EU Leadership Still Self-Blind To US Evil Intentions for Europe and Russia

[SEE:  West wants to end confrontation with Russia over Ukraine – EU foreign policy chief ]
European Union Foreign Policy Chief Federica Mogherini…rejected the idea that the EU’s position on the crisis differs from that of the US.
“It is not true that there is a soft Europe stance, which opposes the US hardline position.”
Mogherini said that Washington’s views on Russia match those of Europe…“everyone wants to get out of the logic of confrontation.”

‘F**k the EU’

Victoria Nuland: US-Assistant Secretary of State for European and Eurasian Affairs Geoffrey R. Pyatt: United States Ambassador to Ukraine

Biden says US ‘embarrassed’ EU into sanctioning Russia over Ukraine

Russia-Today
U.S. Vice President Joe Biden (Reuters / Jonathan Ernst)

U.S. Vice President Joe Biden (Reuters / Jonathan Ernst)

America’s leadership had to embarrass Europe to impose economic hits on Russia over the crisis in Ukraine – even though the EU was opposed to such a motion, US Vice President Joe Biden revealed during a speech at Harvard.

“We’ve given Putin a simple choice: Respect Ukraine’s sovereignty or face increasing consequences,” Biden told a gathering at the John F. Kennedy Jr. Forum at Harvard University’s Institute of Politics on Thursday.

The consequences were the sanctions which the EU imposed on Russia, first targeting individual politicians and businessmen deemed responsible for the crisis in Ukraine, then switching to the energy, defense, and economic sectors.

“It is true they did not want to do that,” Biden admitted.

“It was America’s leadership and the president of the United States insisting, oft times almost having to embarrass Europe to stand up and take economic hits to impose costs,” the US vice president declared.

AFP Photo / Patrick Hertzog

AFP Photo / Patrick Hertzog

Those costs deemed behind the ruble’s historic plunge not only forced America’s ExxonMobil to retreat from Russia’s Arctic shelf, but also provoked counter-measures from Moscow, which suspended certain food imports from the EU.

Russia’s counter-sanctions have hit many of the EU’s agricultural states. EU members, particularly those close to Russia, were the most affected by the loss of the Russian market.

For instance, the Netherlands – the world’s second-largest exporter of agricultural products – is set to lose 300 million euro annually from canceled business with Russia, as it accounts for roughly 10 percent of Dutch exports of vegetables, fruit, and meat.

At the same time, Poland was hit hard by the Kremlin’s sanctions, as its food exports to Russia totaled $1.5 billion in 2013.

Spain, a large exporter of oranges to Russia, is estimated to miss out on 337 million euro ($421 million) in food and agriculture sales, while Italy has estimated its losses at nearly 1 billion euro ($1.2 billion).

Following pressure from local farmers, a 125 million euro EU Commission Common Agricultural Policy fund was established, from which the growers are expected to get some cash, while Amsterdam is willing to cover the cost of transporting excess produce to eight food banks across Holland.

Overall, Moscow’s one-year food embargo against the EU, the US, Norway, Australia, and Canada will block an estimated $9 billion worth of agricultural exports to Russia.

With European countries now at a loss with apple and dairy surplus, it is not exactly clear whether EU producers will be able to return to the Russian markets after the one-year ban expires.

However, this is no secret to the US, as Assistant Secretary of State Victoria Nuland remarked on Thursday.

“Implementing sanctions isn’t easy and many countries are paying a steep price. We know that. But history shows that the cost of inaction and disunity in the face of a determined aggressor will be higher,” Nuland said.

U.S. Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland (R) and U.S. Ambassador Geoffrey Pyatt (2nd R) distribute bread to riot police near Independence square in Kiev December 11, 2013. (Reuters / Andrew Kravchenko)

U.S. Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland (R) and U.S. Ambassador Geoffrey Pyatt (2nd R) distribute bread to riot police near Independence square in Kiev December 11, 2013. (Reuters / Andrew Kravchenko)

Nuland’s reference to necessary action against the “aggressor” might be taken with a grain of salt by the Europeans, as the “F**k the EU” leak is still fresh in their memory.

The four-minute video – titled ‘Maidan puppets,’ referring to Independence Square in Ukraine’s capital – was uploaded by an anonymous user to YouTube.

