Putin's Evolving Strategy in Europe

This week, Vladimir Putin was sworn in for a third term as Russian president, and France's presidential election continued the trend of losses for incumbent European governments when French President Nicolas Sarkozy lost to socialist challenger Francois Hollande. Putin's return to the presidency was not unexpected; he was never really unseated as Russia's leader even during Dmitri Medvedev's presidency. Nevertheless, the changes in Europe exemplified by the French presidential election will require Russia to change its tactics in Europe.

Putin's Plans for Russia and Beyond

Russia has been on the path to resurgence since Putin won the presidency in 1999. He inherited a broken, weak and chaotic Russia. As Stratfor has noted over the years, Putin did not seek to re-create the Soviet Union. He is a student of geopolitics, and he understands Russia's constraints and the overreaching that led to the fall of the Soviet Union. Putin's mission was to return Russia to stability and security -- a massive undertaking for the leader of a country that not only is the world's largest but also is internally diverse and surrounded by potentially hostile powers.

During his first presidential term, Putin launched a comprehensive series of reforms that recentralized power over the Russian regions, cracked down on militancy in the Russian Caucasus, purged the oligarch class and centralized the economy and political system. Putin implemented an autocratic regime and used the military and Russia's security apparatus (including the Federal Security Service), following the example of previous leaders, from the czars to the Soviet rulers. Putin's maneuvers were the natural evolution of how a successful leader rules Russia.

With Russia strong and steady, Putin was able to focus on his country's near abroad. However, the countries surrounding Russia were hostile to the Kremlin's view, with NATO and the European Union pushing ever closer to Russia's borders and forming partnerships with numerous former Soviet states. The czars and Soviet rulers used two primary tactics to counter such a situation.

The first tactic was to mobilize Russia's military to push out foreign influence, whether directly (as Moscow has done with Georgia) or indirectly (by forging military alliances with former Soviet states such as Belarus and Kazakhstan). Although Putin's Russia could do this for one or two countries, it could not use this tactic everywhere in its periphery.

The second tactic was to create alliances of convenience in Europe to help Moscow divide pan-European and NATO expansion and sentiment against Russia while bolstering Russia economically, financially and technologically. Czarist Russia made such arrangements with the United Kingdom during the Napoleonic Wars and with France ahead of World War I, and Soviet leaders formed an alliance of convenience with Germany ahead of World War II. It is not that Russia ever trusted any of these countries (or vice versa), but the Russian and European leaderships shared an inherent understanding that certain alliances are necessary to shape the dynamics on the Continent.

During Putin's era, Russia set its sights on what it considered three of the four premier European powers: Germany, France and Italy. The Kremlin considers the United Kingdom the fourth main power, but London's firm and traditional alliance with the United States has made it resistant to Russia's overtures. The Kremlin saw Germany, France and Italy as the countries holding the economic, political and military heft that, if unified within Western alliance structures, could oppose Russia in Europe. In order to forge partnerships with these countries, Putin built relationships with their rulers.

Putin's Personal Approach

Germany was Russia's natural first choice for a partnership; not only is it the core of Europe, but it is also the European state that the Kremlin fears most. Moreover, Putin has an affinity for Germany that dates back to his days with the KGB, when he was stationed in Dresden, Germany. In the early 2000s, Putin was able to use his fluency in German to develop a strong friendship with then-German Chancellor Gerhard Schroeder. Schroeder saw the relationship first as an economic opportunity, since Russia is the world's largest energy producer and exporter and also a place for potential heavy investment.

During Schroeder's chancellorship, trade between Germany and Russia boomed, and Russia gave Germany special benefits as an energy partner. Germany -- in accordance with Putin's plan -- began supporting Russia's position in Europe on specific strategic issues. Schroeder's Germany was alone among Western governments in not vociferously supporting Ukraine's Orange Revolution in 2004-2005. Schroeder also led European opposition to U.S. efforts to begin the NATO accession process for Ukraine and Georgia.

As his friendship with Putin grew, Schroeder purchased an estate outside Moscow near Putin's home and even sought Putin's assistance in adopting two Russian children. Schroeder's ejection from office in 2005 did not end their friendship -- or Schroeder's usefulness to Putin. Despite widespread German criticism, even from Schroeder's own party, the former chancellor accepted a position with Russian state natural gas firm Gazprom to lead the Nord Stream project, a pipeline designed specifically to maximize Russia's energy leverage over Belarus, Ukraine and Poland.

Having created a strong relationship with Berlin, Putin established a similar relationship with France's then-President Jacques Chirac. France's position is different from Germany's in that France is not connected economically or politically with Russia. However, Paris understands the history of strong Berlin-Moscow ties and what those mean for all of Europe. France thus has an interest in making sure it is not left out when Russia and Germany meet. The relationship between Chirac and Putin took this a step further.

At the beginning of their relationship, Putin and Chirac allied politically against the U.S.-led war in Iraq. This was important to Moscow because it undermined NATO's unity on a critical issue. More important for Russia's interests, Chirac lobbied against NATO's expansion to include the Baltic states of Estonia, Latvia and Lithuania. The Baltics were admitted despite Chirac's objections, and when the next NATO summit occurred -- in Latvia -- Chirac invited Putin to the meeting as his guest.

