European efforts to solve the Russian-Ukranian dispute over gas prices have stalled. According to the Times Online, hundreds of schools, hospitals and factories have closed, especially in the Balkans for lack of heating. “A senior US diplomat warned that Nato might have to intervene to help alliance members such as Bulgaria and Romania if the crisis drags on.”
Frantic efforts to restore gas supplies to millions of European comsumers failed today after Russia flatly refused to turn the pipeline back on.
A European Union plan to send monitors to both countries, agreed in principle by Moscow and Kiev as a way of breaking the deadlock between them, faltered at the 11th hour when Russia demanded that its own inspectors should be sent into Ukraine alongside independent experts. …
A senior US diplomat warned that Nato might have to intervene to help alliance members such as Bulgaria and Romania if the crisis drags on. “There is a commercial dispute at the heart of this, but this also has political overtones – we have seen Russia over time using such events to gain political leverage,” said US Ambassador to Nato Kurt Volker.
How exactly NATO would help was not explained. The Telegraph says the current EU President has characterized GAZPROM’s demand to send inspectors into the Ukraine in exchange for allowing EU inspectors into Russia as “blackmail”.
Alexandr Vondra, the Czech Deputy Prime Minister whose country holds the EU’s rotating presidency attacked “completely unacceptable blackmail” in a dispute that has now hit two thirds of the Union’s members.
“We want supply returned immediately without anymore blackmailing,” he said.
Nicolas Sarkozy, the French President and German Chancellor Angela Merkel joined angry calls for Russia to resume supplies as gas shortages and heating rationing threatened to spread from Eastern to central Europe and beyond.
“The Russians must respect their contractual obligations to the Europeans,” said President Sarkozy.
Or else what? My guess is that or else nothing. With their economies hanging by a thread and facing restive publics, the politicians in the west are probably “risk averse” — paralyzed by fear. They will hang on, bluster and hope for the best. But they will do nothing. The Ukraine and Russia may eventually settle their differences when all the parties at the table are eventually glutted or impoverished.
But the political component of the “international system” is dangerously weak. Third rate powers have called the West’s bluff too many times for Russia to worry about it any more than Toto worried about the Wizard of Oz. Maybe we’ve already reached the point where the shriller the cry, the less intimidating it is. The era of ’speaking softly and carrying a big stick’ has been forgotten in an age of word inflation. After all, when the greatest crisis facing humanity is Global Warming, what warning can be sounded for an encore?
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29 Comments
1. Roderick Reilly:I don’t know what America and Canada’s gas reserves are, and there are definite transportation issues, but wouldn’t more drilling mean that NATO allies could rely on us in the future for substantial natural gas relief supplies, a la Berlin Airlift?
Think of the scenario:
LNG tankers carrying gas from N. America would have to offload in Black Sea ports, escorted by a very major presence of U.S., British and French warships, dwarfing efforts by Russian naval vessels to harrass those shipments, and dramatizing the fact that Russia’s former “private sea” is something other navies can traverse with impunity.
Oh yes, to continue: other shipments would come through Baltic, German, Dutch and Polish ports. The Baltic and Polish offloadings would be an especially pointed reminder to Russia about their tenuous economic and military position.
Jan 8, 2009 - 2:27 pm 2. Michael Hoskins:Wait, I’ve got it. American leadership. When EU fails to function they want our “leadership” (spelled M-O-N-E-Y). When they don’t have a problem, they want us to lower our head and look to them for sophisticated (read elite socialist) guidance.
Our problem…not.
Drill
Jan 8, 2009 - 2:35 pm 3. esmoore5:Refine
Liquify
Fission
H2
“Though still in its infancy, EGS has the
potential to open up much of the planet
to geothermal development. Tiny plants
are already online in France and Germany.”
Source:
http://articles.latimes.com/2008/nov/03/business/fi-geothermal3
Maybe the current situation will encourage further
development in this area.
After all, geothermal doesnt care if it’s day or night,
Jan 8, 2009 - 2:47 pm 4. K:it’s not affected by wind conditions, and it leaves
no radioactive waste.
The Russians are making a mistake here. Europe will be cold and some industry may suffer. But the problem of relying upon Russia will be fixed eventually.
Exactly what is Russia or Putin gaining from all this? Nothing.
They should sell their abundant energy and use the money to improve internally. But they don’t know how. So they revert to what they tried in the Cold War – ironic name – arming, posturing such as sending their navy to Venezuela, and tightening government control over the entire economy.
I sense that Putin is trying to defuse a demographic time bomb with posturing and bravado in hopes of restoring patriotism and lifting spirits. It won’t work.