Nuland was recorded as saying the notoriously known phrase during a phone call with US Ambassador to Ukraine Geoffrey Pyatt, as the two were seemingly discussing a US-preferred line-up of the Ukrainian government. It apparently referred to Washington’s policy differences with those of the EU on ways of handling the Ukrainian political crisis, with Nuland suggesting to “glue this thing” with the help of the UN and ignore Brussels.

The US State Department did not deny the authenticity of the video and stressed that Nuland had apologized for the “reported comments.”

Another Fistfight In Georgia Parliament Over “Enemy of the State” Saakashvili and His Goons In Ukraine

[SEE:  Georgian PM Declares Saakashvili Enemy of State ]


Dec. 26 Fistfight in Georgia Parliament over troops seduced by Saakashvili’s snake tongue into resigning from Georgian Army to enlist in Ukraine Fascist forces fighting in the east.


Last year’s brawl in Georgia Parliament (Dec 11, 2013) over sending troops to fight in Ukraine.

Jeffrey Feltman Is Coming To Ukraine–the Man Who Starts and Manages the Bush/Obama Civil Wars

feltman

United Nations, Dec 13, 2014:
Jeffrey Feltman, the UN under-secretary-general for political affairs, is scheduled to visit Ukraine early next week in a bid to support UN Secretary-General Ban Ki-moon’s efforts to seek a peaceful settlement of the Ukrainian crisis, a UN spokesman said here Friday.”Feltman, in an effort to support the secretary-general’s good offices to assist in finding a peaceful resolution of the crisis in Ukraine, will travel to Kiev Dec 16 and 17 for consultations with senior officials,” Stephane Dujarric said at a daily news briefing.

The visit of the UN political chief comes just a few days after the trip of the UN assistant secretary-general for human rights, Ivan Simonovic, who is currently in Ukraine to assess the human rights situation in the country.

During his visit, Simonovic is scheduled to meet a number of Ukrainian government officials as well as civil society actors, the official said, adding that he is also scheduled to visit the eastern region of the country.

The visits by the two senior UN officials take place one week after Ukrainian forces suspended hostilities against independence-seeking insurgents in the country’s eastern region.

The armed conflict in eastern Ukraine, which began in mid-April, has claimed at least 4,350 lives and wounded more than 10,000 others, according to the latest UN estimates.

– IANS

An American, A Lithuanian and A Georgian Walk Into the Ukrainian Govt.

[SEE: Obama’s Russian War Resolution Passes By 411 to 23]

Ukraine’s new finance minister is a former U.S. State Department employee who graduated from Harvard University’s John F. Kennedy School of Government. Even though the struggling country’s new cabinet now contains three high-profile foreigners, it remains the focus of a crude internal power struggle that will hamper crucial economic changes and could lead to a financial meltdown.

U.S. Vice President Joe Biden, who visited Kiev two weeks ago, told President Petro Poroshenko that Ukraine needed to form a new government “within days, not weeks.” After an International Monetary Fund mission concluded its work Nov. 25, the IMF stated that “discussions will continue after the new Ukrainian government is formed.” That meant Ukraine wouldn’t find out when it might receive the much-needed next tranche of an IMF bailout package until Poroshenko complied with Biden’s wishes.

Pro-European politicians who form the ruling coalition rushed to find a compromise on the attribution of cabinet portfolios. The resulting lineup is a motley crew.

Arseniy Yatsenyuk, whose party performed unexpectedly well in October’s parliamentary elections, remains prime minister. The coalition parties distributed the rest of the 19 posts on a quota system, and Poroshenko had the parliament approve the lineup en bloc, avoiding individual votes for each minister.

Poroshenko’s party proposed three foreigners:  Natalie Jaresko, a U.S. citizen, for finance minister, Lithuanian Aivaras Abromavicius for economics minister and Georgian Alexander Kvitashvili for health minister. Poroshenko granted them Ukrainian citizenship yesterday, hours before the parliamentary vote that approved the appointments. The nationalities of the three officials sent a clear message: Ukraine aspires to be a U.S. ally and a good IMF client, and it admires the reforms that rid Lithiuania and Georgia of their Soviet economic and cultural heritage. The choice of personalities, however, is less straightforward.

