Russia Prepares to Host G-8 Summit G-8 leaders are descending on St. Petersburg for their annual economic summit. Russia will tout its role as a major energy supplier. But the Kremlin's monopolistic energy policy worries many potential customers.
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Russia Prepares to Host G-8 Summit

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Russia Prepares to Host G-8 Summit

Russia Prepares to Host G-8 Summit

Russia Prepares to Host G-8 Summit

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G-8 leaders are descending on St. Petersburg for their annual economic summit. Russia will tout its role as a major energy supplier. But the Kremlin's monopolistic energy policy worries many potential customers.

SHEILAH KAST, host:

Leaders of the group of eight leading industrial countries are descending on St. Petersburg, Russia, this week, to take part in an annual summit. It's a chance for Russia to tout its new role as a top global energy supplier. But its precisely the Kremlin's energy policy that worries some nations most.

NPR's Gregory Feifer reports.

GREGORY FEIFER reporting:

Russia holds the G8 presidency this year and set the summit's agenda to highlight energy security, education, and fighting disease. But Moscow wants energy to take center stage.

Russia is the second-largest global oil exporter, and sits on the world's biggest reserves of natural gas. Sarah Mendelson, of Washington's Center for Strategic and International Studies, says naming energy security the G8's main issue enables Russia to claim status as a world power.

Ms. SARAH MENDELSON (Senior Fellow, Washington's Center for Strategic and International Studies): This is Russian foreign policy. This is the main driver in Russian foreign policy. This is what gives Russia a big, big seat at the table.

FEIFER: Igor Shuvalov is President Vladimir Putin's top G8 advisor. He says Moscow is pushing what he calls interdependence between suppliers and customers as crucial to energy stability amid rising prices and worries of a global energy crisis.

Mr. IGOR SHUVALOV (Russian Advisor): We believe that if foreign companies, major companies, invest in Russia, and Russian companies invest in those companies in the West, then it will mean for all real global energy security.

FEIFER: But behind such talk, it's Moscow's actions that worry Western countries. Since Russia set off gas pipelines to Ukraine last winter during a price dispute, which threatened supplies to Western Europe, European countries have been looking elsewhere to diversify their supplies.

During a recent visit to Moscow to prepare for the summit, Secretary of State Condoleezza Rice hinted at unease over what many believe to be Russia's use of energy as a political tool.

Secretary CONDOLEEZZA RICE (United States Secretary of State): Russia is an extremely important energy supplier, and there have been concerns about what the rules of the game are in terms of reliable supply of energy.

FEIFER: A key question is what exactly energy security means. While European customers worry about energy supplies, Russia is talking about security of demand. Moscow wants to profit from retail sales in the West by buying into distribution utilities, but that's also causing concern abroad.

At the same time foreign companies complain that Moscow is blocking investment in Russia's energy industry. This month the Duma approved a law enshrining the state's monopoly on natural gas exports, but Russian's G-8 point man Shuvalov dismisses accusations that Russia is closing itself to foreign investments.

Mr. SHUVALA: When we hear those criticisms I think that just people don't understand what we mean in reality saying about energy securities.

FEIFER: Putin's creation of a giant state controlled energy industry is central to his bid to make Russia an energy powerhouse. But his former top economic aide, Andrei Illarionov, says the Kremlin's creation of a state energy monopoly actually threatens global energy security.

ANDREI ILLARIONOV (Russia): (Through Translator): The problem of security only arises when government steps in. When government companies come into play, where non-market and non-economic incentives appear. Where government and government owned companies' surface, security ends and danger begins.

FEIFER: Illarionov says Russia's energy policy is part of a wider turn away from democratic values and market principles. He says Moscow has failed to use the G-8 presidency to move towards becoming a worthy and respected partner of the international community, and that presents the group with a serious challenge.

Mr. ILLARINONOV: (Through Translator): It is very possible that other members of the G-8 admit that Russia's actions are allowable. But in that case, the group will automatically stop being a club of Democratic countries. It could have any other criteria, say the size of countries economies, but they won't be democratic.

FEIFER: Besides energy, disease and education, the G-8 members will discuss nuclear programs in Iran and North Korea, terrorism and other issues. However long term developments play out, analysts say this week's summit, like most others, will probably proceed smoothly. They say both Russia and Western G-8 members are hoping for a traditionally uneventful summit and for their deepening disagreements to remain out of sight. Gregory Feifer, NPR News, Moscow.

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