By Eric Vandenbroeck and co-workers
On Jan. 4, Moscow and Kiev settled the matter by agreeing to a
compromise five-year contract. Under terms of that deal, natural gas from the Central
Asian states of Turkmenistan, Uzbekistan and Kazakhstan will be transported
through Russia, making up a mix that would supply Ukraine at a rate of $95 per
1,000 cubic meters. Any Russian gas fed into that mix will be sold at Gazprom's
full rate of $230.
From a strictly commercial standpoint, all now seems right with the
world. The Central Asians, who previously were able to sell natural gas only to
the heavily subsidized Russian market, now have gained a significant export
market for their supplies; the Ukrainians have substituted a mere doubling in
prices for what would have been a fourfold increase; and the Europeans have
their natural gas supplies reestablished.
But that is not the really interesting -- much less important -- part
of what has just occurred. When the crisis first erupted, it centered on
Russia's desire to reassert influence directly in Ukraine; but as the game has
played out, it has come to center on Russia's ability to use Europe as a lever.
The Ukrainian Keystone
From the beginning, the natural gas spat has been about much more than
a few (billion) dollars in annual energy sales. This squabble is over the
orientation of Ukraine between West and East, and ultimately over the ability
of Russia to regenerate its geopolitical fortunes.
Ukraine’s “Orange Revolution” was a seminal event in the Russian mind –
a jarring development that ranks second only to the dissolution of the Soviet
Union in December 1991. Russians view the Soviet collapse as the day they lost
their empire, and they fear that history may mark the Orange Revolution as the
day that Russia degraded past the point of no return.
Viewed from any angle, Ukraine is critical to the long-term defense and
survival of the Russian state. This is not about ethnic kin, although eastern
Ukraine does host the largest Russian community in the world outside of Russia.
Even before the Soviet era, Ukraine was integrated into the industrial and
agricultural heartland of Russia; today, it not only is the transit point for
Russian natural gas to Europe, but actually is a connecting point for nearly
all the country’s meaningful infrastructure between East and West – whether of
the pipe, road, power or rail variety.
Politically and militarily, a Russia denied Ukraine cannot easily
project power into the Northern Caucasus. Nor could Moscow reliably exert
control over Belarus, since that country’s primary water transport route, the
Dnieper, flows south to Ukraine, and it is nearly as well linked into Poland
and the Baltics as it is to Russia proper. That geographic reality means that,
should anything happen to the government of pro-Russian President Alexander
Lukashenko, Minsk’s geopolitical orientation could quite easily shift to match
Ukraine’s.
And of course, taking the long view, it is easy to see why the Russians
are so nervous. Ukraine pushes deep into the former Soviet territory, with
borders a mere 300 miles from either Volgograd or Moscow, and the Ukrainian
port of Sevastopol on the Black Sea has long been Russia’s only deep, warm-water
port. There are no European armies prepared to march east now, nor are there
likely to be anytime soon, but throughout history – apart from the Soviet
period – Europe has profited from Russian weakness. Without meaningful
influence over Ukraine, Russia has no reliable links to Europe, no reliable
control over Belarus, a pinched supply line to the Caucasus – where an
insurgency rages – no navy to speak of and, most importantly for a country with
no natural borders, significantly less strategic depth.
Simply put, with Ukraine in its orbit, Russia maintains strategic
coherence and a chance of eventually reattaining superpower status. Without
Ukraine, Russia’s status as a regional power grows tenuous, and the issue of
Russia’s outright disintegration leaves the realm of the ridiculous and enters
the realm of the possible.
This is not about money; it
is about control and survival.
Ukraine's position in the natural gas dispute has been to take
advantage of the fundamental duality in Russian foreign policy. On one hand,
the Russian leadership fully realizes just how critical Ukraine is to its
national interests. But on the other hand, Russia must have at least relatively
warm relations with the Europeans -- if for no reason other than to keep its
options open.