Jan 8, 2009 - 2:58 pm 5. Steve J. Nelson:Sorry Roderick, there aren’t enough LNG tankers in the world to do what you propose. And the Ukrainians should pay for the freakin’ gas or get a loan from those same EU politicians wringing their hands. Russia cannot continue to export gas to Ukraine for 1/4 of what its end customers in Germany and France pay ($500 per million cubic meters).
I know, I know, for daring to say that our brave bankrupt potential NATO allies in Ukraine need to pay up at a hundred dollars less than the Germans per MCM, I’m a shameless Putin apologist and probably work for the FSB. But the war porn addict commenters still dreaming their Cold War dreams need to wake up to economic reality. Gazprom owes billions in loans to Western investment banks it needs to service. It cannot hope to even maintain production from fields on the frigid Yamal Peninsula, much less meet future demand from China, if it keeps selling its gas dirt cheap to the Russian people, as well as the Ukrainians and Belarussians.
I’m sorry, but the Russians are right, and the EU should agree to their demands to inspect the pipes they’re expected to fill in Ukraine. They don’t call Yulia Timoshenko “The Gas Princess” for nothing. You think the Ukrainians weren’t siphoning off gas bound for Germany for themselves for years? Is a gas pipe that bypasses the perpetually warring oligarch clans of Ukraine really another Hitler-Stalin Pact, as some Poles hysterically said, or “just business”?
Wretchard is correct though that other than extending loans to the Ukrainians which they probably will never pay back, the EU can do nothing, and neither can the U.S., just like when the Russians responded to Saakashvili’s idiotic attack on South Ossetia by humiliating his army.
Jan 8, 2009 - 2:59 pm 6. wretchard:Wretchard is correct though that other than extending loans to the Ukrainians which they probably will never pay back, the EU can do nothing, and neither can the U.S., just like when the Russians responded to Saakashvili’s idiotic attack on South Ossetia by humiliating his army.
The statement that “the EU can do nothing” isn’t equivalent to saying that nothing will happen. It’s sometimes forgotten that even when people are paralyzed by fear, things happen. In this case, something will eventually happen, but not within the framework of the political status quo; not within the menu of acceptable outcomes to the EU — and possibly not within the anticipation of the US or Russia either.
Jan 8, 2009 - 3:08 pm 7. Ammo Guy:I’d suggest more nuclear reactors until I recall what happened to the last one in the Ukraine. Geothermal is a certainly a possibility – my brother-in-law outside Strasbourg has one in his basement and it seems to work very satisfactorily. Meanwhile, the French go about merrily generating 78% of their power via nuclear reactors while the Germans still plan to shut theirs down…and I always thought the Boche were the more technologically advanced of the two peoples. Furthermore, all those damn windmills in Deutschland are screwing up the scenic vistas…how long before you can see them from Neuschwanstein?
Jan 8, 2009 - 3:12 pm 8. Roderick Reilly:“”"”"”"”3. esmoore5:
“Though still in its infancy, EGS has the
potential to open up much of the planet
to geothermal development. Tiny plants
are already online in France and Germany.””"”"”"”"
Put the retiring George Bush in charge of a world-wide initiative. After all, he uses EGS at his Crawford Ranch.
Jan 8, 2009 - 3:25 pm 9. Roderick Reilly:“”"”"”"Sorry Roderick, there aren’t enough LNG tankers in the world to do what you propose. And the Ukrainians should pay for the freakin’ gas or get a loan from those same EU politicians wringing their hands. Russia cannot continue to export gas to Ukraine for 1/4 of what its end customers in Germany and France pay ($500 per million cubic meters).”"”"”
Yes, thanks, I do understand the realities. Besides, I was talking about a possible future that would be at least a decade away. Also, “Drill Here, Drill Now!” has run into a real-world supply-and-demand issue with the oncoming worldwide recession.
Jan 8, 2009 - 3:28 pm 10. Wadeusaf:I read somewhere that the Rukies and Ukies did this same dance two or three years ago, to what end?
I tend to agree with the Russians about subsidizing Ukrainian fuel, however the bigger clearer message of don’t mess with mother Russia’s cuddely cubs or she is going to demand a price fleecing all of the west. Oh wait, what was that price again, for Georgia this time for Ukraine the next and after that?