Jaresko, who grew up in a Ukrainian family in Chicago, has lived in Kiev for 20 years. She started her career in Ukraine distributing U.S. government aid to small and medium-sized businesses, then co-founded a small private equity firm, Horizon Capital, which has invested $255 million in Ukrainian companies. She has a few successful exits under her belt and an untarnished reputation as a thorough and enthusiastic manager, as well as a competent financier. She has no experience of the convoluted Ukrainian budget, however, and the finance minister will have to cut spending by about 10 percent of gross domestic product within weeks, a group of international economists recently concluded. Jaresko will need to learn quickly and act decisively in an unfamiliar, antiquated bureaucratic environment with elaborate, ritualistic paper-based procedures and lots of political traps.

Abromavicius, too, was living in Kiev at the time of his appointment. A partner at the Swedish investment company East Capital, he is married to a Ukrainian. But he also was responsible for managing East Capital’s Russian investments, the core of the company’s business. East Capital Russia Fund has been underperforming for a while: Its five-year return is minus 6.63 percent, according to data compiled by Bloomberg, and the fund’s net asset value is down 55 percent from its 2007 peak.

Kvitashvili, who has a U.S. master’s degree in public management, ran the Georgian Health Ministry for almost three years under former President Mikheil Saakashvili. Yet, according to Larisa Burakova, who wrote a book about Saakashvili’s libertarian reforms, Kvitashvili had no part in designing and implementing the large-scale privatization of Georgia’s health care system.

Kakha Bendukidze, the real architect of Georgia’s economic transformation, told me in one of his last interviews before he died last month that Ukraine had to get rid of many of its ministries and state agencies. “Who needs them when the government’s sole function these days is to take money from the International Monetary Fund and pass them on in payment for Russian gas?” he asked.

The Vox Ukraine group of pro-Western experts recently suggested cutting at least 20 ministries and agencies. Doing that, however, would have made it difficult for coalition parties to reach a compromise because there would have been fewer portfolios to hand out.

The new cabinet even added one portfolio — an Information Ministry. It will be headed By Yuri Stets, who ran Poroshenko’s Channel 5 TV and is a close friend of the president. Stets had recently vowed not to accept any appointment from Poroshenko because it would be seen as a conflict of interest. Now he is setting up an agency whose goal will be to counter Russia’s anti-Ukrainian propaganda.

The new appointment created a furor among Ukrainian journalists, who fear Poroshenko has created a ministry for censorship and propaganda. Even a top Poroshenko administration official recently said Ukraine “doesn’t earn enough” to set up another ministry.

There was another reason for Poroshenko’s dismissal of legislators’ requests that each minister be approved separately: Such a procedure would have buried the coalition compromise. The populist Radical Party, for example, proposed Valery Voshchevsky, the former chief of Ukraine’s perennially corrupt road construction and maintenance agency under deposed President Viktor Yanukovich, for deputy prime minister. Voshchevsky’s chances of separate approval would have been slim, but now he has the job.

Some pro-European legislators, including those elected on Poroshenko’s party ticket, were openly dismayed at this heavy-handedness. Borys Filatov, a close ally of billionaire Igor Kolomoiskiy, called the vote a “disgrace” and an example of “non-transparent Byzantian policies.” “It’s a great way to mess up something the country badly needs, no matter what pretty words are used to cover it up,” he wrote on Facebook.

An official in Poroshenko’s party told me the president’s plan was to undermine Yatsenyuk’s power over the cabinet and perhaps allow him to fail before Team Poroshenko moved in. At the same time, Poroshenko faces a growing rift with Kolomoiskiy, who runs the important Dnepropetrovsk region and finances much of Ukraine’s war effort in the rebellious eastern regions. This political maneuvering has nothing to do with driving down Ukraine’s 20 percent inflation, cutting exorbitant government spending on pensions and energy subsidies and eliminating corruption. According to Transparency International‘s 2014 Corruption Perceptions Index, Ukraine is the 142nd most corrupt of 175 countries, up just two spots from 2013, when Yanukovych’s shameless regime ran the country for personal enrichment. Pro-European Ukraine, according to the index, is more corrupt than Vladimir Putin’s Russia, in 136th place.

