Putin’s Mediterranean Move

The race is on to exploit off-shore energy around Israel, Syria, Lebanon, and Cyprus -- and Moscow is crashing the party.

On Christmas Day, Russian state-owned gas company Soyuzneftegaz inked a $90 million, 25-year deal with Damascus to start exploring for the first time some of Syria's offshore energy resources. On the surface, it represents another show of support from Russia for the beleaguered regime of Bashar al Assad. But the deal also fits into a larger pattern of Russian energy adventurism in one of the world's newest frontiers for oil and gas development. If the investments there work out as planned, they could help cement Russia's eroding hold over Europe's energy supply -- and help boost Moscow's standing as a global power on the rise.

At a time when the whole post-war architecture of the Eastern Mediterranean is crumbling, from the breakdown of Egypt's relations with Israel to tensions in the U.S.-Turkish relationship, Moscow seems to spy an opportunity to reassert itself in a region where it once loomed large, get a grip on a potentially big alternative to Russian energy, and make it easier to flex its military muscles. 

"They can kill two birds with one stone," Jeff Mankoff, Deputy Director of the Russia and Eurasia Program at the Center for Strategic and International Studies, said of the Russians. "They want to be in the Eastern Mediterranean, and if they can get the added bonus of bolstering this relationship with Syria, that's two for the price of one."

Israel, Lebanon, Cyprus, and now Syria are all agog over the seemingly vast reserves of natural gas discovered offshore; the U.S. geological survey estimates there could be as much as 120 trillion cubic feet of natural gas in the Levant basin, bigger than any single gas play in the U.S.

Israel, long plagued by energy poverty, dreams of turning its offshore finds into energy independence and export earnings. That's especially important now that Egypt cut off its gas exports to Israel. 

Cyprus has visions of becoming a regional energy hub, exporting gas to Europe and Asia, but never-ending tensions between the Greek south and the Turkish north cast a pall of uncertainty over gas exploration. Cypriot gas plans also bring Turkey, the champion of north Cyprus, and Russia, Cyprus's main backer, into conflict. 

Lebanon, for its part, eyes a potential economic boost by tapping hydrocarbons for the first time. Now Syria, undismayed by the ongoing civil war, is hoping to tap offshore gas resources to limit its own reliance on imported gas and boost revenues that have been hammered by the war and sanctions. Much of the country's on-shore production is in the east, and is either held by rebels or in contested areas.

Granted, turning those potential energy resources into actual production will be an uphill task. Economically recoverable reserves are likely only a fraction of the total gas trapped under the seabed. Offshore energy development is a lot more expensive and time-consuming that drilling for gas on land. Even once the gas is produced, the entire region will need massive infrastructure investments to ship it by pipeline to Europe, or liquefy it and ship to Asia. Gas development requires closer cooperation by neighboring countries, something in short supply.

Looming behind all those challenges is the region's sketchy security environment, which has only deteriorated since the beginning of the Arab Spring -- most notably in Syria, but also in Lebanon. 

Turkey has threatened Cyprus with warships and aircraft in a bid to dissuade it from drilling in disputed waters. Cyprus, which doesn't have any money or sailors, is spending precious cash to beef up its navy. Israel is buying a pair of German frigates to protect its own gas fields. For the third year in a row, the U.S., Israel, and Greece carried out naval exercises, including practicing to repel attacks on offshore gas platforms.

Why does energy-rich Russia need to dive into these troubled waters? After all, Russia is the world's second-largest gas producer. It's own fields in Western Siberia hold five times the gas resources as the Levant Basin.

The answer appears to be two-fold. First, Russia's traditional domination of European energy supplies is slowly coming under threat. There's  the advent of shale gas and rising volumes of liquefied gas; there are alternative sources of supply such as the Caspian; and there's the prospect of the Eastern Mediterranean turning into a spigot for southern and eastern Europe. Hungary, for one, has already talked up the prospect of using Israeli gas to substitute for reliance on Russia.

That explains why Russian firms such as Gazprom, Rosneft, and Novatek have been angling for a piece of the action in the Mediterranean. Russia's offered billions of dollars in bailouts to Cyprus in exchange for gas. Russian firms are lining up to bid on Lebanese gas concessions. And Gazprom scored a big victory earlier this year in securing the exclusive rights to export liquefied gas from Israel's Tamar field. Russia is keen to increase its share of the global LNG business, which is especially key to meeting Asia's rising demand for natural gas.

