For decades Russia has wield its vast reserves of oil and gas as a political weapon. Despite being “privatized” after the collapse of the Soviet Union, Gazprom, the world’s largest producer of natural gas, functions as part of the Russian government. Europe’s dependence on Russian energy left the continent vulnerable and at the mercy of Kremlin policies. However, Russia is quickly learning that this strategy is a double edged sword. “Those same policies are making it difficult to maneuver, as Gazprom finds itself competing against a wide array of ever more deft and efficient private drillers and shippers in the natural gas industry” (Kramer). By overusing energy as leverage Moscow has encouraged European countries to look elsewhere for its energy needs. Furthermore, recent technological advances in the industry, such liquefied natural gas is providing a financially viable alternative to Russian gas.
While Gazprom has been one of Moscow’s most effective political tools, it’s also Russia’s Achilles heel. Energy exports account for the majority of the Russian state budget. Low energy prices coupled with Western sanctions over the Ukraine crisis has devastated Russia’s economy. The shale revolution in North America and possibly an unrestricted Iran has further depressed Gazprom’s market share. Today Russia’s cash strapped government is equally dependent on its European markets for revenue as these countries are dependent on Russian energy. Even in Russia’s tradition sphere of influence, Eastern Europe, the Kremlin is finding it increasingly difficult to advance its agenda. Unless Putin completely depoliticize Russia’s energy sector it will continue to be noncompetitive like the rest of its economy. Russia no longer has a monopoly on Europe’s energy sector; as such the Kremlin must act accordingly if it’s to survive in the global world.