In the wake of the SCO’s (China’s regional club’s) humiliating refusal to back Russia (hat-tip to Dan Nexon), Russia responded to its growing international isolation by reducing the flow of energy to Europe.
Russiaâ€™s government may prompt at least one oil company to cut supplies of crude oil to Europe in response to the threats to impose sanctions in the wake of the conflict with Georgia.
It is rumored that supplies via Druzhba pipeline that meets oil requirements of Poland and Germany will be probably reduced and that the LUKOIL leadership has been given the notice.
The reduction might happen already starting from September 1, the sources speculate. People in LUKOIL, however, say they know nothing about the plans to cut down supplies, and people in the Kremlin declined to comment.
Two other news pieces for context: China has a new oil deal with Iraq, and even Sudan has refused to South Ossetia and Abkhazia.
The simplistic analysis is that Putin’s bumbling is just continuing, with his historical uniting of Serbia and Kosovo in condemnation of Russian attempt to redraw borders now leading to the genocidiers of Sudan in taking an anti-Russian line!
A better analysis goes back to the Core/Gap divide: Russia, like Sudan but unlike China, is a gap state.Â It creates no wealth, but provides energy that makes it easier for productive countries to generate wealth.Â Core energy-consumers, such as China, help develop the Gap and work towards peace in order to do business.Â Gap energy-providers, such as Russia, create chaos and extort wealth from the Core in order to pay for their eratic behavior.
Related: Europe looks like it will respond in a reasonable way. So good news for the Southern Energy Corridor, but news for Russia’s South Stream.