Monday, January 02, 2006

Russia says 'Nyet' to Ukrainian double-face

I am not entirely surprised that Russia has demanded full cost for the gas supplied to Ukraine. Ukraine had been enjoying highly subsidised gas at only US$68 per 1,000 cubic metres but Russia now wants the full rate of US$314, an increase by nearly 500%.

Everyone knows that after its Orange Revolution, Ukraine has been stupidly antagonising Russia despite the reality that it's still so dependent on Russian subsidised gas. In its headlong rush to brown nose the USA in the belief that Uncle Sam would pour in zillions of aid, it has recklessly forgotten the hand which had been feeding it.

Ukraine wanting to join the European Union is one thing, a relatively harmless one to Russia, but signalling its intention too become a member of NATO had been akin to waving the red flag in the face of the enraged bull. NATO has been formed for one explicit reason, namely to counter Russia and its allies, formerly known as the USSR (though of course today it has expanded its role post 9/11 at the US insistence to cover Afghanistan).

If Ukraine wants to be a member of NATO, that's fine but it’s a bit too much to expect continued Russian subsidy of its Russian supplied gas.

President Putin had offered Ukraine a 3 months relief, with gas supplied at the full subsidised rate, if the latter agrees to an amicable readjustment of the price rate by April this year, but Ukraine brazenly refused, demanding a more gradual increase over a much longer period of time, which of course was supported by the USA. What makes me laugh has been the US’ criticism of Russia for exerting political pressure through the supply of energy. Brazen, isn’t the USA, of all the countries in this world to be so hypocritical as to separate energy sources from politics?

So Russia has cut off the gas supply to Ukraine yesterday. Right at the start of winter!

Ukraine still has a stock for 4 months’ consumption, and may be making plans for alternative sources (which unfortunately for her will definitely be at world price, meaning they won't be subsidised) or may attempt to siphon off (steal) the Russian gas meant for Europe. The situation becomes more complicated in this regards because Russian gas meant for Europe runs through Ukrainian territory. If Ukraine does the latter, I have no doubt that the proverbial will hit the fan.

I have very little sympathy for a petulant Ukraine. One can’t have it both ways, wanting to be a member of an organisation that is basically anti Russia, and yet wishing to enjoy continued subsidised gas from Russia. It’s like biting the hand that feeds Ukraine.

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