IS IT POSSIBLE TO MITIGATE RUSSIA’S EUROPEAN GEOPOLITICAL ACTIVITY BY ARTIFICIALLY INFLUENCING OIL PRICES?

Abstract

Among the geopolitical challenges facing Europe – as has been the case in history – is now one of the most important threats facing Russia. Russia is increasingly aware of the use of hybrid warfare tools in Europe as well as of traditional military actions: annexation of Crimea, its military aircrafts regularly violate the airspace of European countries, launched military operations in Syria seriously violating of European interests.Due to the significant Russian army and nuclear weapon arsenal, direct military conflict is not a real alternative to act against aggressive geopolitical activity of Russia, so European countries have to act in a different way against hostile Russian actions. Beside intelligence (secret services) and IT protection, the tools of economic warfare should also be considered. As a result of annexation of the Crimean Peninsula, several economic sanctions have been imposed onRussia since 2014, but other economic warfare instruments may also be considered.In my research, I investigated whether the artificial influence of oil prices could be an effective economic warfare tool against Russia's actions violating European interests. Analysing oil market data and military spending database linear regression relationship can be discerned between the price of crude oil and the evolution of military spending of Russia. So, the average negative effect on Russian military spending of 1%fall in oil prices can be quantified. According to my research results, European countries alone do not have sufficient economic potential to induce a sustainable and significant price drop on the world oil market, nevertheless in alliance with its allies–first of all the United States –it can/could be an effective geoeconomic tool against hostile Russian geopolitical steps.