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Russia's wake-up call for Europe

Rocky Mountain News

Published January 8, 2009 at 12:05 a.m.

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Europeans likely didn't need much more evidence of how unreliable a partner Russia can be, but this week the Kremlin gave them definitive proof.

In a pricing dispute with Ukraine, Russian Prime Minister Vladimir Putin ordered supplies of natural gas to Europe shut off, just as most of the continent was at the coldest point of what has been an unusually cold winter.

Europe relies on Russia for 25 percent to 40 percent of its natural gas, and 80 percent of that is shipped through pipelines that cross Ukraine. The cutoff was felt from Turkey to France and was particularly acute in the Balkans and southeastern Europe, where several countries declared states of emergency.

Russia claims that Ukraine is behind in its payments for gas and is seeking $600 million in late fees plus a higher price for future shipments.

In any reasonable part of the world, this dispute might be settled by mutually agreed-upon international arbitration. Whatever culpability Ukraine has in this dispute, Russia has motives other than financial. It resents Ukraine's successful experiment with democracy, its support for Georgia in the recent conflict and especially its plans to join NATO.

All this comes as Russia is reeling from a financial crisis brought by the collapse of oil and gas prices and by the Kremlin's custom of appropriating foreign-owned firms once they become profitable.

For the Europeans, Russian natural gas is the most readily available, but as long as the Kremlin uses price and availability as blunt instruments of foreign policy, they'd be foolish to rely on it.

This is a wake-up call for Europe to search for alternative sources delivered through more secure routes.

Comments

  • January 8, 2009

    6:24 a.m.

    Suggest removal

    VVVV writes:

    Russia is claiming Ukraine has to pay them for the gas they burned to ship the Russian gas to the Russian customers across their country. Ukraine doesn't need Russian gas, they have plenty of their own. Now they are getting extorted for politics, and since Russia can't do what they wanted to - drive tanks across the border just like Georgia. If it were as simple as just paying an electric bill, do you think the world would just stand aside? How about you read the news before you comment on it FRN4U?

    As for the RMN, what do you propose this magical "alternate source" should be? I guarantee heating oil or coal would be unthinkable. That leaves electric space heating - the most inefficient method of heating anything. Double the electricity demand in poor Balkan states? Great idea. I suppose you are going to send them the money to install the billions of wind turbines yourself. How about you take your two cents back and also withhold comments about subjects you don't understand.

    Russia needs a heavy hand. If they are going to withhold gas during the winter, then I suggest it's time to embargo imports until they start living up to the expectations of the world economy. Cut off their food and let them see how it feels.

  • January 8, 2009

    7:35 a.m.

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    SheikYurBooty writes:

    When the Berlin Wall fell (20 years ago already) I remember thinking that this would usher in an ongoing reign of peace and cooperation. Now with the thugery of guys like Putin and the emboldening of al Qaeda, it seems like a matter of when and not if we will see a major confrontation and conflagration. Fights over resources can easily escalate beyond anyone's worst nightmares...

  • January 8, 2009

    7:56 a.m.

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    Slimjim_800 writes:

    What a tainted story. Ukraine was skimming gas and Russia had enough of it. To think that Russia is doing this for political reasons is absurd. Russia is in no position economically to mess with one of its revenue streams.

  • January 8, 2009

    8:13 a.m.

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    vendari01 writes:

    You know, Sheik, I remember the wall coming down, too, but I found myself wondering just how long the 'peace' could last. With an old KGB officer in charge, I have to doubt that it will be for very much longer. He misses the power too much. I only hope that I am wrong.

  • January 8, 2009

    9:26 a.m.

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    Michael writes:

    SYB - You're right.
    vendari - Your doubts are well placed.
    The fall of the Berlin Wall and the collapse of the USSR has what everything has - unintended consequences. I am glad we won the Cold War, as is all of eastern Europe and many of the "stan" countries that were former Soviet satellites. But the bear is back. Watch how Europe will again be our friend when the bear comes sniffing and growling around the borders. Caught between Russia and a growing and hostile domestic Muslim population, Europe is doomed and the phone will be ringing again for the USA to save their collective a#@.

