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Engaging Russia: Energy Could Still Be the Answer

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Vice President Biden broke the ice with Russia at the Munich Security Conference. It is time, he said, "to revisit the many areas where we can and should be working together" and it seems that Secretary of State Clinton will soon follow up by meeting her Russian counterpart Sergei Lavrov to talk about engaging on "all levels." These are heady words after a period when US Russian relations had reached their lowest point since the fall of the Soviet Union. But where should Washington reengage with Moscow?

It would be nice to find some of the President Obama's "change we need" in the answer. Yet most the areas proposed by the pundits relate to security issues, exactly where East-West relations played out during Cold War days. Thus arms control, especially the resumption of Start negotiations to reduce nuclear arsenals, and non-proliferation which includes thwarting Iran's nuclear ambitions, are high up on Clinton's "to do" list. Support for US operations in Afghanistan and cooperation with counter terrorism efforts are also in there.

One unlikely candidate for the list, however, is energy. Russia's abrupt cut-off of gas to East and Central Europe in January, the result of an annual price war with Ukraine, set off alarm bells in the West as it did during a similar crisis in 2006. Although this time Ukraine received its share of the blame, Russia was still routinely vilified for starting "an energy cold war" ostensibly to punish Ukraine for wanting to join NATO. So when it comes to engagement with Russia, energy is not the word that comes to mind.

It is rather the opposite. Europe is strongly advised to bypass Russia; diversify gas sources and find alternative gas transit routes. Thus when Prime Minister Putin came to Davos shortly after the gas crisis, the considerable part of his speech devoted to energy issues, with detailed discussion about oil and gas pipelines, was largely ignored. Senator Richard Lugar made it clear during Clinton's confirmation hearings that energy was a NATO security matter. He recalled his warning in 2006 that a natural gas cut off in mid winter causing deaths and industrial damage was as severe a violation of "NATO's Article 5" (that an attack on one member is an attack on all) as a military invasion. Like a disappointed parent he chided the Europeans for dawdling on alternative pipeline projects, specifically the Nabucco Pipeline backed by the US "to help our NATO partners or our EU partners". and he lamented that "the Europeans have not dealt with it very positively". In Munich Biden reportedly reaffirmed that Europe's energy security means skirting Russia's oil and gas. There is no doubt about the message. When it comes to gas, snub Russia and look for supplies from Azerbaijan, Kazakhstan, Turkmenistan and maybe some day, Iran -- all touted as more attractive and more reliable energy partners

But the fact is that. even if these alternative sources and routes turn out to be realistic, Moscow's Gazprom will remain Europe's key gas supplier for the foreseeable future. Rather than running away from the problem the US should recognize that it is stuck with Russia for Europe's gas imports and, lest we forget, for a third of its oil. The Europeans know this, not only the big players in Germany, France and Italy, but also companies in Netherlands and UK where Gazprom is seeking to extend its tentacles. Many have been in the gas business with Russia since Soviet times. Their primary concern is that Russia remain a reliable energy supplier.

That should be Washington's main worry as well. Here is the change that the new US administration can bring: to look again at the potential for energy cooperation between Russia and the United States. In Putin's early years, between 2001 and 2003, a US-Russia Energy Dialogue was set up in the hope that US technology and investment in Russian oil and gas could lead to a productive partnership. Although the project was derailed, its original premise is still correct. Russia needs Western know-how and financing to exploit its vast energy resources. The United States, the world's largest oil consumer, needs new energy suppliers until such time as more progress is made in weaning the country away from foreign oil. The oil industry is eager. The chairmen of Western energy behemoths came to the St Petersburg economic forum in 2007 and in 2008 for private meetings with Vladimir Putin and Dimitri Medvedev. Most recently US Undersecretary of State William Burns expressed interest in a sustained energy dialogue with Russia. Every effort should be made to resume that discussion which could become the linchpin of a renewed US-Russian relationship.