Page 2 of 2 More battles ahead in Russia's 'gas war'
By M K Bhadrakumar
In fact, the American criticism of Russia over the gas war has been so highly
vitriolic that it looks every bit contrived. Aslund's outlandish thesis was
typical. Stratfor, which is linked to the US security establishment, said,
"Russia is once again threatening to cut natural gas supplies to Europe in the
dead of winter. This time, however, Moscow's focus is much tighter. Russia is
not only looking to smash the Ukrainian government, but it is looking for some
specific changes in Kiev."
The Wall Street Journal saw the gas war as the Kremlin's warning to Obama. The
daily commented, "Russia's strongman [Putin] is wielding the energy club to
undermine the pro-Western government in Kiev and scare the European Union into
submission. The strategic stakes are as high as in Georgia last summer ... For
the new Obama administration, Mr Putin has offered yet another tutorial in its
coming challenges in Eurasia."
The Washington Post exhorted the Europeans to "grasp the real message of this
cold week", as "Mr Putin's regime plainly intends to use Europe's dependence on
Russian energy to advance an imperialist and anti-Western geopolitical agenda."
Evidently, Putin was the main target of criticism.
Old Europe cautiously moves
But the shrill propaganda failed to click. The hard-boiled Old Europeans had no
time for it. The European Union reprimanded Kiev when Jose Manuel Barroso,
president of the European Commission, warned that Ukraine's failure to deliver
Russian gas might hurt its aspirations for close ties with Brussels.
Other European leaders also refrained from criticizing Russia. After meeting
German Chancellor Angela Merkel, French President Nicholas Sarkozy called the
dispute a "bilateral [Russian-Ukrainian] matter". At the height of the crisis,
former German chancellor Gerhard Schroeder visited Putin in Moscow in a show of
solidarity. (Putin is scheduled to pay an official visit to Germany.)
It seems the Europeans eventually saw through the Ukrainian game, despite the
adverse media publicity that Moscow received in the early stages. They decided
to associate with the new monitoring mechanism suggested by Moscow to ensure
that Kiev does not any more steal from the Russia gas transiting to the
European market. In the medium term, European countries may also seek to create
their own strategic gas reserves with Russian help. Gazprom is reportedly
planning to build the biggest gas storage facility near the city of
Hinrichshagen (Meklenburg-Upper Pomerania Federal Land) with a huge capacity of
10 bcm of natural gas, with some of it earmarked as strategic reserves for
Germany.
Another positive fallout for Russia is that the European countries may take a
renewed interest in Russian pipeline projects - the Nord Stream under the
Baltic Sea and the South Stream under the Black Sea - which aim at bypassing
Ukraine for supply of gas to the European market. At a joint press conference
with the visiting Czech Prime Minister Mirek Topolanek (the Czech Republic
currently heads the EU presidency), Putin said in Moscow last week, "The
current crisis confirms that there is a need for a true diversification of the
ways to deliver our energy resources to the main consumers in Europe." He and
Schroeder agreed that Nord Stream, which is expected to come on stream in 2011,
would be a guarantee against supply disruptions.
On balance, therefore, Washington will be disappointed to note that Europe's
euphoria over the Orange revolution has all but evaporated. The message was
loud and clear when Barroso said with uncharacteristic bluntness, "If Ukraine
wants to be closer to the EU, it should not create any problems for gas to come
to the EU." Washington underestimated that for Europe, a war over energy
security is not the stuff of propaganda, but is a flesh-and-blood issue for
their economies especially in these troubled times and uncertain future. The
extent of interdependence between Russia and its European buyers of gas indeed
tells a whole story.
According to the figures of the US Energy Information Administration, Austria
meets 60% of its gas from Russia via Ukraine, while the corresponding figures
for other countries are: Germany (42%), Turkey (67%), Greece (82%), Italy
(28%), France (24%), Hungary (60%), Czech Republic (80%), Slovakia (100%),
Bosnia (100%), Serbia (87%), Bulgaria (96%), Poland (40%), Slovenia (64%),
Croatia (37%), Macedonia (100%) and Romania (28%).
