Monday, January 02, 2006

This is Only Going to Get Uglier

Right now the Ukrainians and the Russians have escalated rather than defused the Gas War. Neither side has compromised really. The Russians have offered up some grandstanding proposals. The Ukrainians claim they've offered several to the Russians and all have been rejected.

Now the Russians have cut off gas to Ukraine for Ukraine's own use. Then the Europeans complained that the gas pressure in their lines - which come from Russia and cross Ukrainian territory - had dropped: the Germans even went as far as to state thtat they'd reconsider buying gas from Russia if the problem continued. The Russians accused the Ukrainians of theft. The Ukrainians have denied it. The Russians then stated they'd up the pressure to compensate for the Ukrainians gas "diversions".

The Ukrainians claim that they are innocent and that the Russians are blowing smoke. They also say that they have gas reserves to cover until summer. They've been making applies to the US and Europe for help in their negotiations. They want the next round to be mediated by international third parties. Ukraine also states that they are willing to make a transition to market pricing, just not all at once. They ahd an agreement with Russia before to make the transition by 2008. The blow up over the ownership of the transit pipes and the new proposed transit tax is part of what sparked all of this.

Ukraine has been saying that this is all blackmail to coerce her back into Russia's fold. The Orange Revolution took Ukraine out of Russia's orbit into a transfer orbit into the West. While not a fast transfer, it put Ukraine on the way towards joining NATO and the EU.

Unnoted until recently in all of this is that Moldova has had its gas supply from Russia also cut. Moldova has also been making moves towards becoming a Western nation as well.

If the Ukrainians are, in fact, stealing gas, the Russians just got humiliated big time because their attempted blockade just seriously failed. The Russians are stuck because something on the order of 90% of the gas they sell to Europe transits Ukraine. The Russians are stuck short of following up on some recent comments. If they do that - and the Great Russians have been just been twitted by the Little Russians, so don't assume that they won't necessarily - expect all hell to break loose.

To make matter worse for the Great Russian ego (or better? They're being taken seriously again), the Europeans are really letting them have it.

So what will NovImperial Russia do? I predict things will get hairier before better.

Unfortunately for my in-laws, they're really up a creek. They jsut converted their house to using gas instead of coal for heating. :(


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