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?"
On May 7, 1971, Henry Kissinger planned his first, ultra-secret mission to China and pondered whether it would be better to meet his Chinese interlocutors “in Pakistan where the Pakistanis would tape the meeting — or in China where the Chinese would do the taping.” After a flicker of thought, he decided to have the Chinese do all the tape recording, translating and transcribing. Fortuitously, historians have several thousand pages of verbatim texts of Dr. Kissinger’s negotiations with his Chinese counterparts. Paradoxically, behind the scenes, Chinese stenographers prepared verbatim English language typescripts faster than they could translate and type them
More than 30 years ago when I immigrated to the US, applied for citizenship and took the 100-question civics test, the one part of the naturalization process that left the deepest impression on me was one question on the N-400 form, which asked: “Have you ever been a member of, involved in or in any way associated with any communist or totalitarian party anywhere in the world?” Answering “yes” could lead to the rejection of your application. Some people might try their luck and lie, but if exposed, the consequences could be much worse — a person could be fined,
Xiaomi Corp founder Lei Jun (雷軍) on May 22 made a high-profile announcement, giving online viewers a sneak peek at the company’s first 3-nanometer mobile processor — the Xring O1 chip — and saying it is a breakthrough in China’s chip design history. Although Xiaomi might be capable of designing chips, it lacks the ability to manufacture them. No matter how beautifully planned the blueprints are, if they cannot be mass-produced, they are nothing more than drawings on paper. The truth is that China’s chipmaking efforts are still heavily reliant on the free world — particularly on Taiwan Semiconductor Manufacturing
On May 13, the Legislative Yuan passed an amendment to Article 6 of the Nuclear Reactor Facilities Regulation Act (核子反應器設施管制法) that would extend the life of nuclear reactors from 40 to 60 years, thereby providing a legal basis for the extension or reactivation of nuclear power plants. On May 20, Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP) legislators used their numerical advantage to pass the TPP caucus’ proposal for a public referendum that would determine whether the Ma-anshan Nuclear Power Plant should resume operations, provided it is deemed safe by the authorities. The Central Election Commission (CEC) has
RSS