Although the new cabinet lineup makes the requisite symbolic nods to Ukraine’s Western orientation, and provides the IMF with a comfortable negotiating partner in Jaresko, it is another step toward turning Ukraine into a failed state. The “revolution of dignity” that freed many Ukrainians from a feeling of inferiority early this year will probably need to continue before the country finally sheds the burden of its Soviet past.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net

Putin Cancels South Stream/Netanyahu Peddles His Hot Gas To Europe

[When the Noble Energy company first discovered the massive Tamar and Leviathan gas fields off the shore of Israel, there was no foreseeable buyer of the “gas bonanza.”  It didn’t take long after for the PTB (powers that be) to destroy Russia’s energy franchise to Europe, by disrupting principle flow lines, running mainly through Ukraine.  Due to EU anti-Russian sanctions making the South Stream pipeline impossible, Putin cancelled the project.  In steps Israel (SEE:  Gazprom Signs 20-Year LNG Purchase Deal with Israel).  This is the first, concrete example of the EU cutting its own throat, to bow to Imperialist-Zionist directives.  Stoking the fires in Ukraine has always been the key to US Imperialist war plans for Russia.  If Israel captures the southern European gas market, beating-out both NABUCCO and SOUTH STREAM, then rest assured, that there will be no opposition to them running a four-foot diameter undersea gas line through the eastern Mediterranean war zone. 

It is logical to suspect, at this point, to label the Ukrainian civil war as a Mossad operation.  After all, key elements of the Maidan movement are composed of Jewish militants, some even forming their own brigades (SEE:  In Kiev, an Israeli army vet led a street-fighting unit).]

Ministers of Cyprus, Greece and Israel to meet Energy Union Commissioner

Cyprus mail

Ministers of Cyprus, Greece and Israel to meet Energy Union Commissioner

Energy Ministers of Cyprus, Greece and Israel will meet next Monday with EU Commissioner on Energy Union Maros Sefcovic to promote a joint project on a pipeline to transfer natural gas from the Eastern Mediterranean offshore fields to Europe.

Energy Minister Giorgos Lakkotrypis told the Cyprus News Agency that the three Ministers had signed a letter requesting a meeting with Sefcovic.
The three Ministers will promote a planned pipeline connecting Israel Cyprus, Greece with Europe in view of the new call by the European Commission for projects of common interest in the first quarter of 2015.
Sources told CNA that the ministers would request the approval of the project which emerged after a merger of two separate projects (Cyprus Trans Med pipeline and Greece`s East Med pipeline) to be implemented by the Greek Gas Corporation (DEPA as a project of common interest (PCI)  that will give access to EU funding for technical and feasibility studies.
Projects that will be considered as PCI’s will be entitled to request funding from the Connecting Europe Facility with a budget of €5.85 billion.
The same sources made clear that only new reserves would be channeled through the pipeline, as Cyprus is in consultations with Egypt for a possible sale of the Aphrodite reservoir (estimated at 4.5 trillion cubic feet) located in block 12 of Cyprus` EEZ. Egyptian Minister Serif Ismail said during a Cyprus, Greece and Egypt Energy Ministers meeting that his country could absorb Cyprus` natural gas reserves.
Italy`s ENI is carrying out an exploratory drilling in block 9 with the results expected by January the latest. ENI also has been granted concessions for exploratory drilling in blocs 2 and 3. French TOTAL which has concessions over blocks 10 and 11 will begin exploratory drilling in the second half of 2015.

Davutoglu Visits Athens Over Cypriot Gas/Hollande Visits Putin In Moscow Over Mistral Carrier Transfer

[SEE:  Hollande to discuss Ukraine crisis with Putin in Moscow]

Davutoglu in Athens amid rising tensions over Cyprus gas [Update]

ekathimerini

Turkish Prime Minister Ahmet Davutoglu arrived in Athens on Friday afternoon for talks with his Greek counterpart Antonis Samaras, and participation in the 3rd Greek-Turkish High-Level Cooperation Council, as tensions rise over Ankara’s violation of Cyprus’ Exclusive Economic Zone (EEZ).

Ahead of his talks with Samaras on Friday, Davutoglu met President Karolos Papoulias who stressed the importance of good relations. “We are and will remain neighbors and therefore we must be good neighbors,” Papoulias said. “You’re right, it’s possible to change everything except geographical location,” Davutoglu responded.

The visit came as Cypriot media report that the Turkish research vessel Barbaros has detected large quantities of hydrocarbons in the Cypriot EEZ.

In an interview with Kathimerini ahead of the visit, Turkish Foreign Minister Mevlut Cavusoglu indicated that Turkey will not back down from its position that Cyprus will have to stop exploring for hydrocarbons in its exclusive economic zone for the Turkish research vessel Barbaros to depart the area. He added that he was optimistic that stalled Cyprus talks would resume.