Putin was close friends with the French and German leaders, but he was like a brother to Italy's then-Prime Minister Silvio Berlusconi. This relationship was more personal, because Italy was not as strategic (or threatening) as the other two European powers. Putin and Berlusconi vacationed together, spent birthdays together and bought each other expensive gifts. In 2011, when Berlusconi was on trial for sexual improprieties, Putin publically defended his friend, saying the allegations were "made out of envy." The Putin-Berlusconi friendship led torelationships between Russian and Italian energy companies, banks and military industrial projects. Most notable, Putin was able to use his relationship with Berlusconi to get Gazprom access to Italian state-linked energy giant ENI's assets throughout North Africa, particularly in Libya.

Putin's personal connections with Germany, France and Italy did not change with the leadership shifts in each country from 2005 to 2007, nor did they change when Putin left the presidential spotlight to become prime minister in 2008. Putin used the momentum built under the previous governments to forge relationships -- even if not as personal -- with German Chancellor Angela Merkel, French President Nicolas Sarkozy and (for a time) Italy's then-Prime Minister Romano Prodi. Putin's circle of friends and associates helped him shape some of Russia's most important strategies in Europe: complicating NATO expansion, pushing Moscow's agenda with NATO, expanding military relationships and becoming capable of invading Georgia without European or NATO intervention. It is not that all of this was possible because of Putin's personal relationships with the leaders of Italy, France and Germany, but those connections facilitated many of the deals that made Russia's progress possible.

Changes Across Europe

As Putin returns to the presidency, he faces a very different Europe -- one in which nearly all of his close friends are out of power. As prime minister, Putin focused on Russia's internal issues while Europe became embroiled in a political and financial crisis that has affected the Continent as a whole. Europe is not as concerned as it once was with the wider world (including Russia). Instead, each state is focused on keeping itself -- and some form of the European alliance -- intact.

Voters have ejected two of the three Russian-friendly European governments during these crises. Berlusconi and his political machine were forced from power in favor of technocrat and now Prime Minister Mario Monti. Monti lacks the political mandate or the will to become involved in geopolitical alignments like a close relationship with Russia. France's Chirac has retired from politics, and Sarkozy was voted out of office the day before Putin was inaugurated. France's Hollande surrounds himself with politicians who have not been in government at any point when Putin was in charge in Russia. This leaves Merkel, whose ties with Putin are the weakest in the Russian leader's European circle. Furthermore, Merkel is concerned with holding Europe together, leaving little time or interest for Russia's plans for Europe.

Thus, Putin's tactic of using personal relationships to help strengthen Russia's position in Europe seems to be outdated. The French and Italian governments are still young, so Putin could try to build relationships with Hollande and Monti. But, like Germany, France and Italy are more interested in what is happening in Europe than in Russia.

This new attitude toward Russia already has surfaced in Rome. In the first talks between the new Italian government and the Russian government, Italian President Giorgio Napolitano made it clear that the Moscow-Rome relationship would undergo a "depersonalization." The first evidence of this was Italy's embrace of U.S. ballistic missile defense plans for Europe. Italy -- like France -- long supported Russia's position on missile defense in Europe. Although this did not prevent Washington from moving forward with its plans, it did create disagreements within NATO. Italy's shift toward unity with NATO and the United States comes just before what was to be a NATO-Russia summit in Chicago, but Russia has been disinvited.

The changes in Europe's leadership and focus come amid Russia's adjustments to other new dynamics in Europe. Before the Continent's financial and political crises, Russia had forged a new strategy for foreign policy regarding Europe in which strategic European partners -- especially Germany, France and Italy -- would invest heavily in Russia's economy and financial sector. With Europe nearly broke, however, this strategy has been cut back and could be abandoned altogether. Russia is proceeding with European partners on some projects, but Moscow must financially step up more than it anticipated for these projects to succeed. It is an expensive foreign policy choice.

Russia's main goal regarding Europe is to keep European powers divided while extracting what Moscow wants financially and technologically. The days have passed when Putin could call a friend in Europe to help with NATO or with technological deficiencies. Russia has to design a new strategy to deal with a very different Europe and adhere to its deeper imperatives rather than rely on personal and political relationships, which are fleeting compared to the forces of geopolitics. 

Britain's Strategy

Britain controlled about one-fourth of the Earth's land surface and one-fifth of the world's population in 1939. Fifty years later, its holdings outside the British Isles had become trivial, and it even faced an insurgency in Northern Ireland.

Britain spent the intervening years developing strategies to cope with what poet Rudyard Kipling called its "recessional," or the transient nature of Britain's imperial power. It has spent the last 20 years defining its place not in the world in general but between continental Europe and the United States in particular.

