Russia is acting very neatly, very considerately and respectfully towards our partners. We will certainly guarantee in full the honoring of all our obligations to our European consumers. We are not the problem, the problem is ensuring transit via Ukraine …
What’s he talking about?
Energy Dependence on the ‘Evil Empire’
Russian natural gas is delivered to Europe through 12 pipelines, of which three are direct pipelines (to Finland, Estonia and Latvia), four through Belarus (to Lithuania and Poland) and five through Ukraine (to Slovakia, Romania, Hungary and Poland). In 2011, an additional pipeline, Nord Stream was opened that brings gas directly to Germany through the Baltic Sea. The Nord Stream deal was negotiated by Germany as a way to avoid potential problems with delivery through places like Ukraine that has historically had a rather troubled relationship with Russia. Nordstream also circumvents a pipeline to Germany through Poland, also seen as a country that is potentially antagonistic towards Russia).
EU countries like Estonia, Finland, Latvia and Lithuania receive 100% of their gas consumption from Russia. Slovakia and Bulgaria receive 98 and 92% respectively. Larger European nations like Germany, France, Spain, the UK and Italy all receive lesser quantities, which are still significant, however. Together, Germany and Italy consume almost 50% of all gas imports to the EU. In addition, as of 2007, the European Union imported 32.6% of its total oil import from Russia. Coal is also imported from Russia to the EU in significant quantities.
In 2009, all Russian gas supplies through Ukraine to Western Europe were cut off because of Ukraine’s refusal to pay debts on previous Russian gas purchases and amid allegations by Russia that the Ukrainian government had been stealing gas. Several European countries experienced energy crises as a result.
Behind the 2009 crisis, a similar one in 2006 and the one happening right now, we find what can only be described as squabbling Ukrainian oligarchs vying for control over the profits from Russian gas that transits through and is sold in Ukraine. In addition, there is the ubiquitous presence of the USA as it pursues its decades-long ‘strategic interest’ in attempting to weaken the Russian-EU energy partnership.
As far back as the 1980s, the Reagan administration saw the Russo-EU problem looming and attempted to stop the construction of the very first gas pipeline from Russia to European countries by ordering all US corporation and their subsidiaries in Europe to not sell equipment for the planned pipeline. Practicalities eventually won out however, with the Chairman of Dresser France (a subsidiary of a Texas corporation that made compressors for use in the pipeline) saying: “The laws of the United States are not the laws of the whole world” (tell that to the Americans!). The recent US-sponsored coup in Ukraine and the stand-off with Russia appears to be a renewed effort by the USA to cut Europe off from Russia. The fact that both entities are a contiguous landmass and will naturally engage in trade of all sorts is apparently an obstacle to be overcome.
While I have no inside information about Russian government policies over the past 13 years, it seems to me that Putin and his government have led the Western warmongers into a trap. After the 9/11 attacks and with the advent of the never-ending ‘War on Terror’TM, Russia played along with the West by joining in their war games and attending their high-powered meetings. But behind the scenes, two important things were happening in Russia: the Russian military was being modernized and streamlined, and the Russian government was consolidating European dependency on Russian energy. By 2014, Putin’s government was in a position to, at the very least, assert its rights in its immediate ‘sphere of influence’.
Putin’s letter came hot on the heels of a statement by the coup-installed Ukrainian Finance Minister, Oleksandr Shlapak, that the ‘interim’ Ukrainian government will not use its payoff money from the IMF, EU and USA to pay back major Russian debts. At an IMF and World Bank spring meeting in Washington DC on Thursday, Shlapak said:
The money that we receive from the IMF will be divided between the reserves of the National Bank and the state budget, and the money will be earmarked. So we do not plan to spend on repaying debts to Russia.