Jan 8, 2009 - 3:29 pm 11. dan aronstein:euroland is both too dependent on russian gas and middle eastern/muslim oil.
much more so than the usa on either count.
this is a critical lapse for the entire west, as it makes euroland especially susceptible to blackmail. it makes them a weak ally of the usa than they might otherwise be. this and their demographic deterioration make them liley to be dhimmis of arabs and vassals of russia unless some drastic changes take place – AND SOON!
both the russians and the arabs want euroland as dependent as possible.
the answer for euroland is NOT kyoto, but much more aggressive oil/coal/gas exploration in safer regions. and more nuclear reactors.ASAP!
Jan 8, 2009 - 3:33 pm 12. wretchard:The current economic recession cuts both ways in the struggle for energy independence. One the one hand, it reduces the cash flow to the Middle Eastern and Russian elites. But on the other hand, it stifles the development of higher cost sources of hydrocarbons. Since the lifting costs of the Middle East and Russians is lower, for the present, than alternative producers, when the economy revives they, and not the alternative producers, will be the first to benefit. It’s like being in a series of vertical maneuvers where the opponents, climb, stall, recover and climb again.
To break out of this cycle before everything hits the ground will probably require technological innovation or a chance in the cost structure. Maybe when the Russians and the Middle East run out of cheap oil things will change.
Jan 8, 2009 - 3:41 pm 13. steveaz:Or else…War? Doubtful.
If the Russians take the Europeans’ pacifist rhetoric literally, then Putin has ample reason not to fear any material consequences for his actions.
If I relied on the BBC or the NYT’s for information about EU’s military resolve then the Euro’s would resemble fat, unsheared sheep waiting obediently for the abattoir.
Ba-aa-aaa! Ba-aaa-aa!
Baaa-ckwards Americans, please save us! Whither Bar-aaak!? The Demo-craa-aats?!
Jan 8, 2009 - 3:46 pm 14. Casca:I’ve been given to understand that Ukraine is paying below-market-rate for Russian gas because the Russian gas is transiting Ukraine in a Ukrainian pipeline (subject to Ukranian tariffs), and, moreover, that the terms by which Ukraine transits, purchases, and uses Russian gas are mediated by a contract the two countries signed stipulating terms and pricing.
Russia seems to have violated the pricing/transit-discount it provided to Ukraine in this contract, effectively ‘doubling’ Ukrainian debt-obligations, and is now demanding control of the pipeline itself in exchange for cancelling these manufactured debt-obligations.
This incident seems manufactured, like South Ossetia, and in both cases, also seems to have much to do with controlling energy infrastructure. As in Georgia, the US/EU would be best served supporting Ukraine against the rumbles of its neighbor, and if possible, wean the aligned world from dependence on energy sources controlled by unaligned pseudo-global-powers.
Confrontation doesn’t necessarily lead to war any faster or easier than avoiding confrontation, after all. This isn’t about war-porn.
Jan 8, 2009 - 4:09 pm 15. rhe reader Basil:If I agreed to send my roofing crews over to reroof my brother’s rental houses at a discounted price, and were to find out that he was using my crews to reroof other houses than his own and was charging those homeowners more than our arranged price and keeping the dif, would I not have a fair issue against my brother? We would have words, indeed!
Jan 8, 2009 - 5:03 pm 16. Wadeusaf:On the other hand, if I was so inattentive as to have allowed this transgression, I would certainly share the blame.
I suggest that for the most part, the Russia-Ukraine dust-up and the South Ossetia-Georgia-Russia nightmare could well be looked at like a family problem. That, in my opinion, is the way they have behaved for a really long time, in case your history of the region is limited.
I also hold that staying out of the way of brawling brothers is the best way to stay healthy!
“the Russia-Ukraine dust-up and the South Ossetia-Georgia-Russia nightmare could well be looked at like a family problem….I also hold that staying out of the way of brawling brothers is the best way to stay healthy!”
While I don’t wish to be a part of that family, the brawling has now effected my kith and kin. Staying out of the way is not possible given the Russian moves have surely invited us into the fray. But what response sends the measured and meaningful message to knock it off?
Jan 8, 2009 - 5:55 pm 17. Bob Murphy:Is there no credible international body that can investigate the claims of both sides and sort it out? Some sort of binding arbitration?
Jan 8, 2009 - 6:49 pm 18. Bob Murphy:Or is the Russian dog just licking his dick (because he can)?
BTW if there was any chance of someone coming up with some short term gas, Australia has the resources, a new LNG plant has just come on line in Darwin and there are LNG tankers regularly heading for the northern hemisphere from here.
Jan 8, 2009 - 6:54 pm 19. Mark Maps:Perhaps with reduced demand due to the recession…
Casca,
There was a contract, but it’s expired and the Ukranians have balked at paying even the discounted new rate Russia offered, plus they still owe Russia something like a half-billion dollars on the old contract. Russia is a thug, but in this situation they are within their rights.
