A dispute between Russia and the Ukraine over gas prices has expanded to involve Western Europe. After the two countries failed to agree on a new contract, Russia cut off supplies to the Ukraine, and the Ukraine passed on the cuts, causing shortfalls in Western Europeans energy supplies. The Independent describes the standoff which started in the New Year.
On New Year’s Eve, the deadline expired for Russia and Ukraine to agree a new contract for 2009 gas supplies. Moscow had wanted to raise its prices and charge Kiev $250 per 1,000 cubic metres, up from $179.5 last year. The Ukrainians thought that excessive and refused to pay a cent more than $201. Russia promptly put its price up to $450. Then at 10am on New Year’s Day Russia’s Gazprom halted supplies of all gas meant for domestic use in Ukraine. …
It wasn’t quite as simple as Moscow turning off the Ukraine gas tap. The EU gets about a fifth of its gas from Russia via the same pipes that pass through Ukraine. Russia cut the total volume of gas it was pumping by the amount Ukraine imports. But Russia says Ukraine stole some gas intended for Europe, and has cut deliveries by the same amount that was siphoned off.
Consumer gas prices are already rising despite the falling economies as the supplies fell even faster. Although reserves are available, the situation can’t continue indefinitely. The Europeans appear to trust neither side completely and have nominated themselves to monitor the gas flows between the Ukraine and Russia to prevent cheating. But with the physical pipelines in the hands of the disputants, it will be interesting to see how the referee enforces its decisions.
Neutral monitoring should allow the restoration of supplies to the EU, Barroso said at a news conference in Prague. He added, however, that technical details still needed to be agreed upon at a meeting Thursday in Brussels …
“If both Russia and Ukraine behave as they say they are behaving, there should be no problem,” Barroso said. “So we hope that the Russians put the gas into the Ukrainian network and that the Ukrainians do not interrupt the gas from Russia to the EU.” …
However, the EU warned that if the monitoring initiative failed, it might have consequences for both Moscow and Kiev. It would, Barroso said, “raise serious doubts about the reliability of Russia as a supplier through Ukraine.” …
Barroso said that the existing “solidarity” mechanism was insufficient and that the European Commission, the EU’s executive body, wanted it to be expanded. However, he conceded that the EU lacked energy interconnections between key countries, and appealed to member states to agree to back his proposals to spend billions of euros on improving energy infrastructure.
When Joe Biden predicted that BHO would face a challenge to his mettle upon assuming office, many imagined it might be a latter day Cuban Missile Crisis, a dramatic moment that would provide a moment’s thrill before the sun broke through the clouds. But what if the challenges come in the plural? What if the pent-up problems of decades begin to feed each other, like a patient whose long standing health problems begin to cause multiple organ failure. The problem with each new succeeding crisis isn’t the event itself, but its contribution to the total system load. It’s not Pakistan, Afghanistan, Iran, Gaza, the economic crisis, the squabbling among politcians or even the gas dispute that’s worrisome; it’s what happens if all these spreading blots begin to run together. Or maybe they already have.
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28 Comments
1. Gordon:Suppose Ukraine is siphoning some of Europe’s gas for itself; after all, it’s cold in Kiev, too. Will the EU stamp their little foot and say, “Now you just put that gas back in that pipe … right now!!”
George W must be looking forward to his retirement.
Jan 7, 2009 - 2:28 pm 2. pendejo grande:It wasn’t quite as simple as Moscow turning off the Ukraine gas tap. The EU gets about a fifth of its gas from Russia via the same pipes that pass through Ukraine.
Location,location,location.
Jan 7, 2009 - 2:33 pm 3. sfblue:Russia has the gas, Ukraine has the pipes. Both are required at this point. The bottom line is Ukraine can charge whatever it wants for the transit. Russia is the party that needs to pay up.
Jan 7, 2009 - 2:42 pm 4. newtland:Not when they have a bunch of tanks.
Jan 7, 2009 - 2:47 pm 5. Herb:Russia has severe monetary problems. They’ve devalued the ruble several times over the past few weeks. Their stock market has collapsed. It’s really going to help to burn their only major customer with money.