The Rise of Britain

Britain's rise to its once-extraordinary power represented an unintended gift from Napoleon. It had global ambitions before the Napoleonic Wars, but its defeat in North America and competition with other European navies meant Britain was by no means assured pre-eminence. In Napoleon's first phase, France eliminated navies that could have challenged the British navy. The defeat of the French fleet at Trafalgar and the ultimate French defeat at Waterloo then eliminated France as a significant naval challenger to Britain for several generations.

This gave Britain dominance in the North Atlantic, the key to global power in the 19th century that gave control over trade routes into the Indian and Pacific oceans.

This opportunity aligned with economic imperatives. Not only was Britain the dominant political and military power, it also was emerging as the leader in the Industrial Revolution then occurring in Europe. Napoleon's devastation of continental Europe, the collapse of French power and the underdevelopment of the United States gave Britain an advantage and an opportunity. 

As a manufacturer, it needed raw materials available only abroad, markets to absorb British production and trade routes supported by strategically located supply stations. The British Empire was foremost a trading bloc. Britain resisted encroachment by integrating potential adversaries into trade relationships with the empire that they viewed as beneficial. In addition, the colonies, which saw the benefits of increased trade, would reinforce the defense of the empire. 

As empires go, Britain resembled Rome rather than Nazi Germany. Though Rome imposed its will, key groups in colonial processions benefitted greatly from the relationship. Rome was thus as much an alliance as it was an empire. Nazi Germany, by contrast, had a purely exploitative relationship with subject countries as a result of war and ideology. Britain understood that its empire could be secured only through Roman-style alliances. Britain also benefitted from the Napoleonic Wars' having crippled most European powers. Britain was not under military pressure for most of the century, and was not forced into a singularly exploitative relationship with its empire to support its wars. It thus avoided Hitler's trap.

The German and U.S. Challenges

This began to change in the late 19th century with two major shifts. The first was German unification in 1871, an event that transformed the dynamics of Europe and the world. Once unified, Germany became the most dynamic economy in Europe. Britain had not had to compete for economic primacy since Waterloo, but Germany pressed Britain heavily, underselling British goods with its more efficient production. 

The second challenge came from the United States, which also was industrializing at a dramatic pace -- a process ironically underwritten by investors from Britain seeking higher returns than they could get at home. The U.S. industrial base created a navy that surpassed the British navy in size early in the 20th century. The window of opportunity that had opened with the defeat of Napoleon was closing as Germany and the United States pressed Britain, even if in an uncoordinated fashion.

The German challenge culminated in World War I, a catastrophe for Britain and for the rest of Europe. Apart from decimating a generation of men, the cost of the war undermined Britain's economic base, subtly shifting London's relationship with its empire. Moreover, British power no longer seemed inevitable, raising the question among those who had not benefitted from British imperialism as to whether the empire could be broken. Britain became more dependent on its empire, somewhat shifting the mutuality of relations. And the cost of policing the empire became prohibitive relative to the benefits. Additionally, the United States was emerging as a potential alternative partner for the components of the empire -- and the German question was not closed.

World War II, the second round of the German war, broke Britain's power. Britain lost the war not to Germany but to the United States. It might have been a benign defeat in the sense that the United States, pursuing its own interests, saved Britain from being forced into an accommodation with Germany. Nevertheless, the balance of power between the United States and Britain completely shifted during the war. Britain emerged from the war vastly weaker economically and militarily than the United States. Though it retained its empire, its ability to hold it depended on the United States. Britain no longer could hold it unilaterally. 

British strategy at the end of the war was to remain aligned with the United States and try to find a foundation for the United States to underwrite the retention of the empire. But the United States had no interest in this. It saw its primary strategic interest as blocking the Soviet Union in what became known as the Cold War. Washington saw the empire as undermining this effort, both fueling anti-Western sentiment and perpetuating an economic bloc that had ceased to be self-sustaining.

From Suez to Special Relationship

The U.S. political intervention against the British, French and Israeli attack on Egypt in 1956, which was designed to maintain British control of the Suez Canal, marked the empire's breaking point. Thereafter, the British retreated strategically and psychologically from the empire. They tried to maintain some semblance of enhanced ties with their former colonies through the Commonwealth, but essentially they withdrew to the British Isles. 

As it did during World War II, Britain recognized U.S. economic and military primacy, and it recognized it no longer could retain their empire. As an alternative, the British aligned themselves with the U.S.-dominated alliance system and the postwar financial arrangements lumped together under the Bretton Woods system. The British, however, added a dimension to this. Unable to match the United States militarily, they outstripped other American allies both in the quantity of their military resources and in their willingness to use them at the behest of the Americans.

We might call this the "lieutenant strategy." Britain could not be America's equal. However, it could in effect be America's lieutenant, wielding a military force that outstripped in number -- and technical sophistication -- the forces deployed by other European countries. The British maintained a "full-spectrum" military force, smaller than the U.S. military but more capable across the board than militaries of other U.S. allies. 

The goal was to accept a subordinate position without being simply another U.S. ally. The British used that relationship to extract special concessions and considerations other allies did not receive. They also were able to influence U.S. policy in ways others couldn't. The United States was not motivated to go along merely out of sentiment based on shared history, although that played a part. Rather, like all great powers, the United States wanted to engage in coalition warfare and near warfare along with burden sharing. Britain was prepared to play this role more effectively than other countries, thereby maintaining a global influence based on its ability to prompt the use of U.S. forces in its interest.

