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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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For those cold war paranoid neocons like Rosemary Richter talking about Russia using Gas as a weapon the current viewpoint of the Ukraine PM may be enlightening:
http://in.reuters.com/article/oilRpt/idINLL23369820090121
J.Rijntjes, Lelystad, Netherlands
Now the solution is in (20% discount and market price from 2010) it is clear that the Ukraine was willing to exploit its stranglehold on transit as a weapon. That gas thief characterization is well justified: in 2006 the Ukraine stole transit gas and now partially depressurized the transit lines.
J.Rijntjes, Lelystad, Netherlands
To Fred, San Diego, USA: About who's reselling Russian gas for a profit. The infamous intermediary RosUkrEnergo. Now, who owns RUE? Oficially 50% - Gazprom, 50% - some individuals with UA passports. Most prominent of them - Firtash. Realistically, Most of RUE is under Gazprom control. Interesting..
Pavlo, Minneapolis, USA
It's all good what the writer is saying, but Germany has 90m people and no resources. Italy 60m and no resources. Their economies are heavily dependent on gas and to build an alternative pipeline still needs the gas. That is what the problem is: the resources Russians have them, none else does.
dirk, Melbourne, Australia
Russia is well aware that the US and Europe are impotent to counter the Gazprom weapon. Forget wind power and sun power because they are unreliable, inefficient and inadequate. The only answer to counter the Russian strategy is a combined policy of serious reduction in demand for oil,
plus nuclear.
clive, enfield,
60 years ago Maxim Litnov, wartime soviet diplomat said "food is a weapon". Nothing has changed since then except the commodity used as ammunition in the great politcal game!
Stuart Meyers, Brooklyn, USA
I agree with Gary from Austin. The less Russian /Mid East fossil fuels we use the less they can charge us for them, as demand decreases and there is oversupply.
The solution is to support 'alternative' energy - if not for green reasons, then for political.
Tom, Milton Keynes, UK
Russia is making a huge strategic error in using its gas supplies as a political weapon. In the not-to-distant future our economies will develop alternative energy sources and Russia's economy will suffer hugely for Putin's posturing.
dan, London,
I do hope that Ukraine's statethood shall not be sacrificed, by some well paid (from both EU taxpayers & unoffically by the kremlin) EU officials, under the propaganda spin of a contractual gas dispute.
Steve, Lviv, Ukraine
Very useful comment, Gary from Austin... *sarcasm*
Why anyone depends on the Russians is beyond me.
Brian, New South Wales, Australia
Hey Gary in Austin. Why don't you tell everyone in New England and all the northern states to turn off their gas heaters first. When you succeed at that, come back and ask the Europeans to turn off their heat in winter.
Fred Quimby, New Hampshire, USA
We needed to have nuclear powered power stations being built 20 years ago. Germany doesn't wish to upset Russia, bad memories there. The EU is a Socialist organisation trying to replace the USSR as a controller of 27 countries so the EU is Kremlin friendly.
Our government are fatheads, we freeze !
Phil de Buquet, Newport,
Time perhaps to stop the bellicose Russia bashing. Boyes neatly avoids addressing the mundane facts of theft and non payment of bills. Kiev is no better than an Asbo family. They openly admit to stealing the gas and struttingly claim to have no money to pay for the rest.
John Walter, bonn, germany
Ukraine has enough gas in the ground for its own use.
It uses Russian gas to make a lot of money by selling it to
europe.
Its all about money in the world.
The rich and powerful have really made a mess in the
world. So before you through rocks at Russia - - -
West is ruin of world
Fred, San Diego, USA
Build more nuclear power stations or remain forever at the mercy of the Russians, Arabs, Venezuelans etc. Germany is part of the problem with it's private arrangement with the Stalinists and so is the EU. Will the UK do anything? Not a chance! So you will end up raiding skips.
PL, Cambs, UK
All the EU need do is follow France's example. What is most surprising is that Mr Sarkozy didn't push that agenda. I guess the same applies, if it wasn't a problem for France, it wasn't a problem.
Neil, Norwich, UK
This is a great opportunity for all of the European global warming zealots to contribute to the great cause of reducing CO2. Here's your chance to turn your words into actions. Cut off your gas heaters. Think of that Russian gas as "deadly" carbon dioxide. Leave it buried in frozen Siberia tundra.
Gary, Austin, USA