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.
I love the matrioshka dolls.
Kinda quiet today ? Whats the new spin now that this has blown up in your face.
With Iran, North Korea, and of course that beacon of enlightenment and political pluralism known as Belarus.
You know, the Soviet-style satellite run by the last dictator in Eastern Europe, Aleksandr Lukashenko.
As for N.Korea, Russia has to deal with them in order to send oil by rail to S.Korea, but you might wonder why Russia is arming SOUTH Korea with state of the art weapons. A unified Korea is in Russia's interests.
Ukraine, in Rebuke to Russia, Says It Has Right to Take Gas (Oranges admit to theft & a cold Europe)
Ukraine siphoned off German gas: E.on-Ruhrgas (Orange theft alert)
Your lie and slander campeign is starting to fall apart. Tell your boy Yushchenko he'll have to do better.
Anyone in Russia with honesty and intelligence knows that since the collapse of the Soviet system only two forces were already (and remained) organized and capable of taking power, the KGB and the Russian mobs. The KGB knew where all the dirt is, who is dirty, who can be bribed and who will work with them; while the mob continued as the financial fixers they had always been, though largely out of public view during the Soviet era. Yelstin gave some public space to a few honest reformers while the KGB and the mobs consolidated their hold on the national purse strings behind the scenes, paving the way for Putin.
Putin is every bit a Czar, as were the Communist Czars and the royal Czars before them; nothing has changed.
Anyone in Russia with honesty and intelligence knows that since the collapse of the Soviet system only two forces were already (and remained) organized and capable of taking power, the KGB and the Russian mobs. ===
Anyone in Russia knows?:) I don't know that. I see quite differnt story. The dirty oligarkhs by thier corruption managed to get common property for fraction of cost. Was Hodorkoskii a member of KGB. Or such figure as Abramovich?
You talk and don't know about what.
If not Putin then those figure would strip Russia from all her wealth. Thank Putin he stopped this robbery and even turned it back.
They have their own church, for goodness sake!
Could you even imagine MI6, or the CIA, or the Mossad-or any semi-reputable intelligence agency working outside of the Muslim world's shady Mukhabarat-exercising control over an entire church?!
And a very large one, at that. Vasily Mitrokhin and Christopher Andrew published several critically-acclaimed books detailing the extent of KGB dominance over the daily operations of the Soviet Union-both domestically, and abroad-and to a lesser extent, post-Soviet Russia.
To imply that these agents do not run the show is a statement that strains credulity.
It is a suggestion that is patently absurd.
Where do you think they got their "seed" money? Who is it that you think bankrolled the "oligarchs" to begin with. You believe that out of the former Soviet system, with no private property, an "oligarch" just opened a bank account (with which to buy "privatized" state industries) and on the day his account was first opened he already had money? From where?
By the mid 1990s it was widely reported and accepted that 60% of the banking industry in Russia was under the control of the Russian mobs, with the conivance and protection of the KGB.
The only thing that Putin has done is control which "oligarchs" the state will favor; will permit to operate; the independents or those that will bend to his will.
Many are labeling Russia’s pressure on Ukraine to pay market prices for natural gas as “Cold War” tactics. Of course, the Ukrainian government is paying the full price for their anti-Russian rhetoric and pro-Western orientation. Russia is flexing the only muscles she has: natural resources. But, it’s not so much a message to the Ukraine as to the West. And it’s not so much “Cold War” as Realist geo-politics... www.kirazalan.net
Putin is breaking the contract not Ukraine. Ukraine could afford to pay more, but not immediately as Putin requires. Budget considerations must be taken into account.==
It is stupid even Ukraine herself stopped to tell it and just signed new contract on same 5 years? Why so? Why they didn't go to arbitrage but prefer to flap tongue to media then signed new contract? Please think about this.
Thanks to Putin, the Russian government is now managing virtually all Russian oil and gas. It will be just a matter years until the equipment wears out and the companies go bankrupt again, just as they did under the Soviet Union.==
It is good because natiral resouces belong to whole nation. Who else should to rule them if not goverment of nation? Maybe you prefer sleazy oligarh but I'm not. Same as majority of russians.
I suppose you deserve to be impoverished and enslaved by Putin since you are such a big fan of his, but I feel sorry for the Russian people who don't know any better.==
Russians call it the "tears of crocodile". Means it is not sincere.
The popularity rate of Putin went even higher when he handled this "gas war" with Ukarine. He defended the interests of Russia as the president had to.
The only difference is that since it is now government controlled, they no longer have to follow the rules of good management. Their accounting can be secret because they no longer have to worry about the government prosecuting them for fraud.==
Accually GAZPROM shares each one may buy on open market today. SO it is join-stock company. Russia is hold the control amount of shares but not all of it.
For example AFIAK the german Rurgas hold second big bunch of shares and thier resresentative sits in ruling counsil of Gazprom.
By the way during this few days of "gas war" the cost of Gazprom shares went up 4.5%. SO the market disagrees with you:).
You believe that out of the former Soviet system, with no private property, an "oligarch" just opened a bank account (with which to buy "privatized" state industries) and on the day his account was first opened he already had money? From where? ==
Good question. I think the intitial money came from "speculations". During soviet years theer were some "black market" nevertheless. There were people whose called "speculators". Maybe better to call them "the black marketeers" who gathered big money even during soviet times. Their activity was unlawful under soviet law but they exsisted all the times.
Thier money was legitimated suddently and went on new created market. SO IMHO its was initial.
The money came from the Russian mobs, with strings - conditions - and, in as much as the KGB and the mobs had always had a cozy relationship, the KGB only asked that $$ support not go to someone they opposed. Putin has simply institutionalized these informal post-Soviet arrangements.
The money came from the Russian mobs, ==
During soviet times there were not "russian mobs". There were only "black marketeers" which wasn't mob organizations according definitions.
Soviet KGB were strict organization. Same as american FBI and CIA all together. So to speak that KGB supported mobs in USSR is very imaginary far from reality.
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