Ukraine has viewed the natural gas issue as an opportunity to present
the Russians with a zero-sum game. Kiev did not see the need to agree to pay
European price levels because its leaders knew that Russia could not afford to
cut off supplies -- that would ruin relations with Europe. Additionally,
encouragement from the United States -- the most enthusiastic supporter of
Ukraine's Orange Revolution -- gave the Yushchenko
government a bit of an invulnerability complex, and encouraged Kiev to push the
Russians consistently and painfully.
There was also a timing issue. Since the Orange Revolution, Yushchenko has been having a rocky ride, and his popularity
is at an all-time low. With parliamentary elections scheduled for March, he
needed an anti-Russian crisis in order to bleed support away from Yanukovich's party.
But what Yushchenko -- or, for that matter,
many Europeans now congratulating themselves for their victory over Russia --
appears not to realize is that Russia has changed.
In mid-November, Russian President Vladimir Putin named Dmitry Medvedev
as first deputy prime minister. Medvedev is a rather rare personality in
Russian politics, in that he is a modernizer who has not become unrealistically
optimistic about Russia ever looking like -- much less joining -- the West, and
a nationalist who has not fallen prey to the debilitating paranoia that often
characterizes Russian policy. He also happens to be Putin's protégé and the
board chairman of Gazprom. The Ukraine natural gas crisis was his first Russian
foreign-policy initiative.
Medvedev, like all Russians, recognizes that his country's long-term
prospects without Ukraine are, at best, bleak. That means that Russia's
European relations have become of secondary importance -- they are no longer an
end in their own right, but rather a means to other ends.
Prior to the Jan. 1 shutoff, the Europeans had become complacent,
unappreciative of the scope of their dependency upon Russia or how much they
have taken a "friendly" Moscow for granted since the end -- or even
before the end -- of the Cold War. Energy supplies to Europe continued
throughout the Afghan war, the 1983 war scare, the Moscow Olympic boycott, the
putsch against Gorbachev, the Soviet breakup, the Chechen war, the Kosovo war,
and the enlargements of NATO and the EU. The Europeans grew confident that as
far as energy supplies were concerned, the Russians -- while unpredictable in
their rhetoric -- were rock-solid in their reliability.
Medvedev's primary goal was to redefine European perceptions of Russia.
As of Dec. 31, Western Europeans perceived Russia primarily as an easily
dismissed, benign former foe. But with the Gazprom cutoff -- which diminished
gas supplies needed for heating in the middle of winter -- Russia proved itself
not only sufficiently erratic to be taken seriously, but also capable of
inflicting very real pain with a modicum of effort.
Now, did the Russians want to hurt the Europeans? Of course not.
Europe, particularly "old" Europe, remains a potential partner for
Moscow, and there is no reason for the Kremlin to introduce spite into an
already complex relationship. But did the Russians want the Europeans to know
that the Kremlin has the capacity and chutzpah to turn the screws? Absolutely.
And doing so at a time of year when the wind whipping off the North Sea is
anything but balmy adds that ever-incisive Russian touch.
This is not about establishing trust, but about establishing in Europe
a respect for Russia's strengths and an awareness of Russia's concerns.
Which brings us back to
Ukraine.
Moscow wants to capitalize on Europe's dawning realization of Russia's
forcefulness and convince the Europeans this is not just about Ukraine, but
also about the United States. U.S. pressure made the Orange Revolution
possible. U.S. support has emboldened Kiev -- even specifically on the natural
gas issue.
And now Ukraine's American-encouraged invulnerability complex has
demonstrated an ability to endanger Europe's economic and personal well-being.
However, unlike the Europeans, the Americans do not import so much as a
molecule of Russian natural gas. For Washington, supporting Ukraine against
Russia is a low-risk, high-payoff issue; for Europe, it is the reverse. When
natural gas supplies dropped on Jan. 1, many Europeans were left wondering
exactly what it was that they were supposed to get out of this revolution that
the Americans were so excited about.
The question for Europe now is simple: How to ensure that the Russians
don't cut off the heat? The answer is equally simple: Take Russian interests in
Ukraine to heart.
The Fine Print
This is hardly the end of the matter. The way the Russians set up the final
compromise deal on Jan. 4 also gives them heretofore unheard-of flexibility in
pressuring Ukraine and Europe in the future.
