Gas flows, everything ok?

Article published on Jan. 22, 2009
community published
Article published on Jan. 22, 2009
After three weeks dispute Russian gas is heating European homes. Talks ended agreement, it was even signed, bills are paid, prices fixed, EU monitors are checking implementation and everything seems to be ok next ten years. I would not like to be bird of ill omen but I must state to have serious doubts and fear that on the end of year 2009 the situation is the same as three weeks ago.

I base my gloomy forecast to three main factors related to Ukraine, which are

Financial situation, Questions related to domestic policy, and International policy.

Financial situation

The price of Russian gas to Ukraine almost doubled in situation of international financial turmoil where inflation in Ukraine has been over 50 % last year, its currency has lost most of its value compared to Euro, steel (one of the main export products) is down and the signs of better future are unseen in near future.

Domestic policy

Domestic political sphere is in stagnation, everybody is waiting new elections which outcome with great possibility is not bringing any solutions. Same time The Security Service of Ukraine (SBU) has finished pre-judicial investigation and directed to court the criminal case of two activists of association Popular Front Sevastopol-Crimea-Russia, has launched new operations against separatist Rusin movement (Subcarpathian Rusin parliament, Carpathian Ruthenians, Rusins of Carpathian Rus), has prevented recruitment of mujahedeens and is speeding its work on revealing streams of financing of the extremist radical Muslim organizations. An of course the Russian population in East Ukraine and Crimea is ready to activate if needed.

International policy

Ukraine is in cross-swell of declining U.S. hegemony and rising Russian sphere of interest and the country itself is divided which direction is the best. One part of playground is the energy policy of EU, but also U.S. and Russia. The latest gas dispute made it clear that Ukraine is not reliable transmitter of Russian gas to Europe. This boosts EU’s Nabucco –plan to new level. The same is true also with Russia’s South Stream, Nord Pipe and plans to increase more Liquefied natural gas (LNG) production and transport facilities. When impleneted – probably until 2015 – the new line(s) are invalidating the significance of Ukraine as transit route of energy.

Alternative paths

I believe unforeseeable future in social developments so the scenario I described above is not predestined the alternative paths are possible as well. E.g. in next elections Viktor Yanukovich’s the Party of Regions can win or lead ruling alliance in future, reconstruct better relations with Russia and minimize the impact of old parties of Orange revolution. It is also possible that despite results in election separatist movements are gaining more support and one compromise can be creation some kind of federation with strong minority rights which also can block Ukraine’s former western dreams.

Bottom line

Whatever happens, interesting year is starting in Ukraine. To the end I take second opinion by Czech intelligence agency as follows:

The Security Information Service (BIS), state intelligence agency of the Czech Republic, have warned members of parliament of the country that gas dispute between Russia and Ukraine most likely will repeat and it is only a matter of time, Prague-based newspaper Pravo reports. "We have received overwhelming information from intelligence and counterspionage services", said the head of the Czech parliament’s lower chamber committee on security issues, Frantisek Bublan. He marked that these data testified to presence of commercial and political factors which could provoke the next gas conflict between Russia and Ukraine. "It is impossible to guarantee that both sides will come to an agreement and the situation will normalize", noted Bublan, having pointed out that there was lack of transparency of the contracts concluded by Gazprom and Naftogaz. (Source: 21.1.2009)

(More my views over Balkans, Caucasus and energy war in my BalkanBlog )