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On one hand, Russia has every right in the world to demand market prices for it's gas. The media has not correctly reported this.

On the other hand, the "energy as a political weapon"-meme does have some weight.

Not for the big markets, France, Germany and Italy, or for the transit countries.

But for the other customers, small countries of the beaten track (like Georgia, Finland, the Baltic countries etc) there is a very real threat. The Russians might raise gas prices to unacceptable rates above the market, or just stop deliveries, to enforce political pressures.

This can also drive dangerous wedges between EU countries against Russia. Would France and Germany protect their smaller allies against Russian extortion if they themselves recieve plenty of relatively cheap gas?

Sure, you can conserve and build nuclear reactors, but that takes several years. You can't go without heat and power for several years.

The easiest solution for these countries seems to me not to have anyting to do with Russian gas and or electricity imports.

Generate domestic heat and power. It's not hard at all.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Thu Dec 28th, 2006 at 10:13:29 AM EST

Would France and Germany protect their smaller allies against Russian extortion if they themselves recieve plenty of relatively cheap gas?

France and Germany do not get "cheap" gas - they get gas at the full price - indexed on oil prices. Gazprom is looking for markets and income, so it has no reason to cut markets that pay the full price.

I agree in any case that a capricious cut off of Finland (or the Balts) should be treated by the EU with the same severity as a (more theoretical) cut to the big countries, but I'd suggest that the other side of the "grand deal" between European countries would be to drop that liberalisation nonsense. Either the market can provide, or it cannot. There's no middle way.

In the long run, we're all dead. John Maynard Keynes

by Jerome a Paris (etg@eurotrib.com) on Thu Dec 28th, 2006 at 11:10:04 AM EST
[ Parent ]
I like how you use this to beat up on neoliberal economics, "either the markets work or you agree that government intervention is sometimes needed" is an excellent point to hammer--especially with regard to the mildy retarded free market ideologues ruling the current US political establishment, but the notion of true energy independence  -- alternate energy schemes that are carbon absent or carbon neutral --are perhaps the most valuable answer to this dilemma, given where we are with global warming, etc. Perhaps, in addition to stressing the hypocrisy of the current neoliberal ideology, you might mention explicitly (and earlier on) what you say in closing: that free markets alone don't work and as a consequence a more reasonable, govermental intervention is needed, including 'diversifying' (as you mention) but also--taking the long view --governments should be strategizing and funding through research grants, tax breaks, market subsidies, etc...alternative energy infrastructures. Obviously as well, ANY solution should specifically NOT BE military in nature as they can only temporarily force availability for a limited supply. If energy (not necessarily oil) is a 'strategic' resource, than it follows that public funds should be invested into long term stable alternate energy solutions, not short term, erradicate and unpredictable 'interventions' to protect a resource that everyone now agrees will sooner or later be exhausted (and likely sooner), that may or may not even be successful--a military use of public funds is almost always the worst use. Given the WSJ's premise on this one (that energy is a 'strategic resource', that the market doesn't work to protect it, and that public intervention is necessary), it's a great time to push for strong public intervention exactly where it's needed, in the construction of a stable and strategic alternate energy game plan for the long term.

 

by delicatemonster (delicatemons@delicatemonster.com) on Thu Dec 28th, 2006 at 06:25:09 PM EST
[ Parent ]
The current price of $235 (?`) per 1000 cubic feet is cheap. That's what I meant.

And I restate that Moscow has all the rights in the world to demand market prices from all it's customers, and also has every right in the world to stop gas deliveries if they are not payed said market prices.

And of course the market can not provide. That's just senseless ideology.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Fri Dec 29th, 2006 at 12:34:30 PM EST
[ Parent ]
"Generate domestic heat and power. It's not hard at all."
Yes. I always thought that if we could get all of a country's politicians in a very large room and start talking, we could capture enough hot air to energize several large cities.


Hey, Grandma Moses started late!
by LEP (rafifoon@yahoo.com) on Thu Dec 28th, 2006 at 12:18:31 PM EST
[ Parent ]
I know certain politicians who would be of much greater service to their nations if they were processed through a thermal depolymerisation plant.

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid (arvid.hallen at gmail.com) on Fri Dec 29th, 2006 at 12:34:27 PM EST
[ Parent ]
But for the other customers, small countries of the beaten track (like Georgia, Finland, the Baltic countries etc) there is a very real threat. The Russians might raise gas prices to unacceptable rates above the market, or just stop deliveries, to enforce political pressures.
Err... did Russians (Gazprom, if you please - I never stopped my own nat gas deliveries to you) ever do that? I mean - just stop deliveries, rather than use a temporary stoppage to show seriousness of the negotiating position?

These things are getting really annoying. I understand Poles - the other day, I've read a book on Kievan Rus' ruler Jaroslav the Wise who lived a millenium ago. It included some quotes from contemporary Polish chronicles regarding Rus' and its inhabitants. They could have been written today - the same level of blind hatred and mockery. But why should mature Europeans support the belief system supporting this juvenile behavior - refusing to consider any arguments and then cry wolf and run to big brother for help?

by Sargon on Thu Dec 28th, 2006 at 01:02:07 PM EST
[ Parent ]
Gazprom is not a corporation like any other. It's practically a part of the Russian governmental/oligarch/siloviki elite.

Anyway, the Russians (doh!, I meant Gazprom... let's say Moscow?), have a stellar track record when it comes to delivering gas it's big customers. Some small customers have recieved subsidized gas in exchange for Russian political influence in their conutries. Nothing wrong with this if both sides approve of it, nor anything wrong if Moscow demand market prices when the small nation prefers not to have Moscow meddling in their internal affairs.

But what if Moscow decides to pressure a small nation even though it pays full price? The gas would be vital and Russia would have put said nation in a very weak position for at least 5 years.  

