrate the
CIS region", Problems of Post-
Communism, LV:4, July-August, 2008, pp. 4-17; Andrew
Kramer, "Falling gas prices deny
Russia a lever of power", New York Times, May 16, 2009,
www.nytimes.com
10
2017 11:21:13 UTC
rope gets Central Asian gas and oil regardless of cost.26 This
policy
ensures continuing leverage over Central Asian gas exports that
are
vital to the Uzbek, Kazakh, and Turkmen economies. Although
it
has failed with regard to Turkmenistan because China bailed it
out,
clearly Ashgabat has no desire to provoke Moscow by buying
into
ideas like the European Union's support for various trans-
Caspian
pipeline projects. And of course that leverage over the energy

sector
then translates into corresponding leverage over domestic and
for-
eign policies of these states.
But the most important manifestations of Russian energy strat-
egy occur in the Western borderlands from the Baltic to
Moldova
and in Europe where the goals, as noted above, go beyond
accruing
revenues to establishing lasting positions in both upstream and
downstream (distribution) sectors of these states' energy
economies,
using that leverage for purposes of enhancing lasting economic
and
political influence, either through support for subversion or
through
corruption and direct lobbying of governments, in those states,
and of dividing Europe in order to arrest the process of
European
integration under the EU's auspices. Indeed, despite the
dynamic
changes occurring in Europe and Eurasia Moscow continues to
use

its energy weapon there for these selfsame purposes.
ENERGY, ORGANIZED CRIME,
AND INTELLIGENCE PENETRATION
Some pattern of linkages between energy, organized crime fig-
ures and intelligence penetration of governments has
characterized
Russian activities across Eastern Europe and would
undoubtedly
26 BertilNygren, The rebuilding of greater Russia: Putin's
foreign policy towards the CIS
countries( London: Routledge, 2008).
STRATEGY 11
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develop in Georgia if the authorities there allow Russia to
become
substantially involved in Georgia's energy economy.27 Spanish
in-
vestigators found that the Russian Mafia, which is closely
linked to
the government, exercises "tremendous control" over some
strategic
sectors of the global economy such as aluminum and natural

gas.28
Previous studies make clear the political purposes and
outcomes of
Russian energy policies throughout the former Soviet bloc, not
just
the former Soviet Union. And these efforts to corrupt Western
insti-
tutions are also ongoing. Thus Deutsche Bank is now
investigating
a total of $10 Billion in illegal trades from its operations in
Russia
whose purpose appears to be money laundering.29
To defend its 'Petro-Power, Russia strives to keep as many of
its part-
ners as possible in a state of energy dependence, a dependence
which
can be manipulated as Russia chooses. A key component of this
strate-
gy is the control of pipelines and other energy facilities in
neighboring
countries. [In addition] Oil and gas allow Russia to 'buy off'
foreign
companies and individuals. More importantly, the Kremlin can
ma-

nipulate whole countries as in the days of the Warsaw Pact;
loyal allies
are rewarded with ample amounts of subsidized energy, at great
cost
to Moscow.30
For example, in 2004 Roman Giertych, Deputy Chairman of the
27 Magdalena Rubaj and Tomasz Pompowski, "What is the
KGB interested in?" Warsaw,
Fakt , in Polish, October 19, 2004, FBIS SOV, October 19,
2004;Jan Pinski and
KrzystofTrebski, "The oil mafia fights for power", Warsaw,
Wprost , in Polish, October
24, 2004, FBIS SOV, October 24, 2004; Warsaw, Polish Radio
3 in Polish, October 15,
2004, FBIS SOV, October 15, 2004; Warsaw, PAP, in Polish,
December 13, 2004, FBIS
SOV, December 13, 2004, Open Source Center Analysis,
"Lithuania: Businessman
Stonyswields power with Russian backing," FBIS ŚOV,
October 1, 2007.
28 Maria Snegovaya, "The implications of Russia's mafia
state", The American Interest ;
December 23, 2015., http://www.the-american-interest.com,
29 "Deutsche Bank Moscow laundering probe tallies $10
Billion", The Moscow Times,
December 22, 2015, http://www.themoscowtimes.com,
30 Ibid.