  • January 8, 2009

    9:30 a.m.

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    Cwillyrun1 writes:

    No slimjim, Russia uses anything it can leverage against neighboring former-Soviet Union countries to keep them in line with Russia's concerns. Why do you think they keep whining about the missile defense shield planned for small countries in Eastern Europe that can't defend themselves from attacks..... a missile defense that still wouldn't be able to stop an attack from Russia?

  • January 8, 2009

    11:18 a.m.

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    NoMoe writes:

    In many ways, I disagree with Obama. However, one I hope I have with our new president is that he is going to set a new policy; the U.S. is no longer going to be the world's police force.

    The EuroPEEEans are no longer a primary concern for the U.S. Look at the history and the misery they have caused with all their stupid little wars and struggles. Let the muslims and/or Russia control the region and GET us out of NATO. Lets focus on the Americas. Central and South America is going to be the New Economy.

    Signed,
    a conservative

  • January 8, 2009

    12:04 p.m.

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    Michael writes:

    No Moe - I tend to agree. We may have no choice or the budget to allow for our continual defense of a Europe that generally hates us until they need us to clean up their mess - AGAIN. 100 years is enough. Time for Europe to stand on its own and realize you cannot depend on the USA to defend you, not spend anything on defense, and offer their people cradle to grave social programs while refusing to defend your self from external and internal threats.

  • January 8, 2009

    1:14 p.m.

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    ConservativeGuy writes:

    FRN4U, there are also charges that are required to move the gas across pipelines. These are called transportation fees. Russia wants to renogotiate the price of the gas but not the tport fees. Do you believe tport fees should be free? They aren't in any other part of the world.

    Slimjim_800, Ukraine was burning gas to run the compressors that are required to move the gas. Again another reasonable practice.

    I work in the oil and gas industry, specifically on the natural gas side so I would like to believe I understand the practices.

  • January 8, 2009

    3:25 p.m.

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    Slimjim_800 writes:

    conservative guy-russia had two contracts with Ukraine one to transport gas to other european countries and one to sell gas to the Ukraine. Russia decided not to renew the contract selling gas to the Ukraine because it did not like the terms. By not renewing the contract Ukraine suddenly had no gas. As a result Ukraine began siphoning gas from the pipes going to Europe. Russia stopped transporting that gas as a result. The fuel use argument by Ukraine is simply not believable. A rupture in the pipeline would be a more believable reason for such a large discrepancy in delivered gas. My guess is that the Ukrainians did not choose to use that reason because they would probably be liable under the terms of the transportation contract.

  • January 8, 2009

    4:36 p.m.

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    vendari01 writes:

    I'd love to agree with you, Michael, but isolationism has never worked. In the end, it will come down to our own national interests to defend our allies- whether they like us or not. I'd go on, but I have to shut down. 'bye.

  • January 9, 2009

    7:47 a.m.

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    ConservativeGuy writes:

    Slimjim, From the info I have gathered the Ukraine burns about 80Bcf/year, 20 of which is supplied by Russia. In adittion they have about 16Bcf in storage. So to suggest they have "no gas" is erroneous if not dangerous. I have worked in the marketing department for a major independent natural gas company for the last 11 years, I am currently the Manager of our downstream scheduling group. One thing I can tell you is the pipelines are very delicate and any interruption will cause ineffeciencies and can cripple an entire grid. I also know certain pressures are needed to operate efficiently. And finally in most cases natural gas is burned at the compressor sites to keep them running. I believe that the Ukraine was protecting the integrity of the system and that is why losses were seen. I do not believe, as the Russians claim, that they were "stealing" gas. It is obviously more than just business and a political game as well. Personally, I don't trust the Russians and see no reason to believe them.

  • January 9, 2009

    9:52 a.m.

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    ConservativeGuy writes:

    FRN4U, I believe the Russian people are good. I don't believe the Russian government, specifically Putin, has good intentions.