Much of this was covert, such as U.S. intelligence and security aid for Britain during the Troubles in Northern Ireland. Other efforts were aimed at developing economic relationships and partnerships that might have been questionable with other countries but that were logical with Britain. A good example -- though not a very important one -- was London's ability to recruit U.S. support in Britain's war against Argentina in the Falkland Islands, also known as the Malvinas. The United States had no interests at stake, but given that Britain did have an interest, the U.S. default setting was to support the British. 

There were two dangers for the British in this relationship. The first was the cost of maintaining the force relative to the benefits. In extremis, the potential benefits were great. In normal times, the case easily could be made that the cost outstripped the benefit. The second was the danger of being drawn so deeply into the U.S. orbit that Britain would lose its own freedom of action, effectively becoming, as some warned, the 51st state.

Britain modified its strategy from maintaining the balance of power on the Continent to maintaining a balance between the United States and Europe. This allowed it to follow its U.S. strategy while maintaining leverage in that relationship beyond a wholesale willingness to support U.S. policies and wars. 

Britain has developed a strategy of being enmeshed in Europe without France's enthusiasm, at the same time positioning itself as the single most important ally of the only global power. There are costs on both sides of this, but Britain has been able to retain its options while limiting its dependency on either side.

As Europe increased its unity, Britain participated in Europe, but with serious limits. It exercised its autonomy and did not join the eurozone. While the United States remains Britain's largest customer for exports if Europe is viewed as individual countries, Europe as a whole is a bigger customer. Where others in Europe, particularly the Germans and French, opposed the Iraq war, Britain participated in it. At the same time, when the French wanted to intervene in Libya and the Americans were extremely reluctant, the British joined with the French and helped draw in the Americans.

Keeping its Options Open

Britain has positioned itself superbly for a strategy of waiting, watching and retaining options regardless of what happens. If the European Union fails and the European nation-states re-emerge as primary institutions, Britain will be in a position to exploit the fragmentation of Europe to its own economic and political advantage and have the United States available to support its strategy. If the United States stumbles and Europe emerges more prominent, Britain can modulate its relationship with Europe at will and serve as the Europeans' interface with a weakened United States. If both Europe and the United States weaken, Britain is in a position to chart whatever independent course it must.

The adjustment British Prime Minister Winston Churchill made in 1943 when it became evident that the United States was going to be much more powerful than Britain remains in place. Britain's willingness to undertake military burdens created by the United States over the last 10 years allows one to see this strategy in action. Whatever the British thought of Iraq, a strategy of remaining the most reliable ally of the United States dictated participation. At the same time, the British participated deeply in the European Union while hedging their bets. Britain continues to be maintaining its balance, this time not within Europe, but, to the extent possible, between Europe and the United States.

The British strategy represents a classic case of a nation accepting reversal, retaining autonomy, and accommodating itself to its environment while manipulating it. All the while Britain waits, holding its options open, waiting to see how the game plays out and positioning itself to take maximum advantage of its shifts in the environment.

It is a dangerous course, as Britain could lose its balance. But there are no safe courses for Britain, as it learned centuries ago. Instead, the British buy time and wait for the next change in history.

The India-China Rivalry

As the world moves into the second decade of the 21st century, a new power rivalry is taking shape between India and China, Asia's two behemoths in terms of territory, population and richness of civilization. India's recent successful launch of a long-range missile able to hit Beijing and Shanghai with nuclear weapons is the latest sign of this development.

This is a rivalry born completely of high-tech geopolitics, creating a core dichotomy between two powers whose own geographical expansion patterns throughout history have rarely overlapped or interacted with each other. Despite the limited war fought between the two countries on their Himalayan border 50 years ago, this competition has relatively little long-standing historical or ethnic animosity behind it.

The signal geographical fact about Indians and Chinese is that the impassable wall of the Himalayas separates them. Buddhism spread in varying forms from India, via Sri Lanka and Myanmar, to Yunnan in southern China in the third century B.C., but this kind of profound cultural interaction was the exception more than the rule.

Moreover, the dispute over the demarcation of their common frontier in the Himalayan foothills, from Kashmir in the west to Arunachal Pradesh in the east, while a source of serious tension in its own right, is not especially the cause of the new rivalry. The cause of the new rivalry is the collapse of distance brought about by the advance of military technology.

Indeed, the theoretical arc of operations of Chinese fighter jets at Tibetan airfields includes India. Indian space satellites are able to do surveillance on China. In addition, India is able to send warships into the South China Sea, even as China helps develop state-of-the-art ports in the Indian Ocean. And so, India and China are eyeing each other warily. The whole map of Asia now spreads out in front of defense planners in New Delhi and Beijing, as it becomes apparent that the two nations with the largest populations in the world (even as both are undergoing rapid military buildups) are encroaching upon each other's spheres of influence -- spheres of influence that exist in concrete terms today in a way they did not in an earlier era of technology.

