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The bust-up between Russia and Ukraine that threatens to gum up the gas supplies of much of Southern and Eastern Europe hardly comes as a surprise. It is almost part of the new year ritual and somehow always seems to strike during a cold spell. Across the Continent, radiators run cold.
So why hasn’t the European Union devised some kind of strategy to deal with the threat by now? Years of talk about energy security have generated nothing but hot air.
The fundamental problem is that Western Europeans, and in particular the Germans, have bought into the myth that Gazprom is a normal commercial concern struggling to succeed in the marketplace. The European Commission pretends that it is behaving in an even-handed way in the row between Kiev and Moscow. Scratch the skin of a Euro-bureaucrat, however, and you see soon enough that Brussels is in sympathy with the Gazprom line. Ukraine, you will hear, is chaotically governed, is not a reliable friend to the EU; a gas thief, no less.
There does not seem much doubt, admittedly, that the feuding between Viktor Yushchenko, the Ukrainian President, and Yuliya Tymoshenko, the Prime Minister, has sapped Kiev’s bargaining power.
Gazprom is intent on exploiting these divisions; the gas-price war is part of its long game to neutralise Ukraine. Or rather, it is a ploy mounted by those in the Kremlin who dictate Gazprom strategy.
“Gazprom itself is neither good nor bad,” say the Russian authors Valeri Panyushkin and Mikhail Sygar. “It is like a Kalashnikov or a Colt that can be used either to intimidate or in defence. Its moral value depends on the intention of the person whose finger is on the trigger.” In other words, stop talking about Gazprom as a straightforward market player. It is a political weapon.
The key aim of the Kremlin (President Medvedev is a former Gazprom chairman; the Gazprom CEO, Alexei Miller, was a confidant of Vladimir Putin when he was running St Petersburg) is to stop the EU and Nato expanding to include Georgia and Ukraine. A short war against Georgia discredited its Nato-friendly leadership. Game One to the Kremlin. Ukraine is about to be exposed as a wobbly European ally. Game Two to the Kremlin.
This is not about gas pricing. If it were, Moscow could have initiated serious talks about long-term supply contracts rather than engaging in annual price wrangles. The Kremlin disrupted supplies after the revolutions in Ukraine and Georgia. It lowers gas tariffs for friendly states such as Belarus and Armenia. In 2006, when a Polish energy company outbid Russian competitors for a stake in a Baltic oil refinery, the flow of Russian oil there stopped immediately. Because of “technical problems”.
Three days after the Czechs signed a missile defence deal with the US, Russian oil flow dropped by 40 per cent. Technical problems.
If the EU is serious about energy security it has to diversify away from Russian supplies as quickly as it can. It should also demand more transparency from Gazprom. The Germans are best placed to do this. E.ON, the German energy giant, has a 6 per cent stake in Gazprom; not much, but surely enough to make Gazprom management think twice before acting politically. Its heavy dependency on Russia should give Germany clout.
Instead, it co-operates enthusiastically with Gazprom in building a Baltic gas pipeline that bypasses Poland. The former Chancellor Gerhard Schröder has taken the Gazprom shilling and is quick to defend Kremlin policies. His post on the supervisory board of a company building an underwater gas pipeline through the Baltic Sea is reported to be highly lucrative. Germans regarded the move so soon after he left office in 2005 with deep suspicion, his friendship with Mr Putin adding to doubts on whether the former Chancellor was acting in the best interests of the country. Gazprom, keen to buy friendship in Germany, sponsors the football team Schalke. All of this helps to dilute the EU aim of energy security. As long as Germany’s supplies are guaranteed, why should it worry about the small fry, the Central Europeans currently shivering in the Big Chill?
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