To make matters worse, Ukrainian ‘interim’ Energy Minister Yuri Prodan stated that Ukraine is preparing to go to the Stockholm arbitration court because, he claims, the Russian gas price is “unacceptable after all of the discounts are withdrawn”. In addition, Prodan said that Ukraine is “negotiating with the European Union about reverse deliveries into Ukraine.” “Reverse deliveries into Ukraine” means Ukraine getting Russian gas ‘by the back door’, so to speak, via France or other European countries after it has already transited through Ukraine! From the Russian perspective, there is also the risk of a repeat of the 2009 debacle where Ukraine was illegally siphoning off Russia gas destined for Europe. The ‘reverse deliveries’ idea however seems to be a nonstarter since the contracts that EU countries signed to receive Russian gas most likely contain clauses that forbid such double-dealing.
What Putin is rather coyly intimating (loud and clear, mind you) in his letter to the EU is that, while the US/EU may have intended that their big loans to their newly-installed puppet regime in Ukraine be used to ‘open up’ the Ukrainian economy to Western plunder, remove Ukraine from Russia’s ‘sphere of influence’ and perhaps tap Ukraine’s own latent gas and oil reserves, there’s a slight problem.
Ukraine owes Russia a lot of money, partly in the form of $2.2-billion worth of back payments to Gazprom, but the total Ukrainian debt to Russia stands at a massive $16.6 billion. So with the best will in the world, Putin is sorry to have to say that, if Ukraine doesn’t at least pay the $2.2 billion and begin paying for all Russian gas in advance, Gazprom may be unable to continue to finance the supply of gas through Ukraine to EU countries…hint hint.
You Made Your Bed…
The EU and its US overlords had such a strong desire for a ‘closer relationship’ with Ukraine that they were willing to involve themselves in a rather undemocratic coup in the country earlier this year. Well, now that they have that ‘close relationship’, Putin is merely reminding them that it comes with the sticky problem of Ukraine’s large debts to Russia and the fact that Russian gas to Europe transits through Ukraine.
If in their irrational hatred of everything Russian, the Ukrainian puppet politicians are blind to the political realities and think themselves in a position to dismiss Russian requests for debt repayment, the same can’t be said of the EU. Speaking for Germany and all EU minions dependent (to one extent or another) on Russian gas, German Chancellor Angela Merkel appears to have finally awoken to the cold hard facts of the situation and realised that, if anyone is out of touch with reality, it’s the US/EU ‘regime changers’ and their lackeys in Ukraine:
In response to Putin’s letter, Merkel said:
There are many reasons to seriously take into account this message […] and for Europe to deliver a joint European response. When we take all these steps, we can be sure that we have reached a joint response for the countries that face this problem because they are getting gas from Gazprom. European states would like to be good clients but we would also like to be sure Russian gas supplies are not interrupted.
The US State Department that oversaw the coup in Ukraine, on the other hand, weighed in to the debate with the kind of hollow, hypocritical rhetoric for which it has become infamous in recent years:
US State Department spokeswoman Jen Psaki has accused Russia of reneging on an agreement that offered reduced gas prices to Kiev and using “energy as a tool of coercion against Ukraine.” The price Ukraine is currently paying is “clearly not set by market forces and well above the average price paid by EU member.”
Putin’s response to US State Department officials sticking their mendacious noses in was perfect:
It’s a bit strange, because it’s bad to read other people’s letters. It wasn’t addressed to them, but to the consumers of gas in Europe. Everybody is used to the fact that our American friends are eavesdropping on everyone, but turning into peeping toms is altogether shabby.
Who Needs Nuclear War When You Can Frack Yourself To Death?
While I have no doubt that EU leaders like Merkel and Hollande (not to mention the cold war hawks in the US State Department) would be overjoyed if they could impose real sanctions on Russia for its ‘meddling’ in Ukraine (perhaps something like the sanctions on Iraq in the 1990s that killed 500,000 Iraqi children), their options are rather limited. The obvious way to effectively hurt energy-sales-dependent Russia would be to place sanctions on its export of gas and oil. But you can see the problem. In cutting off energy purchases from Russia, Germany and other EU countries would be giving the world a very public example of what it means to “cut off your nose to spite your face”. So it seems highly unlikely that that will happen because, as Merkel made clear in her statement above, EU politicians are still able to take stock of the facts on the ground.
