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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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Location: Washington, D.C.

greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

13 February 2006

Energy cold war?

Yuri Ushakov, Russia’s ambassador to the United States, wrote an article in today’s Wall Street Journal to defend his country’s position on the natural gas dispute with the Ukraine. Here is an excerpt:

“Over the last 15 years, the newly independent states of the former Soviet Union were treated differently from other European consumers of our energy: Our pricing policy toward some of them was shaped by our history of interdependence and our hopes for expanded integration with Russia. That policy was inherently transitional -- a temporary step to help former ‘roommates.’ Selling them energy at bargain prices indefinitely does not merely defy common sense, it means subsidizing the entire industries of sovereign countries. It also hurts the interests of our energy companies' shareholders.

Now that the Russian government has switched to a universal pricing formula dictated by the market, as evidenced in a recent, widely debated natural gas deal, Russia is being accused of politicizing the energy issue. The irony is that such accusations are coming from those who had previously lectured us on the need for a speedy transition to market principles. I hope that no sensible observer questions why we are renouncing the policy of subsidizing our neighbors. But we continue to see attempts to look for political undertones in this totally pragmatic approach” (1).

There are too many things to pick apart from this article, not least of which is the reference to Eastern Europe and the Former Soviet Republics as “roommates,” a characterization I feel few citizens of those countries would share. What is more interesting to note, I think, is the intra-European politics that are emerging; last week, Kazimierz Marcinkiewicz, Poland’s prime minister, wrote an article in the Financial Times calling for an energy security treaty in Europe:

“It is the right time, in my view, to suggest a common effort to face not only current but also future challenges. That is why I want to propose to our partners from the EU and the Nato alliance a treaty on energy security. It would be an expression of solidarity for all parties, uniting them in the face of any energy threat provoked by either a cut or a diminution of supply sources that may occur because of natural disasters, disruption of wide distribution and supply systems or political decisions by suppliers” (2).

Here is the Polish prime minister urging Western Europe to defend Eastern Europe in an energy dispute; and then the Russian ambassador trying to make the case in America for Russia’s stance. I doubt Mr. Ushakov’s argument will have much appeal—such was the crassness with which Russia acted. Now Eastern Europe is asking for a new guarantee, offering one of the greatest challenges in Europe’s eastward expansion; it is also a test for intra-European politics: will Western Europe care? Here is a growing divide between Eastern Europe and Russia; will Europe step in? Will America?

(1) Yuri Ushakov, “Don’t blame Russia,” Wall Street Journal, 12 Feb 06
(2) Kazimierz Marcinkiewicz, “Europe’s energy musketeers must stand together,” Financial Times, 9 Feb 05

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