Posted on 01/03/2006 6:18:45 AM PST by twinself
In the old gangster flicks, the Mafia took sole control over a business to extort exorbitant prices. Refusal to pay carried dire consequences for the victim. That's basically Russia's approach in its energy fight against Ukraine, according to REVIEW & OUTLOOK: The Wall Street Journal Europe, New York, Tuesday, January 3, 2006.
Moscow unilaterally demanded an almost fivefold price increase for its natural gas sold to Ukraine. As the "negotiations" proceeded, the Kremlin bought up future gas supplies from Turkmenistan, trying to limit Kiev's access to alternative energy supplies. When Ukraine refused to cave to its demands, Russia simply shut off supplies on January 1, apparently including existing, and contracted, delivery of Turkmen gas to Ukraine that runs in a pipeline through Russian territory.
Yesterday, however, Russia reconsidered, mainly because of an angry European reaction, and said it would pump more gas through the pipeline so that customers in Europe wouldn't suffer severe hardship during this cold winter.
This scuffle is only peripherally about money. Influence over a democratic, free-thinking and erstwhile subservient neighbor is what the Kremlin craves. Viktor Yushchenko's presidential victory and turn toward the west after his 2004 "Orange Revolution" succeeded was not taken kindly by Mr. Putin.
The U.S. can be no mere bystander. State Department spokesman Sean McCormack said Moscow's actions "raise serious questions about the use of energy to exert political pressure," in particular just three months before parliamentary elections in Ukraine.
Russia's claim that it is only introducing "fair market prices" would be more plausible if a market in fact existed. Ukraine pays prices well below the international average, but gas, unlike oil, is not a heavily traded commodity and global comparisons are not very useful. Gazprom is a huge monopoly, with monopoly pricing power. Ukraine's more Moscow-friendly neighbor, Belarus, seems to be exempt from its "market" pricing.
Mr. Yushchenko told us in an interview last month that Kiev wants to rationalize prices as well. But this change must be negotiated, especially since any future pricing regime must take into account transit fees for use of pipelines that send Russian gas to Western Europe through Ukraine.
As of now, Moscow is violating its contractual obligations. In the summer of2004, the two countries agreed on the current pricing framework until 2009.But then Russia had different electoral considerations in mind. The deal was intended to boost the presidential aspirations of Ukraine's Viktor Yanukovych, Moscow's favored candidate.
The Kremlin exercised heavy-handed involvement in the fraudulent election that touched off the Orange Revolution that forced the previous regime to rerun the poll freely and fairly. In that election, Mr. Yushchenko, who wants a balanced foreign policy, including close ties with NATO and the EU, emerged triumphant. Mr. Putin was badly bruised and one might imagine he has been thirsting for revenge ever since. He and his ex-KGB friends in the Kremlin have never accepted the political independence of the former Soviet republics. But his transparent attempts to swing the parliamentary elections, due March 26, could as easily backfire on him as did his wrongheaded intervention in 2004.
Ukrainians are a proud people and are very sensitive to Russian interference in their affairs, even if many in the eastern provinces speak Russian at home and have a kinship with their Russian cousins. "A year ago, we beat the dictatorship and won a real victory," Mr. Yushchenko told his people in his New Year's address. "Today we have to go a step further to ensure together Ukraine's economic independence."
Mr. Putin's strategy affects Gazprom customers in the European Union. He is warning Ukraine not to siphon off gas destined for Europe so as to be in a position to blame Kiev if EU states run short. Ukrainian Prime Minister Yuri Yekhanurov immediately denied any such intent, but Ukraine may need to be creatively ambiguous to get through these cold months.
If Europe's supplies are in danger, it's Mr. Putin and not Ukraine that's to blame. Mr. Yekhanurov pointed out that Ukraine was entitled to 15% of the gas that goes through its pipelines in lieu of transit fees from Gazprom. For now, it's not clear whether the reduced supplies flowing into Hungary and Poland are the result of any Ukrainian siphoning or simply reduced pressure on the line after Russia cut off supplies to Ukraine itself. Happily, Mr. Putin isn't getting much support in Europe. Germany's new government put the blame where it belongs -- on Moscow. Conservative economics minister Michael Glos called on Russia to "act responsibly," saying future increases in gas purchases from Russia are only possible if they are reliable.
With Poland and the other "new Europeans" in the EU firmly supporting Ukrainian democracy, Germany will be the key in this crisis. Under the previous Red-Green government, Berlin was particularly indulgent of Mr. Putin. Its gas industry is also closely linked with Russian energy giant Gazprom. But new Chancellor Angela Merkel, an avowed Atlanticist with hopes of mending ties with the U.S., has promised a new approach. This will be the test for both her and George W. Bush.
The Ukrainian crisis demonstrates what a colossal disservice previous Chancellor Gerhard Schröder has done to Europe and his own country by pushing for the ill-conceived new pipeline that will go under the Baltic Sea and bypass Ukraine and the Baltic countries. At the moment, Moscow can't shut off the Ukrainian pipelines without also hurting European gas supplies.
Once the new pipeline is finished around 2010, Russia's power to reward those states that follow its ukase and punish those that question its policies will only increase. And this doesn't only apply to Russia's former vassals. It would also allow Moscow to target just Germany and Western Europe without affecting deliveries to other regions.
