Rhein on Energy and Climate

The second gas crisis is as much directed at Ukraine as the first one in the winter of 2006. By cutting gas supplies to Ukraine in the worst time of the year Russia wants to weaken Ukraine economically and discredit its –pro-Western – government for its inability to provide the population with gas.
The connected disruption of gas supplies to several small EU countries constitutes a collateral damage that Russia is ready to accept as much as the loss of export revenues for Gazprom.

By reacting decisively and separating the transit issue from the supply of Ukraine, the EU has been able to foil Russian efforts to put the blame on Ukraine.

This has become evident in the last two days after the signature of the tripartite understanding for deploying technical experts for monitoring the inflow of Russian gas.
To understand the foul play it suffices to combine three apparently separate “events” during the last two days.

First, instead of sending gas into the main transit pipeline, which links Russia and the EU, but does not interfere with the domestic Ukrainian network, Russia insisted on sending small volumes of gas via a domestic pipeline that happens to extend to the Rumanian border.

Technically this does not make sense for three reasons:
• The quantities that can pass are far too low to satisfy the demands of southeast Europe.
• Romania has enough domestic gas.
• If this pipeline were used for transit Ukraine would no longer be able to supply its citizens in Odessa and other places in the south.

This would have cut off major segments of the Ukrainian population from their essential gas supplies, infuriating them against their government, and not against Russia.

Second, the leader of the main opposition party, Victor Janukovitch, has introduced a vote of non-confidence against the government for having mishandled the gas crisis and provoked a serious crisis in Ukrainian relations with Russia.

Third, Alexander Medvedev, the deputy CEO of Gazprom, accused the Ukrainian government of not to opening the main transit line under pressure from the USA, with which it has recently signed a strategic agreement that also covers energy cooperation. This is a ridiculous accusation for deputy chief executive of one the leading global energy companies.

The EU should draw five conclusions from the Russian behaviour:
• It has to make Gazprom commercially fully responsible for the economic damage that it causes. All EU countries should therefore align behind the Bulgarian law suit.
• It has to be extremely firm with Putin, who calls the shots.
• Berlin, Paris and London have to pick up the phones with Moscow.
• It needs urgently to deliver gas or alternative sources of energy to its south-eastern neighbours.
• It must show solidarity with Ukraine

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Comments

  1. Mr. Rhein, I think you are erring on this issue. You cannot count me in the pro-Russian blogosphere, but Ukraine has no responsible government and they should be blamed equally. I think the responsibility of this economic and humanitarian disaster should be shared in equal proportions by the EU, Russian and Ukraine.

    Ukraine is a quasi failed state whose leaders are personally involved in the gains of selling disproportionately much gas to their population and than relying on EU and IMF funds to pay off the bills.

  2. Dear Eberhard,

    Having read with interest your commentary, I have a few questions regarding the Conclusions. My questions are based on my belief that the EU ought to be careful and level-headed in its relations with Russia. It shouldn’t be drawn into affairs between Russia and its old allies/new neighbours on its borders. Georgia yesterday, Ukraine today …

    If Gazprom/the Russian government politicize the trade, shouldn’t the EU and its members rather calm the matter down and not „be extremely firm with Putin“ or „show solidarity with Ukraine“ which may escalate the matter?

    Why can’t the Ukraine and Russia agree on a price which is higher than the former “Soviet family” price and lower than the market price – until „ better times“ will come for Ukraine? Isn’t there some politicizing on the part of the Ukraine, too?

    Gazprom is a company that can be taken to court by customers, isn’t it? Have the EU governments or the EU oil trade agreements with Gazprom which are affected by the Bulgarian-Gazprom dispute and which would justify the EU aligning behind the suit?
    Is there a common EU gas/oil acquisition and supply policy?

    How can the EU practically deliver gas to its S-E neighbours and who pays for it?

    Renate
    P.S. Blog replies must be a pain in the neck for the authors.

  3. Just a small technical correction to your post. Romania can survive for a maximum of 60 days without the Russian gas. It is true no major disturbancy occurred during the recent shortage, but industrial activity was slowed down in Romania as well.

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