It’s a story that’s played out time and again across the world: An economically stagnating and repressive government hikes prices on essential products, like food or fuel, or imposes social service cuts and other austerity measures. The populace, a significant portion of whom live in poverty or deprivation, takes to the streets. The catalyzing event becomes a metonymy for other sources of anger with the central government—corruption, police and military brutality, a ravaged job market—and the rallies massively increase in number. Clashes break out between citizens and police, and the head of state is forced to address the turmoil. Some of the most famous examples of this have been seen in France and Chile—but a more significant portent may be gauged from the recent unrest in Kazakhstan.
Earlier this month, the Kazakhstani government rolled back subsidies on liquefied petroleum gas, a byproduct of natural gas used as a fuel source by much of the nation. This single decision spurred the biggest protests in Kazakhstan’s modern history, with Kazakhstani citizens all over the country forming rallies and even storming the country’s capitol. President Kassym-Jomart Tokayev undertook a wholesale reshuffling of the government and promised to restore lower fuel prices as Russian soldiers swooped in to calm the riots and restore order.
The protests have since simmered down, and Russian troops started withdrawing on Thursday, but the spillover effects of this episode will be potent—as a test of Kazakhstan’s brand-new government; of Russia’s military capability and control over surrounding regions, especially as tensions with Ukraine increase; and most importantly, of how shocks to the fragile energy systems in fossil fuel–dependent countries like Kazakhstan and Russia may lead to further chaos. After all, as evidenced by its stances toward Ukraine and the European Union, Russia is more than happy to wield its fossil fuel reserves as a geopolitical cudgel. The Kazakhstan incident, sparked by a natural resource Russia heavily depends on, may be just one clue toward Russia’s future as a great power in stagnation and possible decline.
What can the revolt in Kazakhstan tell us about the future of Russia and the Soviet bloc as climate change progresses? To find out, I spoke with Thane Gustafson, a Russia expert and author of multiple books on European energy policy; his most recent work, Klimat: Russia in the Age of Climate Change, looks at how climate change and energy transitions will cripple Russia’s place on the world stage. Our conversation has been edited and condensed for clarity.
Nitish Pahwa: How would you explain what’s been transpiring in Kazakhstan, and what Russia’s role has been?
Thane Gustafson: Kazakhstan is one of the five Central Asian republics of the former Soviet Union. It’s also the one out of those five that historically has been the closest to Russia, and whose regime seemed to be the most stable. So what’s happening right now is a bit of a surprise, but it simply stems from the fact that the strongman of Kazakhstan for 30 years, Nursultan Nazarbayev, has now reached retirement age. He thought he would be able to run the republic from an honorific post—chair of the Security Council—and that hasn’t worked out. So what we’re seeing is this explosion of discontent, newly sparked by increases in energy prices.
This is due to the fact that natural gas price controls were lifted.
Yes, although in this particular case, we’re talking about LPG, liquid petroleum gas, which also comes out of gas wells and is the liquid component that’s dissolved in the natural gas. It’s not too far from regular gasoline and is cheaper, and the price was heavily subsidized to Kazakhstani drivers and consumers.
So the price at the pump doubled, and people got mad all over Kazakhstan. But behind that is discontent over the fact that you’ve had some family-run businesses basically monopolizing all of the revenues from hydrocarbon exports—which keep Kazakhstan afloat—with very little of that trickling down to the ordinary population. There’s also a lot of resentment over corruption, and of course, any participation in political life has been systematically quashed.
What spurred this rollback of subsidies?
The accounts that I’ve read say what we’re seeing here is, to some extent, the result of policy overreach. Those LPG prices have been subsidized for a long time. It was expensive to do that; it was a hit from the government budget. And I think the government simply decided, We’re going to be efficient here, we’re going to do things in the modern way, and we’re going to eliminate this subsidy. Well, the timing was terrible.
This has been called the biggest protest since Kazakhstan’s independence. Is that why Russia was so quick to step in?
A standing theme under Putin has been, We’re going to do everything we can to rebuild the Soviet-era sphere of influence. If there’s unrest, if the regimes that we support are in danger, or if they’re being challenged by an unfriendly regime, we’re going to intervene and try to stabilize things. One recent episode involved the battle between the Armenians and the Azerbaijanis.
Yes, definitely. Ever since Putin came to power, he has been concerned about what the Russians call “color revolutions.” That term was invented by the Western media to describe the street protests that then topple an unpopular government. There have been several of those, including the Tulip Revolution in Kyrgyzstan.
Regarding Russia being very protective of former Soviet states, obviously there’s history, but I’m wondering if a part of it is Russia attempting to avert the growth of Chinese influence in those regions?