And this is to say nothing of China's expanding economic reach, which projects Chinese influence throughout the Indian Ocean world, as evinced by Beijing's port-enhancement projects in Kenya, Pakistan, Sri Lanka, Bangladesh and Myanmar. This, too, makes India nervous.

Because this rivalry is geopolitical -- based, that is, on the positions of India and China, with their huge populations, on the map of Eurasia -- there is little emotion behind it. In that sense, it is comparable to the Cold War ideological contest between the United States and the Soviet Union, which were not especially geographically proximate and had little emotional baggage dividing them.

The best way to gauge the relatively restrained atmosphere of the India-China rivalry is to compare it to the rivalry between India and Pakistan. India and Pakistan abut one another. India's highly populated Ganges River Valley is within 480 kilometers (300 miles) of Pakistan's highly populated Indus River Valley. There is an intimacy to India-Pakistan tensions that simply does not apply to those between India and China. That intimacy is inflamed by a religious element: Pakistan is the modern incarnation of all of the Muslim invasions that have assaulted Hindu northern India throughout history. And then there is the tangled story of the partition of the Asian subcontinent itself to consider -- India and Pakistan were both born in blood together.

Partly because the India-China rivalry carries nothing like this degree of long-standing passion, it serves the interests of the elite policy community in New Delhi very well. A rivalry with China in and of itself raises the stature of India because China is a great power with which India can now be compared. Indian elites hate when India is hyphenated with Pakistan, a poor and semi-chaotic state; they much prefer to be hyphenated with China. Indian elites can be obsessed with China, even as Chinese elites think much less about India. This is normal. In an unequal rivalry, it is the lesser power that always demonstrates the greater degree of obsession. For instance, Greeks have always been more worried about Turks than Turks have been about Greeks.

China's inherent strength in relation to India is more than just a matter of its greater economic capacity, or its more efficient governmental authority. It is also a matter of its geography. True, ethnic-Han Chinese are virtually surrounded by non-Han minorities -- Inner Mongolians, Uighur Turks and Tibetans -- in China's drier uplands. Nevertheless, Beijing has incorporated these minorities into the Chinese state so that internal security is manageable, even as China has in recent years been resolving its frontier disputes with neighboring countries, few of which present a threat to China.

India, on the other hand, is bedeviled by long and insecure borders not only with troubled Pakistan, but also with Nepal and Bangladesh, both of which are weak states that create refugee problems for India. Then there is the Maoist Naxalite insurgency in eastern and central India. The result is that while the Indian navy can contemplate the projection of power in the Indian Ocean -- and thus hedge against China -- the Indian army is constrained with problems inside the subcontinent itself.

India and China do play a great game of sorts, competing for economic and military influence in Nepal, Bangladesh, Myanmar and Sri Lanka. But these places are generally within the Greater Indian subcontinent, so that China is taking the struggle to India's backyard.

Just as a crucial test for India remains the future of Afghanistan, a crucial test for China remains the fate of North Korea. Both Afghanistan and North Korea have the capacity to drain energy and resources away from India and China, though here India may have the upper hand because India has no land border with Afghanistan, whereas China has a land border with North Korea. Thus, a chaotic, post-American Afghanistan is less troublesome for India than an unraveling regime in North Korea would be for China, which faces the possibility of millions of refugees streaming into Chinese Manchuria.

Because India's population will surpass that of China in 2030 or so, even as India's population will get gray at a slower rate than that of China, India may in relative terms have a brighter future. As inefficient as India's democratic system is, it does not face a fundamental problem of legitimacy like China's authoritarian system very well might.

Then there is Tibet. Tibet abuts the Indian subcontinent where India and China are at odds over the Himalayan borderlands. The less control China has over Tibet, the more advantageous the geopolitical situation is for India. The Indians provide a refuge for the Tibetan Dalai Lama. Anti-Chinese manifestations in Tibet inconvenience China and are therefore convenient to India. Were China ever to face a serious insurrection in Tibet, India's shadow zone of influence would grow measurably. Thus, while China is clearly the greater power, there are favorable possibilities for India in this rivalry.

India and the United States are not formal allies. The Indian political establishment, with its nationalistic and leftist characteristics, would never allow for that. Yet, merely because of its location astride the Indian Ocean in the heart of maritime Eurasia, the growth of Indian military and economic power benefits the United States since it acts as a counter-balance to a rising Chinese power; the United States never wants to see a power as dominant in the Eastern Hemisphere as it itself is in the Western Hemisphere. That is the silver lining of the India-China rivalry: India balancing against China, and thus relieving the United States of some of the burden of being the world's dominant power.

Poland's Growing Regional Energy Importance

Summary

The Czech Republic and Poland announced April 30 that they will build an interconnector between their natural gas networks. The announcement came on the same day that Gaz-System, Poland's natural gas transit system operator, expressed a great deal of interest in purchasing Net4Gas, its counterpart in the Czech Republic, and the Czechs reciprocated. Net4Gas is the driver behind the Moravian interconnector and is being sold by Germany's utility giant RWE. These developments are among the first indicators that Poland is using its privileged economic position during the European crisis and its success in energy diversification to become a leading player in Central Europe's shifting energy markets.

