Tuesday, January 03, 2006

Russia backs down for now

Russia backed off its nascent halting of distributions of natural gas to Ukraine, pressured by big European consumers. Because the gas must travel through pipeline in Ukraine to reach Europe, Yushchenko was not powerless:

Russia cut off gas supplies to Ukraine Sunday after Kiev refused to agree to Gazprom's demand for an end to the below-market prices Ukraine has paid for the last 15 years. Early Monday, Gazprom accused Ukraine of "stealing" gas valued at about $25 million from the European-bound exports Gazprom shipped across its territory since Sunday. Ukrainian officials denied the allegations.
That's comical. Gazprom expected to shut off gas to Ukraine but maintained that Ukraine must continue to allow the stuff to flow underneath the feet of its shivering citizenry to the West? Putin probably hoped that Europe would blame Ukraine for the shortage (some places in Europe reported shortfalls of as much as 50% of normal supply from the cutoff on Sunday), but Russia felt the heat instead:

Germany, Russia's biggest customer in Europe and, through gas company E.On Ruhrgas AG, a shareholder in Gazprom, warned that Moscow's handling of the pricing dispute raised questions about Russia's ambitions to supply even more of Europe's growing demand for gas.

Russia is trying to coerce Ukraine back into its sphere of influence, disrupted last year by Yushchenko's victory. So long as the gas must flow through Ukraine to arrive in Europe, Russia's threats are empty. Ukraine claims it is entitled to part of what flows through the line headed to Europe since it does not otherwise charge Gazprom:

Ukraine says it is entitled to 15% of gas that goes through its pipelines in lieu of transit fees from Gazprom. And so far at least, Mr. Putin isn't getting much support in Europe. Germany's new government has blamed Moscow, and yesterday Russia reacted to that criticism by saying it would pump more gas through the pipeline to accommodate Europeans suffering an especially cold winter.
So for now, this looks like hollow power politics. However, Ukraine's strategic pipeline is not a perpetual panoply. Russia is already looking to circumvent its uncooperative neighbor:

Former German Prime Minister Gerhard Schroder, meanwhile, has taken a job as chairman of a Gazprom-controlled venture that will build pipeline under the Baltic Sea to bring Russian gas directly to Germany.
Ukraine cannot count on Western European support forever. The former Soviet state is mostly Orthodox and culturally much closer to Russia than the West. When it stops hurting at the wallet, don't expect Western Europe to go to bat for Ukraine unless the western (geographically and culturally) part of the country moves for secession sometime in the future. Of course, the more stress the Kremlin can put on Ukraine's delicate economy, the more likely it becomes that Yushchenko's coalition loses power and a pro-Russian block takes over.

While this plays out, Russia is getting settled in as head of the G8. Putatively, the organization of economic giants promotes (and its members, with the exception of Russia, are practitioners of) liberal democratic and free-market policies. Consequently, Russia was not admitted until the close of the 21st Century in hopes of bringing her into the liberal camp.

In terms of GDP, Russia is the second smallest member (Canada trails slightly, although our northern neighbor only has 33 million people to Russia's 143 million) and the country's steady move towards state-controlled totalitarianism makes it the group's salient outsider. Russia is now designated as "not free" by Freedom House, enjoying the company of cohorts such as Zimbabwe, Iran, and North Korea. This isn't surprising. Putin burst onto the political scene by taking a hardline against rebels in the second Chechen war and was a former member of the KGB.

As the West declines, so will everything the Occident stands for: Liberalism, democracy, human rights (as we define them), individualism, freedom of expression and religion, just to name a few. Demographic trends portend the coming preciptous drop in Western influence on the world. India and especially China, together comprising over a third of the world's population, are going to increasingly define global politics as they enjoy wild economic growth.

Russia suffers from many of the same problems faced by the Western Europe and the US. But Moscow has actively pursued closer ties with nations hostile to the West like Iran and China. As global warming makes the enormous, resource rich and sparcely habitated land east of the Urals more accessible, Russia stands to become wealthier and by extension a power player (once again) on the world scene. Russia will challenge the West and those in its orbit (like Ukraine under Yushchenko) more, not less, as time goes on.


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