The problem goes beyond this particular dispute over gas prices or Moscow's general desire to control what it considers its "near abroad." All these are just symptoms of a more serious disease. Mr. Putin, who last year called the demise of the Soviet empire the "greatest geopolitical catastrophe of the century" seems to be doing everything possible to undo this "catastrophe." He is not trying to bring back Communism as such but using oil and gas "diplomacy" to try to restore the Russian empire.
As David Satter chronicles nearby, Mr. Putin has gradually destroyed Russian democracy and concentrated in the Kremlin not only political but also economic power by renationalizing the country's vast energy resources. As Russia looks more like the Soviet Union at home, its foreign policy follows old patterns as well. It sells nuclear technology and missiles to Iran while giving it diplomatic protection. Wherever there is a major political crisis -- be it Syria or Sudan -- Moscow almost inevitably opposes U.S. policy and backs the rogues.
Last week, the Kremlin's former economic adviser Andrei Illarionov resigned in disgust at Mr. Putin's gradual strangulation of Russian democracy. He likened Russia's price demand on Ukraine to Nazi and Soviet ultimatums to Eastern European nations on the eve of World War II. A not overly dramatic description, given that Defense Minister Sergei Ivanov warned Ukraine of "fatal" consequences after Kiev hinted at raising the rent for the Russian Black Sea fleet at Sevastopol, the Ukrainian naval base in the Crimea.
All this makes Russia's assumption of the G-8 presidency this month not just ironic but almost as absurd as when Sudan chaired the U.N. Human Rights Commission. Moscow's inclusion in the club was never (and still isn't) justified on economic grounds.
It was predominantly designed to encourage democratic and economic reforms in a country that still holds a formidable nuclear arsenal. Perhaps the engineers of that policy, including Mr. Bush, are now beginning to see that they made a mistake.
Puty Put is our friend
Islam is the religion of peace
Central and South American undocumented workers are here to do the work Americans are too lazy to do.
Repeat
"Mr. Putin has gradually destroyed Russian democracy and concentrated in the Kremlin not only political but also economic power by renationalizing the country's vast energy resources. As Russia looks more like the Soviet Union at home, its foreign policy follows old patterns as well. It sells nuclear technology and missiles to Iran while giving it diplomatic protection. Wherever there is a major political crisis -- be it Syria or Sudan -- Moscow almost inevitably opposes U.S. policy and backs the rogues. "
I think its time for $30 oil again - that will get Puties attention.
PutiePing
Wonder where all the Putin defenders are?
LOL What a funny comparison, but how true...
What is funny if Sudan would take G8 presidency and Russia chaired the U.N. Human Rights Commission my perception of this situation would be similar :)
I think its time for $30 oil again - that will get Puties attention.==
Until you will not have thermonuclier electricity plant orepational you won't see $30.
But if you see this plant then firstly you will see it in Russia:).
The article so stupid that beneath contempt.
The example.
"..In the old gangster flicks, the Mafia took sole control over a business to extort exorbitant prices. Refusal to pay carried dire consequences for the victim. That's basically Russia's approach in its energy fight against Ukraine, .."
How so the prices which Germany and other customers pays is "extort exorbitant prices"? Maybe its called the market prices.
The only two things that have changed very much at all in Russia since the days of the royal Russian Czars are (1)the names of the ruling Czarist organizations (from the royal Czars to the communist Czars to the KGB-Mafia Czars) and (2)the names of the ruling Czars (Nicholas, Lenin, Stalin, Kruschev, Breshnev, Andropov, Gorbachev, Yeltsin, Putin).
Russia is, since Yeltsin, a KGB-RussianMafia alligned mob-ocracy and it will either continue as such or it will create the conditions for the rebirth of the communist czars. If the communists come back to power, the current ruling KGB officials will be replaced with KGB officers compliant to the communist party, without missing a beat and the mob will go back underground and continue to provide the grease that actually gets things done in Russia, just as it did from 1917 to 1990.
The only two things that have changed very much at all in Russia since the days of the royal Russian Czars are (1)the names of the ruling Czarist organizations (from the royal Czars to the communist Czars to the KGB-Mafia Czars) and (2)the names of the ruling Czars (Nicholas, Lenin, Stalin, Kruschev, Breshnev, Andropov, Gorbachev, Yeltsin, Putin). ==
Who are you to tell such things? Have you ever been in Russia? DO you know ever one russian people yourself?
Surely not.
So stop to flap your tongue please. You show your ignorance nothing more.
They're watching Monanieba (Repentance), wondering why the current leader of Mother Russia can't be invested with the same powers as the great Uncle Joe.
Wow, the WSJ is whoring for Berezovsky again. How quaint. They're still pissed Putin didn't go into the Free Trade mantra that's their stock and barrel and which is killing America.
Wow, as an expert in Russia, how long have you lived there? If I may?
Freedom or trade and economic liberalism was and always be been at foundations of capitalist state and contributed greatly to building only true superpower USA is today. If you think free market thinking and WS brokers are killing America move your stuff to Belarus or Cuba. So long. You won't be missed. You may take your cheerleaders with you.
I see the Ukranian propaganda machine churned out this article. Boy did they ever forget to mention several points.
You - born and living your whole life in a free country have not the slightest right to talk judge it.
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