Context

As the RUSSO-BLOCK steps up its military action in Ukraine, the alliance of countries opposed to the invasion – 73% of the UN Assembly (Resolution 68/262) – seek to avoid direct involvement through increasing economic sanctions. The main untapped target are oil and gas imports from Russia that provide a daily income to the RUSSO-BLOCK regime of ca. $0.5bn/day. But this is not an easy option to exercise.

Dependency on Russia, whether for arms (notably, India and South Africa) or for commodities (e.g. Palladium – 40% of all mined production) was a central plank of the RUSSO-BLOCK’s long-term strategy for regaining control over former USSR states such as Ukraine.

In the case of energy, the main ‘dependant’ is the EURO-BLOCK – as the figure below shows (Eurostat 2020)

[It is worth noting, for the future, that the RUSSO-BLOCK has also begun to build dependency into its relation with the SINO-BLOCK through the commissioning of the Power of Siberia 1 in 2019 and the, as yet approved, Power of Siberia 2, running through Mongolia].

In contrast, the EURO-BLOCK’s other main military partners – US and UK – are relatively free from Russian Oil and Gas dependence. This makes Secretary of State Blinken’s idea (FT 7/3/22) to cut oil and gas supplies, domestically easy for the AM-BLOCK to propose but difficult for the EURO-BLOCK to accept. The immediate cessation of the oil and gas supplies from Russia, would plunge the EURO-BLOCK into recession and greatly heighten tensions throughout Europe.

The immediate termination of Russian oil and gas is the ‘economic’ equivalent of the nuclear option that the RUSSO-BLOCK leader has recently threatened to use, militarily, on a number of occasions (Guardian 27/2/22). The added fear is that a cessation of oil and gas imports may well provoke an even more violent response from the increasingly isolated RUSSO-BLOCK regime.

How should the world respond? The figure below shows the characteristic response of the four, segmented worlds. (see Dialogues in thesegmentedworld.com website)

Blinken’s proposal resembles the response of the ANXIOUS WORLD – a ‘quick fix’ to relieve the understandable anxiety we all feel for the barbarity of the RUSSO-BLOCK military.

In the past few days, an EMERGENT WORLD-type response has been suggested by a group of London-based oil and gas experts that deserves careful attention by AM-Block and EURO-Blocks leaders.

It is proposed that all governments opposed to the RUSSO-BLOCK’s actions would impose a levy on all importers of Russian Oil and Gas. as an alternative to a full embargo. The monies received would be placed in escrow accounts to be be used for humanitarian aid and the eventual rebuilding of Ukraine. It is a form of ‘live reparations’, with the size of the levy being adjusted according to the intensity of the RUSSO-BLOCK actions. The importing companies would pass on the cost of the levy (plus administration) through a discount that would be a condition of sale with the Russian producer. The scheme has the merit by not only placing a direct economic price on escalation but also to ensure – important for the highly dependent EURO-BLOCK – the continued flow of energy. For abstaining nations, trying to take advantage of the scheme by buying, non-levied, discounted Russian contracts, there would have to a concerted effort to deter such trades through sanctions on related parties (insurance, banks, ship owners etc.)  to such transactions.

This is a typical EMERGENT WORLD-type solution: hard-nosed but realistic. It may not neutralise the visceral disgust every civilised human being has in response to the brutality of the RUSSO-BLOCK regime, but it directs significant economic pain (through ‘live reparations’) on the aggressor while inflicting minimal damage on the opposing EURO-BLOCK.

What will the civilised world do? Will it be level-headed or emotional? We only have to go back three months to COP 26, when a similar problem confronted the world. Phase out or phase down coal usage was what confronted delegates (see the segmentedworld.com Dialogues). Then, common sense prevailed, adopting a ‘phase down’ approach. A few months later, even more realism – with natural gas being adopted as an acceptable, ‘continuous’ transition fuel by the EURO-BLOCK – among many others (see Segmented World Blog dated 20/12/21)

Now, what will be the choice of those opposing the RUSSO-BLOCK aggression. An ANXIOUS WORLD or an EMERGENT WORLD response?

In decisions like this the future direction of our world will be determined.

David Nash

7/3/22