At first, we thought it was just countries opposing Russian interests such as Ukraine that were getting screwed by Gazprom, the largest Russian company and the biggest extractor of natural gas in the world. It turns out the energy giant’s wrath is affecting Russia’s foes and friends alike. From the print edition of the Financial Times:
Russia ready to cut off gas supplies to Belarus, Georgia.Russia is preparing to cut off natural gas supplies to neighbouring Belarus and Georgia unless the two former Soviet republics agree by the year-end to pay much higher prices in 2007.
Coming a year after Gazprom, the Russian gas giant, briefly cut gas to Ukraine in a similar pricing dispute, such a move could provoke further criticism that Moscow is using energy as a political tool. It might also intensify pressure on Russia to ratify the European Energy Charter treaty, which would require such disagreements to be resolved through arbitration.
It’s no secret to CA readers that Belarus has been happy to remain in Moscow’s orbit, while Georgia is scrambling into the Western camp and frequently challenging Russian hegemony in the Caucasus. That both these countries are being targeted suggests that, when Gazprom says it is moving towards a transparent market price system, it may actually mean it.
Belarus currently pays $47 per 1,000 cubic metres for the gas its imports from Gazprom, Russia’s state-owned gas monopoly. Gazprom has said this will increase to $200 early next year unless Belarus cedes control of its distribution network, including a valuable transit pipeline which supplies gas to Poland and Germany.Moscow wants to buy Beltransgas for $4bn but Minsk says that the business is worth four times that amount. Analysts said a hefty price rise over the winter could further undermine Belarus’ struggling, largely state-controlled, economy.
“Putin is trying to maximise the pressure on Lukashenko with prices on energy consumers in order to force the Belarusian leader to play by Russian rules,” said Yaroslav Romanchuk, a Minsk-based economic analyst.
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COMMENTS / 4 COMMENTS
Dan tdaxp added these pithy words on 19 Dec 06 at 3:08 pm
That both these countries are being targeted suggests that, when Gazprom says it is moving towards a transparent market price system, it may actually mean it.Alternatively,
a) Russia is increasingly desperate for cash, and so continues her historic land-for-capital strategy
b) Putin’s crackdown on Yeltsin’s circle further alienates former allies, with even loyal states like Belarus now on the outs.Thank God for Putin. His gift of an increasingly crippled and isolated Russia does the entire world a favor.
moorethanthis added these pithy words on 19 Dec 06 at 3:42 pmThat both these countries are being targeted suggests that, when Gazprom says it is moving towards a transparent market price system, it may actually mean it.
By “transparent”, you mean energy-based extortion directed at friends and foes alike?
IJ added these pithy words on 19 Dec 06 at 3:58 pmIt looks as though Russia will not comply with all the practices of the global market. But such default is unnecessary for it to join the World Trade Organisation.
Compliance: The EU want the Russian Federation, as a condition of WTO, to stop subsidising its consumers of energy – no doubt Belarus and Georgia will have to pay more.
Non-compliance: On the Energy Charter Treaty, the Russian president says he won’t sign it. Moreover Russia expects to buy foreign property, while preventing foreigners from buying Russian assets.
von Kaufman-Turkestansky added these pithy words on 20 Dec 06 at 1:50 amNothing in Kaukasos recently, but I thought Chirol would find this report interesting if he has not seen it (about Georgia’s Armenian and Azeri Minorities by International Crisis Group). Sorry it’s off topic, but since we mentioned Georgia…
