Ukraine crisis: How to strike at Putin where it hurts

  • Article by: GLENN GARVIN , Miami Herald
  • Updated: March 4, 2014 - 6:22 PM

His strength is predicated on oil and gas exports. The U.S. can maneuver in those markets.

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In North Dakota’s Bakken region near Williston, fracking technology is used to extract natural gas and oil from the underlying shale formation.

Photo: JIM GEHRZ • Star Tribune file,

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Future historians may recall President Obama’s foreign policy as the Clash of the Clichés: Every time the president draws a red line, he winds up painting himself into the corner.

He did it with Syria, and now he’s done it with Ukraine. After Obama warned Russia to back off — “there will be consequences if people step over the line” — Vladimir Putin snorted in disdain and invaded the country anyway.

What are the consequences? None in sight. Neither the United States nor anyone else is going to get into a war over who controls Crimea. And if Obama proposes economic sanctions, he’ll find himself pretty much going it alone.

Russia, as the world’s third-largest producer of both oil and natural gas, is just too important for most countries to play economic hardball with. The Western European nations that are most dismayed by Putin’s adventuring in Ukraine are also the least able to do anything about it: More than a third of their natural gas is supplied by Russia.

Fortunately, Obama can bring crushing pressure to bear on Putin without risking a life or spending a penny. All he’s got to do is borrow a page from former President Ronald Reagan’s foreign-policy playbook.

Reagan’s military confrontations with Putin’s Soviet predecessors — the contras, the mujahedeen, Star Wars — are well-known. But his most effective policy is less-remembered: Reagan relentlessly jawboned Saudi Arabia to boost its oil production.

That increased supply and decreased prices, ripping the heart out of Moscow’s oil-export business and sending its already-shaky economy into a tailspin. Less than a decade later, the Soviet Union collapsed.

Obama can do the same thing to Putin, without even asking for help from Saudi Arabia. All he has to do is stop interfering with the U.S. production of natural gas through fracking and stop blocking construction of the Keystone XL oil pipeline.

Fracking — short for hydraulic fracturing, a process that frees natural gas by injecting pressurized liquids into the ground — has been around since the 1940s. But new technologies introduced over the past 15 years have made it cheaper and more effective. The result is a production boom that has cut natural-gas prices by as much as 75 percent.

The boom already has taken a huge bite out of the profits from Russia’s natural-gas exports. And it could do more if Obama would tell the Department of Interior to quit monkeying around with the regulations on fracking on the one-third of America’s natural-gas wells located on federal land.

The Keystone XL pipeline, meanwhile, would move 830,000 barrels of crude oil a day from Canada to Texas refineries, from where it would head outward onto world markets, offering another (and more politically stable) source of petroleum. When oil supplies go up, prices go down, and the Russians take a hit.

But Obama has been dragging his feet for years on approval of the pipeline, even after the latest of the hoops he set for approval — a State Department report on the pipeline’s environmental impact — gave it a clean bill of health.

The Canadians are not going to leave the oil in the ground; without Keystone, they’ll just build a pipeline to their own west coast — or, maybe, ship the oil via rail, a far more risky proposition. But that will take years. Why not leverage the pipeline’s foreign-policy value now?

Oil and gas exports have been Putin’s salvation. They grew to be 70 percent of Russia’s exports and funded 7 percent annual economic growth. The burgeoning Russian middle class, in return, was willing to overlook Putin’s antidemocratic quirks. If the good times end, so will his support.

Ronald Reagan would have figured that out.

Will Obama?

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