I predicted this yesterday:
Russia has lowered deliveries to Ukraine, and ukraine will lower deliveries West. Russia will blame Ukraine, but what will Europe do? Will they be weak and tell the Ukrainians to stop "stealing" gas? Will they offer to help the Ukrainians pay for the increased price? Or will they do the right thing and remind the Russians that the gas is purchased at the Czech border and that it is the Russians' responsibility to take care of transit to that points? You can't do it, we'll take over? Sell us your gas at the Russian-Ukrainian border... Europe has been insanely weak-kneed is dealing with Russia, but on this one, it's a no-brainer. In the end, I expect a compromise whereby gas prices will be increased, but a bit less than the Russians asked for; gas transit fees through Ukraine will also be increased, but not enough to compensate for the increased price in gas for the Ukrainians, and loans will be provided for the difference - and will never be paid.
In the end, I expect a compromise whereby gas prices will be increased, but a bit less than the Russians asked for; gas transit fees through Ukraine will also be increased, but not enough to compensate for the increased price in gas for the Ukrainians, and loans will be provided for the difference - and will never be paid.
We're right on schedule now: Russia has cut off gas, and supplies West have been cut, as at least Hungary, Poland ans Austria have noted.
Funnily enough, the blame game has not been started by Russia, but bu the US, which (rightly) blame Russia.
To be continued... The essential thing is that Europe show some backbone. In the long run, we're all dead. John Maynard Keynes
I think Russia has the upper hand in the short term, because they have the gas Europe needs to avoid freezing over, and they can get their money elsewhere, or borrow their way out of the short-term crisis. guaranteed to evoke a violent reaction from police is to challenge their right to "define the situation." --- David Graeber citing Marc Cooper
Russia does not have the upper hand. If the gassupply disruption lasts more than a couple of days, Russia's reliability will be compromised, and its ability to borrow money on future receivables (i.e. the expectation of steady revenues over many years under stable contracts) will be damaged - and they vitally need that ability, and Gazprom knows it. In good times, like today, sure, they can borrow easily, but in troubels times like 1998-2001, it was the ONLY way they borrowed ANYTHING. The gas business is a very long term business, you cannot afford to lose trust for a temporary commercial advantage. In the long run, we're all dead. John Maynard Keynes
This is about who gets the loot. This is one of the juiciest, and most discreet, bits of loot for Russian and Ukrainian officialdom. As I write in the other thread, I suspect that Yuschenko has tried to clean up the Ukrainian side of this and both the Russians and the Ukrainain oligarchs who used to profit from this are trying to prevent that, in an unusually public way. The Russians are playing a very dangerous game, because if the Europeans see them as using the gas deliveries as a political weapon, they will hurry to find alternatives, and you'll see LNG terminals or Mediterranean pipelines for African gas financed and given priority rather than Baltic pipelines. In the long run, we're all dead. John Maynard Keynes
With hours left before the current bilateral agreement on natural gas deliveries and transit to Europe end, Russia and Ukraine face a crisis that could have serious international implications. Energy giant Gazprom is demanding Ukraine pay a fourfold price increase for gas deliveries staring next year. Ukraine says this is an exorbitant demand that is politically motivated.
Energy giant Gazprom is demanding Ukraine pay a fourfold price increase for gas deliveries staring next year. Ukraine says this is an exorbitant demand that is politically motivated.
Ukraine's competitive advantage in dealing with Gazprom is its location. The firm transits its natural gas through Ukraine to sell in other foreign markets. Naftogaz is key to Gazprom's international operations and this is the leverage Ukraine has in any agreement over the price it pays for Russia's natural gas, as well as transit fees.
Ukraine's leverage in these negotiations has become a political issue in the country's parliamentary elections scheduled for March 2006. President Viktor Yushchenko has no choice but to be reminded of what he said during the Orange Revolution last winter: Ukraine should have economic relations with Russia based on market principles, while protecting the country's economic sovereignty.
What is really in play and how will this conflict be resolved? First, most of the talk and bitterness about the negotiations have come from the companies most involved -- Gazprom and Naftogaz. When Gazprom announced its new price demands, politicians entered the fray. Presidents Vladimir Putin and Yushchenko have sought to cool tempers. Putin's statement that the gas dispute should not hinder Russo-Ukraine relations appears to be directed to Europe to apply pressure on Ukraine to compromise. In the end, neither president has an interest in offending Europe -- Gazprom's most-important customer. The second issue is how this dispute is perceived by the other former Soviet republics that import Russian natural gas. The drawn-out negotiations with Ukraine have sent the powerful message the days of cheap Russian natural gas are coming to a close. Moldova, Georgia and the three Baltic states -- and even Belarus -- have watched the spat closely and come to the conclusion playing hardball with Gazprom is a losing proposition. Third is the issue of control over natural gas pipelines. The issue that is making the headlines is natural gas prices, but the subtext is management and ownership of pipeline lines transporting Gazprom's gas. The company is offering to accept stakes in Ukrainian enterprises -- in particular the country's natural gas transportation network -- instead of cash payment for natural gas. Gazprom appears interested in acquiring control over the remaining parts of the Europe-bound gas transportation network, even accepting a price of $46.68 per 1,000 cu m from Belarus last week after Minsk agreed to hand over 50 percent of its gas transport company, Beltransgaz. This issue, of course, is delicate for Ukraine -- pipelines are the country's most important card in this dispute.
First, most of the talk and bitterness about the negotiations have come from the companies most involved -- Gazprom and Naftogaz. When Gazprom announced its new price demands, politicians entered the fray.
Presidents Vladimir Putin and Yushchenko have sought to cool tempers. Putin's statement that the gas dispute should not hinder Russo-Ukraine relations appears to be directed to Europe to apply pressure on Ukraine to compromise. In the end, neither president has an interest in offending Europe -- Gazprom's most-important customer.
The second issue is how this dispute is perceived by the other former Soviet republics that import Russian natural gas. The drawn-out negotiations with Ukraine have sent the powerful message the days of cheap Russian natural gas are coming to a close. Moldova, Georgia and the three Baltic states -- and even Belarus -- have watched the spat closely and come to the conclusion playing hardball with Gazprom is a losing proposition.
Third is the issue of control over natural gas pipelines. The issue that is making the headlines is natural gas prices, but the subtext is management and ownership of pipeline lines transporting Gazprom's gas. The company is offering to accept stakes in Ukrainian enterprises -- in particular the country's natural gas transportation network -- instead of cash payment for natural gas. Gazprom appears interested in acquiring control over the remaining parts of the Europe-bound gas transportation network, even accepting a price of $46.68 per 1,000 cu m from Belarus last week after Minsk agreed to hand over 50 percent of its gas transport company, Beltransgaz. This issue, of course, is delicate for Ukraine -- pipelines are the country's most important card in this dispute.
This is a coordinated attempt to isolate Ukraine from the EU.
The United States, however, is happy to step in; that base at Sevastopol would be a juicy piece of payback for Cam Ranh Bay after Vietnam. Have Keyboard. Will Travel. :)
