Energy-Power: Ukraine with Russia or EU?
The Ukraine is in the midst of a back-and-forth with Russia concerning prices of natural gas and ultimately concerning it's potential fusing with Russia's Customs Union. The latter would unify the country's tariff system, and potentially open the path for Russia to swallow up and integrate Ukraine's Naftogaz with Gazprom. Ukraine is juggling these issues while actively pursuing talks on European Union membership and the prospect of free trade with the European Union. Only in 2009 was the Ukraine seen as the “bad apple” when the faucets were closed and supply of gas to Europe was blocked. Russia managed to conjure a crisis that happened to draw the majority of Europe into its beef with the Ukraine. If the Ukraine were indeed siphoning EU Customer-meant gas, no one knows. Ukraine's move is part of a larger picture-an attempt to maintain balance but perhaps not entirely commit to either Russia or the West. If the Ukraine doesn't entirely commit, the other sides may lose faith, and this could lead to a weakening in relations.
The Ukrainian President Viktor Yanukovich stated that affiliation to the EU and free trade was paramount. However, the picture is now tainted. In the midst of these discussions, the Ukraine's former Prime Minister has been put on trial a long with Yulia Tymoshenko on charges of abuse of power related to the signing of a natural gas deal with Russia in 2009 - they were eventually convicted and sentenced to a maximum sentence of 7 years in prison. Naturally, the EU isn't too happy about this. The EU and the general international audience claims that the use of justice was highly selective, and more for political purposes. One cannot expect a system like this to have an association right to the European Union. Needless to say, the treaty between the EU and the Ukraine would require the parliamentary approval of all 27 EU member states.
In the present debate, the floor between Russia and the Ukraine is hot. Russia has turned the proverb “Speak softly, and carry a big stick.” to its own purposes. It speaks loudly and carries a big stick. It is definitely not in Russia's interest to change their behavior. Moscow is candid and rather aggressive when it comes to using energy as a means to send a message. What exactly this message is - I don't know. Perhaps it's just showing how dependent Europe is on Russian gas. But this isn't bravado; Russia has the means, and the tools. We're edging up to November and the cold winter months thereafter. The Nord Stream project, conceived by Germany's former Chancellor, Gerhard Schro¨der, is direct pipeline under the Baltic Sea which circumvents the Ukraine and provides a direct supply of Russia gas to Germany. The pipeline is supposed to become fully operational by November 2011. The Nord Stream, a twin pipeline, was built at a cost of $12.5bn (8.8bn euros) and is 1,224km long. It runs from Vyborg in northwest Russia to Sassnitz in northeast Germany. Putin mentioned that the Nord Stream pipeline would facilitate the shipment of gas from Russia to Europe since Russia's dependence on Ukrainian pipelines is now reduced. Before the Nord Stream project, an approximate 80% of gas exported from Russia went on transit across Ukrainian soil. German consumers can expect to receive Russian gas in the next couple weeks.
Putin also stated in front of journalists upon the launch of the new Nord Stream Pipeline his views on the coming implications of the new pipeline: "Ukraine is our old and traditional partner. As with any transit country, it has the temptation to benefit from its transit position. Now that this exclusive right is disappearing, our relations will become more civilized."
According to the Economist, although Russia is very reliant on Europe as a source of new technology and seen as pivotal to it's modernization, Russia has lost interest in Europe. Now, it sees it as an aging, and inflexible Economy as a whole. “Europe is no longer the sole source of inspiration for modernization in Russia;” says Mr Lukyanov, editor of the journal Russia in Global Affairs. Russia really does still depend on the EU for half its trade. However, trade with China doubled last year. Now, especially that Germany has abandoned nuclear power, Russian gas will most definitely be needed to compensate, if only temporarily.
This Nord Stream project is nothing short of Putin's means to ensure that Kiev doesn't drift too far from Moscow. Russia is simply showing that it doesn't need the Ukraine as a transit country to make a profit on it's gas. The Ukraine, however, is split in two. Half of the country has an affinity with the West. The other half of the population
wants to be more closely affiliated with Russia.
Ultimately, the Ukraine has to make up its own mind. As German Parliamentary Gunther Krichbaum said: “The country is at a crossroads. If Ukraine does in fact want to get closer to the EU, then it must adopt European values. That means the rule of law, democracy and respect for human rights.”For Russia, energy has proven itself time and time again, to be an incredulously powerful tool of leverage. Russia has ultimately found a way to implement this method without simultaneously applying unnecessary pressure on Europe. Enter Nord Stream.
In summary, Russia and the Ukraine find themselves in a brawl over the negotiations of gas prices that have had and can again incur fallout on the European Union. Russia's ego is hurt, and it takes retaliatory action: it withdraws the Ukraine's right as a transit country by the construction of the Nord Stream Pipeline that bypasses all transit states and directly enters Germany. One could speculate that Putin's smugness in context with his statement saying that “relationships will become civilized” is an extra jab at the Ukraine. With the Ukraine not in a position to negotiate, Russia has the upper hand. Despite this complicated relationship, things between Germany and Russia are warming up, both figuratively and literally. Now, especially through the abolishing of Nuclear Energy, Germany finds itself very much dependent on Russia's gas.