12
2017 11:21:13 UTC
commission that investigated the notorious Orlen scandal in
Po-
land, concluded in his report that,
The commission has evidence that a certain kind of conspiracy
func-
tioned "within the background of the State Treasury Ministry,
the
Prime Ministerial Chancellery, the Presidential Chancellery,
and big
business," which was supposed to bring about the sale of the
Polish
energy sector into the hands of Russian firms.31
In Lithuania, former President RolandasPaksas was impeached
for his connections to Russian organized crime and intelligence
figures. In August 2009 the Seimas moved to block any
possibility
that the Russo-Lithuanian capital bank Snoras could gain
control of

the LeutvosRytas media group.32 But this is hardly a new
Russian
policy.
In 2007-08 the Lithuanian businessman RimandasStonys, Pres-
ident of Dujotekana, Lithuania's Gazprom intermediary, who
has
close ties to Russian and Lithuanian officials and has extensive
investments in Lithuania's energy and transit sectors, was
brought
under investigation by Lithuania's Parliament. These
investigative
reports charge that he had used his ties to Russian intelligence
and
other Lithuanian political connections to advance personal and
Russian interests in Lithuania's energy sector. Dujotekana was
re-
puted to be a front for Russian intelligence services that are
already
entwined with Gazprom. And a counter-intelligence probe into
a foreign citizen's efforts to recruit senior Lithuanian
Intelligence
(VSD) officers led to the firm, which also recruited government

officials. Key executives of Dujotekana were apparently also
KGB
alumni. Similar charges were also raised in regard to Stonys'
and
31 FBIS SOV, December 13, 2004.
32 ViktorsBaublys, "Bank may lose LieutvosRytas", Vilnius,
VilnaiusDiena, in Lithuanian,
August 8, 2009, FBIS SOV, August 8, 2009.
STRATEGY 13
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his firm's influence in Lithuania's transit sector and his large
con-
tributions to politicians and media and his influence over
political
appointments.33
Subsequently it became clear that the company was established
with the help of Russian special services, but because Stonys
failed
to gain control of a new power plant in Kaunas that would have
legitimized Gazprom as an investor and power in Lithuania, he

may well be on his way out.34 However that would hardly stop
other friends of Russia from trying to capture key positions in
the
state and its policy.35 Indeed, Gazprom kept trying to obtain a
long-
term contract to supply Lithuania with gas and make a deal
with
the main gas company LieutvosDujos until 2030.36 Clearly this
is
a constant, long-term Russian policy. Thus Stonys only took
off
from where earlier efforts had failed when attempts were made
to
compromise Lithuanian politics by using such figures as Viktor
Us-
paskich, founder of the Labor party, who is trying to make a
come-
back, and Paksas.37 Likewise, in Estonia the 2006 annual
report
of the Security Police noted that the Constitution Party is
financed
partly from Moscow.38 These kinds of operations are
apparently
also ongoing. Thus the Estonian newspaper, Postimees,

reported in
2015 about how Russian oligarchs, operating closely with some
of
the highest figures of Putin's Administration, are attempting to
seize
33 FBIS SOY ; October 1, 2007.
34JurgaTvaskiene, "Russia does not need 'exposed' friends",
Vilnius, LieutvosZinios, in
Lithuanian, September 11, 2009, FBIS SOV, September 11,
2009.
35 Ibid.
36 Moscow, ITAR-TASS, in English, September 9, 2009, FBIS
SOV, September 9, 2009.
37 Richard J. Krickus, "The presidential crisis in Lithuania: Its
roots and the Russian factor",
Occasional Papers of the East European Studies Institute,
No.73, Wilson Center,
Washington, D.C., 2004; Vilnius, BNS Internet Version in
English, September 21, 2007,
FBIS SOV, September 21, 2007; Kaunas, KaunoDiena Internet
Version, in Lithuanian,
September 20, 2007, FBIS SOV, September 21, 2007.
38 Tallinn, Eesti Express Internet Version, in Estonian,
October 1, 2007, FBIS SOV, October 1,
2007.
14

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control of Estonia's economy and use their influence to not
only to
take over sectors like oil, but also to influence Estonian
politics.39
In Hungary Istvan Simiscko, a member of the Christian Demo-
cratic People's Party and Chairman of the National Security
Com-
mittee of the Parliament, has publicly charged that Russian
(and
possibly Slovak) intelligence and criminal links may be
involved
in the murder of members of the Hungarian Roma in an attempt
to incite ethnic unrest inside Hungary and/or discredit Hungary
abroad.40 There are also repeated examples of Russia, either
acting
on its own or through the Austrian energy firm OMV,
atempting
to gain control over Hungarian energy firms, notably MOL.41
Thus

there has been good reason for open US concern about
Hungarian
policy, especially when the Socialists led by Prime Minister
Ferenc
Gyurcany were in power.42 Indeed, Gyurcsany had at various
times
proposed that the EU, Russia, and Caspian Sea governments
form
an energy partnership or said that despite Hungary's democratic
orientation, it cannot expect to become independent of
Russia.43
More recently there are discenrible signs of this phalanx of
busi-
ness, crime and government money establishing havens for
itself in
Iceland and Montenegro.44
39 Andrey Kuzichkin, "Putin's friends in Estonia: Local
economy as citadel of Russian
business", Postimees, September 1, 2015, BBC Monitoring.
40 Budapest, Magyar Hirlap Online, in Hungarian, August 6,
2009, FBIS SOV, August 6,
2009.
41 Budapest, Hungary Around the clock, in English, August 24,
2009, FBIS SOV, August 24,

