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If you think the Russians cruel for cutting off their neighbour, try the Ukrainian option when the gas bill next drops on your doormat (the price we pay in Britain, too, is about to soar). Tell the gas company that the price is unreasonable, refuse to pay and see what happens.
I can predict a flurry of indignant correspondence, the offer by the gas company of a brief period of relief and interim credit. Shortly thereafter, expect the arrival of a man in a little van to turn off your tap.
All this happened in Ukraine, except, unlike you, Ukrainians were enjoying very cheap gas, less than a quarter the price charged to most Europeans, a subsidy worth several billion dollars a year. Ukraine’s Orange Revolution (a declaration of independence from Moscow that never mentioned the word “gas”) released Gazprom from the political obligation to support financially a former Soviet comrade. So it behaved like any dominant supplier of a vital commodity in huge demand — it jacked up the price, in this case fourfold.
Predictably, European politicians are in a flap, noticing for the first time their utter dependence on Russian gas. Instead, they should reflect on their even greater dependence on pipelines — yesterday’s sudden drop in gas pressure in Austria, France, Germany and Hungary was due to theft by Ukrainians from transit pipes, not a Russian embargo.
Europeans ought to know that the gas price is a thorny problem. It was the European Union and the United States that held up negotiations over Russia’s accession to the World Trade Organisation, arguing that Russian industry was enjoying an unfair energy subsidy from cheap gas. Eventually, the Kremlin agreed that Gazprom would raise gradually its domestic fuel price from $27 per 1,000 cubic metres in 2004 to a still cheap $60 by 2010. It would be difficult for Washington and Brussels to argue, then, that Ukrainians should be treated with kid gloves. Do we really want cheap Ukrainian steel, subsidised by underpriced Russian gas, dumped on our markets?
Russophobes in Washington and elsewhere may find it difficult to accept, but this is business, albeit of a Godfatherish variety. It may be true that President Putin egged on the gas merchants, savouring the discomfort of the naive President Yuschenko, who a year ago thumbed his nose at the Kremlin. Amusing, perhaps, for Mr Putin to present gas bills to Ukrainians as they shuffle to the polling booth next March. But Gazprom has its eyes on something bigger than Ukraine.
It is all about pipes. The Russian company wants control of its export routes, hence its insistence that payment for gas transit fees across Ukraine would no longer be made in gas but in cash at market rates. Initial talks about bringing the transit lines into a German- Russian-Ukrainian consortium are off the table, Ukraine having realised that it would lose its last bargaining chip.
Control of export routes is the key to Mr Putin’s strategy of enclosing erstwhile enemies in Europe and America in an ever-tightening but warm and cosy embrace of natural gas. Ukraine is an irritating hurdle to overcome, but in the end there can be no doubt that Kiev will knuckle down and pay. There is no alternative; can Mr Yuschenko dare to suggest that his Western market economy should be propped up by a foreign, socialist institution? Today, EU ministers will confer on a strategy to deal with the perceived new threat of disruption to supplies of Russian gas. Were they honest, they would summon the Ukrainian ambassador and demand assurances that there will be no further theft of gas in transit to European customers.
They needn’t bother. It is too late. The decisions that might have slowed or limited the dependence, such as investment in nuclear power, should have been made a decade ago. Instead, Europe’s leaders chose to ignore reality, to pander to political extremists on the environmental fringe. In energy terms, we are no longer in control.
Merkel’s jobs for the boys
ANGELA MERKEL, the new German Chancellor, had some good news on the jobs front — a drop of 110,000 in the number on the dole, the eighth fall in nine months.
However, the total figure of 4.6 million, or 11.2 per cent of the workforce, is still alarming and her Cabinet will be in session early next week to consider a package of growth and job-boosting measures, including an injection of €25 billion (£17 billion).
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