1. Israel and Palestine
2. Pakistan and India
3. Pakistan generally
3. Afghanistan
5. Russia
6. Illinois (the whole place)
7. Credit problems in the US
8. Nancy and Harry
9. Haven’t heard from China (yet)
10. Bush spent ALL the money.
Im surprised the boy hasn’t asked for a recount. I sort of feel sorry for him.
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Naah.
Jan 7, 2009 - 2:56 pm 6. LarryD:The Winter Gas War, Wall Street Journal:
I wonder if parts of the EU will wake up and decide that being dependent on Russia for energy is unacceptable.
Jan 7, 2009 - 3:03 pm 7. Roderick Reilly:“”"”"”Moscow had wanted to raise its prices and charge Kiev $250 per 1,000 cubic metres, up from $179.5 last year. The Ukrainians thought that excessive and refused to pay a cent more than $201. Russia promptly put its price up to $450.”"”"”"”
Wow, that’s smart, returning with a counter offer of $450. Do you suppose the Russians were serious about negotiating?
Hard to tell the difference between the Russian Mob and the Russian Government.
Jan 7, 2009 - 3:09 pm 8. Fred from Canuckistan . . .:Herb . . . I’m with you on starting to feel pity for the Big O.
Finally gets the golden ring in hand just in time for huge mounds of doo-doo to explode all over the place.
Let the mess begin !
Jan 7, 2009 - 3:12 pm 9. Salt Lick:Heh. The U.S. Space Shuttle will discontinue flights in 2010, the same year the International Space Station is completed.
Guess what country the world will then rely on for transporation to the Space Station?
Jan 7, 2009 - 3:14 pm 10. Roderick Reilly:To elaborate on my “Russia is stupid” comments:
They invaded Georgia in an attempt to assert themselves, and then their economy collapsed, thus putting almost back to square one. They flex their muscles by getting cosy with Hugo Chavez at a time when oil prices are collapsing, thus weakiening both Russia and Venezuela. Brilliant, they really know how to pick’em. Also, the Black Sea is no longer a Russian lake, and they’ve even had to share it with the U.S. Navy.
Here’s where I’m going with this:
Right now, we and the West are even stupider than the Russians. We should be able to rein them in by bluntly pointing out to them what I enumerated above, and also send more Navy ships to the Black Sea, and remind them that half the world’s naval ships belong to the U.S. Let them know that we’re neither afraid nor impressed by their Potemkin Village pseudo-macho charades and to start behaving like a responsible country whose first concern is the prosperity and well-being of its people. They won’t listen or acknowledge any of this except with bluster about “insults,” but they will know that we don’t intend to fold to their B.S.
Jan 7, 2009 - 3:18 pm 11. Gordon:#10–assuming we would do that, it would probably make an impression–but we hardly ever do. “World opinion”, you know, usually orchestrated by the Russians.
In Russia, might and power mean everything. Their strongest suit is that if they see weakness they don’t hesitate to exploit it if it’s in their interest and they don’t worry much about world opinion.
Lenin set the stage: he told his followers to probe here and if you encounter force, back up and probe elsewhere. When you find a weak spot (I think he used the word ’salient’), attack.
They do not embarrass easily; if the gas trick works, fine. If not, simply wait and apply pressure against someone else.
Would that our politics allowed us to be as assertive.
Jan 7, 2009 - 3:41 pm 12. Herb:Russia has the habits and mindset of an individual who was the baddest dude on the block when he was 16, but is now 56, 120# overweight with serious health problems and hasn’t learned anything in the last 40 years.
Russia is in a position to cause discomfort but nothing serious to real nation-states. It can, however, cause death to some of those people who are unfortunate enough to live in the “near abroad”. (SEE Chechnya)
If the American administration (whoever) recognized reality and the right and then did what they should, they would slap Putin up side the head and render Russia totally impotent within a week.
This could be done by a Naval exercise, an aviation expedition, through a fiscal war or even in cyberspace (tho’ in the latter no one would know except us)
BUT we cant do that because it would “humiliate” the russians. WGAS? What are they doing to the Ukraine? Byelorussia? They need to learn what happens to bullies when Gary Cooper or John Wayne shows up.
American Westerns are the true embodiment of the American personality and should be the moral guide to Foreign Policy.
