Belarus - Russia 'Gas War' now affects Europe: is Nord Stream the solution?

The spat between Russia and Belarus over money owed (in both directions) just ratcheted up another notch:


Source

Not for the first time in recent years Belarus is engaging in a face-off with Russia over energy supplies.

This new brinkmanship has arisen as a result of Russia imposing price rises last year for gas supplied to Belarus. The Belarusian govt. has simply ignored the price rise, leaving Russia $200 million short — with the result that Russia yesterday announced it was cutting supplies by 30%.

Now the President of Belarus is trying to kick its neighbour in the teeth by cutting off Russian supplies to Europe, which is, apparently, illegal.

Only Lithuania, Germany and Poland will be hit, and Russia has stated it can bypass Belarus by supplying Europe through Ukraine. Nevertheless in the short term questions will still be raised over the reliability of Russia as a supplier, as European governments have found that Ukraine is also apt to disrupt supplies to Europe when it suits its agenda.

Enter Nord Stream, the new pipeline designed to supply Germany (and beyond) from the Russian mainland directly via the Baltic. Construction began just a couple of months ago, and is due for completion in 2011-12.


[atsimg]http://files.abovetopsecret.com/images/member/aa121d17f3b1.png[/atsimg]


Russia claims it is a purely commercial venture that will be mutually beneficial. They would like Western Europe to see the project as the answer to doubts over Russia's ability to act as a reliable supplier. Not everyone is convinced:

European dependence on Russian energy is already heavy and the pipeline expands dependence. Opponents have seen the pipeline as a move by Russia to bypass traditional transit countries (currently Ukraine, Slovakia, Czech Republic, Belarus and Poland).

Some transit countries are concerned that a long-term plan of the Kremlin is to attempt to exert political influence on them by threatening their gas supply without affecting supplies to Western Europe. The fears are strengthened by the fact that Russia has refused to ratify the Energy Charter Treaty.

Critics of Nord Stream say that Europe could become dangerously dependent on Russian natural gas, particularly since Russia could face problems meeting a surge in domestic as well as foreign demand.

Following several cuts to supplies to Ukraine, and further on to Europe on 1 January 2006 and 1 January 2009, as well as foreign policy towards Eastern Europe, it has been noted that the distribution of gas can be used as a political tool from the Russian state through Gazprom, which it owns.

In April 2006 Radosław Sikorski, then Poland's defence minister, currently the foreign minister, compared the project to the infamous 1939 Nazi-Soviet Molotov–Ribbentrop Pact.

Source

So both the current transit countries and the European Union are potentially threatened by this project. So who's funding the project?

...70% will be from external financing by banks...

(Source as above)

Has that got your cogs turning? If you want to go the whole hog, *unknown* globalist bankers might not be averse to states, and even entire global regions having energy security reduced, and thus more open to the creation of cataclysmic crises. After all, they'd never let a good crisis go to waste...

On the other hand maybe it's the solution to the transit problem, and will actually improve energy security. New pipelines providing gas from non-Russian sources are being planned, though interestingly not on a sufficient scale to cancel Europe's overwhelming dependence on Russian gas.

But this still begs the question: can Russia be trusted to use Gazprom as a purely economic enterprise? Or will it also be used as a political tool, potentially even as an instrument for blackmail?


[link to source article added]

[edit on 22/6/10 by pause4thought]

Gazprom is an economic enterprise in today's context. Could it be a political tool? Potentially but unlikely. Has it been used as such? No.


We keep hearing over and over how Russia "blackmails" and "pressures" its neighbors with energy supplies. Certainly that is the perspective that Western media is trying to push. But if you look at all of the price increases and supply cuts that took place - it was purely economic. In fact it was purely capitalist - in that Russia is trying to move away from the system of heavily subsidized energy for its neighbors that is left over from Soviet Times. Instead of subsidies, Russia is simply instituting market prices for everyone it supplies.


In Soviet times, and through the 90's and early 2000's Russia supplied gas to all of its socialist neighbors at heavily subsidized prices, and in fact it was losing money overall instead of profiting. For example Ukraine and Belarus both paid around $40-50 per 1,000 cubic meters, when everyone else around the world was paying the market price of $250-300. Even Russian clients were paying much more for Russian gas, than Ukrainian clients. Why should Russia subsidize the gas supplies of other countries?

And during the last 5 years Russia has been transitioning to fully market-based pricing system. This transition was announced way ahead of time, and applied to everyone - whether they were or were not Russia's polical allies. If anything the result was fair and equal treatment of everyone.


Of course we know that Ukraine and now Belarus raised a huge stink - but it was simply because they couldn't pay up but still wanted the product. Do you realize that there were many other customers beyond Ukraine and Belarus that saw their prices rise to market levels? Poland, Lithuania, Moldova, Romania, Bulgaria, Armenia - they was no problem with them, and all of them paid.




So I ask you - why must Russia continue to sustain Ukraine and Belarus at its own expense? If they want to be independent then they should be weened off Russia's subsidized gas. Truth is - that through the early 2000's Ukraine's economy was expanding rapidly mostly thanks to nearly free Russian gas. In many cases Ukraine didn't even make payments on the subsidized basis, which in fact amounted to stealing the product.

