The overwhelming majority of Russia’s population lives in the western regions near the border with Europe and the Black Sea. Cultural and economic ties with Mediterranean countries have been crucial for Moscow to exert influence and regain superpower status. The stagnation of Russia’s economic development is a serious impediment to its ambition. However, Moscow has skillfully exploited the few resources and advantages it has to maintain its position with several influential countries.
Doing more with less
Russia has been isolated from the West since it invaded Crimea, which has led to economic and diplomatic sanctions. Despite souring relations with the West, Moscow has managed to reverse some of the geopolitical ‘losses’ by extending its influence in the Mediterranean. Support for Assad’s Syria created a permanent foothold for the Russian army in the region, while economic and diplomatic relations with other littoral states are being pursued.
The tools at Moscow’s disposal are focused on two industries where it still has an edge: energy and the defense sector. These resources have been skillfully applied with three influential Mediterranean States: Algeria, Egypt, and Turkey. Except for their majority Sunni Muslim societies, these countries are very different from a political point of view. Moscow, however, has been able to cultivate ties that serve its interests and extend its influence in the region.
Russia’s energy sector is especially important for maintaining economic relations. With the world’s largest natural gas reserves and significant oil exporters, Moscow remains an important factor in the global economy. Furthermore, significant technical and scientific capabilities in the defense and energy sectors are major assets in negotiations as there is something to offer to potential customers.
Russian energy exports to Turkey are substantial due to the latter’s negligible domestic production. In addition, Gazprom, a state-controlled company, has been very assertive in constructing new pipelines to Turkey. Despite the imports of natural gas from Azerbaijan and Iran, Gazprom’s position is unparalleled due to its sizeable capacity compared to competitors.
In the case of Egypt, with substantial natural gas reserves of itself, Russian companies have been able to gain a foothold. State-controlled Rosneft owns up to 35 percent of the giant Zohr gas field and Cairo's nuclear ambition has provided another opportunity. State-controlled Rosatom is constructing the Arab country’s first nuclear power plant. The $30 billion facility is built with a $25 billion loan from Russia and will provide 4,800 MW of electricity starting from 2030. In Turkey, Rosatom is engaged in a similar project where the country’s first nuclear power plant is being constructed at Akuyyu.
Furthermore, Russia has become an alternative arms dealer for these countries. The drive towards modernization and significant investments in the Russian defense industry has produced high-quality products that can compete with western peers. In the case of Algeria, Moscow’s market share was already significant during Soviet times. Russia has also provided Turkey and Egypt with advanced weapons, a NATO ally and a major recipient of Western arms under Mubarak respectively. In some cases, such as Turkey’s acquisition of the S-400 air defense system, the additional effect of Ankara falling out with Western partners was a perk.
Although Moscow has had some success in exerting influence in the Mediterranean, its potential is limited in the long term. In most cases, Russian state-controlled energy and defense companies have been able to exploit weaknesses such as Western concerns of Egypt’s human rights record and Turkey’s increasingly belligerent foreign policy.
Furthermore, Russia has been outflanked by the U.S., EU, and China in other cases. Moscow is not able to offer the same range and quality of alternative elements of statecraft such as development aid and diplomacy.
First, bilateral trade between Russia and most Mediterranean countries is relatively low. Second, investments from Russia in most littoral states are negligible. Third, Moscow does not provide the same level of development assistance as do the West or China.
In most cases, Russia is the second or third choice as relations with economic and political powerhouses in the West and Asia have more to offer. With the energy transition, the probability that oil and gas sales will diminish in the near future is becoming a reality which threatens Russia's economic future. Therefore, Moscow’s influence in the Mediterranean remains uncertain in the long run.
By Vanand Meliksetian for Oilprice.com
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Energy transition won’t succeed without huge contributions of natural gas and nuclear energy. A case in point is Germany which is a forerunner of global energy transition and still it is being forced to use increasing volumes of coal to meet electricity demand since renewables on their own can’t satisfy that demand.
And with a growing world population projected to grow from 7.9 billion currently to 9.7 billion by 2050 and a rising global GDP from $91 trillion now to a projected $265 trillion by 2050 according to data from both the World Bank and the IMF, global demand for fossil fuels will continue rising well into the future with net-zero emissions no more than a myth.
Russia has flourished against the most atrocious and intrusive US sanctions since 2014 and is projected to grow this year at 3.8%. Moreover, its GDP in 2021 is estimated at $4.32 trillion based on purchasing power parity (PPP) making it the world’s sixth largest economy.
As for its influence in the Mediterranean, its presence in Syria despite all the military and political manoeuvring by the United States and a few other countries speaks volumes of its growing influence in the area. Moreover, Russia recently scored an outstanding victory against the United States in the battle for the Nord Stream 2 gas pipeline. The pipeline is a fait accompli.
Russia is the world’s superpower of energy with far greater influence over the global oil market and prices than the United States. It is the world’s largest producer of crude oil and the largest exporter of natural gas the demand for both of which will continue to rise throughout the 21st century and far beyond. Its association with OPEC+ has given it a huge sway in the global oil market.
Moreover, it is wedded to China, the world’s largest economy based on PPP and also the largest consumer of primary energy. Its strategic alliance with China has enhanced its global influence particularly in the Gulf region and the Mediterranean.
Last but not least it is led by President Putin who is, in my opinion, the most astute strategist on the international stage. He is leading the renaissance of Russia to levels not seen since the former Soviet Union.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London