Again, European countries seem to have concluded that Moscow has been driven by
commercial considerations. They see the criticality of the income from gas
sales to Europe for the Russian economy. The fact of the matter is that Russia
faces a grave economic crisis. Oil prices anywhere below $70 create budget
deficits for Russia. The rouble is declining, the stock market has crashed,
unemployment is soaring, and social unrest and discontent may erupt despite
Putin's popular rating soaring over 80%.
In such a surcharged environment, Moscow has no reason to continue to subsidize
the Ukrainian economy, especially with a government in Kiev which, under US
instigation, has been constantly pursuing an unfriendly policy towards Russia.
As Dmitry Peskov, Russian spokesman put it, "We are struggling with the
consequences of the world economic crisis, but it does not mean that Russian
taxpayers have to sacrifice in order to keep Ukrainian production alive."
Besides, there is an inherent double standard in the US rhetoric. In a
devastating essay in The Guardian newspaper of London, Mark Almond of Oriel
College, Oxford wrote: "Keeping Russia hemmed in is why Ukraine matters to
America ... Although its EU allies pay around $500 per unit, Washington wants
Gazprom to subsidize the anti-Russian coalition government in Kiev by charging
the poor Ukrainians only $175."
He concluded, "Western triumphalists marked Russia down for inevitable decline.
Certainly, so long as [Boris] Yeltsin let his crony capitalists plunder the
country and deposit the loot in London and New York, pessimism was justified.
Now, however, Russia's capitalist crew are not fly-by-night asset-strippers but
ruthless capitalist politician-businessmen of the sort Britain used to
produce."
Armistice far away
So, is the gas war over? To be sure, Russian gas supply to Europe via Ukraine
has resumed. But the great game continues. Washington can draw satisfaction
that only a temporary solution has been found but the final armistice depends
on a Russian-Ukrainian gas deal with three interlocking elements: pricing,
debts and the volume of gas to be sent across Ukraine. Europe will not find it
an easy job to mediate between Russia and Ukraine.
At the root of the impasse lies the unresolved question of Ukraine's admission
to NATO, which Washington insists on despite European reservations. Washington
is determined to have its way and hardliners are hoping Obama will endorse the
line, while Moscow has made it clear to the Western world that it is the "red
line". And Washington commentators are peeved that Old Europeans do not want to
annoy Russia. Increasingly, they run down Germany for expanding its ties with
Russia.
Indeed, there are any number of issues over which Washington can instigate
Yushchenko to exacerbate tensions in Ukraine's relations with Russia, such as
NATO membership, Crimea and the Black Sea fleet, the Russian language, the
World Trade Organization membership, territorial disputes, etc - and attempt to
draw the EU into them.
On the other hand, it suits Yushchenko politically to distract public opinion
as his personal popularity is abysmally low in single digits. According to a
recent poll conducted by the Swedish International Development Cooperation
Agency, 83.7% of Ukrainians feel gloomy that things are going seriously wrong
in their country, with 49% calling it "critical and explosive". An
Agence-France Presse dispatch from Kiev recently reported that analysts do not
rule out Ukraine sliding toward authoritarian rule.
If nothing else, Yushchenko could always turn the pages of history and pick up
a lively quarrel with Moscow. In November, he decided to have an anniversary
bash over Holodomor, the tragic Ukrainian famine that Joseph Stalin's
collectivization drive caused in 1932-33. Yushchenko sent out invitations for a
summit of world leaders and included the Kremlin in his mailing list. President
Dmitry Medvedev naturally declined the invitation. Moscow had a different take
on that painful slice of Soviet history. What Yushchenko called "genocide",
Russian historians interpreted as "sociocide" - a murderous plot against a
whole social group instead of a specific ethnic community.
Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign
Service. His assignments included the Soviet Union, South Korea, Sri Lanka,
Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.
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