Europe ’s winter of discontent: the Russian-Ukrainian gas war

This will appear in the next issue of Al-Ahram Weekly http://weekly.ahram.eg.org/

More tricks and hot air from across the Atlantic leave Europeans in the cold, notes Eric Walberg

A hurried resolution to the Ukraine-Russia gas war was reached during a visit to Moscow by Ukrainian Prime Minister Yulia Timoshenko to meet with her Russian counterpart, Vladimir Putin this week. Ukraine finally agreed to pay higher European prices for Russian gas from 2010, after a 20 per cent discount in 2009.

This accord came in the wake of sharp criticism of Ukraine by European leaders and Putin's first official visit to Germany as prime minister, where he presented a more ambitious long term solution to the unending troubles with Ukraine that have left European countries without winter fuel more than once. His proposal involves leading European energy companies forming a consortium with Russia ’s Gazprom to ensure that Russian supplies reach their destination. “Trust has been damaged,” German Chancellor Angela Merkel said after the talks, without specifying who was to blame. “We hope this idea of a consortium has a chance in succeeding.”

In Soviet days, there was never a reliability problem in dealing with Moscow , so what’s the problem now that we are all one big, happy, capitalist family? Quite simply, Ukraine refuses to pay market prices for its own gas imports from Russia, and even stopped paying its gas debt, preferring to steal Europe ’s gas as it transits Ukrainian territory and create a reserve for its own use, a strange and shortsighted policy to say the least. Whereas in the past, world price fluctuations among the “free nations” were of little concern to Soviet planners, Russian politicians today very sensibly want to extract every last kopeck from trade partners. They certainly will not put up with blatant theft and nonpayment of debts.

But Ukraine is the West’s “friend” and would-be member of NATO, while Russia is now the West’s “enemy”. Still, theft is theft, and the EU is beginning to sour on its eastern friend. Talks on a new association agreement with the Ukraine and on energy cooperation are now on hold. “This is about their credibility in terms of their entire relationship,” said an EU official. European Commission President Jose Manuel Barroso warned with uncharacteristic bluntness, “If Ukraine wants to be closer to the EU, it should not create any problems for gas to come to the EU.”

Ukraine ’s bonanza of gas transit fees could disappear as well. Putin raised with Merkel the issue of Gazprom’s NordStream pipeline, being built with German energy companies Wintershall and Ruhrgas which would allow Russia to send gas directly to Europe under the Baltic Sea as part of its policy of diversifying its export routes. At present 80 per cent of Gazprom’s exports — supplying a quarter of Europe ’s gas — must transit Ukraine. The best remedy against theft is to avoid dealing with the thief.

But in the meantime, EU and Russian officials are still pressuring Ukraine for an acceptable way to monitor gas supplies. Russia wants a 50 per cent share in the Ukrainian portion of the pipeline, as it has with a similar pipeline network through Belarus, which would put an end to the pilfering, but Ukraine refuses. Thus Putin's idea of a compromise international consortium, with Russia ’s involvement, to manage the pipeline, a proposal quickly approved of by Merkel. She has an election coming and Ukraine ’s defiant anti-Russian stance — and its shenanigans — do not impress potential voters, however much they may please Washington .

Hardest hit in early January were Bulgaria, Slovakia, the Czech Republic, Hungary, Bosnia, Serbia, Slovenia, Croatia and Macedonia during an especially cold winter spell. But the fractious 27-member EU, with its latest additions — the Polands and Croatias — is not amenable to making big deals with Russia in the common interest. Anti-Russian rhetoric is a big vote-getter for the new guys on the block, and it is no surprise Putin chooses to bypass the toothless EU and speak to Germany directly.

The factors leading up to the gas war are well known. On 2 October, the Russian and Ukrainian prime ministers agreed to switch to market prices in the business between their gas companies — Gazprom and Nafotgaz — with the Russian side allowed to sell directly to end users in Ukraine. In late November Kiev stopped payment of pending debts, making a new gas deal for 2009 impossible. Russia has been heavily subsidising Ukraine, buying from Central Asian producers at $375 per 1,000 cubic meters and selling to Ukraine at $179.5. It has been more than generous in easing Ukraine ’s transition to market prices, accepting a gradual increase to $250 for the 2009 contract. Based on 2008 sales, Gazprom lost $12 billion by selling gas at a subsidised price to Ukraine and had to ask for a bailout from the Russian government.

