Russia and Natural Gas Imperialism

More details on the "pay up or freeze" natural gas deal between Russia and Ukraine are beginning to leak out. Here's Jackson Diehl at the Washington Post:

Ukraine's president, Viktor Yushchenko, and Prime Minister Yuriy Yekhanurov had agreed to purchase Ukraine's gas through a Swiss trading company whose owners and beneficiaries are publicly unknown -- but are rumored to include senior officials and organized crime figures in both Russia and Ukraine. They granted this same shadowy company a 50 percent share in the business of delivering gas to Ukrainian consumers. They accepted a price deal on gas delivered to Ukraine lasting only a few months but guaranteed that rock-bottom rates charged by Ukraine for the storage and transit of Russian gas to the West would be frozen for 25 years.

What does this have to do with democracy in Europe? In effect, some U.S. experts concluded, the Ukrainians may have sold to Putin that which he was prevented from stealing: a Kremlin stranglehold on Ukraine's government. The Russian leader poured money and men into his huge neighbor in late 2004 in a blatant bid to install a pro-Moscow strongman as president and make Ukraine's political system a mirror of the new authoritarian Russian order. His overreach triggered the Orange Revolution and the subsequent democratic election of Yushchenko, whose goals include leading Ukraine to membership in NATO and the European Union.

Harm De Bilj thinks he has an answer.

For more, visit The Washington Realist and The Oil Rules.

UPDATE: Meanwhile, Mr. Putin is visiting a former Soviet satellite, Hungary. From RIA-Novosti:

Hungary is the leading consumer of Russian natural gas in central and eastern Europe. Since 1975, when the supplies began, the country has received about 164 billion cubic meters of Russian gas totaling roughly 80% of Hungarian gas imports.

Under a contract with Russian natural gas monopoly Gazprom, Hungary will be provided with up to 10 billion cu m of gas every year until 2015.

Hungary is also the transit country for Russian gas designated for Bosnia, Serbia and Montenegro, with the transit close on 2.4 billion cu m in 2005.

Russia is the leading oil importer for Hungary. LUKoil, Russia's no.1 independent crude producer, delivered about 6.4 million metric tons of oil (128,500 bbl/d) in 2005. The company also owns a chain of gasoline stations in the country.

I wonder how the Hungarian government, now a part of NATO, is feeling today? And do you think it's any accident that the three Baltic states, all three of which were bypassed by the proposed Russia-Germany natural gas pipeline, announced yesterday that they would jointly build a nuclear power plant? More from RWDB.

But despite all this news, there are still some folks who would rather be at the mercy of the Russian natural gas supply.

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