JOHN MARONE, KYIV
PUTIN’S DEAD UKRAINIAN HORSE
Russian President Vladimir Putin has once again accused Ukraine of sponging Russian gas. So what else is new?
Nothing - the accusations refer to the past, but Putin’s reasons for reviving them are in fact very forward looking if not misguided.
If you want to punish someone for doing something that isn’t considered wrong by everyone else, it’s very convenient to come up with another justification, even if you have to dig it up from the past.
Speaking in Moscow on the eve of the G-8 summit in Germany, Putin said that Russia was through with subsidizing Ukraine and other post-Soviet states with energy resources.
Moreover, he added, the price Ukraine pays for its gas imports would go up by as much as 17 percent to compensate for past losses.
Ukraine and the rest of Europe have long gotten used to tough talk coming out of the Kremlin, which has used its position as the continent’s biggest energy supplier to demand the kind of respect it got during Soviet times.
And although it may be acting against its own best interests in the long term, Moscow has not hesitated to follow up on its threats.
A year after Ukraine’s Orange Revolution, which set the country on a distinctly westward course, Russian state gas monopoly Gazprom raised the price Ukraine pays for its imported gas.
It went from around $50.00 per thousand cubic meters to $130 within the space of a year.
More importantly, the suddenness which with the first price hike was carried out – during the Christmas holidays in subzero temperatures – led to temporary shortages in Europe.
In response to international criticism that the Kremlin was trying to reel in stroppy former satellites, Moscow blamed everything on Kyiv, repeating earlier allegations that Ukrainians are inveterate gas thieves.
The Kremlin’s key message to Europe seemed to be that the newly independent states which popped up after the breakup of the Soviet Union were unreliable in matters of importance.
And the delivery of clean burning gas to environmentally conscious Europe is just such a matter.
Even Belarus, whose dictatorial President Aliaksandr Lukashenka has made the country a pariah state in the eyes of the West, has had its energy bill raised unilaterally by Moscow.
Of all former Soviet Republics, Belarus has clearly been the beneficiary of dirt cheap Russian energy, allowing Lukashenka to pacify the country’s population with high pensions and low consumer prices.
Ukraine, on the other hand, is a horse of a different color.
Pro-Western Ukrainian President Yushchenko’s team was quick to respond to Putin’s recent threat.
Oleksandr Chaly, the deputy head of Yushchenko’s Secretariat, called the Russian leader’s statements “absolutely baseless”.
However, if you throw enough mud at a wall, some of it’s going to stick. Putin’s intended audience included not only Europe, which gets most of its eastern gas via Ukraine, but Russians increasingly subject to arbitrary government, and Ukrainians increasingly doubtful as to who is in charge of their country.
While Putin has tightened his grip on his country since coming to power, Yushchenko has lost most of his authority.
That’s why pressure from Moscow is particularly hard felt in Ukraine, which has found itself wedged between an aloof EU and an indignant Russia.
Chaly tried to parry Putin’s verbal attack by arguing that the price Ukraine paid for gas delivered from Russia between 1992 and 2000 was lower than the average paid by Europe.
The fact is that during Soviet times, Russia subsidized Soviet Republics as well as members of the Warsaw Pact, which have all, to one extent or another, had their energy bills raised closer to the international market price since the breakup of the Soviet Union.
Chaly also mentioned Russia’s reliance on the gas pipelines that run through its former satellite states, noting that Ukraine charges transportation fees below the international rate.
Here, he hit the nail right on the head.
But this is no news to the Kremlin, which has attempted to make itself less dependent by building pipelines around countries with Western-friendly regimes such as Ukraine, Poland and the Baltics.
It won’t be easy to replace Ukraine’s transit pipeline, though, which is why Moscow has continually proposed schemes to gain joint control over it.
Fearing that the country’s pro-Russian parliamentary majority might act against the nation’s long-term interest, President Yushchenko signed a bill put forward by the opposition that prohibits transfer of control over the pipeline.
Unfortunately, what Chaly failed to mention in his arguments is that most if not all of the gas that Ukraine gets from Russia originates in Central Asia – about three fourths of Ukraine’s total consumption.
Russia merely transports the Central Asian gas along its pipelines, just as Ukraine does for Russia.
Not only does this fact blow a hole in Putin’s moral argument that his country’s generosity is being used, but it also reveals the weakness of Russia’s position overall.
As Russia began to raise the price it charges for the gas it sells to Ukraine, Central Asian states like Turkmenistan followed suit.
But for now, the Kremlin still holds a few trump cards, as Central Asia is dependent on Russian pipelines to market its products.
That’s why Kazakhstan has been cool on US-brokered proposals to build an oil pipeline around Russia. It would be too risky for the newly independent state to upset the Region’s power broker.
But as the Chinese and Indian economies continue to heat up, demanding more and more fuel to drive their expanding economies, Central Asia might eventually consider other offers.
In the mean time, Ukraine has been courted by Western-based energy giants offering to explore for newer, less accessible hydrocarbon deposits.
Shell Group obtained exploration license more than a year ago, while US Marathon has just announced a joint agreement with Ukraine’s state oil and gas company Naftogaz Ukrayiny.
Simultaneously, Ukraine’s gas-guzzling industry is investing in energy saving technology.
So as Putin defines his country’s relations with Ukraine, he would be better off looking to the future, when Russia’s energy monopoly may be a lot less of a threat to its neighbors. Accusing Ukraine of sponging or stealing Russian gas is like beating a dead horse – a horse that doesn’t even belong to Russia.
John Marone, Kyiv Post Senior Journalist, based in Ukraine.
June 13, 2007
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