Who needs Russian-Ukrainian gas wars and what for

The West compels Russia to keep up dealing with unfriendly regimes.

REGNUM news agency arranged a roundtable conference called "Gas lobbyism in Russian-Ukrainian relations" for specialists, yesterday. Institute of Ukraine Director Yevgeny Minchenko, Free Russia Foundation President Modest Kolerov, and National Energy Security Foundation President Konstantin Simonov spoke of geopolitics rather than of lobbyists. All experts were convinced that the list of major players in gas wars included Russia, Ukraine, European Union, and - also importantly - the United States and gas exporters in Central Asia.

"Importance of gas price itself is fading," Minchenko warned. "Routes, volumes, and stability of deliveries start to take precedence." US strategy comes down to taking over Russian and Central Asian gas. Its tactic is centered around the efforts to drive a wedge between Russia and the European Union, arrange gas export routes from Central Asia to Europe bypassing Russia, and prevent Gazprom from making detours around Ukraine. That is why Washington invariably backs Kiev in Russian-Ukrainian conflicts. Brussels' stand on the matter is ambivalent. "EU energy companies and metallurgists perceive Ukraine as a major rival and therefore back Gazprom in general," Simonov said. "On the other hand, EU politicians second Ukraine because Brussels is wouldn't cross Washington if it can help it."

As for Kiev, all experts speaking at the roundtable conference agreed that it lacked any clear strategy at all. According to Minchenko, a smooth and gradual transition to European gas prices, preservation of transit monopoly, and stability of transit would have benefited Ukraine enormously... but for the sad lack of a competent negotiator in Kiev. "Victor Yuschenko is out to retain gas benefits and metal bushiness ventures that belong to East European oligarchs who sponsor the Galician political project," Kolerov said. Hence existence of intermediaries like RosUkrEnergo and regular attempts to secure privileges and benefits for certain gas companies.

Yulia Timoshenko in her turn is determined to bring down her political enemies' capitalization and weight and take over the gas sphere to finance her own presidential campaign next year. Minchenko is convinced that it will up gas prices but Timoshenko's sponsors and their businesses are going to be spared the worst consequences. Experts believe that most assets (60%) of the Donbass Industrial Alliance are located abroad, namely in Poland.

Meanwhile, Simonov warned that Ukraine would need 140 billion cubic meters before 2015 and Russia is the only country capable of delivering that much gas. According to Kolerov, the Ukrainian gas transportation system is on the verge of collapse. "It's 40 years if it is a day, and repairs will require billions in terms of investments," the specialist said. Along with everything else, Kiev may be counted on to do everything in its power to prevent South Stream construction across the Black Sea by Gazprom. (The Baltic states in the meantime keep interfering with the Nord Stream project.)

According to Simonov, Russia cannot hope to replace Ukraine with anyone else in the capacity of a transit country over the next 5-7 years. Turning gas off is pointless, unfortunately, and an agreement with Kiev is only possible with the EU as a go-between. Brussels, however, promotes interests of Ukraine and insists on some sort of "energy NATO" that will oversee gas export from Russia.

In other words, the West compels Russia to sponsor unfriendly regimes (with gas, that is).

Author: Victor Yadukha

Published: RBC Daily, March 6, 2008, p. 2