Posted on 01/03/2006 11:26:15 PM PST by twinself
Ukrainian President Victor Yushchenko only has to look in the mirror and see his pockmarked, disfigured face – the result of chemical poisoning – to know that the KGB is still in charge in Moscow. Since the beginning of this year we all know it, too. Russia’s state-owned gas company Gazprom cut the supply of gas to Ukraine after the latter refused to pay the new price Russia is charging Kiev: a rise from 50$ to 230$ per 1,000 cubic metres of gas.
As in the days of the Cold War, the Russians have their Western apologists. The latter say the price rise is the result of Russia’s wish to introduce free-market price mechanisms. However, as Andrei Illarionov, the former economic adviser to Russian President Vladimir Putin, said last Saturday, the price hike is a political move signalling the rise of neo-imperialist trends in Kremlin policy. Illarionov, a libertarian economist, resigned last week after the Kremlin had asked him to help cast the price rise as a free-market measure. Illarionov likened the measure to Nazi and Soviet ultimatums issued to Eastern European nations before their annexation on the eve of World War II. He urged the Kremlin to step away “from the brink of a precipice that we are approaching so blindly and quickly. Energy weapons are being used against neighbors. The move toward a policy of imperialism [...] has a clear and high price that will eventually be paid by the citizens of a nation that embarks on the imperialist path.”
According to Illarionov the political target of Russia’s price rise and cutoff of Ukrainian gas are the coming Ukranian parliamentary elections in March. Recently Russia has also cut off Moldova from its key power supplier and blocked oil deliveries from Kazakhstan to Lithuania. Illarionov told Time:
“What they are doing to Ukraine is obvious price discrimination. […] One feels that the main objective is having the negotiating partner sufficiently insulted in order to make reaching the agreement impossible. One feels that Russia seeks frustrating the deal for some duration. Actually, Konstantin Kosachev, Chair of the Duma’s Foreign Relations Committee, put it succinctly when he said the other day that no deal would be reached before Ukraine has its parliamentary election in March. […] Russia has made it plain it wants [control over] Ukraine’s gas transporting system. Then, Gazprom says, the prices will go down.”
As readers of the Brussels Journal know, Andrei Illarionov, one of the bravest men in Europe today (who now runs the serious risk of ending up with a face like Mr Yushchenko’s), has been replaced as Putin’s advisor by one of the most repulsive of Europeans: the German Socialist former Chancellor Gerhard Schröder. Since last month Herr Schröder is cashing in 1 million euro a month as political advisor of Gazprom. This is the booty Herr Schröder earned for agreeing, in his final weeks as Chancellor, to build a gas pipeline on the Baltic seabed. By 2010 the line will allow the Kremlin to pump gas directly from Siberia to Western Europe, bypassing nations such as Ukraine, Poland and the Baltics.
As the events of the past three days have shown, it is difficult today for Russia to deprive these nations of their energy supplies because the pipelines to Western Europe pass through their territories. The axing of gas supplies to Ukraine initiated a domino effect causing a drop in Russian gas deliveries to Western Europe, which imports a quarter of its gas needs from Russia.
The Ukrainian-Russian conflict has made the European Union very nervous. While the United States regretted the Russian move, saying that the issue “raises serious questions about the use of energy to exert political pressure,” the EU energy commissioner Andris Piebalgs was anxious to state that “nobody was to blame” and that “the situation was complex.” The situation, however, is not that complex at all. As the US government spokesman said: “We support a move toward market pricing for energy but believe that such a change should be introduced over time rather than suddenly and unilaterally.” Matters would be different if Gazprom were a private company. Such companies do not price their products according to the political inclinations of their clients, as Gazprom does when it charges Moscow-friendly Belarus 49$ for the amount of gas that Ukraine has to pay 230$ for, simply because Mr Putin (and Herr Schröder) does not like Mr Yushchenko.
Gazprom is Russia’s gas monopoly. It was brought under government control last Autumn. There is a pattern here. Two years ago Putin nationalized the Russian oil industry by dismembering the private oil company Yukos. What Russia is doing is dangerous for the whole of Europe because Gazprom is the largest gas company in the world, owning over 90% of all Russia’s enormous gas reserves and 25% of the world’s. It is gradually acquiring a monopoly position in the whole of Europe. Today Putin is abusing this power to squeeze Ukraine, but if Europe does not react the Kremlin might soon be in a position to squeeze Europe and treat all of us as its treats Ukraine today.