Davutoglu, who was flanked by some 10 Turkish ministers on his visit, was to meet Samaras at the Maximos Mansion before addressing a joint business forum at 8.30 p.m. and co-chairing the high-level council on Saturday with Samaras.

Security was increased in the capital ahead of Davutoglu’s visit and amid fears of protests to commemorate the killing of a teenager by a policeman on Saturday and against a scheduled parliamentary vote on next year’s budget on Sunday.

The Importance Of The Cancellation Of South Stream—(Vinyard of the Saker)

[SEE:  Turkey Gets 63 Billion Cubic Meter Gas Line That Europe No Longer Wanted]

RIA Novosti / Ramil Sitdikov [SEE: Hungary Begins Laying Pipe for South Stream System ]

The Importance Of The Cancellation Of South Stream

vinyard of the saker
by Alexander Mercouris

The reaction to the cancellation of the Sound Stream project has been a wonder to behold and needs to be explained very carefully.

In order to understand what has happened it is first necessary to go back to the way Russian-European relations were developing in the 1990s.

Briefly, at that period, the assumption was that Russia would become the great supplier of energy and raw materials to Europe. This was the period of Europe’s great “rush for gas” as the Europeans looked forward to unlimited and unending Russian supplies. It was the increase in the role of Russian gas in the European energy mix which made it possible for Europe to run down its coal industry and cut its carbon emissions and bully and lecture everyone else to do the same.

However the Europeans did not envisage that Russia would just supply them with energy. Rather they always supposed this energy would be extracted for them in Russia by Western energy companies. This after all is the pattern in most of the developing world. The EU calls this “energy security” – a euphemism for the extraction of energy in other countries by its own companies under its own control.

It never happened that way. Though the Russian oil industry was privatised it mostly remained in Russian hands. After Putin came to power in 2000 the trend towards privatisation in the oil industry was reversed. One of the major reasons for western anger at the arrest of Khodorkovsky and the closure of Yukos and the transfer of its assets to the state oil company Rosneft was precisely because is reversed this trend of privatisation in the oil industry.

In the gas industry the process of privatisation never really got started. Gas export continued to be controlled by Gazprom, maintaining its position as a state owned monopoly gas exporter. Since Putin came to power Gazprom’s position as a state owned Russian monopoly has been made fully secure.

Much of the anger that exists in the west towards Putin can be explained by European and western resentment at his refusal and that of the Russian government to the break up of Russia’s energy monopolies and to the “opening up” (as it is euphemistically called) of the Russian energy industry to the advantage of western companies. Many of the allegations of corruption that are routinely made against Putin personally are intended to insinuate that he opposes the “opening up” of the Russian energy industry and the break up and privatisation of Gazprom and Rosneft because he has a personal stake in them (in the case of Gazprom, that he is actually its owner). If one examines in detail the specific allegations of corruption made against Putin (as I have done) this quickly becomes obvious.

His agenda of forcing Russia to privatise and break up its energy monopolies has never gone away. This is why Gazprom, despite the vital and reliable service it provides to its European customers, comes in for so much criticism. When Europeans complain about Europe’s energy dependence upon Russia, they express their resentment at having to buy gas from a single Russian state owned company (Gazprom) as opposed to their own western companies operating in Russia.

This resentment exists simultaneously with a belief, very entrenched in Europe, that Russia is somehow dependent upon Europe as a customer for its gas and as a supplier of finance and technology.

This combination of resentment and overconfidence is what lies behind the repeated European attempts to legislate in Europe on energy questions in a way that is intended to force Russia to “open up” its the energy industry there.

The first attempt was the so-called Energy Charter, which Russia signed but ultimately refused to ratify. The latest attempt is the EU’s so-called Third Energy Package.

This is presented as a development of EU anti-competition and anti-monopoly law. In reality, as everyone knows, it is targeted at Gazprom, which is a monopoly, though obviously not a European one.

This is the background to the conflict over South Stream. The EU authorities have insisted that South Stream must comply with the Third Energy Package even though the Third Energy Package came into existence only after the outline agreements for South Stream had been already reached.

Compliance with the Third Energy Package would have meant that though Gazprom supplied the gas it could not own or control the pipeline through which gas was supplied.

Were Gazprom to agree to this, it would acknowledge the EU’s authority over its operations. It would in that case undoubtedly face down the line more demands for more changes to its operating methods. Ultimately this would lead to demands for changes in the structure of the energy industry in Russia itself.