Grabbing access to Mediterranean gas would be a way for Moscow to try and maintain its energy hold over Europe, akin to Russian purchases of gas-distribution assets throughout southern and eastern Europe. At the same time, Russian involvement gives Moscow the ability to dictate the pace of some development in the region; some observers suspect Russian bids for Mediterranean resources are meant to slow down, not accelerate, the development of new sources of gas.

"The Russians aren't hurting for gas that they can send to Europe. They just need to make sure that other people aren't increasing supply in a way that competes with them," Mankoff said.

But more broadly, Russia's rush into the Mediterranean seems part of Vladimir Putin's plan to give Russia the kind of global, geopolitical heft that the Soviet Union had. During the Cold War, Soviet influence extended beyond the Middle East and well into the Mediterranean.

Indeed, the high point by some measures of Soviet naval prowess was the famous Fifth squadron that shadowed the U.S. Navy in the Mediterranean during the early 1970s. For centuries, Russian and Soviet leaders have seen the Eastern Mediterranean as a natural extension of the Black Sea, waters dominated by the Soviet and Russian navies.

Building closer energy and trade ties with key countries in the region, especially Cyprus, Israel, and Greece, gives Russia a way back in to an area it considers within its sphere of influence. That is already happening: During the Syrian civil war, Russian naval deployments to the region have reached levels last seen in Soviet times, with more than a dozen warships on station. 

Some experts see closer Russian cooperation with Cyprus over gas as a way to bolster potential naval capabilities in the region; Russian requests for air basing in addition to naval basing on Cyprus have caused a minor furor on the island. Finding an alternative naval base would be crucial for Russia's Mediterranean plans; its last overseas naval base is in Syria, right near the offshore blocks earmarked for exploration.

And the benefits go two ways. By building closer energy ties with Russia, countries such as Israel, Cyprus, and Greece win a big backer in their disputes with Turkey and other neighbors. Indeed, after Turkish threats over Cypriot gas exploration, Russia dispatched an aircraft carrier to the region. Local reports suggest that Russia offered security assurances to Israel in a private meeting last month between Putin and Israeli Prime Minister Benyamin Netanyahu. 

"Given the environment the Israelis are in, they are more willing to work with the Russians. Since the relationship with Turkey has gone so pear shaped, they need other partners to work with," Mankoff noted. "They think if they can get Russia involved, that gives Russia a stake in their security."

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Putin's Knack for Surprise

Behind Putin's sudden release of former tycoon Mikhail Khodorkovsky.

This week, Russian President Vladimir Putin again demonstrated his talent for surprise.

The almighty president -- who this year managed to prevent the West from military intervention in Syria, and who, in spite of pressure from Washington, gave refuge to America's most wanted spy, Edward Snowden -- pardoned his main critic and enemy, the oil tycoon Mikhail Khodorkovsky (pictured above), who had languished in jail for a decade. The unexpected release shocked the country. Before anyone knew what was happening, Putin, with the "unlimited power of a monarch," signed a pardon to release the man who had once been the richest and most powerful oligarch in Russia. On Dec. 20, Khodorkovsky left his prison in Karelia and headed off to reunite with his ailing mother, who is seeking cancer treatment in Germany.

Khodorkovsky is a former Russian tycoon who founded Yukos Oil Company, and was imprisoned in 2003 on charges of fraud and tax evasion, and later embezzlement. His trials -- and espeically the second round of charges in 2007 -- were widely considered to be politically motivated. While in jail, Khodorkovsky became something of a political philosopher, amassing a following and presenting a real -- if neutralized -- challenge to Putin's power. He published numerous political articles in independent newspapers and magazines and corresponded with famous Russian intellectuals, and is credited with inspiring the anti-Putin uprising in 2011-2012. As Khodorkovsky approached eligibility for parole, Putin was faced with a choice: take him to trial and lock him up once again, or feign having a big heart, and let Khodorkovsky free so he can visit his dying mother -- just in time for the controversial Sochi 2014 Olympic games.

Ironically, the news about Khodorkovsky's freedom fell on the professional holiday for Russia's security agencies, known as "The Day of Chekist" (after the Soviet state security organization). To mark the moment, a pro-opposition TV and radio star, Tikhon Dzyadko, applauded Putin (who was once an officer in the KGB) on his Facebook page on Friday morning: "I congratulate the president of Russia on the Day of Chekist, who, whether you like it or not, beat everybody this year."

"There is no other man in Russia who could compare to Putin in influence, not even a little bit."

Carnegie analyst Maria Lipman agreed it was happy news, commenting, "There is no other man in Russia who could compare to Putin in influence, not even a little bit."

