Huffington Post: Putin's Pipeline Predicament

As Russia and Ukraine approach yet another confrontation over natural gas, the recent demise of Putin's flagship South Stream pipeline casts doubt on his strategic acumen.

In December 2014, Russian President Vladimir Putin surprised even Gazprom's close business partners by announcing that Russia would abandon the South Stream pipeline project. South Stream was Putin's strategic flagship project, a controversial pipeline through the Black Sea to South-Eastern Europe, and while its commercial profitability had always seemed questionable, few observers doubted that it would proceed.

Markets reacted to the news with a slight rise in Gazprom's stock, confirming the primarily strategic nature of the pipeline project. What the project reflects, instead, is a broader geoeconomic struggle between Russia and the EU in which economic means are used to advocate geopolitical goals.

In the aftermath of the Cold War in Europe in the 1990s, there was a widespread hope that liberalized commerce, especially in important strategic commodities such as natural gas, would become the cornerstone of a mutually beneficial and interdependent relationship between the two regional powers. As events unfolded, however, the natural gas trade evolved into a strategic playing field for power politics. Memories of the Russian cut-offs of gas to Ukraine in 2006 and 2009 are still fresh in the EU, heightening concern about energy security and attempts to utilize natural gas trade for political purposes.

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