With no contract for 2009 in place, Moscow was forced to cut off the gas supplies to Ukraine on 1 January. Ukraine retaliated by refusing to allow the transit of Russian gas to Europe and using gas destined for the European market to create a gas reserve of its own at no cost, enough to last six months even if Russia cuts off all supplies.

Ukraine pleads its coffers are bare, which is no doubt true. Its industrial production sharply declined in November and GDP is forecast to contract by 10 per cent in 2009. It just accepted a $16.4 billion loan from the IMF. Chief Economist of the European Bank for Reconstruction and Development Erik Berglof recently warned that the IMF package might not suffice: “Ukraine is heading toward a twin currency and banking sector crisis that could well bring down most of the economies of Eastern Europe .” However, the IMF, no friend of Russia, also argues that Ukraine could easily solve its debt by transferring partial ownership of the pipeline to Gazprom, the obvious solution, which Merkel surely approves of as well. Russia is a reliable partner as both she and the IMF know perfectly well, but justifiably balks at being robbed by an ungrateful neighbour.

The missing link in this tedious and unnecessary “crisis” is the meeting Ukrainian President Viktor Yushchenko had with US officials in mid-December, where he signed a strategic partnership agreement that included a clause on energy cooperation. Ukraine ’s refusal to pay its debts or negotiate joint control of the pipeline with Russia were no doubt part of this agreement. This trail of events was not lost on the Russians. Medvedev openly blamed the US for the shutoff, saying Ukraine ’s actions were directed from Washington . Editor-in-chief of Russia in Global Politics Fedor Lukyanov said, “ Ukraine chose a tactic of deliberately creating a crisis through its rejection of talks and agreement, with the expectation that ultimately any major disruption of gas deliveries to Europe would hurt Gazprom’s reputation as a reliable energy partner. Everything that has happened after 31 December seems to me a delaying tactic. We are losing not a mere propaganda war but a real gas war. It is not accidental that countries that have excellent relations with Russia such as Greece, Hungary and Bulgaria, which are among our main European partners, are experiencing the worst difficulties.”

Yushchenko has played the anti-Russian card to the hilt since his suspicious “Orange Revolution”, financed by US government-funded “nongovernmental” organisations, amid accusations that he was poisoned by KGB (excuse me, FSB) agents. He has presided over a Wild West “democracy” since then, which has little to show for itself beside his failed attempt to push a divided Ukraine into NATO and his disastrous support of Georgia’s mini-war last summer, for which he provided some rusty tanks, a scandal which is still smoldering. According to a recent poll conducted by the Swedish International Development Cooperation Agency, 84 per cent of Ukrainians feel that things are going seriously wrong in their country, with 49 per cent calling it “critical and explosive”. Analysts do not rule out Ukraine sliding toward authoritarian rule.

Like the war in South Ossetia last summer, this latest “crisis” has “Made in the USA” written all over it, like the US-approved invasion of South Ossetia by Georgia, a trap set by the Cheneyites to snare both the Russians and the new administration in Washington. They even concluded a last-minute security pact with Georgia on 9 January which will most probably lead to a permanent US military presence in the Caucasus. The Kremlin has so far been cautiously optimistic about a fresh start to US-Russia relations under Obama, but he has his own Russophobe advisers, Robert Gates and Zbigniew Brzezinski, so the omens are poor for a turn-around.

Just as the US used the Georgian war to depict Russia as expansionist, and to push its unpopular missile defence project on Europe, it appears to have a hand in this made-to-measure energy crisis, yet another link in its latest Cold War, which is almost sure to proceed despite the cosmetic change of power in Washington this week. US media did its part, with the Washington Post exhorting the Europeans to “grasp the real message of this cold week”, as “Mr Putin’s regime plainly intends to use Europe ’s dependence on Russian energy to advance an imperialist and anti-Western geopolitical agenda.”