 

Analysis

The planned Moravian interconnector would be relatively short -- approximately 100 kilometers (62 miles) -- and would have a capacity of 8-10 billion cubic meters (bcm) of natural gas per year. The only other link between the two countries is the recently completed Czech-Polish STORK Interconnector, which has a capacity of only 0.5 bcm per year since it was designed as a rapid emergency relief line. The project's price has not been made public, but the European Union has promised to pay 31 percent of the final cost.

The interconnector, on which construction is scheduled to begin in 2017, is the latest in a series of interconnector projects planned in Central Europe, including interconnectors linking Poland to Lithuania, Poland to Slovakia and Slovakia to Hungary, as countries in the region attempt to diversify their energy sources away from Russia. The natural gas flowing from Poland through the Moravian interconnector to the Czech Republic's northern storage facilities would come from different sources in order of importance: Russian gas transited via Nord Stream to Germany, regasified liquefied natural gas (LNG) from the upcoming Polish Swinoujscie terminal and Polish shale gas (only in the long term and if expectations are realized).

Gaz-System's planned acquisition of Net4Gas would be another step in integrating the European natural gas network. The purchase would make it easier for the Czech Republic to secure natural gas from diverse sources than if Net4Gas were purchased by Gazprom, another major contender in the bid for the Czech company.

One of the reasons the Czechs are eager to diversify their natural gas import routes and integrate more with Poland is the contentious relationship Russia has with Ukraine. Although Ukraine is currently the main eastern transit state for the TransGaz pipeline, which serves southern European markets and Germany, political problems have led Russia to try to change its natural gas export system in order to bypass Ukraine as a transit state. Nord Stream was the first piece in that plan -- it allows natural gas to reach Germany directly. Before Nord Stream, 80 percent of Europe's natural gas imports transited Ukraine. The South Stream project, whose construction is expected to start at the end of this year, would serve southern Europe and bypass Ukraine.

This is worrisome for the Czech Republic, which, after Slovakia, is immediately downstream from Ukraine on the natural gas line. If Russia curtails shipments through Ukraine, the Czech Republic will be left without its main source of natural gas. Thus, the interconnector between the Czech Republic and Poland is an important part of the Czechs' ability to secure natural gas supplies, given Moscow's plans to bypass Ukraine.

Another signifier of Poland's growing importance is Gaz-System's strong bid for Net4Gas. The proposal shows that Poland is becoming more aggressive in regional energy politics. This confidence stems in part from Poland's own successful energy diversification efforts, particularly in the construction of its own LNG terminal, the creation of an efficient natural gas buyback program with Germany and the ongoing development of a shale gas extraction industry.

Moreover, Poland has weathered the financial crisis better than any other country in the European Union, maintaining relatively high growth levels throughout the crisis. This gives Polish enterprises the financial stability to pursue expansive and profitable policies in neighboring countries that have been affected much more by the crisis. Poland's economic and energy success also earned it the backing of the EU Commission, which has prioritized the liberalization of the entire EU energy structure. The European Union both encourages and finances the construction of regional network links and the purchase of Czech energy assets to keep them from falling into Russian hands.

Slovakia already has expressed interest in linking its natural gas network with Poland's and the Czech Republic's. As Russia continues working to bypass potentially troublesome transit states like Ukraine and Belarus by accessing Western European markets more directly, Poland has the chance to lead the emergence of a more integrated and liberalized natural gas network in Central Europe.

Russia likely will push back; Moscow will not appreciate Warsaw's growing power in a region and industry that for so long has been under Moscow's influence. That Central Europeans would still mostly consume Russian natural gas in the short term gives Poland some leeway in increasing its leadership role in the region's energy sector -- as does the low profitability of Central European markets compared to Western European markets. Warsaw can use interconnector projects and distribution system acquisitions to gain a favorable position in anticipation of the upcoming diversification of energy supplies in Central Europe.

 

