The Gas War

The gas war between Russia and Ukraine is not what it seems. It resembles a bitter commercial dispute, but in fact, it is a power struggle. Russia, by cutting off the gas to Ukraine, is pressuring Ukraine to submit to its will — while government-connected oligarchs on both sides maneuver to profit no matter what agreement is eventually reached.

The center of the Soviet gas infrastructure was Ukraine. This remained the case when the focus of gas exploration and exploitation moved to Western Siberia. When the Soviet Union broke up, the Soviet gas industry was divided up among the former republics. Most of Ukraine’s gas came from Russia, but much of Russia’s export pipeline network was in Ukraine, outside Russian control. This meant the two countries were trapped in a marriage they could not annul, and in which negotiations quickly came to resemble threats of suicide.

Russia could threaten to cut off supplies to Ukraine. But with 80 percent of Russia’s gas exports going through its territory, Ukraine could steal the gas intended for Europe. It was in this unstable situation that Europe elected to increase its energy dependence on Russia. The security of European gas supplies thereby depended not only on the reliability of Russian and Ukrainian commitments but, much more problematically, on their ability to behave in a civilized manner toward each other.

In the wake of Ukraine’s efforts to join NATO, Russia is in no mood to be civilized toward Ukraine. This is the reason for the suggested price increase from $179 per 1,000 cubic meters to $450, a price described by Russian opposition leader Boris Nemtsov as “blackmail.” Each side quietly hopes that European pressure will force the other side to submit.

But Ukraine is in the throes of a financial crisis that forced it to seek a $16.4 billion bailout from the International Monetary Fund. It is not a position to make huge concessions to Russian pressure. Nor should NATO membership come at such a steep price. This is the reason why the West needs to help end this dispute by putting pressure on Russia.

– David Satter is a senior fellow at the Hudson Institute and a visiting scholar at the Johns Hopkins University School of Advanced International Studies (SAIS). His latest book is Darkness at Dawn: the Rise of the Russian Criminal State.

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