Jan 3, 2006

Meatball Brinkmanship Gone Awry

The dispute between the Ukraine and Russia ain't no trade dispute despite what the Chicken Noodle News outlets are tellin' us. Putin hates Ukrainian President Viktor Yushchenko whom he tried to Bhopal in a botched poisoning hit. Matters weren't made rosier by American election rigging consultants brought in to successfully pull off the slick Orange Revolution coup d'etat right under Putin's beak.

Russia is in the process of reasserting herself as a superpower and she's using her vast energy resources to do so this time around. The private aspect of energy ownership in Russia has been aggressively neutered and Gazprom is now snugly liased with the Kremlin as an instrument with which to project power.

In this latest round of Russian-Ukrainian posturing, Putin tried to blackmail Yushchenko using gas prices but the brinkmanship spiel went a bit too far and now the two parties are sitting there like silly ducks not knowing what to do after threats and bluffs have been called. Meanwhile Western Europe is waiting for its gas.

Russia will eventually have to sell all its gas at world market prices (and thus avoid being accused of dumping energy intensive domestic aluminum on the world market) if it wants to follow through on its ambition of joining the WTO. That will entail inevitable price hikes on both domestic gas sales as well as sales to the Ukraine, favored Belarus, and elsewhere - but this sudden browbeating hike in price for the Ukrainians is for the time being only about meddling with their upcoming parliamentary election in an attempt to undermine President Yushchenko's juice. It's all rather Abbott and Costello funny if ya ask me.


Kira Zalan said...

Many are labeling Russia’s pressure on Ukraine to pay market prices for natural gas as “Cold War” tactics. Of course, the Ukrainian government is paying the full price for their anti-Russian rhetoric and pro-Western orientation. Russia is flexing the only muscles she has: natural resources. But, it’s not so much a message to the Ukraine as to the West. And it’s not so much “Cold War” as Realist geo-politics.

Putin quickly realized that Russia only has one card to play in today’s world of growing demand for natural resources. Domestically, this realization became clear with the takeover of the Yukos oil company. Disguised as retribution for legal transgressions, Putin removed the threat of a western-oriented Yukos
by imprisoning its managers, and paved the way for a predictable government takeover of Russia’s oil industry. Today, it is not so clear what the rules of oil investment are (i.e. no foreigner shall hold majority stock in a Russian oil company), but it is very clear who makes the rules.

Meatball One said...

Damn Gurl, I couldn't have said it better even if I wasn't so lazy with words.

Maybe I would have interjected a swear word or two here 'n there - but damn, that never made a good thing better. Bravo!

(Are you sure you're not a CIA honey trap?)