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Eric Walberg writes for Al-Ahram Weekly. You can reach him at www.geocities.com/walberg2002/

The ghost of Stalingrad: can Russia prevent NATO expansion?

This will appear in the next issue of Al-Ahram Weekly http://weekly.ahram.org.eg/

The ghost of Stalingrad
by Eric Walbert

NATO’s metamorphosis from Cold War Euro-policeman into the unabashed global military arm of the United States over the past 18 years has left a trail of debris from the Balkans to Afghanistan that will take decades to clear. It is a flagrant violation of the agreement James Baker III made with Soviet president Mikhail Gorbachev that the US would not extend the borders of NATO eastwards in return for Moscow allowing a united Germany to be a member of NATO. Russia was still in disarray and in no position to protest when the Eastern European countries and the Baltics joined, but as this policy of expansion turned into a blatant encirclement of Russia and a conquest of the Middle East, a furious, now self-confident Russia has finally drawn the line, at least in its immediate neighbourhood, with Georgia and Ukraine the last straws.

In a provocative analogy, Russian President Dmitri Medvedev called Georgia’s 8 August attack on Ossetia Russia ’s 9/11, and said Russia would react the same even if Georgia is accepted as a prospective member of NATO. He announced to the Russian Information Agency 31 August “Five Points of Russian foreign policy” already dubbed the Medvedev Doctrine, as a response to what we might call the Bush I/ Clinton / Bush II Doctrine, i.e., the dismemberment of the USSR / Russia to ensure a US-dominated unipolar world. They include:

1) a commitment to the principles of international law,

2) a statement that “the world should be multipolar”,

3) the wish to have peaceful friendly relations with all nations,

4) the intent to protect its citizens “wherever they may be”, and

5) the decisive fifth point: “as is the case of other countries, there are regions in which Russia has privileged interests. These regions are home to countries with which we share special historical relations and are bound together as friends and good neighbours. We will pay particular attention to our work in these regions and build friendly ties with these countries, our close neighbours.”

The crisis in Georgia will be seen by future historians as the beginning of the end for the grandiose plans of the US to bring its version of a New World Order in Eurasia to fruition, if not “Russia’s 9/11”. Instead of a seemingly inexorable march towards the Volga and the dismantling of the Russian Federation — recall this was Hitler’s goal — we are now witnessing war preparations at full tilt across the globe, with little Georgia as the catalyst.

The spider’s web of intrigue surrounding Georgia is thick indeed. It even reaches as far as Iran , which Israel appeared to be preparing to attack using nearby Georgian bases as a launching pad. This plan has been thwarted for the moment, though Iran proceeded last week with its war games to test its defences in anticipation of a US/Israeli attack from farther afield.

As Georgia welcomes a permanent US military presence to help restore its battered army, Russia is expanding its military presence at Tajikstan’s Gissar Airport. As the US positions missiles in Russia’s neighbours Poland and the Czech Republic, Russia is preparing to hold joint naval drills with US neighbour Venezuela (10-14 November) and station long-range anti-submarine patrol aircraft there “temporarily”.

The Russian navy has resumed its (or rather its predecessor’s) presence in different regions of the world’s oceans. A naval task force from Russia’s Northern Fleet conducted a two-month tour of duty in the Mediterranean Sea and North Atlantic from December 2007 to February 2008.

Russia’s Foreign Ministry spokesman Andrei Nesterenko insisted that Russia’s decision to send its armed forces to Venezuela was made before Russia’s war with Georgia. “This deployment had been planned in advance, and it’s unrelated to the current political situation and the developments in the Caucasus.” But the announcement was made just a week after Prime Minister Vladimir Putin warned that Russia would mount an unspecified response to recent US aid shipments to Georgia.

