NATO prepares for energy wars -- How it affects you

December 6, 2006

During November 28-29 NATO summit in Riga, Latvia, the U.S. asked NATO to take an active role if any oil or gas producing country disrupt the supply to member countries, and to consider it an act of war.

U.S. Senator Richard Lugar was referring to Russia’s brief cutoff of gas to Ukraine last winter as an example of “death and economic loss on the scale of a military attack.” Russia supplies 25% of Europe’s energy needs, and the pipeline to Europe runs through Ukraine.

What NATO’s role in the energy wars means:
NATO is in a state of transition:

• Its membership has expanded to include ex-Soviet Union countries.
• It has expanded its role in the fight against terrorism, which has taken it to non-member countries Afghanistan and Iraq.
• It has negotiated an uneasy partnership with Russia, who is not a member.
• It is often in conflict with its role vis-a-vis the EU, which is hoping the trade agreement route with Russia will ensure a secure supply of gas and oil.

However, the fact that a discussion is taking place within a NATO conference hints of a military solution, which in itself is enough to potentially escalate the threat of further energy embargoes. In fact, Russian Foreign Minister Sergei Lavrov issued a statement after the Riga Summit that essentially chided them for discussing energy issues without Russia’s involvement.

Action steps:
This kind of escalation can only mean higher natural gas and oil prices in the future. Make sure your natural resources funds include both natural gas and oil companies. As always, check with your financial advisor before selecting specific funds.

Source: Radio Free Europe web site, NATO web site, CRS Report for Congress, “NATO and Energy Security”, March 21, 2006.