Up to this point, Gazprom has maintained a monopoly on natural gas
exports from the former Soviet states to Europe, and only Turkmenistan was
allowed to export natural gas to Ukraine. This derives from a longstanding
Gazprom position: Because the company is required to supply natural gas to the
Russian market at prices below the cost of production, Gazprom has jealously
protected its monopoly on exports. Turkmenistan was granted an exemption to
supply a few former Soviet republics because Moscow, in an effort to maintain
political alliances, dictated that their supplies should be subsidized.
Gazprom, therefore, had Turkmenistan sell to its regional undesirables for
peanuts, while the company pocketed hard currency from European customers
paying top dollar.
Under the new deal, Turkmenistan, Kazakhstan and Uzbekistan will be
able to sell natural gas directly to Ukraine at sharply higher rates than
before. While that might seem like an improvement for Ukraine in terms of both
political palatability -- the natural gas is not Russian -- and supply
diversification, it is neither. Just as Russian natural gas must go through
Ukraine en route to Europe, all Central Asian natural
gas must go through Russia to reach Ukraine. The terms of the new agreement
mean that Europe's natural gas supplies now will depend not only on the tenor
of Russian-European and Russian-Ukrainian relations, but also on
Russian-Kazakh, -Uzbek, and -Turkmen relations. Suddenly Europe has a vested,
if reluctant, interest in ensuring that Moscow is satisfied with its level of
influence in the bulk of the largest former Soviet territories.
Such developments cannot come as much of a shock to the United States.
Truth be told, American policy toward Ukraine has been a bit of a Hail Mary all
along. Washington's tools of influence in Ukraine and Russia are few and far
between, and it cannot even pretend to offer an alternative energy supplier for
the Europeans or Ukrainians. In fact, some of Washington's policies have even
encouraged Europe's dependence on Russian energy: The Continent's most viable
alternative to Russian natural gas is Iran -- which, with President Mahmoud Ahmadinejad
regularly shouting "Death to Israel," is hardly a place the United
States wants the Europeans to foster warm relations.
The elegance of Medvedev's strategy lies in the fact that simply
causing the Europeans to think about Russian interests means that the Kremlin
has driven a wedge not only between the Europeans and the Ukrainians, but
between the Europeans and the Americans. If Russia is to recover what it has
lost in geopolitical stature these past 15 years, this is precisely the sort of
policy that will give it a fighting chance.
While Russia's perspective on the matter is certainly central, this is
not all about Moscow -- Germany has a stake as well.
There, Chancellor Angela Merkel is in a bit of a fix. Her East German
roots prompt her instinctually to side with her fellow Central Europeans, and
by extension, the Ukrainians. But she is hardly oblivious to the fact that
Germany is the "old" European country that relies most heavily on
Russian energy supplies. In Germany, more than in any European state, power
rests upon location and economic strength (Germany has not had a military to
speak of in more than a decade). With the one internationally approved vehicle
for German ambition -- the European Union -- in rather less than the best
shape, Berlin's options for furthering its interests are nil. Without energy to
power its economy, Germany will remain the underwhelming geopolitical power it
has been since the end of World War II.
For most Central European states, this would be no large disaster -- if
not for the possibility of flickering lights or sudden mid-winter cold. The
Poles, Hungarians, Balts, Czechs and others -- all of whom have visceral
memories of wartime experiences at German or Russian hands -- like the idea of
German nationalism being contained by pan-European organizations such as the
European Union, even if they do not embrace everything that the EU requires
them to do.
But now Medvedev's maneuvering will force Germany to take the greatest
interest of all the European powers in keeping the Russians happy, even if
Merkel might be personally inclined to let Moscow rot. Which means that, moving
forward, whatever compromises are made in relations between Moscow and the West
will be actively brokered by Berlin. And while that may ensure steady energy
supplies to Europe, having affairs in the region managed by a de facto
partnership between Germany and Russia is not the sort of development that will
lead to restful nights in the vast tracts of easily-marchable
land between Berlin and Moscow.
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