Thankfully, the war is still at the level of hot air. “Go ahead and squeal, Yankees,” Venezuelan President Hugo Chavez said in a national broadcast in which he announced the exercises. The US mocked the announcement. State Department spokesman Sean McCormack poked fun at Russia’s navy, expressing surprise that “they found a few ships that can make it that far.” Just in case Venezuela is too far from US shores for the outmoded Russian vessels, Russia has signaled it is keen to restore military and intelligence ties with Cuba. There are rumours it is seeking a naval base in Vietnam.

Not to be left out of the increasingly complex maritime equation, in June the US Navy announced it was re-establishing the Fourth Fleet, disbanded in 1950, which would direct naval operations in the Caribbean and Latin America. It is also negotiating with Georgia and Turkey to establish a naval base at the Georgian port of Poti. One of the responsibilities of US Special Forces in the region is to ensure the security of an oil pipeline passing through Georgia.

As US “aid” flows to the Black Sea in US warships, Russian military hardware flows to the Caribbean, as Venezuela recently bought 24 Russian Sukhoi fighter jets, as well as submarines and missiles. Chavez has said that he would allow Venezuela to be a strategic base for Russian bombers should it be required. “In Venezuela they will always have a green light, they will be welcome, because Russia is an ally of Venezuela,” said Chavez. He proceeded to expel the US ambassador last week until after the November presidential elections.

Sergei Markov, a United Russia Duma member, sees this as posturing rather than the prelude to setting up a permanent base in the Americas. “We need bases on the territory of Iran and Syria where our strategic interests lie.” While it indeed looks like Russia will re-establish a permanent presence in the Mediterranean using a Soviet-era base in Tartus, Syria, this talk of bases in Iran is a new development. It is rumoured that Russia may set up bases there and supply Tehran with the cutting edge S-300 missile system to help protect its nuclear facilities from airstrikes.

But apart from Venezuela, the main posturing is going on in Tbilisi, where President Mikhail Saakashvili insisted the West would help his country regain control of South Ossetia and Abkhazia, the separatist regions of Georgia recognised as independent nations by Russia and a trickle of other countries, including Nicaragua and Belarus. “Our territorial integrity will be restored, I am more convinced of this than ever,” Saakashvili said in a televised appearance. “This will not be an easy process, but now this is a process between an irate Russia and the rest of the world.”

The hot air and military strutting by this collection of antagonists is beginning to look like the calm before the storm. If it is true that US military were part of the invasion of South Ossetia, if only as advisors, this could mean that Russian soldiers might have been killed by Americans, something that never happened even during the height of the Cold War. During the Cold War, “the sides were very careful of each other. They were careful not to come too close,” said Alexander Pikayev. “The risk of direct military clashes is much higher. This situation is much riskier than the Cold War.” Both US presidential candidates are talking tough, and vice presidential hopeful Sarah Palin said, “We will not repeat a Cold War”, presumably meaning she preferred a hot one.

In such a hair-trigger atmosphere, Ukraine and Georgia can kiss any dream of joining the ersatz Western “defence” alliance do svidania.

Nevertheless, last week Vice President Dick Cheney toured ex-Soviet countries the US considers threatened by Russia, including Ukraine, Georgia and Azerbaijan, promising Georgia $1 billion (where do these nice round sums come from?), vowing the US will continue to back the country’s NATO application and saying that Moscow’s intervention “cast grave doubt on Russia’s intentions and on its reliability as an international partner.” In Ukraine, he spoke of the “threat of tyranny, economic blackmail and military invasion or intimidation” from Russia . That is an interesting slant on the Medvedev Doctrine. The reader can easily conjure up appropriate words that Medvedev might use to describe the Bush I/ Clinton/ Bush II Doctrine.

Ukraine is now embroiled in a mud-slinging match, with the collapse of the coalition government 3 September, when President Viktor Yushchenko withdrew his support over the refusal of Prime Minister Yulia Tymoshenko to back the president in his support for Georgia and condemnation of Russia. Yushchenko accused Tymoshenko of “treason and political corruption”, over her failure to back a pro-US stand, and of seeking Moscow ’s support of her likely presidential bid. Ukraine ’s pro-Russian former prime minister Viktor Yanukovich, who heads the Party of Regions, did not rule out the possibility of forming a parliamentary majority with the Yulia Tymoshenko bloc. Such a move would remove from the discussion the entire issue of a Ukrainian application to join NATO. Tymoshenko could well pull off a metaphorical coup by campaigning in the upcoming presidential elections on a sober platform of peace with Russia , which would very likely hand her the presidency with the support of the large Russian population of Ukraine as well as astute Ukrainians.