On the other side of the Atlantic however, no such grounding in the real world exists because, as we all know, the people in charge in Washington are ‘reality creators‘; they can make it up as they go along and leave the rest of us to “judiciously study what they do”. As such, the latest US plan to thwart a cozy relationship breaking out between Russia and the EU is a real doozy.
In recent weeks, two bills have been introduced into the US Congress – one in the House of Representatives (H.R. 6), one in the Senate (S. 2083) – that attempt to fast-track liquefied natural gas (LNG) exports, in theory to Europe. The idea here is to frack the hell out of the US landmass in order to produce enough natural gas to ship to Europe so that Europe no longer has to rely on Russian supplies. Cory Gardner, the Republican congressman who introduced the House bill was obviously so excited by the prospect that he couldn’t resist inserting an oblique reference to 9/11 in his plaintive plea for support for his bill:
“…opposing this legislation is like hanging up on a 911 call from our friends and allies,” Gardner exclaimed.
This plan is a both literally and figuratively a ‘pipe dream’. As Naomi Klein states:
Building the infrastructure necessary to export gas on this scale would take many years in permitting and construction – a single LNG terminal can carry a $7bn price tag, must be fed by a massive, interlocking web of pipelines and compressor stations, and requires its own power plant just to generate energy sufficient to liquefy the gas through super-cooling. By the time these massive industrial projects are up and running, Germany and Russia may well be fast friends.
If this were just another case of geopolitics gone mad across the pond, the American people might be forgiven for turning a blind eye to it all, but the plan to dramatically increase fracking in the USA to “help our friends and allies” [to screw over Russia] carries a serious threat to the American way of life, or just American life. A recent report in the LA Times revealed that geologists in Ohio have found links between fracking and sudden bursts of earthquakes. Given that the US West Coast is “waiting on the big one” and Oklahoma has been experiencing a record breaking number of earthquakes (where fracking is ongoing), does launching frackapalooza in the USA sound like a good idea to you? Another recent US-based study found that fracking is depleting water supplies in America’s driest areas. This report comes in the aftermath of the warmest and driest winter on record for California.
Remember I said that the new coup-installed Ukrainian government was possessed of (or by) an irrational hatred of Russia? Well, clearly they’re not alone. In fact, you could say that the hand-picked coup administration in Ukraine is the ideological bastard child of the US State Department, the grotesque political offspring of the real-life marriage between Asst. Sec. of State for European and Eurasian Affairs Victoria Nuland and arch NeoCon and Brookings Institute mogul Robert Kagan.
Over the past few months, Putin has watched the US organise an ill-advised coup in Ukraine that installed a bunch of right wing nationalist nutjobs with an irrational hatred of Russia who proceeded to sufficiently antagonise the large ethnic Russian population in Ukraine to the point that Crimea seceded and large areas of Eastern Ukraine are pushing in the same direction as I write. Now, as Ukraine falls apart socially, politically and financially, Putin observes the EU looking even more incompetent than usual as it tries to figure out at what point things went wrong after it chose to side with the USA in poking the Russian bear that supplies it (but not the USA) with vital energy resources [Duh!]. And off in the distance, Putin spies the American Empire builders, apparently so intoxicated by the ‘exceptional’ air that graces their ‘shining city on a hill’, that in an effort to ensure that the USA continues to reign supreme in a unipolar world, they are willing to risk, and perhaps precipitate, the literal destruction of parts of the USA.
How’s that for cutting off your nose to spite your face, or opening the door to geologic catastrophe just so you can ‘flip the bird’ at your arch enemy, who looks on with bemusement as your ship of state sinks beneath the waves.