The Spoils of Gas War
It is often the case that wars result in a redrawing of international maps or a reshuffling of a country’s political deck. Ukraine’s recent gas war with Russia appears to be no exception in as much as it is likely to change the face of Europe’s energy map while reshuffling the political elite in Kyiv.
Wars, however, not only offer up spoils to the victor; they also spoil a lot of other things for those who are involved or not.
Analysts said European gas companies have been foregoing income to the tune of 150m euros per day. And the gas has yet to be turned on.
Eastern Europeans have been hit the hardest, though, particularly the Balkans, Hungary and Slovakia. There were nasty reports of freezing schools and hospitals, even ‘civilian’ deaths, as a result of gas shut-offs.
The Bulgarians threatened to restart their rickety Soviet-era nuclear reactor. The Slovaks did the same, while crying for a state of emergency.
Some, such as the Czech, were more insulated due to the layout of the international pipeline system and some economic foresight at home.
Prague, nevertheless, had its share of headaches. Having just taken over the rotating EU presidency, the country has been sending its diplomats back and forth between Moscow and Kyiv like ping pong balls.
The casualties among the warring combatants have also been significant.
With characteristically crocodile tears, the Kremlin said Russia had lost $1.2 billion.
The opposition in Ukraine claimed $100m in foregone transit revenues as a result of the war, not to mention the losses incurred by the country’s gas-dependent chemical industry.
But the real damage that Russia and Ukraine inflicted on each other and, indeed, on themselves, has yet to be revealed.
It can no longer be denied by EU policy makers that gas transits from the east are unreliable, at best.
No doubt under pressure from powerful gas lobbyists in all the major capitals of ‘old Europe,” Brussels was reluctant to forge a coherent and, more importantly, a united energy policy in relation to an increasingly more assertive Moscow.
Now, someone has to take the blame, and the fingers are pointing east. Maybe Europe will finally get around to implementing some of those nice-sounding renewable energy products; maybe they will speed up construction of alternative pipelines; or maybe they will just settle for more empty eastern promises after the dust of disgust has settled.
Everyone saw it coming, though. Everyone knew that the bilateral gas agreement between the two countries was to end on January 1, that Russia had turned the taps off before, in 2006. In fact, things developed pretty much as they had three years earlier, with Russia first cutting off Ukraine, then everyone else, whose gas it accused Ukraine of stealing en-route. Only this time the war lasted longer.
The question is whether Russia or Ukraine will suffer any further economic consequences.
So far, there has only been talk of the two countries’ spoiled reputation. In addition, the European Commission has issued vague threats about a possible lawsuit against Russia’s powerful Gazprom or Ukraine’s financially crippled Naftohaz Ukrayiny.
The fact that Russia under Vladimir Putin has increasingly taken a high-handed approach to its former satellite countries, and that its shutting-off the gas it delivers to Ukraine in the dead of winter might also be considered high handed has taken backstage to the immediate effects of the gas war on the EU.
That hasn’t prevented Mr. Putin, however, from accusing the EU of “practically” taking Ukraine’s side in the conflict.
But considering Gazprom’s clout in Berlin and Rome, it wouldn’t be surprising if Ukraine came out as the aggressor in the gas war. Georgia suffered a similar fate following its brief and unsuccessful real war against Russia last August. First Tbilisi was the victim, now it is seen as equally if not more responsible for the hostilities.
Ukraine is all the more vulnerable due to its unstable domestic political situation.
As Moscow and Kyiv traded blows via the international media, Ukrainian President Viktor Yushchenko and Ukrainian Premier Yulia Tymoshenko took swipes at each other at home.
While Moscow accused Ukraine of stealing gas meant for Europe, Tymoshenko launched accusations of corruption at Yushchenko, who sent similar accusations back at her.
In the din of the battle, Ukraine’s very legitimate argument that Russia is punishing it for Kyiv’s Western integration efforts has been drowned out.
Its smudged reputation for corruption is being used against Ukraine by its own short-sighted leaders.
As a result, like the murder victim who exchanged hostile words with his attacker or the rape victim who flirted with hers, the fledgling democracy may be judged unfairly by its peers.
And when the map of European energy supplies is redrawn, it may be Ukraine that loses out on the spoils – not just because the idea of building (expensive) alternative pipelines will win the day, but because taking control of Ukraine’s pipeline is already on the table in the form of a proposed “international’ consortium that includes Moscow.
And it doesn’t matter that keeping control of the pipeline is one of the few things that Ukrainian leaders such as Yushchenko and Tymoshenko have agreed upon.
A second term for the pro-Western Yushchenko is as unlikely as the banning of brawls among the nation’s lawmakers. Tymoshenko’s reputation as a champion of the people has also suffered serious damage, leaving an ex-con with close ties to the Kremlin as the leader in public opinion polls.
Even as Tymoshenko announced that a deal had finally been struck during her latest visit to Moscow on January 19, the president’s team was raining on her parade.
Ukraine would surely have to pay closer to the market price footed by Europe, Yushchenko’s people said, or: what did Ms. Tymoshenko have to give Moscow in return for the new low gas price she supposedly brokered up north?
Indeed, although both Putin and Tymoshenko were their respective countries’ chief combatants during the peak of the gas war, the two seemed to have chummed up during their meeting in Moscow on Monday.
Not one to toss words around lightly (unless in anger), the Russian premier said he was obliged to Ukrainian Prime Minister Yulia Tymoshenko, “who during this most difficult situation was able to take responsibility for such important decisions that have led to a resolution of the deadlock.”
For her part, the lady in braids said: “I am much obliged to Vladimir Putin and all his team for their making it possible for Ukraine to make a special condition in 2009 – 20 percent off the international price of gas,” she said the same day, following her meeting in Moscow.
Whether this means Tymoshenko has come out the heroine of the gas war is doubtful, as she can now be easily portrayed by her political enemies to pro-Western voters as a sellout to Moscow, which for its turn could always find a way to challenge any deal at its convenience.
Thus, at the very least, the gas war means the final nail in the coffin of President Yushchenko and possibly a booby trap down the road for Tymoshenko – reshuffling two major cards in the Ukrainian deck.
The geopolitical map is also likely to change, as Ukraine’s only staunch supporters appear to be EU troublemaker Poland and a NATO leadership in retreat behind the US economy.
John Marone, a columnist of Eurasian Home website, Kyiv, Ukraine