What has just happened is that the Russians have said no. Rather than proceed with the project by submitting to European demands, which is what the Europeans expected, the Russians have to everyone’s astonishment instead pulled out of the whole project.

This decision was completely unexpected. As I write this, the air is of full of angry complaints from south-eastern Europe that they were not consulted or informed of this decision in advance. Several politicians in south-eastern Europe (Bulgaria especially) are desperately clinging to the idea that the Russian announcement is a bluff (it isn’t) and that the project can still be saved. Since the Europeans cling to the belief that the Russians have no alternative to them as a customer, they were unable to anticipate and cannot now explain this decision.

Here it is important to explain why South Stream is important to the countries of south-eastern Europe and to the European economy as a whole.

All the south eastern European economies are in bad shape. For these countries South Stream was a vital investment and infrastructure project, securing their energy future. Moreover the transit fees that it promised would have been a major foreign currency earner.

For the EU, the essential point is that it depends on Russian gas. There has been a vast amount of talk in Europe about seeking alternative supplies. Progress in that direction had been to put it mildly small. Quite simply alternative supplies do not exist in anything like the quantity needed to replace the gas Europe gets from Russia.

There has been some brave talk of supplies of US liquefied natural gas replacing gas supplied by pipeline from Russia. Not only is such US gas inherently more expensive than Russian pipeline gas, hitting European consumers hard and hurting European competitiveness. It is unlikely to be available in anything like the necessary quantity. Quite apart from the probable dampening effects of the recent oil price fall on the US shale industry, on past record the US as a voracious consumer of energy will consume most or all of the energy from shales it produces. It is unlikely to be in a position to export much to Europe. The facilities to do this anyway do not exist, and are unlikely to exist for some time if ever.

Other possible sources of gas are problematic to say the least. Production of North Sea gas is falling. Imports of gas from north Africa and the Arabian Gulf are unlikely to be available in anything like the necessary quantity. Gas from Iran is not available for political reasons. Whilst that might eventually change, the probability is when it does that the Iranians (like the Russians) will decide to direct their energy flow eastwards, towards India and China, rather than to Europe.

For obvious reasons of geography Russia is the logical and most economic source of Europe’s gas. All alternatives come with economic and political costs that make them in the end unattractive.

The EU’s difficulties in finding alternative sources of gas were cruelly exposed by the debacle of the so-called another Nabucco pipeline project to bring Europe gas from the Caucasus and Central Asia. Though talked about for years in the end it never got off the ground because it never made economic sense.

Meanwhile, whilst Europe talks about diversifying its supplies, it is Russia which is actually cutting the deals.

Russia has sealed a key deal with Iran to swap Iranian oil for Russian industrial goods. Russia has also agreed to invest heavily in the Iranian nuclear industry. If and when sanctions on Iran are lifted the Europeans will find the Russians already there. Russia has just agreed a massive deal to supply gas to Turkey (about which more below). Overshadowing these deals are the two huge deals Russia has made this year to supply gas to China.

Russia’s energy resources are enormous but they are not infinite. The second deal done with China and the deal just done with Turkey redirect to these two countries gas that had previously been earmarked for Europe. The gas volumes involved in the Turkish deal almost exactly match those previously intended for South Stream. The Turkish deal replaces South Stream.

These deals show that Russia had made a strategic decision this year to redirect its energy flow away from Europe. Though it will take time for the full effect to become clear, the consequences of that for Europe are grim. Europe is looking at a serious energy shortfall, which it will only be able to make up by buying energy at a much higher price.

These Russian deals with China and Turkey have been criticised or even ridiculed for providing Russia with a lower price for its gas than that paid by Europe.

The actual difference in price is not as great as some allege. Such criticism anyway overlooks the fact that price is only one part in a business relationship.

By redirecting gas to China, Russia cements economic links with the country that it now considers its key strategic ally and which has (or which soon will have) the world’s biggest and fastest growing economy. By redirecting gas to Turkey, Russia consolidates a burgeoning relationship with Turkey of which it is now the biggest trading partner.

Turkey is a key potential ally for Russia, consolidating Russia’s position in the Caucasus and the Black Sea. It is also a country of 76 million people with a $1.5 trillion rapidly growing economy, which over the last two decades has become increasingly alienated and distanced from the EU and the West.