Jan 7, 2009 - 4:22 pm 13. steeple:This is a costly game for Russia, as the gas that they are not selling into Europe each day is just backing up into the motherland. This is clearly a political exercise, as it is costing Russia more than anyone else.
Perhaps the game is more interesting now than in the past, as a Swiss-based middleman company (conveniently owned by a few well-placed Russians of the highest repute) by the name of RosUkrEnergo was recently cut out of the flow between Russia’s Gazprom and Ukraine’s Naftogaz (taking a cut out of all of the gas flowing from Russia to Europe is nice work if you can get it). Sounds like someone’s palm isn’t getting greased like before. Shocking.
http://en.wikipedia.org/wiki/RosUkrEnergo
Jan 7, 2009 - 4:23 pm 14. Ivan:Putin for all his cool eyes has shown himself to be just another stupid thug. Earlier I had some respect for him expecting that he would help the Russians recover and build a humane society. But I should have known that nothing good would come from the KGB.
Jan 7, 2009 - 7:03 pm 15. RWE:Anybody out there wonder why, given their dependence on Russia for gas, the Euros are not scrambling to adopt the Pickens plan for solar power and wind energy to replace that energy? And they are big Kyoto treaty supporters too, so it is a great fit.
The U.S. has Design Margin that the Euos lack. Even in our current debilitated state we can go off and pursue crazy ass fads like hula hoops, pet rocks, and having 1200 B-47’s flying around the world and still be able to get by just fine. They can spout all the nonsense they want but are in no position to actually do any more of it.
Jan 7, 2009 - 7:08 pm 16. Al:$450 is what the Europeans pay for Russian gas. It’s about what Ukraine would have to pay for gas if they were to buy it from somewhere other than Russia.
I find it interesting that this little tidbit was not reported. But of course, it would make Russia’s position seem more reasonable, and we can’t have that, can we?
Jan 7, 2009 - 7:21 pm 17. Gordon:#15–the only remaining B-47s are in museums; you’ll have to use something else.
Jan 7, 2009 - 7:32 pm 18. NahnCee:“They invaded Georgia in an attempt to assert themselves, and then their economy collapsed …”
You don’t think their economy was assisted along the way towards collapse? I thought at the time that we/America would be repaying Putin’s intransigence and bullying in the new 21-st Century new way of war, which is via banking and economics — that we would do the same sorts of things to Russia that we’ve learned out to do to Al-Queda the last several years.
We don’t *need* to nuke Moscow any more to defeat Russia. We can just bankrupt them.
Also, we’ve talked here on B.C. about the possibility of “economic terrorism” being committed against America — for example an entity with Big Money like China or Saudia Arabia artificially affecting prices on Wall Street and individual companies like Bear Stearns by buying big and selling short.
Russia would be MUCH more susceptible to “economic terrorism” because they don’t have much experience with capitalism, they’re really not that solidly rich as America, and they don’t trust each other to bail each other out. What would happen if Bill Gates, for example, or Queen Elizabeth or Oprah Winfrey or a Western government with a black untraceable budget decided to put some serious money into Russia’s economy when it’s out invading smaller countries and then summarily yanks that money out of the oligarchs’ projects at the most opportune time to cause Putin-Pain?
Yum.
Jan 7, 2009 - 7:33 pm 19. Boghie:All those inkspots merging together…
The Turds of Terror are using our strategy against us!!!
Jan 7, 2009 - 8:01 pm 20. dannyfrommiddletown:I think the Russians would be happy to have an excuse to invade the Ukraine. This may provide it. Half the population is pro Russian. Russia would like to take crimea to have port facilities for their fleet. In the back of my head there is a red flag saying what comes next may be a Ukraine invasion. Putin knows the west is not going to do anything, that was proven with Georgia.
Jan 7, 2009 - 9:01 pm 21. wretchard:I think the Russians would be happy to have an excuse to invade the Ukraine. This may provide it. Half the population is pro Russian. Russia would like to take crimea to have port facilities for their fleet. In the back of my head there is a red flag saying what comes next may be a Ukraine invasion. Putin knows the west is not going to do anything, that was proven with Georgia.
