An alternative to the IMF was launched this week (9 July 2015).  The so-called BRICS (Brazil, Russia, India, China, and South Africa) jointly founded the new bank, based in Shanghai, and will be able to apply through it for project financing. They will also be able to tap the $100 billion reserve fund set up to offer support in case of financial emergencies.

The bank was launched ahead of a BRICS summit in Russia, and the Kremlin hopes the initiative will demonstrate that Russia has not been economically or politically isolated by the imposition of sanctions over the annexation of Crimea. Nevertheless, the European Bank for Reconstruction and Development expects the Russian economy to contract by 4.5% in 2015.

We had a comment sent in from Hugo, who thinks that the combination of falling oil prices and economic sanctions will force Russia to change its strategy in Ukraine.

Is Hugo being overly optimistic? To get a reaction, we spoke to Michael Rühle, Head of the Energy Security Section at NATO. How would he respond?

To get another perspective, we also spoke to Friedbert Pflüger, Director of the European Centre of Energy and Resource Security at King’s College London, and a former member of the German Bundestag. What would he say to Hugo?

We also had a comment from Ari, who thinks that sanctions against Russia will merely push it to work more closely with countries like China and Iran. Certainly, the relationship between Russia and Iran has been strengthened in recent years, not least because both countries have been the target of Western sanctions.

However, negotiations are currently taking place over Iran’s nuclear programme that could result in the lifting of sanctions, potentially driving global oil prices even lower as Iranian oil appears on the market. We asked Friedbert Pflüger what impact the lifting of sanctions against Iran would have on energy geopolitics?

Will falling oil prices convince Russia to change its strategy in Ukraine? What impact would lifting sanctions against Iran have on energy geopolitics? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!

IMAGE CREDITS: CC / Flickr – Adam Cohn

24 comments Post a commentcomment

What do YOU think?

  1. avatar
    Jason Picci

    Sure they will…as Saudi just invests 10bn in Russia and in Ufa they just floated 100bn Brics Bank reserve fund.

  2. avatar
    Matej Zaggy Zagorc

    It will slow down the progress of advancement towards the future and new technologies that are more efficient in both the economic sense and production.

  3. avatar
    Ivan Burrows


    As long as the warmongering ‘Europeans’ pose a threat to Russia’s borders they will be interested in Ukraine.

  4. avatar
    Maia Alexandrova

    Sanctions will not change anything about Ukraine, rather direct Russia to a different path – away from Europe and towards increased trade and co-operation with Asian and South American countries, but also towards diversifying its own economy so that it is not so much dependent on energy exports. Sanctions will only force Russia to make economic changes but not political. The country will not betray its own truth, history, justice and people for the sake of USA and EU’s approval.

  5. avatar
    Rui Duarte

    Cheaper oil is good, but it may postpone our liberation from oil. As sheikh Yamani put it, «the stone age didn’t end becaus ethe cavemen ran out of stone». Élas, our generation does look like it is waiting for oil to end.

  6. avatar
    catherine benning

    This is another giant con. The oil price drop over the last year or so has seen no significant change to the public in this country at all

    It went down 2 pence a litere and within a couple of weeks it was back up to the same level as prior to the fall of prices.

    Ditto with Gas and Electric. In this country it is an enormous con trying to persude the public we are seeing good time. Just as they are doing with inflation.

    They tell us there is minimal inflation. Pleeeeese last year what cost £50 is not costing £80. And that includeds everthing except some really nasty cheap clothing. Shoes went from £49.00 to £73 for exactly the same pair of shoes. Yet our politicians take us for complete idiots telling us the reverse is taking place.

    It’s heads off time. They did this, my mother told me, in the 70,s everthing went up by giants steps whilst they told us it was only 4% yet the groceries that cost £10 one week were £20 the next then £40 and so on. And don’t mention rents, now they intend to increase the rent on social housing to leave the poor with nothing left to eat with.

  7. avatar
    Ryan Gibson

    No. According to a source in Ukraine that I have discussed this with in Crimea, It stopped being about oil when Ukraine soldiers started killing anyone who spoke Russian, and when I say soldiers I mean the extremist white supremists who originally helped over throw the government. Now it’s a war between soldiers, hooligans, and the people caught in the middle. I don’t think oil will change the strategy anymore.

  8. avatar
    Mike Oxlittle

    This ‘BRICS’ alliance has always baffled me.Firstly what the hell is South Africa doing in this company,it’s not a economic power on the world stage,it’s not even the largest economy in Africa,Nigeria is.Now i can understand China and India being in some sort of alliance they are economic giants and will one day be the two superpowers of the world,but Brazil and Russia??what have these two third world dictatorships got apart from corruption,organised crime and a privileged elite.They have just one thing going for them,a enormous population,so if that’s the only thing you require to be in this club you might as well stick Pakistan or Mexico in there.They have large populations and lets face it they have a better class of people.

  9. avatar
    Ferenc Lázár

    No, it won’t, in contrary the OEP countries turned their back on USA and american companies loosing much more with cheap oil prices…Should leave alone the Russians and make order in the E.U. as well as we europeans should care about our own problems, like the 5 million immigrants who want to come into Europe and the Greek financial crisis, which hammering down european economy…why do we have to follow american geopolitics and loose lots of trading ben3fits with Russia and China like some foolish children?!

  10. avatar
    Joao Antonio Camoes

    not for a second. If you analyse the situation as a P&L account analyst would do, you ´ll be sure this the right option to put pressure on Russia. If you analyse russian history, the pride of Mother Russia felt by russian people you will know that will not be by this way. And, in a realistic point a view, there is no rational way unless a good talk/conversation, eye-to-eye, frank and open dialogue. There is lot more in common between EU and Russia than differences and, in future, you will see EU/Russia side by side facing common threats .

  11. avatar
    EU reform- proactive

    The new BRICS development bank creates interesting competition! It pits the experienced Bretton Woods institutions against the new kid on the block & less rigid BRICS team. To be seen how soon one of them needs a further 100 billion injection (no problem for China). BRICS (not burdened with the European south’s debt) have a low insolvency risk, as suggested by the very low debt-to-GDP ratios by comparison with the struggling Euro Area.

    Implemented EU trade sanctions are silly, counterproductive, outdated tools & unconvincing economic reasons to play (hostile energy geo-) politics! They are not harming the US but the EU. Countries dependent on oil/gas imports are always disadvantaged and lower oil prices will assist temporarily to remain competitive!

    But- whoever will become the global leader (by hugely investing in R&D & science) to harvest renewable “space energy” will in future be able to produce the cheapest & cleanest energy per KWh and lay the foundation by winning the game of “COMPARATIVE ADVANTAGE” once more!

    It is estimated that the US is becoming totally energy independent over the next 20 years- which could give them a cost advantage of up to 25% over Europe.

  12. avatar
    Eiza Jean-Jacques Descayrac

    This will go against global warming control objectives and will reinforce the petro chemical industry against ecological changes. Morever this might increase the continuous worries related to nuclear misuse or pollution for middle east. Indeed It would be better to accelerate the energies source changes globally instead of lobbying oil prices and sacking specific countries.

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