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Fri Dec 29th, 2006 at 12:34:25 PM EST
[ Parent ]
But what if Moscow decides to pressure a small nation even though it pays full price? The gas would be vital and Russia would have put said nation in a very weak position for at least 5 years.

But what if every passerby on Unter der Linden, say, suddenly turns into a murderous beast? Are there enough policemen to prevent any harm coming my way if this happens? Is travelling to Berlin safe?

I intentionally sound crazy, just to show how stupid the hypothetical scaremongering could be.

Actually, several people around me could turn mad at the same time just by a chance. A country is usually a set of very complicated interests and turns mad only under influence of a strong ideology influencing all players in the same way. Russia is adamantly anti-ideological at this point and will remain so for a foreseeable future. It isn't Putin's toy either (Kremlin has many towers, and every tower has many sentries, as a current saying goes).

Therefore, gas to a paying customer could be switched off only for a very good reason, such as duly imposed sanctions. I can imagine Georgia stating a war with South Osetia (as it almost did in 2004), in which case there is mobilisation and economic sanctions. But even this isn't on the table any longer, as Azerbaijan will become major Georgian supplier. Otherwise, I am hard pressed to think of a realistic rather than purely hypothetical scenario for an event you suggest.

by Sargon on Fri Dec 29th, 2006 at 04:16:34 PM EST
[ Parent ]
Many small countries are vary of Moscow. This might have something to do with Moscow meddling in their internal affairs, or occupying them and or their neighbours for 50 years.

Germany became accepted after the war because everyone down there seemed really, really sad and ashamed and because the Germans were needed to hold the front. Still after 60 years, the Poles become pissed off now and then over real or imagined insults.  

Now, while Russia is needed to supply oil&gas that is not as important as Germany was in the 50's. And neither the Russian people nor the elite seem very sad or ashamed at all over the Soviet Union and its crimes. Actually I believe Putin said the fall of the Soviet Union was the biggest disaster of the century, or something like that. What if Merkel said the fall of the Third Reich had been the greatest disaster of the century? A lot of people would be very angry and very afraid...

So expect people to be very vary of Russia for at least 50 more years.

Peak oil is not an energy crisis. It is a liquid fuel crisis.

by Starvid (arvid.hallen at gmail.com) on Fri Dec 29th, 2006 at 05:50:40 PM EST
[ Parent ]
I guess equating Nazi Germany and Soviet Union (the latter being, saving your sensitivity, marginally helpful in defeating the former) became a favorite sport in Europe, and ET didn't avoid this fad. Well, can't argue with quasi-religious beliefs.

Regarding fall of Soviet Union, Putin said it was the biggest geopolitical disaster of the century. If you just look around and notice what has happened after 1991, such as: several countries jumping to get nukes, certain large country deciding it's the biggest kid on the block and trying to impregnate the rest of the world with its vision of democracy with the results all too obvious, the same certain country refusing efforts for militarisation of the space, etc. - you should admit there's a certain point to his statement.

Two caveats: first, don't get me started on Central and Eastern Europe getting its freedom as a result of the collapse. These countries got the freedom before the collapse by conscious decision of Gorbachev (or Moscow, as many other people were involved). Second: these words were said at a military parade commemorating victory in the WWII, and they were to said to  veterans of this war. These people made the most of all currently living in Europe to produce all the bright things in existence (I hope we at least agree that Nazi Europe would have been a bad idea), and got a flood of brownish waste from "civilised" media in exchange. They did deserve some kind words.

Finally, on the question of shame and apology. You know, Gorbachev  tried it. Eltsin tried it. USSR discarded its empire, its ideology, and its confrontation with the West, on its own volition. Well, it turned out to be not enough, as the West wanted a defeated and humiliated country without defeating it first. Can't work. It's not a big surprise that Russians recalled all the good things their predecessors have done (even though some Europeans have conveniently forgotten them) and adopted a stance resembling that of Austrians, or Japanese for that matter - pretty well integrated members of the international community, ugh?

Sorry for delving into history - its was you who used 50 years of occupation to justify some ridiculous projections into future commercial matters.

by Sargon on Sat Dec 30th, 2006 at 06:11:44 AM EST
[ Parent ]
Therefore, gas to a paying customer could be switched off only for a very good reason, such as duly imposed sanctions. I can imagine Georgia stating a war with South Osetia (as it almost did in 2004), in which case there is mobilisation and economic sanctions

You sound like you think such sanctions would be justified. Assuming that's correct I presume you also think Russia should be under longstanding sanctions for starting its war against Chechnya.

by MarekNYC on Fri Dec 29th, 2006 at 05:55:59 PM EST
[ Parent ]
     Marek,
I do observe sanctions in the world. From this observation, I must make a conclusion that sanctions are  an internationally accepted method of action toward countries whose behavior your country (or a group of countries) finds unacceptable. Usually (but not always), they don't work. More often than not, they are needed for domestic consumption. Perfectly fine with me - if leading democracies of this planet are engaged in such behavior to shore up domestic support, why not Russia?

About Chechnya - I believe Russia should have been under sanctions for it between December 1994 (start of the 1st war) and summer 1995 (when Basaev performed his Budennovsk raid and turned this war from a war of independence into a fight with a brutal terrorist movement). Actually, such sanctions would have helped Russia a lot - by endorsing Eltsin's bombing of parliament in 1993 and Chechen war in 1994, the West clearly showed how "our SOB" could behave as long as his loyalty is assured.

Of course, I don't believe Russia should be under sanctions for the 2nd Chechen war which started in response to external aggression (remember Dagestan)? Definitely not imposed by the countries which invaded Afghanistan in response to 9/11.

by Sargon on Sat Dec 30th, 2006 at 06:28:01 AM EST
[ Parent ]

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