But the release was fishy from the start. For one thing, Khodorkovsky's lawyers seemed to know nothing about the inmate's request for pardon. For another, as Russian opposition leader Boris Nemtsov explained, "It is unclear how free he really is, and what the conditions of his release actually are." When Khodorkovsky landed in Germany, new information came out that his mother was, in fact, in Moscow. Many wondered why her son rushed to Berlin and why Russia authorities were so eager to help him obtain his visa and international passport. Some Russian bloggers found an answer, writing, "This is deportation!" Khodorkovsky's parents arrived in Berlin to meet their son early on Saturday, Dec. 21.  

On top of this, another central issue is still up in the air: Did Khodorkovsky admit guilt?

Previously, the jailed tycoon and his lawyers had claimed he would never admit guilt, since that could implicate his former colleagues. But Putin knew something that even Khodorkovsky's lawyers did not. "Khodorkovsky wrote me a letter asking for a pardon," Putin explained on Thursday. Putin's spokesman told Interfax, a Russian news agency, that in asking for a pardon, Khodorkovsky had admitted his guilt.

In his first public statement on the issue, on Friday, Dec. 20, Khodorkovsky confirmed that he had asked the president to pardon him, but that "the question about his guilt was never raised."

In this case, as always, Putin was unpredictable. Only a few days ago, Russia experts told me that Putin was horrified by the idea of Khodorkovsky's freedom, and that the tycoon would remain in jail as long as Putin stayed in power. On Dec. 20, Stanislav Belkovsky, a prominent Kremlin expert, told me that Putin no longer fears Khodorkovsky: "Khodorkovsky is not a threat to Putin anymore. He is not a revolutionary, but a manager who got caught up in a game and lost." Looking back at the Putin era, I realize that very few of Belkovsky and his fellow experts' predictions came true. Last year, for example, they insisted that Putin was not going to run for reelection -- and they couldn't have been more wrong.

Putin clearly has a gift for surprise -- but just before the pardon announcement, Putin himself heard surprising news. Specifically, he found out just how bad life is getting for neglected Russian citizens. The president is, after all, woefully out of touch with what people from remote regions are going through, and what they want from their president.

On Thursday, Dec. 19, the president sat down for a four hour-long press conference, a sort of traditional psychotherapy session at the end of each year of his rule. Reporters came to Moscow from the most remote places to ask Putin to do something about unemployment in industrial towns, about the thousands of Russians in danger of freezing to death in Siberia for lack of heat, about the hunger strikes of desperate workers in the Far East. Putin's face looked more and more tired with each piece of bad news he heard.

"I'm not just unfamiliar with the details -- I know nothing at all about that problem," Putin said, seeming upset. 

When a reporter from Buryatia asked him about a local protest, he pierced her with a serious look. She pressed him to do something about the protest in her remote Siberian town of Selenginsk, by Lake Baikal. The town, which has a population of 15,000, was due to run out of coal in the middle of winter, when temperatures dropped down to -22 degrees Fahrenheit. In response, hundreds of protesters surrounded the local administration building for weeks, threatening to block the federal highway and "smash everything" if authorities did not address their problems. "I'm not just unfamiliar with the details -- I know nothing at all about that problem," Putin said, seeming upset.

If I ever have a chance to talk with President Putin, I would describe life in two of the "monotowns" near Selenginsk that I visited this fall. When major industries shuttered down, companies fired thousands of workers -- but in these one-industry towns, this left the town's citizens without any other options. Both Baikalsk and Vydrino sank into depression. In Baikalsk, the leader of the professional union, Yuriy Nabokov, believed that Putin was the only man who would be able to help his town and the hundreds of workers that were fired last September.

"But we wrote our desperate letters to Putin in vain. All our letters bounced back without the president's response," Nabokov said, frustrated.

It would be physically impossible for the president to read all of the desperate letters addressed to him, but I thought he might keep apprised of Russia's troubles by reading the news online. But when I asked Putin's close supporter and pro-Kremlin expert, Yuriy Krupnov, whether the president did this, he replied: "No, most of the depressing information is kept away from the president, who does not trust Internet news, so these annual press conferences are the only moments, the seconds of truth, when the president can look into the eyes of the people from troubled regions."

Putin's supporters are proud of Russia's non-drinking, non-smoking president, "Putin is free of digital addictions. You will never see an iPhone or iPad in his hands, the toys used by secret agencies to listen in on other presidents," the Duma deputy Mikhail Degtyarev said.

"The president receives news from his helpers and at events like the annual press conference. To those who still have doubts, I can confirm: Putin will rule Russia for 10 more years -- so expect quite a few more annual press conferences," the deputy added.

Maybe. But if there is one man who knows how Russian people have suffered for the past ten years, it's the one he just released from prison.