Another such scandal is brewing in Georgia itself, with the arrest of former president Zviad Gamsakhurdia’s son Tsotne as a Russian spy smack in the middle of Cheney’s visit to Georgia . He was charged in late 2007 with an attempted coup and links with Russian security services after opposition protests against Saakashvili. The voices of sensible Georgians, fed up with President Mikheil Saakashvili’s reckless chauvinism, are clearly being cut in the bud, as he consolidates a very nasty dictatorship backed by the Americans and Israelis. Of course, all Western media coverage of Georgia slavishly supports this loose cannon, but Medvedev’s description of him as “a political corpse” probably is closer to the truth.

It is hard not to sympathise with the Russians. The Black Sea, once the domain of the Soviet navy, now is the home of three NATO members — Turkey, Bulgaria and Romania — and two applicants, Georgia and Ukraine . If the two applicants join the alliance, Russia ’s Black Sea coastline would be surrounded by NATO. The volatile Caucasus would then be the playground of the US .

“Now it looks like there is a certain red line that exists in the heads of Russian leadership and they are willing to do anything to stop it from being crossed,” said Nikolai Petrov, at the Carnegie Endowment for International Peace. “And this red line is Ukraine and Georgia joining NATO.”

Russia ’s success in thwarting the Georgian attempt to wrest back Ossetia has shown its resolution. Russian warships have been sent to the coast of nearby Abkhazia. In the relatively close proximity in which the Russian and American ships operate there and elsewhere in the Black Sea , one misunderstanding could create an international incident. “We remember very well the Tonkin Gulf incident” in which untrue reports of North Vietnamese ships firing on US ships started the Vietnam War, said Markov. This was seconded by Republican California Congressman Dana Rohrabacher in a sharp criticism of US support for the Georgian attack.

Aleksandr Dugin, whose ideas about America’s weakening geopolitical standing are popular with many Russian leaders, said Russia was challenging US dominance and that confrontation may be unavoidable. Russia’s move into Georgia was “an irreversible decision that will mean in the future a serious, profound, irreversible confrontation with the United States. The stakes are so high that Moscow has placed all its chips on the table.”

It is not surprising that the Shanghai Cooperation Organisation, which includes Russia, China and the former Soviet Asian republics Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan , are supporting Moscow for “assisting peace and cooperation in this region.” Nor that Armenia and Belarus also support Russia, and the non-Yushchenko forces in the Ukraine are backing away from the flirtation with NATO. It is clear now that the US has insufficient power to cope with the occupations of Iraq and Afghanistan. Both were to have been an essential part of a US policy to militarily control Eurasian rivals, especially Russia and China.

If the Russians hold firm, and it is worth remembering their spectacular defeat of the Nazis at Stalingrad in this regard, this crisis will defuse with or without fireworks, US hawks will find their feathers clipped, and the world will adjust to a “post-America” multilateral sanity.

The tide has already turned. The latter-day Dr Strangelove was pointedly ignored on his cheerleading tour of countries supposedly threatened by Russia, except by his pal Saakashvili, and the European Union disregarded the US veepee’s bluster, hammering out an agreement with Russia to replace Russian troops with EU observers in undisputed Georgian territory by 1 October.

The bottom line here is a very mundane one: the EU is Russia’s neighbour and dependent on it for gas, whether her politicians like it or not. It is one thing for the US to wage wars far from its shores, as it is doing in Afghanistan and Iraq, or to play war games in other people’s backyards, as it is doing in Poland and Georgia, but it is quite another thing to expect a war-weary Europe to sign up and prepare to freeze in the dark.

Eric Walberg writes for Al-Ahram Weekly. You can reach him at www.geocities.com/walberg2002/