The current disruption of gas supplies to Ukraine and therefore to the rest of Europe is unprecedented and its scale is much larger than the first such disruption during a similar dispute on gas prices, Ukrainian debts, and/or transit fees back in 2006. The media is full of these stories. Here is one.
Who’s to blame? Well. In the short term both. Certainly, fundamentally, this dispute is commercial in nature. Ukraine should pay market prices for its gas and not receive subsidized gas prices from Russia, a Soviet legacy, especially if it wants to be politically independent from Russia. And Ukraine should not take Russia and the EU hostage by charging excessive transit fees just because 80% of Russian gas going to Europe transits through Ukraine. However, what is happening is a nasty show of power. If Ukraine is playing a nasty little game, out of desperation more than anything else, the big “nasty guy” is Gazprom. Gazprom has a monopoly over the exports of all Russian gas and over gas from Central Asia that transits through Russia. Gazprom has a track-record of leveraging gas disputes for geopolitical reasons. Here’s a major report on Russia’s Energy policies since the 1990s, if you have the patience to go through it.
In the current case, one needs to bear in mind the political context. The Russian government is in crisis at the moment. Hydrocarbons prices have plummeted, hundreds of thousands of Russians have lost their jobs, people have been protesting in the streets. The government is not loosening its grip over the people, nor over the economy, on the contrary. Being the one to hold cash reserves accumulated during the oil boom that stopped abruptly late this summer, the government is becoming even more dictatorial and paranoid. Ukraine is an ideal “victim” – it is looking West, democratizing, suffering from the economic crisis, was opposed to Russia’s invasion of Georgia, has managed to get into the WTO before Russia, is negotiating a free trade agreement with the EU, etc. The current crisis is therefore a way of: making a point with Ukraine on who’s boss, making a point with the EU on how powerful it is, and of (desperately?) bidding the gas price up. If Russia wanted the dispute to be “purely commercial”, it would use legal means, such as the Energy Charter (which it has signed but refuses to ratify, although it agreed to apply it provisionally….) to have its way with Ukraine; it would consult with the Europeans, and would certainly not just stop supplies in the midst of the winter.
My main point however here is on the EU’s reaction to the gas crisis. First the Czechs, holders of the rotating presidenc, said it is a bilateral matter between Russia and Ukraine. Then they changed their mind and issued a joint declaration with the EU Commission saying Russia’s behavior is “unacceptable”. But we are in a world where gas markets are national and foreign policies are national. Where are the member states? Absent. In the meantime some countries are suffering from a severe energy crisis and nobody knows when all this will end. Sarkozy is on a photo-op diplomacy tour in the Middle East (admittedly what is happening in Gaza is much more than “unacceptable”), we haven’t heard anything significant from the Germans, nor from the Italians…
The FT today says that since the big member states are also hit they might get moving and start doing something about it. Well, let’s hope so. The issue is that these countries tend to be in the Kremlin’s pocket when it comes to energy policies. Their own national energy champions do big business with Gazprom, but they are less dependent on Russian gas deliveries than the members of the former Soviet bloc, for which some depenency rates are 100%. Have a look again at Pierre Noel’s piece for more details on the power asymmetries that mire the EU’s gas relationship with Russia, and at the ECFR’s assessment of who are the Russia’s “Strategic Partners” in the EU their “Power Audit” of EU-Russian relations. The “strategic partners” include those that matter most in gas issues with Russia: Germany, France, Italy. Expectations that something will change must be kept modest. Indeed the problem is structural. Most analysts say the EU needs a common energy market and a foreign policy, with the hope that instituting such reforms will change things at once.
However, a quite iconoclastic author recently offered a radically different analysis of the EU’s ineptitude in world affairs, and in particular when it comes to Russia. It is Wess Mitchell from the Centre for European Policy Analysis (a staunchly pro-market and pro-Atlanticist outfit, it needs to be underlined), who wrote a very witty piece for The American Interest back in November/December, entitled Perhapsburg. He says that a common foreign policy will not change anything in the EU’s inability to be a functioning great power. Rather, the EU today resembles the defunct Austro-Hungarian Empire of the late 19th Century, which did have a common foreign policy. And it risks ending up in more or less full dependency on Russia, as Austria ended up being on Prussia pre-1914. Let me quote a few passages:
“virtually every […] analyst who has rolled the bones in the Great Europe Debate, is the assumption that the nations of Europe will choose, ab intra, their own geopolitical destiny. What they all ignore is the influence that other great powers exert, ab extra, on EU political outcomes. Preoccupied with the impact that the European project will have on the international system, these authors fail to consider the impact that the international system will have—indeed, is now having—on the European project.”
“the European Union is likely to resemble not 19th-century Britain or Germany, but their palsied polyglot neighbor, the Austro-Hungarian Empire: surrounded, geopolitically polygamous and predisposed to dependency on, if not submission to, a powerful neighbor (…)”.
“For beneath [19th Century] Austria’s pale red coat lies a simple geopolitical fact that has been almost entirely ignored in the debates about the European Union’s strategic future: A multinational union is fundamentally different from other great powers irrespective of how politically integrated it may become. Its internal and external success—indeed, its very existence—is inextricably tied up in the actions and wills of other powers. This presents the European Union with a predicament that could be framed as follows: Internal Division + Relative Decline = Geopolitical Dependency. (…)”
“the problem inheres in the strategic affinities (mostly geographically derived, some psycho-historical, many permanent) that exist between the mostly small and mid-sized powers inside the EU project on the one hand, and larger powers on the outside on the other (…)”
“For the European Union, the most important of these flanking great powers are the United States and Russia. (…)”
“The real disaggregator, however, is not the United States but Russia. In recent years, Moscow has used what a recent report from the European Council on Foreign Relations called “coercive bilateralism” to systematically penetrate and fragment the EU project. (…)”
“for the European dilemma is structural in nature. EU member states have always sought the backing of powerful external patrons to augment their positions in the intra-EU balance of power. The European Union’s fringes, the new Central European member states plus Britain and the Scandinavians, turn to Atlanticiscm; the core, Germany, France and their respective satellites, sees its advantage in Eurasianism. (…)”
“While geopolitical decline presents severe challenges for any great power, it is especially perilous for a multinational state. Over the course of the 19th century, Austria underwent a slow but steady process of economic, military and demographic enervation that left it in a state of perpetual geriatric greatness in relation to the other powers. Decline eventually stripped Austria-Hungary of its status as a necessity in the other powers’ eyes as its capacity for independent action eroded and its dependence on other poles in the system grew. Both of these symptoms are now observable in the European Union.”
“Most Europeans, to the extent they even recognize this danger, say the power they are apt to be dependent on is the United States. In fact, they are more susceptible to dependence on Russia.”
Having said all this, I leave us all wondering when gas supplies will resume. Expect the worst, hope for the best.