The New Year has arrived, and the East European gas war has begun. Two of the continent's most closely-related countries, the former Soviet republics Russia and Ukraine, have squared off in a nasty dispute over how much Kiev should pay for Moscow's natural gas.
The inter-Slavic conflict carries the alarming potential of a total halt to nearly one-third of all of Europe's natural gas imports.
It is also, already, the worst spat in nearly two decades of almost always friendly relations between the two close neighbors -- Ukraine and Russia's economies and populaces are more closely intertwined than just about any other pair of nations on the modern European continent.
Yet now, with this year's very first trade war suddenly gone hot, two of Europe's newest nations, independent Ukraine and its former colonial master Russia, are employing traditional tactics.
Russian President Vladimir Putin, on the face of it, should be negotiating from a position of strength. The Ukrainians use about 80 billion cubic meters of natural gas every year, and only produce 20 billion domestically.
The remainder is imported, roughly 24 billion cubic meters from Turkmenistan, and 36 billion cubic meters from Russia itself. Ukraine's economy is dependent on low-cost manufacture of industrial energy-intensive commodities like steel and chemicals, and the cheaper the natural gas, the more competitive those industries become.
"It makes no economic sense for Russia to sell Ukraine gas at a subsidized price, so that Ukrainian steel manufacturers can dump their product back in Russia," Putin said last week at a press conference. "We need to place relations between both our countries on a rational basis, and that means an international market price for our [Russian] gas."
The European price for natural gas, as Putin has repeatedly pointed out, is around US$230. If that price doesn't suit the Ukrainians, he reasoned, they should certainly do without.
"The days of subsidized gas are gone," Putin said. "All customers will pay the market rate."
And if you ask the Ukrainians they will agree, only, they will insist Putin's view of a fair market isn't very fair at all.
Yushchenko only hours before the boycott went into effect pointed out to countrymen, and Gazprom customers Europe-wide, that other energy-poor customers in the region, the Baltic states and the Caucasus nations, pay Gazprom around US$100.
"So why is Ukraine singled out for special treatment?" he asked.
More worrying for the Kremlin were last week's comments from Ukrainian Prime Minister Yury Ekhunarov, who declared: "Ukraine guarantees transport of Russian gas to European markets ... but not for free."
Ekhanurov's innocuous statement hides, only barely, a multi-billion dollar veiled threat to Russia's biggest company, Gazprom, whose 2004 revenue was US$36 billion. Half of that cash torrent, Gazprom executives know painfully well, was generated by Gazprom gas sold to Europe via pipelines controlled by Ukraine.
"This gives Ukraine leverage on Gazprom in price negotiations, and Russia doesn't like that," said Ihor Tkach, an energy industry analyst.
The biggest fortunes of post-Soviet Ukraine, by no coincidence, were made by importing Russian gas into Ukraine at a Socialist rate, and then selling to Europe at a capitalist rate.
Ukrainian energy tycoons raised the "redirection" of Russian gas to an art form, using shell companies, faked Ukrainian consumers and inflated transportation contracts. And, according to the authoritative Korrespondent magazine, they also used black market gas reservoirs holding billions of cubic meters of reserves.
The actual size of Ukraine's debt to Gazprom for gas used and pilfered is unknown, and has been the main feature of negotiations between the two states since, literally, they were created.
Now that the Russian boycott is in effect, both sides are pointing fingers the same old way. Only hours after the cut-off Gazprom spokesmen accused the Ukrainians of pilfering gas. Spokesmen from Ukrnafta, Gazprom's Ukrainian counterpart, blithely retorted the only gas "diverted" from the flow would be gas fairly due Ukraine -- in Ukrnafta's opinion, of course.
Industry analysts generally agreed that Ukraine's economy might manage a gas cut-off with difficulty, but successfully, by increasing domestic production, fuel efficiency and by using of alternative energy sources.
Ukrainian skill at obtaining Gazprom gas for their own needs (the Ukrainians call it "fair payment") make Gazprom hopes that Kiev can be brought heel soon quite low, they said.
"The real question is what Gazprom wants more," Tkach said. "Its European profits, or to teach the Ukrainians a lesson?"
Donald Trump’s return to the White House has offered Taiwan a paradoxical mix of reassurance and risk. Trump’s visceral hostility toward China could reinforce deterrence in the Taiwan Strait. Yet his disdain for alliances and penchant for transactional bargaining threaten to erode what Taiwan needs most: a reliable US commitment. Taiwan’s security depends less on US power than on US reliability, but Trump is undermining the latter. Deterrence without credibility is a hollow shield. Trump’s China policy in his second term has oscillated wildly between confrontation and conciliation. One day, he threatens Beijing with “massive” tariffs and calls China America’s “greatest geopolitical
Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) made the astonishing assertion during an interview with Germany’s Deutsche Welle, published on Friday last week, that Russian President Vladimir Putin is not a dictator. She also essentially absolved Putin of blame for initiating the war in Ukraine. Commentators have since listed the reasons that Cheng’s assertion was not only absurd, but bordered on dangerous. Her claim is certainly absurd to the extent that there is no need to discuss the substance of it: It would be far more useful to assess what drove her to make the point and stick so
The central bank has launched a redesign of the New Taiwan dollar banknotes, prompting questions from Chinese Nationalist Party (KMT) legislators — “Are we not promoting digital payments? Why spend NT$5 billion on a redesign?” Many assume that cash will disappear in the digital age, but they forget that it represents the ultimate trust in the system. Banknotes do not become obsolete, they do not crash, they cannot be frozen and they leave no record of transactions. They remain the cleanest means of exchange in a free society. In a fully digitized world, every purchase, donation and action leaves behind data.
The Honduran elections seem to have put China on defense. The promises of trade and aid have failed to materialize, industries are frustrated, and leading candidate Salvador Nasralla, who has increased his lead in the polls, has caused Beijing to engage in a surge of activity that appears more like damage control than partnership building. As Nasralla’s momentum has grown, China’s diplomacy, which seems to be dormant since the establishment of diplomatic relations in 2023, has shown several attempts to avoid a reversal if the Liberal or the National party — which also favor Taipei — emerge as winners in the
RSS