Can't pay? Tough luck. If you want to be independent, you have to learn to get by on your own. Go ask the other countries or international banking agencies for loans.

Belarus is Russia's ally, but it too must face reality. The fact that Belarus is an ally demonstrates that there is no political motive here - only an economic one. Belarus owes Russia a large sum of money, and there is no reason why the debt should be forgiven. And the issue is that Belarus (more specifically Lukashenko) has the money - but just doesn't want to pay up.




So should Europe worry about facing pressure or being blackmailed by Russia? No. Should it worry about Russian gas supplies - not if Europeans make payments on time, and Nord Stream should solve any transit problems. Remember that this is a two way relationship. Russia depends on income from European customers just as much as Europe depends on Russian energy resources. All of the major partners (Germany, France, Poland, Italy, Czech Republic, Hungary) understand this and have sought to establish better economic relations with Russia. On the other hand if Russia attempt to use gas/oil as a political tool, it can backfire dangerously and result in decreased revenue stream for Russia.


The issue is that the media and certain interest groups (mostly in UK, US) is pushing its own agenda, and trying to desperately discredit Russia. Why? Because US and British energy conglomerates are trying to find backing to an alternative and very expensive pipeline project bypassing Russia, that would result in Europeans paying more and the energy companies making more profit.


[edit on 22-6-2010 by maloy]

To what extent are we, The UK, reliant on Russian gas and if the situation deteriorated how would / could it effect us?

Originally posted by Freeborn
To what extent are we, The UK, reliant on Russian gas and if the situation deteriorated how would / could it effect us?

UK is probably the least reliant on Russian gas of all European nations. In the current case with Belarus, UK would not be affected at all. Nor was it affected during transit issues with Ukraine.

You would have to wonder however why UK media is so concerned about it, and is so intent on criticizing Russia. The British government and interest groups do have a stake in this - but it's not about relying on Russian supplies. Rather it is about BP and a number of other gas/oil ventures, and their initiatives in Central Asia, Turkey, and SouthEastern Europe. They are simply a rival to Russia, and want to get a part of Russia's market share of energy supplies to Europe. They could care less about energy security - it is all about profit.


The real debate about Russian gas is not what the media present it is. It is not about European energy security - it is about a match-up between Russian and US/UK energy conglomerates, and their respective underlying political forces. And the issue won't subside anytime soon. Nordsteam will simply realign the priorities - and the real conflict over energy supplies and markets will shift to Central Asia.

reply to post by maloy


I must admit I get the impression that the UK MSM tend to sensationalise anything to do with Russian gas supplies.

The majority of Brits are amazingly ignorant of the sources for all their utilities and have a tendency to believe anything that is presented to them.

Of course our own multi-nationals have their own agenda which they tend to force upon any incumbent government regardless of their political leaning.

reply to post by pause4thought

Originally posted by pause4thought
On the other hand maybe it's the solution to the transit problem, and will actually improve energy security. New pipelines providing gas from non-Russian sources are being planned, though interestingly not on a sufficient scale to cancel Europe's overwhelming dependence on Russian gas.

But this still begs the question: can Russia be trusted to use Gazprom as a purely economic enterprise? Or will it also be used as a political tool, potentially even as an instrument for blackmail?

Thanks for the thread plug.

Some of us knew this was coming. Now they can't deny it. It looks like a cold winter may be on the horizon again this year for some. We will see. Thanks for the situational update.

PEACE

Slay


[edit on 22-6-2010 by SLAYER69]

Somewhat surprisingly Belarus claims it has actually cleared its debt with Russia today. Russia 1 Belarus 0.


reply to post by maloy


You have put your case very well.

I can only agree that it is good to see Russia exploiting its vast natural resources more effectively than during the Soviet era. I have no problem with that per se.

The issue of whether poorer (partner) nations might reasonably expect to pay a discounted rate for their gas supplies is in reality of little concern to countries in the EU. However the fact that Russia HAS used its ability to cut off supplies during disputes is quite reasonably of concern to other nations — particularly when Europe as a whole is so vastly dependent on the very same source.

It is above all an issue of trust. Put it this way: would the EU be wise to become vastly dependent on a historically hostile nation for its food supplies? The answer is plain. Why, then, should energy supply be taken less seriously?

You are right to say Russia needs the income and would be unwise to risk undermining such a vast revenue stream by ever threatening to use supply to achieve political ends. But take the long view and matters are not so simple. To illustrate: China needed massive investment from western nations in order to modernize and expand its industrial base. But it is wholly foreseeable that once China has developed sufficiently on the back of western investment it will happily turn its back on the west and proceed on its own chosen course, most likely strengthening/forging alliances with nations who compete with/oppose the west. Russia is immeasurably more likely to follow a similar path than merge its interests with those of the West. Taken in this light concerns over Russia's ability to use gas supplies to achieve political objectives are far from sensationalistic, especially taking into consideration the length of time needed to plan and construct new pipelines.

The chess player who looks further ahead sees a completely different picture.

Sensationalistic journalism would consist of arguments in favour of phasing out Russian supplies as far as possible. But arguing there is a need for balance is simply common sense.