Russia’s Gas Clash with Ukraine: Geopolitics or Just the Money?

The latest conflict between Russia and Ukraine over gas supplies has hit the headlines in both Europe and the United States but the media are far from agreed on the causes. Some argue that it is a geo-political move aimed at increasing Russian power in the region while others argue that it is a result of opaque conflicts between energy oligarchs in Kiev and Moscow.   Below, we provide a round-up dividing the commentary between those in the geopolitical and those in the "oligarch" camps:

Oligarchs and Money

  • Don’t Act Surprised
    In their International Herald Tribune op-ed, Jonathan Elkind of the Brookings Institution and Edward Chow of the Center for Strategic and International Studies argue that while both Russia and Ukraine are responsible for stabilizing their energy relationship the real blame for troubles can be traced to Ukraine. They say that Ukrainian officials treat their country’s energy industry as a "political trophy," submerging sound energy policy to personal and "business clan" interests. The European Union sees Ukrainian politics as a "black hole" that can best be circumvented by building new pipelines bypassing Ukraine, ignoring the possibility that European interests might be better served by promoting sounder energy policies in Kiev.
  • The battle of the oligarchs behind the gas dispute
    The Financial Times' Jerome Guillet and John Evans point out that while Russia has the gas supplies, most of Russia’s export pipelines and storage capacity were built by the Soviet Union in Ukraine. Ukraine relies on gas from Russia to fuel its heavy industry as it has depleted most of own reserves. The authors argue that Gazprom has long understood that Ukraine would never pay for official gas deliveries; as a result, complicated, opaque deals were made at high political and business levels. Those involved set up the system in a way that allows them to make immense personal profits. The real blame for the gas cut-offs is infighting amongst the oligarchs in Kiev and Moscow and the real concern should be that the Russian and Ukrainian governments allow this kind of in-fighting to stymie the creation of a needed, stable energy agreement. Further, the article suggest that perhaps Russian Prime Minister Vladimir Putin is not as politically influential as believed, given that these oligarchs have the power to cause such a wide reaching crisis.
  • Analysis: Money at the Root of Russia’s gas war
    Focusing on Russia rather than Ukraine, Douglas Birch of the Associated Press argues that the real issue for Russia is money and not political clout. Given the declining price of energy and the global financial crisis, the value of Russia’s reserves is plummeting and Moscow’s priorities are turning away from "reasserting its global influence toward shoring up its shaky economy." According to Birch, Russia simply wants Ukraine to pay something closer to the market rate. He quotes Dmitry Peskov, Prime Minister Vladimir Putin’s spokesman, saying "we are struggling with the consequences of the world economic crisis, but it does not mean that Russian taxpayers have to sacrifice to keep Ukrainian production alive."
  • À l’origine du conflit gazier, “contentieux politiques et corruption”
    In this Le Monde piece, translated as Contentious politics and corruption are at the origin of the gas conflict) corruption are at the origin of the gas conflict, Marc-Antoine Eyl-Mazzega of the Center for Research and International Studies argues that traditional commercial conflicts play only a minor role in the gas conflict and that oligarch-related corruption is the prime reason why Russia and Ukraine find it so difficult to negotiate new energy contracts.

Geopolitical Power Play

  • Mary Dejevsky: Russia does not hold all the cards in a game both sides could lose
    The Independent article does point out the purely economic aspects of the crisis. In the end, however, she suggests that while Russia portrays the clash as being about money, it is really about politics.
    The Kremlin resented and feared the 2005 Orange Revolution.  It sees no reason why Russia should subsidize gas for Ukrainians who have oriented their country towards the West. But this dispute is being treated as one between two commercial companies over payments and price.

    She also notes that Ukraine has the potential "to hold the whole EU hostage in pursuit of a bilateral dispute with Russia."

  • Mr. Putin’s Cold War
    The Washington Post suggests that Russia is using the current gas crisis to achieve several foreign policy goals: weakening Ukraine’s "pro-western" government, and reasserting itself over countries formerly in its tutelage that are leaning towards NATO. The analysis concludes:
    The real message of this cold week is the same that European governments have repeatedly received – and largely ignored in recent years. Mr. Putin’s regime plainly intends to use Europe’s dependence on Russian energy to advance an imperialist and anti-Western agenda.

  • Kremlin’s secret weapon
    This Los Angeles Times report says that on the surface the gas dispute between Russia and Ukraine appears to be a commercial conflict, but that deep down "it’s something more menacing – part of what looks like a calculated strategy by Russia to regain influence over countries that were once part of the Soviet empire and to neutralize European opposition." Like the Financial Times piece cited in this blog, the Los Angeles Times connects Gazprom to Russian foreign policy, but, unlike the Financial Times op-ed, it believes that Putin is calling the shots.

Russia “learns from British Empire”

  • A Capitalist Revolution
    While most other articles either focus on the immediate background to the dispute, Oxford University Historian Mark Almond heads off in an idiosyncratic direction in The Guardian, with a piece that accuses the Kremlin of acting like 19th century British imperialists in a new “Cold War” against Washington.
    Russia’s energy giant, Gazprom, is at the heart of a new cold war pitting the Kremlin against Washington.  In the old cold war, Soviet gas still flowed west at the height of rows between Reagan and Brezhnev – but post-communist Russia is proving less pliant than the "evil empire."

    Almond argues that Ukraine is a "geo-political pawn" to America and that Washington supports Ukraine in the conflict to limit Russia’s influence. In addition to suggesting that the United States has a role in the current conflict (despite Washington being very quiet about it), Almond compares Gazprom to British chartered companies in the 19th century and American oil companies in the first half of the of the 20th century. It is not surprising, he says, that Gazprom should behave like this as it makes its way in the market economy.