In Geopolitics Today - Monday, March 7th
In Geopolitics Today - Monday, March 7th
War in Ukraine Threatens Indonesia’s Energy Security, US Signals Interest in Sanctioning Russian Energy Sector, War in Ukraine Attracts International Mercenaries
Geopolitical Uncertainties Threaten Indonesia’s Energy Security
The global price of oil continues to surge. Oil markets are disrupted and the sanctions regime which has been levelled at Moscow threatens to be a significant blow to countries dependent on Russia for their energy needs and those which import their energy from abroad. Indonesia is one such country, with its energy sector unlikely to cope well with a situation where supplies are limited and energy prices are soaring.
Indonesia applies price subsidies to energy commodities in a bid to supply the Indonesian public with low-cost energy. This means that rising energies prices, which have in part been driven up by speculation surrounding geopolitical uncertainties emanating from Ukraine, have the potential to drive up the costs of Indonesia’s energy subsidies and weaken the country’s energy security. Unless global production increases and the price falls, Indonesia will be forces to accept new realities and import oil at higher prices than it would have expected. One way Jakarta could mitigate this vulnerability to shocks in global energy markets is to create a strategic petroleum reserve. This reserve would offer a means of addressing any short-term energy shortages that arise due to supply disruptions.
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US Signals Interest in Sanctioning Russian Energy Sector
The United States and its European allies are reportedly discussing a total ban on importing Russian oil as the latest tool of economic warfare intended to punish Russia. Such a move would put enormous pressure on oil and gas supplies, and work to push the price of oil even higher.
The US Congress is working on a set of sanctions targeting Russian oil companies, even though the US imports roughly 200,000 barrels of Russian crude per day. At the same time, European governments have become more willing to sanction Russian crude exports, even as many member states remain heavily dependent on energy from Russia. But without the backing of major oil producers outside Russia, further sanctions on Russia will also translate to severe costs to the US and the EU indirectly via rising energy prices. In anticipation of such a move, US officials are said to be considering talks with Saudi Arabia and even Venezuela.
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War in Ukraine Attracts International Mercenaries
More and more mercenaries are heading to Ukraine. Ukrainian President Volodymyr Zelensky’s establishment of an “International Legion of Territorial Defence of Ukraine,” and his lifting of visa restrictions for any eager volunteers, has worked to facilitate a flow of people eager to fight against Russia’s armed forces. Ukrainian officials have estimated that some 16,000 have already volunteered, with reports indicating that some of these volunteers are experienced soldiers working as private military contractors.
Foreign mercenaries employed by private firms is one way that the government in Kiev is hoping to push back against the threat posed by Russian forces. Inexperienced volunteers and professional soldiers are going to Ukraine, where organizations such as the French Foreign Legion already operate. The Ukrainian government does not directly hire private military contractors, instead accepting them as volunteers and incorporating them into Ukraine’s own foreign legion. There are suggestions that Russia too may be looking to incorporate foreign fighters into its ranks by relying on its own experienced mercenaries from Syria.
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