While I don’t think it would be Russia’s interests to do this, if they ever planned on doing it, could you pick a better time? Times of crisis can have the same effect on people that department store sales, an open jewelry display case, or a lady asking you to come up for a drink can sometimes have. You wind up doing things you really shouldn’t and will actually regret just because it’s an opportunity you know won’t come again.
The reason the US developed a three-legged deterrent posture was to keep dictators from the impulse to gamble. But we don’t believe that bad things happen to good people any more.
Jan 7, 2009 - 9:08 pm 22. Kinuachdrach:Because energy statistics are usually presented as US vis-a-vis Belgium rather than EU vis-a-vis Montana, many people are not aware that the EU is actually the world’s largest fossil fuel importer — much of it oil & gas from Russia.
Keep your eye on the prize here. Russia sells a barrel of oil into the EU for about $40, out of which the Russian side has to pay all the costs of finding, producing, transporting. The various state governments in the EU then slap on about $150/Bbl in taxes — pure profit to the EU govs.
Is that fair? If you were Russia, would you think that perhaps the high price paid by the EU consumer ought to be shared more equitably?
It is coming, maybe sooner than anyone thinks. you can imagine the discussion now. Russia needs to invest in pipelines which by-pass some of these trouble spots so that the EU’s gas & oil supplies will be more secure, and it is only fair that EU govs rebate part of the high taxes they collect on Russian oil to help cover the costs.
And once that door is open, the EU will soon become a mere tributary state to Russia. Russia and the EU — they deserve each other.
Jan 7, 2009 - 10:12 pm 23. NahnCee:I absolutely do not want to go to war with Russia in any way to defend Europe. Not even Great Britain. The EU can do or not do whatever it wants vis-a-vis Russia, but America needs to stay out of it.
On the other hand, I’m quite willing to belly up to the bar in defense of Ukraine, Georgia, Poland, etc., and get very close and personal to the Russian bear if Putin is still feeling puckish.
(Has anyone else noticed how badly Russians misbehave when they immigrate? There doesn’t seem to be a humble or law-abiding soul among them, once they step on American soil. I wonder if they’re capable of being good human beings, or if we need that generational thing with Russians, too, before they become Good Americans.)
Jan 7, 2009 - 10:24 pm 24. Lifeofthemind:I was missing the crowd from the Russia House.
Putin is Big Chief of a declining 3rd World country facing strategic, environmental and demographic disaster. Rationally he should devote his countries declining energies to stimulating real growth in the economy, the culture and the population. That should be accompanied by supportive alliances with those non-threatening neighbors and powers who could support a threatened and depopulated peripheral nation. With a population of approximately 140,000,000 Russia is only twice the size of Turkey, Less than half the size of the United States , a third that of the European Union and one eighth that of China. The Arab League has two and a half times the population.
To the contrary current Russian policy is devoted to crippling the Europeans, who pose no threat to Russia or anyone else and picking totally unnecessary fights with the United States. Playing the Big Bear to needle Uncle Sam with Chavez and Castro in an area devoid of strategic concern for Russia’s security, may stroke wounded post imperial egos at home. It does nothing to strengthen Russia in the face of real threats to his county’s survival. There are two potential existential threats to Russia, they are China and The Ummah.
Jan 8, 2009 - 1:34 am 25. Herb:Lifeofthemind:
There are two potential existential threats to Russia, they are China and The Ummah.
You forgot Russia.
Jan 8, 2009 - 7:29 am 26. barry:“WELL, The Euros always wanted the Russians to be in charge I mean as fellow socialists and communist what did the Euros expect?”
Jan 8, 2009 - 9:18 am 27. Anton:Stay warm Europe buy Russian gas and keep a blanket handy LOL
I find Russia’s decline both amusing and sad at the same time.
Amusing in that so much bluster and noise is coming from such an empty vessel, they can’t take themselves seriously most of the time. It borders on comical.
Sad in that there are such riches in that land that they could be at least as rich as the US, but there is such an emptiness of soul. It is almost as if the will to live has left them, like a has-been biker tough guy picking a fight with the cops so they will shoot him.
Jan 8, 2009 - 9:46 am 28. RWE:Yes, and the hula hoops and pet rocks are in the museums too, if you get my point.
Jan 8, 2009 - 11:01 amSorry, comments for this entry are closed at this time.