There are two lessons to be learned here. It is very dangerous to be dependent on a single energy supplier. This is illustrated by the case of Belgium, which is dependent on French state-controlled companies for 90% of its electricity. This has turned Belgium into a vassal of France and Brussels into a mouthpiece of Paris. If Europe similarly allows the itself to become dependent on Russia, the EU will in a decade from now be the mouthpiece of the Kremlin. To prevent this Europe must diversify its energy resources and seriously consider rebuilding its nuclear power plants. France is 80% nuclear already, which shows that at least Paris wants to be able to confront Moscow on an equal basis. Germany, however, has closed down its nuclear plants. It is no coincidence that this was done during the rule of Russian collaborator Schröder, who intends to go down in history as the man who sold out Berlin to Moscow.
The second lesson is that Russia’s imperial ambitions must be stopped today. It is important to stand by Ukraine and the other countries that lie between Germany and Russia. Rerouting Russian gas directly into Germany via the Baltic Sea, whilst bypassing Ukraine, Poland or the Baltics, should not be allowed. So long as Gazprom remains a Russian state-owned gas monopoly, it is necessary that some other authorities – be it other governments – are in a position to exert some control over the company’s gas deliveries. And seeing as Russia has apparently remained under the political control of former agents of the previous communist regime, such as KGB veteran Putin, it is imperative that Ukraine be brought into NATO.
BBC is reporting an agreement has been reached between Ukraine and Russia.
Good things. Thank you. I'll find out what's going on.
Europe will soon have two natural gas lines via North Africa, one from Morocco and the other from Algeria. Viva España!
They seem to conveniently omit that the market price of gas in europe is around $220, exactly what the Russians are asking for. Should they continue to subsidize a non-friendly (and, by the way, corrupt) government in Ukraine ? I'm not seeing anything wrong here with the Russians charging market prices, for one, and two, the Ukrainians knew that the price increase was coming for about 2 years now and are balking at it. I feel very little sympathy for them.
Like you I like customer-salesman logic very much. But it doesn't work in monopolistic environment. And pity it is not applied by neoKGB to a friedly regime of Belarus. Russia's cards are weak since 80% of EU exports are going trough the territory of Ukraine. Both parties need to find a satisfactory solution. Blackmail won't help. To Putie's regret USSR is over...
Just an early skirmish in the Peak Oil Energy Wars to come.
Fair enough - but Russians have played this very well, actually. What they did is the forced the EU (Germans, to be exact) to do their dirty work for them. I can assure you Germany's screaming bloody murder at the Ukrainians. And you're incorrect - only 25% of EU exports go through Ukraine. Russians said, ok, we're turning the gas back up, but if there's a drop in gas, means Ukrainans are siphoning off. They'll even put the EU observers in the pump stations to show the EU they're pumping, but if gas doesn't arrive in EU, means Ukraine's taking the gas. Puts the Ukraine between the rock and the hard place. Try explaining the Germans where the gas went.
As far as I'm concerned, Russians are welcome to give discounts to whom they like. If they like Belarus, let them sell gas to them at a loss. I don't care. But I can't support Ukraine moaning/groaning about being charged market prices. I can guarantee you Ukraine's independence from Russia rates far below Germany's (and EU's) need for the natural gas on their list of priorities.
I'm just a impassioned observer of the geopolitical game being played out. Unfortunately, Ukraine is still way too much intertwined economically to Russia to be able to peel off their sphere of influence. And that's why there will be very little payback, if any, at least in the short term. It's just a reality.
I know Poland has suffered greatly at Russian hands, and Poles are sure trying damn hard to be a thorn in Russian dealings in what Russians consider to be their sphere of influence. Poland's explicit support for Ukraine has not gone unnoticed. That's a payback if I've ever seen one. But don't get too carried away - Russians are not very nice people, and there are some lines that are better not crossed. Hell, they publicly threatened war if Ukraine were to "review" black sea ports treaty. Noone wants that.
Hell, using a threat is business-as-usual Kremlin's tool for geopolitics. Who cares? Ukrainians were promised price of $230 per 1K of cubic meters. They get $95 and significant increase in transit fees. So question who won the conflict is rather rhetoric. What's more in international arena Russia lost credibility in the eyes of EU customers not to mention those people in worldwide who believed that Putin's hardline policy is justified to counterbalance influence of India and China. War? They can't even effectively handle one war in tiny Chechnya. Another conventional war with country the size of Ukraine would be the end of Russia in today's shape, and Russian generals know it. I don't believe Chinese would think twice before "protecting" West China territories of Siberia, too.
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