January 2, 2006 12:28 PM

Desperate measures from a desperate (and failing) regime

Europe feels pinch as Russia-Ukraine gas row deepens

UK ‘could be hit’ by Russia gas row

Putin sends a shiver through Europe

Such an abrupt step creates insecurity in the energy sector in the region and raises serious questions about the use of energy to exert political pressure. As we have told both Russia and Ukraine, 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.

  • US State Department spokesman Sean McCormack

Since the breakup of the Soviet Union, the Russian government, long the anchor of the old Soviet Empire, has struggled to maintain it’s hegemony and influence over the states that previously comprised the USSR. In some cases, Russia has employed thinly-veiled military threats, in others not-so-thinly-veiled economic pressure. Not bad for a government that prides itself as an emerging democratic power, eh?

There is little doubt that Vladimir Putin’s Russia is a democracy insofar as the position and power of the current version of the nomenklatura remains unthreatened. Since Russia is still by far the largest economic and military power in the region, it can still get exactly what it wants in exactly the manner it wants it be simply flexing it’s considerable muscle.

Russia took Europe to the brink of a winter energy crisis yesterday when it carried out a Cold War-style threat and halted gas deliveries to Ukraine, the main conduit for exports to the West.

With a quarter of its gas supplied by Russia, Europe is facing serious disruption and price rises for as long as the dispute rumbles on.

Moscow turned off the tap at 10am after Ukraine refused to sign a new contract with the Russian state monopoly Gazprom quadrupling prices.

Critics of the Kremlin say the rise was punishment for the Orange Revolution in 2004 which brought in a westward-leaning government that promised to remove Ukraine from the Kremlin’s sphere of influence.

Though Putin’s government may protest that it is simply reacting to Ukraine’s refusal to negotiate new terms and prices for access to Russian natural gas, it’s quickly becoming clear that there is much more at stake here than a simple price increase.

Ukraine has upset Moscow by pushing to join the EU and Nato. However, Russia insists that the price rise merely brings Ukraine in line with the price that most of Europe pays: about $240 per 1,000 cubic metres.

President Vladimir Putin adopted almost warlike terms when he spoke on television as the hours ticked by before the ultimatum expired.

“If no clear response [from Kiev] follows, we will conclude that our proposal has been rejected,” he said.

That being the case, Ukraine has claimed the right to siphon gas from any piplelines that cross Ukrainian territory in lieu of transit fees. It doesn’t take much to see the possibility of a crisis escalating from there, and escalating into something that could quickly and adversely impact the entire European and, ultimately, the world economy. Russia may be in no condition to go to war against Ukraine (not that this unpleasant fact will stop Putin), but Vladimir Putin’s dispute with Ukraine has just deteriorated into a declaration of economic war. The question is what, if anything, can be done to convince or coerce the Russians to back off their insulting and inflammatory four-fold price increase. Not bad for an opening negotiating ploy, eh?

Russia seems to neither notice nor care what impact their spat with Ukraine could potentially have on Europe this winter, nor what this lunacy could do to an already fragile and nervous world economy. It seems far more interested in convincing Russians that their country is still the dominant regional and world power they have always seen themselves as- rather than the tired, corrupt, and decrepit excuse for a world power that it currently is. Yes, Russian may nominally be a democracy- if one believes that merely holding elections is enough to define a democracy. The sad reality, though, is that even though the Communist Party no longer has a death grip on the Russian body politic, Russia is still the sick old man of Europe. Take away the failing, decades-out-of-date and dangerously crumbling infrastructure, the lack of any meaningful economic opportunities for everyday Russians, a political system that still discriminates egregiously against women and minority groups (to call it a “kelptocracy” would be simpler), and a myriad of similar problems not likely to be solved, much less addressed, any time soon, and what you have is the world’s largest and most dysfunctional Third World country with a highly unstable and immature government. Nice combination, eh?

Despite all of the verbal saber-rattling emanating from the Kremlin these days, the Russian government is at best a corrupt, inept, and morally bankrupt collection of power addicts, and at worse a xenophobic, self-interested, venal, corrupt, inept, and morally bankrupt collection of power addicts. It is difficult to know with any degree of certainty what the end game will be in this dispute when all is said and done. I suspect that the Russians may eventually back off under intense pressure from the US and Europe after extracting promises and concessions to improve their own position…because in the end, that’s really what this is all about, don’t you think?

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This page contains a single entry by Jack Cluth published on January 2, 2006 12:28 PM.

Maybe next year, eh? was the previous entry in this blog.

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