Kazakhstan borders China, and consequently there has been an increase in Chinese influence with the Chinese “Belt and Road” policy, which aims in particular to promote lines of transit through Kazakhstan, investment in Kazakhstan, and Chinese influence on Kazakhstan. That, of course, makes the Russians nervous because they still think of Kazakhstan as part of their sphere of influence. Not to take over Kazakhstan, mind you—that’s not any part of the Russian game plan. But Putin doesn’t want the Americans there, and he’s not excited about having the Chinese there either. He wants the place to stay nice and quiet as it did in fact for 30 years.
One point you make very clear in your book is that Russia is going to remain all-in on fossil fuels, at least until midcentury or so, and it’s going in on natural gas. If there were ever a similar price shock for natural gas and oil in Russia, would you see similar revolts among the populace?
Russia’s is a hydrocarbon economy. Through taxation, through dividends, it collects the wealth from oil and gas exports and uses those to subsidize this huge welfare state. If those revenues decline, the ability of the Russian state to keep that welfare system, to keep that recycling machine going, is impaired. Russians themselves are aware of the threat. There’s an economics institute in Moscow, the Gaidar Institute, that’s modeled the budget of the Russian government going forward under this scenario. And warned, You’ve got problems ahead. You would have chronic budget deficits in a lower-hydrocarbon world. Plus, two-thirds of the Russians’ natural gas is not exported, but piped directly into the domestic economy at relatively low prices. For their power supply, the present is gas, and the future is going to be gas.
The republics of Central Asia are very dependent on hydrocarbons as well. If we’re ultimately moving toward an era of lower hydrocarbon prices and falling demand, it’s not just Russia that would be affected—Central Asia would be, as well. Turkmenistan produces natural gas, which it exports by pipeline to China, as does Uzbekistan, as does Kazakhstan. Kazakhstan produces 1.5 million barrels a day of oil, and all of that is oriented toward exports.
Russia keeps footprints in all those former Soviet republics, and it’s recently been threatening Ukraine’s autonomy again. Are energy economics a factor there, like with the unrest in Kazakhstan, and do you think there’s a likelihood of Russia invading Ukraine?
Here, it helps to try to take the long view, both backward into the history and then forward into what it implies for the longer-range future. About 15 years ago, the Russians decided, We’re going to bypass Ukraine. That relationship is too much trouble. Consequently, they decided to build the first pipeline under the Black Sea, called Blue Stream, that goes to Turkey and bypasses Ukraine. Then there’s one called the Yamal-Europe pipeline that goes through Belarus and Poland. Then there’s something called Nord Stream 1, which nobody talks about but which actually was the first pipeline along that same route: under the water on the bottom of the Baltic Sea going to Germany. Then there was one more called TurkStream, which comes up from Turkey and into Southeastern Europe. Nord Stream 2 is the fifth of that whole new generation of export pipelines, all of which bypass Ukraine.
The strategic intention is to cut Ukraine out of the transit business. In a sense, it’s bringing an end to the Soviet era when all those pipelines ran through Ukraine. There was no reason to bypass Ukraine when Ukraine was still a Soviet Republic. The whole gas business actually started out there, and the very first gas pipeline to Europe was a pipeline from the western part of the region, what is now Western Ukraine, to Nazi Germany. The Soviet central planners basically kick-started their gas industry with Ukrainian gas. By the time the Soviet Union broke up, Ukraine’s developed gas reserves were pretty much gone, and the Russians had moved on to West Siberia, which became the capital of the gas industry. So the Russians were left with the gas, but the Ukrainians were left with the transit pipelines. That made for a very uneasy relationship.
So, energy has been an irritant, but it’s not a core issue in the dispute that’s going on right now. It helps to recall that today’s Ukraine is broadly two halves: a Ukrainian-speaking west and a Russian-speaking east. Historically, the industrial center of Ukraine is in the east while the more agricultural region, the part more oriented toward Europe, is in the west. Kyiv, the capital, is somewhere in the middle. Now, no matter what may be going on in Putin’s mind, you can be sure he has no intention of invading Western Ukraine. That wouldn’t make any sense, and it would be just a huge undertaking. But it’s pretty clear that he sees the eastern part of Ukraine as directly a part of Russian heritage, of the Russian-language sphere, of Russia’s economic sphere of interest. That doesn’t extend as far as Kyiv, however—it probably extends three or four provinces to the west of where the Russians are now, allied with separatists in Eastern Ukraine. The awkward thing, though, is that ever since the Crimea annexation, Russia has lost a lot of popularity in Ukraine, even among its Russian speakers.
The big question that hangs over everything is: Is it going to be a cold winter or a warm winter? Putin is watching that question very closely. You can imagine why: The warmer the winter is in Ukraine, the muddier it is, and then it’s too sloppy for his tanks. More than anything else, that is likely to determine when the Russians attack, if they attack. So watch the temperature gauge.