By redirecting gas away from Europe, Russia by contrast leaves behind a market for its gas which is economically stagnant and which (as the events of this year have shown) is irremediably hostile. No one should be surprised that Russia has given up on a relationship from which it gets from its erstwhile partner an endless stream of threats and abuse, combined with moralising lectures, political meddling and now sanctions. No relationship, business or otherwise, can work that way and the one between Russia and Europe is no exception.

I have said nothing about the Ukraine since in my opinion this has little bearing on this issue.

South Stream was first conceived because of the Ukraine’s continuous abuse of its position as a transit state – something which is likely to continue. It is important to say that this fact was acknowledged in Europe as much as in Russia. It was because the Ukraine perennially abuses its position as a transit state that the South Stream project had the grudging formal endorsement of the EU. Basically, the EU needs to circumvent the Ukraine to secure its energy supplies every bit as much as Russia wanted a route around the Ukraine to avoid it.

The Ukraine’s friends in Washington and Brussels have never been happy about this, and have constantly lobbied against South Stream.

The point is it was Russia which pulled the plug on South Stream when it had the option of going ahead with it by accepting the Europeans’ conditions. In other words the Russians consider the problems posed by the Ukraine as a transit state to be a lesser evil than the conditions the EU was attaching to South Stream .

South Stream would take years to build and its cancellation therefore has no bearing on the current Ukrainian crisis. The Russians decided they could afford to cancel it is because they have decided Russia’s future is in selling its energy to China and Turkey and other states in Asia (more gas deals are pending with Korea and Japan and possibly also with Pakistan and India) than to Europe. Given that this is so, for Russia South Stream has lost its point. That is why in their characteristically direct way, rather than accept the Europeans’ conditions, the Russians pulled the plug on it.

In doing so the Russians have called the Europeans’ bluff. So far from Russia being dependent on Europe as its energy customer, it is Europe which has antagonised, probably irreparably, its key economic partner and energy supplier.

Before finishing I would however first say something about those who have come out worst of all from this affair. These are the corrupt and incompetent political pygmies who pretend to be the government of Bulgaria. Had these people had a modicum of dignity and self respect they would have told the EU Commission when it brought up the Third Energy Package to take a running jump. If Bulgaria had made clear its intention to press ahead with the South Stream project, there is no doubt it would have been built. There would of course have been an almighty row within the EU as Bulgaria openly flouted the Third Energy Package, but Bulgaria would have been acting in its national interests and would have had within the EU no shortage of friends. In the end it would have won through.

Instead, under pressure from individuals like Senator John McCain, the Bulgarian leadership behaved like the provincial politicians they are, and tried to run at the same time with both the EU hare and the Russian hounds. The result of this imbecile policy is to offend Russia, Bulgaria’s historic ally, whilst ensuring that the Russian gas which might have flown to Bulgaria and transformed the country, will instead flow to Turkey, Bulgaria’s historic enemy.

The Bulgarians are not the only ones to have acted in this craven fashion. All the EU countries, even those with historic ties to Russia, have supported the EU’s various sanctions packages against Russia notwithstanding the doubts they have expressed about the policy. Last year Greece, another country with strong ties to Russia, pulled out of a deal to sell its natural gas company to Gazprom because the EU disapproved of it, even though it was Gazprom that offered the best price.

This points to a larger moral. Whenever the Russians act in the way they have just done, the Europeans respond bafflement and anger, of which there is plenty around at the moment. The EU politicians who make the decisions that provoke these Russian actions seem to have this strange assumption that whilst it is fine for the EU to sanction Russia as much as it wishes, Russia will never do the same to the EU. When Russia does, there is astonishment, accompanied always by a flood of mendacious commentary about how Russia is behaving “aggressively” or “contrary to its interests” or has “suffered a defeat”. None of this is true as the rage and recriminations currently sweeping through the EU’s corridors (of which I am well informed) bear witness.

In July the EU sought to cripple Russia’s oil industry by sanctioning the export of oil drilling technology to Russia. That attempt will certainly fail as Russia and the countries it trades with (including China and South Korea) are certainly capable of producing this technology themselves.

By contrast through the deals it has made this year with China, Turkey and Iran, Russia has dealt a devastating blow to the energy future of the EU. A few years down the line Europeans will start to discover that moralising and bluff comes with a price. Regardless, by cancelling South Stream, Russia has imposed upon Europe the most effective of the sanctions we have seen this year. .