When the Ukraine did not pay for the gas it received from Russia last year, the 'western' commentators did not say a word.
But a few days ago Russia shut off gas supplies for the Ukraine, and as
the Ukraine was siphoning off gas from transit pipelines, today stopped
all delivery through the country. Some eastern European countries
depend on those supplies and will now have to cope with some shortages.
As Russia now says no payment, no product, everyone is up in arms. Here comes a new round of Russia bashing.
Gazprom is not a market player, it’s a political weapon comments the London Times. The U.S. is concerned.
The Telegraph asserts that the European Union issues 24-hour deadline for Russia to restore gas supplies:
Mirek
Topolanek, the Czech prime minister whose country holds the rotating EU
presidency, threatened to treat the conflict as a political and
diplomatic snub to Europe if talks between Gazprom and Naftogaz
scheduled for Thursday failed to settle a dispute over gas prices."There is a political dimension to this problem," said Mr Topolanek
said. "Tomorrow is a key day. If supplies are not restored tomorrow,
then we will have to see a strong EU intervention."
Well, what is the EU going to do? Stomp its feet?
And did Mirek
Topolanek discuss that intervention with his libertarian president Vaclav Klaus who today in the Financial Times argues for the opposite?
Our
historical experience gives us a clear instruction: we always need more
of markets and less of government intervention. We also know that
government failure is more costly than market failure.
The Russian gas monopoly Gazprom wants to raise the price for gas delivered to the Ukraine and the back-payments. Ukraine last year payed (or not) $179,50 per 1000 cubic meter (tcm) gas. It offers to pay $201 in 2009 but only if the transit fees it charges to Gazprom are increased by 17%.
The market price in Europe and for Ukraine's neighbors is some $450 per tcm. That is what Gazprom is now asking the Ukraine to pay too after an earlier offer in the upper two-hundred range was rebuffed by Kiev.
There is nothing political about that. Sure, Russia has reason not to like the Ukrainian government which supported Georgia's war on Russian protectorates, but the price conflict would not be much different if a Russia friendly government would rule in Kiev.
This is a simple business dispute between oligarchs as Jérôme Guillet and John Evans explain in a FT op-ed:
[W]hile the world focuses on the predictable brinkmanship between Ukraine and Russia, the real fight over the share-out is taking place more discreetly between a few oligarchs in Moscow and Kiev. This is perhaps the whole purpose of the noisy puppet show. Worries about Russia or Gaz prom using the “gas weapon” against Europe are misplaced. In their official capacity, both are keenly aware of their absolute dependency on exports to Europe for a huge share of the country’s income, and on the need for stable, reliable, long-term relationships to finance the in vestments needed in gas infrastructure.
Of far more concern is that governments in Ukraine and Russia tolerate – indeed encourage – use of their upper political echelons and large parts of their infrastructure as instruments in disputes between unknown oligarchs.
A lot of politicians on both sides make a whole bunch of black money from their shady cooperation with the oligarchs. That is the real problem here. Everything else is theater.
In a few days, before reserves run out, there will be a compromise over the price and deliveries will resume. But until then we will have to endure a lot of Russia bashing from the usual suspects.