2009;Budapest, Magyar Hirlap Internet Version, in Hungarian,
December 14, 2007, FBIS
SOV, December 14, 2007; "Hungary, Austria: A continuing
energy rivalry in the Balkans,"
August 6, 2008, http://www.stratfor.com,
42FerenceKepecs, "Hungarian maneuvering in the draw of
three power centers",
Budapest, Nepszava, in Hungarian, July 31, 2008, FBIS SOV,
July 31, 2008; Budapest,
MTI, December 10, 2007, FBIS SOV, December 10, 2007.
43 Budapest, MTI, in English, November 14, 2008, FBIS
SOVF, November 14, 2008;
Budapest, MTI, in English, September 25, 2008, FBIS SOVF,
September 25, 2008.
44 Vladimir Prybylovsky, Natalya Morar, llya Barabanov,
YevgeniyaAlbats, "From
Petersburg to Reykjavik: Whose money is rescuing Iceland",
Compromat.ru Internet, in
Russian, October 20, 2008, FBIS SOV, October 20, 2008; Dan
Bilefsky, "Despite crisis,
STRATEGY 15
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Finally, in the Czech Republic already in 2008 one NATO
diplo-
mat told the Czech newspaper Mlada Fronta Dnes,

The extensive building up of Russian espionage networks in the
Czech
Repbulic and in other NATO countires, and also the hitherto
unprec-
edented amounts of money that Moscow was starting to invest
in this
'project' in the recent period have exceeded the acceptable, and
some-
times also tolerated, limits of espionage. In the recent period
this has
exceeded any kind of degree, whether this is a case of
infiltrating the
intelligence services or of contacting experts involved in
NATO strate-
gic defense.45
Formally Prague expelled these diplomats for attempting to
influence public opinion against the planned US missile
defense
installations in the Czech Republic. Czech officials and reports
have
long observed that, using business and either Czech or Russian
businessmen as a front, Moscow has been trying to make
contact

with and suborn politicians to influence Czech policies.
By 2009 Moscow had doubled the number of known agents in
the Czech Republic from 50-100 and many officials believed
that
the leadership of the Czech Social Democratic party is either
prey
to dangerous illusions about Russia or worse and would
undermine
Prague's pro-Western policies.46 Czech intelligence thus
reported
Wealthy Russians are buying up coastal Montenegro", New
York Times , November 1,
2008, http://www.nytimes.com,
45 Jan Gazdik, "In Czech Republic Russians are reactivating
agents from the Cold War
period", Prague, IDnes.cz Online, in Czech, August 25, 2009,
FBIS SOV, August 25, 2009.
46/ö/'c/.; Erik Tabery and OndrejKundra, "The big spying
game: What was behind the
expulsion of two Russians from the Czech Republic?" Prague,
Respekt.cz Online , in Czech
August 24, 2009-August 30, 2009, FBIS SOV, August 31,
2009; LenkaZiamalova, "Interview
with Lucas Dobrovský", Prague, HospodarskeNoviny Online, in
Czech, August 21, 2009,
FBIS SOV, August 25, 2009; Prague, Czech Happenings, in
English, August 21, 2009, FBIS

SOV, August 25, 2009; Prague, Czech Happenings ; in English
August 27, 2009, FBIS SOV,
August 27, 2009; Prague, CTK, in English, August 31, 2009,
FBIS SOV, August 31, 2009;
"Russia, Czech Republic: Trading Diplomatic Expulsions",
Stratfor.com, August 18, 2009.
16
2017 11:21:13 UTC
that Russian intelligence has attemtped to establish and exploit
ties
to Czech politicians and civic groups for purposes hostile to
gov-
ernment policy and on behalf of Russia.47 As one
representative of
Czech Inteligence, the BIS, told the Czech journal Respekt.cz
previ-
ously,
In the last few years we have noted numerous attempts by
business
entities that had proven connections to suspicious Russian
capital to
gain control over telecommunications, information systems,

and trans-
portation infrastructure from railroads to airports and airlines.
To
what extent the Russian secret services are involved in these
activities,
however, we do not know.48
Knowledgeable Czech experts like the former Ambassador to
Moscow Lucas Dobrovský have little doubt what Moscow
wants to
achieve through such efforts to penetrate the Czech
government. As
he observed,
We would stop resisting the efforts to bring Russia's economic,
polit-
ical, and perhaps, to a certain extent, military, influence back
to the
area of Central Europe. The current Russian Government and
the
president believe that this is a natural influence in the area that
was
directly and indirectly occupied by the former Soviet Union.
You will
find a lot of evidence of this in the statements of Russian