The Continuing Threat of Libyan Missiles

In March 2011, while many of the arms depots belonging to the government of Libya were being looted, we wrote about how the weapons taken from Libyan government stockpiles could end up being used to fuel violence in the region and beyond. Since then we have seen Tuareg militants, who were previously employed by the regime of former Libyan leader Moammar Gadhafi, leave Libya with sizable stockpiles of weapons and return to their homes in northern Mali, where they have successfully wrested control of the region away from the Malian government. These Tuareg militants were aided greatly in their battle against the government by the hundreds of light pickup trucks mounted with crew-served heavy weapons that they looted from Libyan depots. These vehicles, known as "technicals," permitted the Tuareg rebels to outmaneuver and at times outgun the Malian military. Moreover, we have recently received reports that Tuareg rebels also brought back a sizable quantity of SA-7b shoulder fired surface-to-air missiles, also known as man-portable air defense systems (MANPADS). While we have not yet seen reports of the Tuaregs using these missiles, reports of close interaction between the Tuaregs in northern Mali and regional jihadist franchise al Qaeda in the Islamic Maghreb (AQIM) raise concern that AQIM could buy or somehow acquire them from the Tuaregs. We have seen unconfirmed reports of AQIM fighters possessing MANPADS, and Algerian authorities have seized MANPADS among the weapons being smuggled into the country from Libya. For example, in mid-February, Algerian authorities seized 15 SA-24 and 28 SA-7 Russian-made MANPADS at a location in the southern desert called In Amenas. For the Tuareg militants, the MANPADS are seen as a way to protect themselves against attack by government aircraft. They also serve the same function for AQIM, which has been attacked by Mauritanian aircraft in northern Mali. However, the possession of such weapons by a group like AQIM also raises the possibility of their being used against civilian aircraft in a terrorist attack -- a threat we will now examine in more detail. Uses and Weaknesses of MANPADS MANPADS were first fielded in the late 1960s, and since that time more than 1 million have been fielded by at least 25 different countries that manufacture them. These include large countries such as the United States, Russia and China as well as smaller countries such as North Korea, Iran and Pakistan. By definition, MANPADS are designed to be man-portable. The missiles are balanced on and fired from the shooter's shoulder, and the launch tube averages roughly 1.5 meters (5 feet) in length and 7 centimeters (3 inches) in diameter. Since MANPADS are intended to be operated by infantry soldiers on the front lines, durability is an important part of their design. Also, while the guidance mechanism within the missile itself can be quite complex, a simple targeting interface makes most MANPADS relatively easy to operate. The SA-7 has a kill zone with an upper limit of 1,300 meters, while some newer models can reach altitudes of more than 3,658 meters. The average range of MANPADS is 4.8 kilometers (about 3 miles). This means that most large commercial aircraft, which generally cruise at around 9,140 meters, are out of the range of MANPADS, but the weapon can be employed against them effectively during the extremely vulnerable takeoff and landing portions of a flight or when they are operating at lower altitudes. Despite their rugged design, MANPADS are not without limitations. Some research suggests that battery life makes the weapon obsolete after about 22 years. Missiles treated roughly, stored poorly and not maintained well may not last anywhere near that long. Since replacement batteries can be found on the black market, battery life is not necessarily a key limiting factor. For example, two SA-7s used by al Qaeda to target an Israeli civilian flight over Mombasa, Kenya, in 2002 were 28 years old and appeared to be fully functional. It is believed they did not hit their target due to countermeasures employed by the aircraft. Some of the classified U.S. military reports released by WikiLeaks indicted that, many times in Iraq and Afghanistan, the older SA-7s were ejected from their tubes and had engine ignition but failed to acquire and lock onto the intended target. This may also have been the case in the Mombasa attack. Perhaps the most limiting factor to MANPADS' utility has to do with the kind of aircraft being targeted. As MANPADS were developed and refined for military use, so were countermeasures for military aircraft. This means that most modern military aircraft are equipped with countermeasures that are effective against older models of MANPADS. Due to budget constraints, however, most commercial airliners and general aviation aircraft are not equipped with military-style countermeasures systems, which can alert a pilot that a missile has been launched so proper action can be taken, including evasive maneuvers, the deployment of infrared flares to decoy the missile or lasers to blind the missile's seeker. Industry estimates indicate that outfitting and maintaining the entire U.S. airline fleet with countermeasures that could foil missiles would cost $40 billion. Because of the high cost of such defensive systems, the bulk of the civilian aviation fleet worldwide remains undefended and vulnerable to MANPADS. MANPADS in Terrorist Attacks The SA-7 was first deployed by the Soviet army in 1968 and was sent to North Vietnam, where it was used in combat against American military aircraft in the early 1970s. But it did not take long for militant groups to understand how the weapons could be utilized in a terrorist attack. In January and September 1973, Black September militants attempted to use SA-7s against Israeli civilian aircraft in Rome (the January flight was carrying then-Prime Minister Golda Meir). Both attempts were thwarted in their final minutes. Two years later, the first successful MANPADS attack against a civilian aircraft occurred when North Vietnamese forces launched an SA-7 missile against an Air Vietnam flight, resulting in the deaths of all 26 passengers and crewmembers. One of the most famous civilian MANPADS attacks was in 1994, when two SA-16s were used to shoot down a Rwandan government flight, killing the presidents of Rwanda and Burundi and sparking the Rwandan genocide, which resulted in approximately 800,000 deaths in 100 days (the identity of the attackers remains a matter of debate). Over the years, MANPADS attacks have been plotted and actively attempted in at least 20 countries, resulting in more than 900 civilian fatalities. The most recent