Jan 8, 2009 - 7:24 pm 20. Bob Murphy:19. Mark Maps:
Jan 8, 2009 - 8:19 pm 21. Dan:I wish they would make their case better in the public arena, Mark. Maybe they have and I just missed it.
A crisis over gas was inevitable because the oil price has collapsed and there is nothing Russia can do to prop it up; but gas can provide the revenue stream Russia needs under the right circumstances.
Methinks Ukraine is just a convent reason for dispute.
Jan 8, 2009 - 10:20 pm 22. Casca:Mark,
From what I’ve heard, you’re wrong, but I haven’t actually read the contract myself. Supposedly, the contract is current and the price Ukraine is supposed to pay on their contract isn’t negotiable until the end of 2009 at the earliest.
Russia claims the contract terms expired because “an inter-government accord” wasn’t “renewed” this year. Unfortunately, as I’ve been lead to believe, only Putin, and not the contract, requires this accord to be passed each year.
In other words, Russia says the contract has expired while the contract says it has not. Russia doesn’t even want the money. They want the pipeline. They’re jacking up the price so that Ukraine sells the pipeline to Russia. When/if Ukraine nationalizes the pipeline back, Russia will have their casus belli.
Jan 9, 2009 - 1:38 am 23. FEriksen:#22:
That was actually a very interesting perspective that I myself had not thought of at all, but, when presented like that, actually makes perfect sense.
I thank you.
Jan 9, 2009 - 5:25 am 24. Tom Holsinger:Wretchard said:
“How exactly NATO would help was not explained.”
NATO will send diplomats.
Jan 9, 2009 - 8:53 am 25. Roderick Reilly:“”"”"”"”"24. Tom Holsinger:
Wretchard said:
“How exactly NATO would help was not explained.”
NATO will send diplomats.”"”"”"”"”
I disagree. I think they will get tough and send people in uniforms with binoculars.
Jan 9, 2009 - 11:47 am 26. weSwinger:It’s beautiful the way the euro-trash with their solipsistic prancing and posing and posturing have tied themselves to a treacherous monopoly provider of heating fuel, fastidiously cut themselves off from economic alternatives, and then have hissy fits when said treacherous monopolist cuts them off and demands higher prices during a cold snap.
Just pay up, a******s!
Jan 9, 2009 - 12:12 pm 27. Steve J. Nelson:Wretchard: To break out of this cycle before everything hits the ground will probably require technological innovation or a chance in the cost structure. Maybe when the Russians and the Middle East run out of cheap oil things will change.
Based on my conversations with a former Chevron executive in Moscow, there is no way Russia is going to run out of oil anytime soon, though whether it is “cheap” or not would depend on the appetite of foreign investors to lend billions to Rosneft and Gazprom for exploration in the frigid Yamal Peninsula (think the North Slope of Alaska) and for additional exploration in Eastern Siberia. The ex-Chevron exec though said there is plenty of oil left in the traditional Western Siberian fields as long as Russia remains open to Westerners coming in to develop it.
Hopefully, just as Russia developed the Stabilization Fund (which it is rapidly burning through) as a hedge against a 1998-style collapse in commodity prices, it can also learn from this current collapse that resource nationalism and at least winking and nodding at Iranian and Venezuelan attempts to artificially inflate the worldwide price of oil have their price too.
Just because Russia is justified in pressing for a higher price now that the contract has expired (and the other commenters never addressed the issue of Ukrainian oligarchs, perhaps with the connivance of politicians like Timoshenko, outright STEALING gas from the pipe) doesn’t mean Russia is entirely blameless in all of this. It’s just that the West needs to wake up and realize that Ukraine is a failed state with perpetually warring clans masquerading as a government and that the second a wildly unpopular regime in Kyev forces NATO membership down the throats of an unwilling population, the eastern half of the country and the Crimea will secede and form a defacto anschluss with Mother Russia. The idiots pushing for NATO membership, such as John McCain and his lobbyist/advisor Randy Scheunemann, never seemed to care about this scenario. Perhaps it would allow them to justify the “moral clarity” and New Cold War they’ve been dreaming of for sometime.
Jan 9, 2009 - 12:40 pm 28. barry:Let the Euros freeze.
Jan 10, 2009 - 9:34 am 29. veracious:W,
softly and carrying a big stick’
I more suspect, the stick is used so _rarely_ used, that it’s easy to disregard, esp. if the rewards are big. Regards…
Jan 10, 2009 - 3:57 pmSorry, comments for this entry are closed at this time.