politicians.
This would lead to the weakening of our Euro-Atlantic
relations.49
Czech Deputy Foreign Minister Thomas Pojar echoed these
comments and notes that recovering Russia's position in
Central
47 Prague, CTK, in English, August 31, 2009, FBIS SOV,
August 31, 2009.
48Tabery and Kundra, FBIS SOV, August 31, 2009.
49 LenkaZiamalova, "Interview with Lucas Dobrovský", FBIS
SOV August 25, 2009.
STRATEGY 17
2017 11:21:13 UTC
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Europe has been a Putin priority since he took power in
2000.50
More recently Lukoil finance President Milos Zeman's election
in
2013.51
THE BALKANS: AN ARENA OF EAST-WEST
GEOPOLITICAL RIVALRY
Similar phnenomena are observable in the Balkans. The

Balkans
remain an arena of East-West geopolitical rivalry as they have
been
for centuries. Today, however, the instruments of rivalry are
not
armies but rather economic-political forces: control of energy
pipe-
lines and production and the use of that control for political
more
than purely econoimic objectives, as well as the attraction of
com-
peting political models i.e. the liberal internationalist and post-
na-
tionalist EU model or the Putinist model of authoritarian
statism
and crimnalized elite rule buttressed by state if not popular
nation-
alism. Thus a Macedonian newspaper observed that the
Balkans'
geostrategic importance today is in no small measure due to the
fact
that it is the heartland of the confrontation between rival
energy
pipelines, the EU's Nabucco pipeline and Russia's South Stream

project. Since the Bosphorous and the Dardanelles are limited
in the
amount of energy that can be transported through them, the
Balkan
landmass becomes all the more important in this context and
each
state therefore does its utmost to ensure that oil and gas
pipelines
traverse their territory.52
50 LenkaZlamalova, "Interview with Deputy Foreign Minister
Thomas Pojar", Prague,
HospodarskeNoviny Online, in Czech, September 25, 2009-
September 28, 2009, FBIS
SOV, September 28, 2009.
51 Jan Richter, "MilošZeman - Political veteran seeking to
crown his career", http://www.
radio.cz/en/section/curraffrs/milos-zeman-political-veteran-
seeking-to-crown-his-
career, December 19, 2012.
52 MerselBilalli, "Utter isolation", Skopje, Dnevnik, in
Macedonian, October 16-17, 2010,
18
2017 11:21:13 UTC

Arguably the current struggle for the Balkans, now occurring
through competitive energy projects and political models,
therefore
ties into the larger East-West geoeconomic and geopolitical
rivalry
founded on control of energy supplies and routes. Milan
Simurdic
duly observes that,
Russian energy policy in the Balkans could be viewed as part
of the
competition for accces, control, and influence over the oil and
gas
business, especially in the Caspian basin and in Central Asia.
The Bal-
kans represent the final stage of oil and gas delivery from that
region
towards, in the case of gas and gas pipelines - the European
markets,
and, in the case of oil to sea ports, transporting oil further to
the world
market. More and more, the Balkan region is being connected
to the

"New Great Game, i.e. the modern re-run of the struggle
between Im-
perial Britain and Imperial Russia of the XIX century for
influence in
Central Asia.53
Although Balkan states wanted to be ableto maximize their op-
tions and access to gas by relying on both Russia's South
Stream
project and the Azero-Turkish Trans-Anatolian pipeline
(TANAP)
for obvious economic reasons, ultimately the decision to rely
prim-
iarily on one oranother pipeline scheme, is a statement of
political
intent as well.54 Therefore the decision to rely mainly on
Russian
pipeline projects like the South Stream gas pipeline or the EU's
pro-
jected Nabucco West project or, the Trans-Adriatic Pipeline
(TAP),
the TANAP emerging Azeri-Turkish Trans-Anatolian gas
pipeline
(TANAP) were as much if not fundamentally geopolitical
decisions

Open Source Center, Foreign Broadcast Information Service,
Central Eurasia, (Henceforth
FBIS SOV), October 17, 2010.
53 Milan Simurdic, "Russian energy policy and the Balkans",
http://www.isac-fund.
org/.../06e-Milan%20Simurdic%20-., pp. 3-4
54 Liuhto
STRATEGY 19
2017 11:21:13 UTC
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and had geopolitical outcome rather than purely econoimc ones.
While it may well be the case as Balkan ministers have told US
audiences that if they do not have Russian gas, built over pre-
exist-
ing pipelines their countrymen will freeze during the winter;
this
attribution of a primary geopolitical importance to pipeline
choices
is still correct because what is at stake is not just energy
supplies
but rather decisive leverage over economic-political affairs in
Balkan

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