MANPADS attack that resulted in loss of life was the strike by al Shabaab over Somalia in 2007 against a Belarusian cargo plane. Eleven people were killed. The attack reportedly involved a Russian SA-18 that was manufactured in Russia in 1995. It was one of a batch of SA-18s sent from Russia to Eritrea, some of which were provided to the Somali jihadist group. A MANPADS attack does not necessarily mean certain death for an aircrew and passengers. In fact, some civilian airliners hit by MANPADS have made emergency landings without loss of human life. In November 2004, a DHL Airbus 300 was struck in the left wing by a MANPAD after leaving Baghdad International Airport on a mail delivery flight. While the aircraft was badly damaged and one engine caught fire, the pilot still was able to land safely. The man-portable facet of MANPADS severely limits the size of the warhead that the weapon can carry compared to larger surface-to-air missile systems. They are also designed to engage and destroy low-flying military aircraft densely packed with fuel and ordnance. Because of this, MANPADS are not ideally suited for bringing down large civilian aircraft. Though airliners are hardly designed to absorb a missile strike, the damage a single MANPADS can inflict may not be catastrophic. MANPADS systems employ infrared seekers that are drawn to the heat signature of an aircraft's engine, and therefore tend to hit the engine. Large commercial jets are designed to be able to fly and land if they lose an engine, and because of these factors, nearly 30 percent of the commercial aircraft struck by MANPADS have managed to make some sort of emergency or crash landing without loss of life, despite, in some cases, sustaining significant structural damage to the aircraft. Still, the threat is not insignificant. The other 70 percent of civilian planes that have been hit by MANPADS have crashed with considerable loss of life. Indeed, on departure from or approach to an airport, airliners do have to traverse predictable airspace at low altitudes -- well within the engagement envelope of MANPADS -- and their airframes are under considerable stress. An attack at low altitude also provides the pilot less time to react and recover from an attack before the aircraft strikes the ground. These lower-level phases of flight also frequently occur over large swaths of built-up urban terrain that would be impossible to search and secure, even temporarily. Due to the noise involved with living under a flight path, this is usually low-rent real estate. With flight paths so well established, even casual observers generally have a sense of when and where large, low-flying aircraft can be found at any given time over their city. Outlook As noted in Stratfor's previous coverage of the MANPADS threat, since 1973 at least 30 civilian aircraft have been brought down and approximately 920 civilians have been killed by MANPADS attacks. These attacks brought about the concerted international effort to remove these weapons from the black and gray arms markets. Because of these efforts, attempts to use MANPADS against civilian airliners were down about 66 percent from 2000 to 2010 compared to the previous decade. Nevertheless, sting operations and seizures of illicit arms shipments clearly demonstrate that militant groups continue to work to acquire the weapons. There are at least 11 active non-state militant groups that are believed to possess MANPADS, and we have seen them employed sporadically in the wars in Iraq and Afghanistan. There are more than 10 other groups, such as the Revolutionary Armed Forces of Colombia, that have been making efforts to obtain them. While there is no evidence that these groups now have them in their arsenals, their efforts may have become easier as missiles from Libya have trickled onto the black arms market. Estimates vary widely, but it appears that the Libyans had an estimated inventory of 20,000 MANPADS. It appears that the SA-7b seems to have been the most common MANPAD in the Libyan inventory, though there were also several far more advanced SA-24 missiles (the latest Russian design) that were intended to be used in vehicle-mounted launchers sold to the Libyans but that could be used as MANPADS if they were paired with the proper gripstocks and battery coolant units. Of those 20,000 missiles, teams from the United States and NATO have secured roughly 5,000; another 5,000 are thought to be in the hands of the various Libyan militias and to still be in the country. That leaves a remainder of 10,000 missiles. While a number of them were destroyed by NATO airstrikes or launched at aircraft, it is believed that somewhere around half have been smuggled out of the country. For obvious reasons, obtaining an accurate number of missiles is very difficult. Indeed, with a variety of parties involved in the smuggling, it is doubtful that anyone knows for sure how many missiles have been smuggled out of Libya. The U.S. government has designated $40 million for a program intended to buy back Libyan MANPADS, but clearly many of them have already made it out of the country. In addition to the February seizure in Algeria, Egyptian authorities seized eight SA-24 missiles in the Sinai Peninsula in September 2011. A month earlier, two Israeli Cobra helicopters came under fire from a MANPAD fired from Sinai during a multi-stage attack launched from Sinai that resulted in the deaths of eight Israelis. The missile missed the Cobras. Indeed, the Jerusalem Post reported that due to the perceived increase in the MANPADS threat from Sinai, commercial aircraft landing in Eilat have changed their approach pattern. To date, we are not aware of any attacks or attempted attacks against commercial airliners using MANPADS taken from Libyan stocks. But with the missiles in the hands of Palestinian militants in Sinai and Gaza as well as in the inventory of groups such as AQIM, there is a legitimate concern that they will be used in an attack in the immediate future. Jihadists have long had a fixation on aviation as a target. With increases in airline passenger and luggage screening, MANPADS provide jihadists with the means to bypass those security measures and conduct attacks against civilian aircraft. They may have problems getting missiles into Europe or North America, but with active jihadist franchises in Afghanistan, Pakistan, Yemen, Somalia and North Africa, there is a very real threat of a MANPADS attack directed against U.S.- or European-flagged carriers in those regions. But with a year now gone since the Libyan weapons stockpiles were looted, Libyan MANPADS could be almost anywhere in the world, and it is somewhat surprising that they have not been more widely used.