01/07/2009 (11:40 am)
Remember when Republican presidential candidate John McCain, during debates with foreign policy neophyte Barack Obama, kept saying “Keep your eye on Ukraine?” I kept wanting to reply, “Ok, my eye’s on them, what am I looking for?” Turns out the old guy knew what he was talking about. So did Dick Cheney and a number of world leaders, who rushed to Kiev after Russia invaded South Ossetia and Abkhazia in Georgia last summer.
Suddenly this week, Russia is having disputes with Ukraine over shipments of natural gas to Europe in the dead of winter. As you can see from the map to the right (borrowed from BBC News,) all the major pipelines from Russian gas fields to central and western Europe pass through Ukraine.
First, Russia threatened to triple the price of natural gas to Ukraine, allegedly a response to Ukraine discussing becoming a member of NATO and/or the European Union (it seems that the Ukraine has been paying subsidized prices for natural gas, apparently a hold-over from the days when both Ukraine and Russia were members of the Soviet Union. More on this below.) Next, Russia accused Ukraine of siphoning gas from the lines without paying; Ukraine says they’re simply buffering gas to smooth transshipments into Western Europe. Today, Russia claims Ukraine simply stopped all gas from reaching Europe, with Ukrainian engineers counter-charging that Russia shut off the gas. Russia and the Ukraine are holding talks, but appear to be at a standoff.
Gazprom [the Russian gas monopoly] said Ukraine shut down three export pipelines without warning Tuesday, forcing Russia to cut deliveries to one-seventh their normal levels. Naftogaz, Ukraine’s state energy firm, denied the accusation, saying it was Russia that halted deliveries through the pipelines.
“We did not turn anything off. There is simply no gas there,” said Naftogaz spokesman Valentyn Zemlyansky.
The reductions came a day after Russian Prime Minister Vladimir Putin accused Ukraine of stealing fuel meant for other countries and ordered Gazprom to cut deliveries using Ukrainian pipelines in retaliation.
Meanwhile, European nations are freezing. Bulgaria, Croatia, Greece, Macedonia, Romania, Serbia and Turkey said gas from Russia coming through Ukraine stopped altogether Tuesday, and 12 other countries reported major reductions, according to today’s Washington Post story. Some Bulgarian cities are completely without heat. The European Union is proving its value by calling the situation “completely unacceptable.”
Mind you, no money ever changed hands between Ukraine and Russia for gas; Russia sends their gas without charge, and receives in return use of Ukraine’s transshipment pipelines into Europe and use of Ukraine’s ports on the Black Sea for their naval vessels. The two countries have been attempting to negotiate a natural gas consortium since 2000, to replace the current agreement for use of the gas lines that is set to expire in 2013. Ukraine has been relying on cheap natural gas since the breakup of the Soviet Union, but has done nothing to wean itself away from it since then. Their economy is addicted to subsidized gas, and might not survive a sudden shift to market pricing.
Sounds to me as though Comrade Putin is picking a fight. NPR suggests Putin is attempting to affect Ukrainian elections that are scheduled to take place in March, but I suspect there is more afoot. Putin appears to have his own idea of how the borders for the nations in the Caucasus should look. So far, the Bush administration has said “No, we’re not going to let you simply redraw the map.” Soon it will be Obama’s turn. How long do you suppose it will be before Russian troops step over the border into Ukraine and annex some part of it?
3 Comments »
Comment by Josh Maxwell
Hi. I read a few of your other posts and wanted to know if you would be interested in exchanging blogroll links?
Comment by robert verdi
Cool Blog, I posted on Russia and natural gas myself the other day. The link contains Russia’s natural gas resources and European consumption trends.
Comment by Alex
Seven ways of stealing from budget
1. “Make an order”.
Speed limiters, for instance. Do you know why they appeared recently? And why they are being mounted three or even four in a row? The answer is very simple: capital authorities pay Uah 50000 for mounting the single one, while wholesale cost of it is Uah 300. They earn 100 times including installations maintenance. Sudden replacement of old traffic lights that took place all over Kiev hardly could be explained by sudden care of pedestrians ‘cause no “zebra” markings were refreshed .