'Ukraine can’t have it both ways'

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By:Chronicles | April 11, 2014

Srdja Trifkovic discusses the Ukraine energy crisis, RT live, April 10, 18:06 GMT

RT: Ukraine’s economy is in a shambles and its people are suffering. Is it morally justified to turn the taps off?

Srdja Trifkovic: Talking about “moral justification,” let’s remember the first OPEC oil crisis in the winter of 1973-74, after the Yom Kippur War. It would have been rather funny for the Western countries which imported Arab oil to say, “We don’t recognize your prices. We are going to pay the old ones.”

Moral justification doesn’t come into it. What we are looking at is business like any other. If the Western countries are so terribly concerned about Ukraine’s economy and about the suffering of Ukrainian consumers, then of course they are more than welcome to re-export Russian gas, which is coming regularly through the North Stream pipeline to Germany, and I don’t think the Russians would mind. If they want to sell that gas to Ukraine on discounted prices, they are more than welcome to do so. But at the same time to say “it’s that horrible Russian bear using the gas weapon,” because the Russians are simply charging normal market prices, is ridiculous.

RT: President Putin has warned that supplies to Europe could be affected. If they are, what sort of further backlash we’ll see against Russia? We are seeing what’s happening in PACE [Parliamentary Assembly of the Council of Europe, where Russia’s voting rights are suspended].

ST: Forget about PACE. It’s an utterly useless talking shop, and Russia is better without it. I don’t think Putin meant to say that Russia would play with supplies to Europe via Ukraine, but that it is possible that the Ukrainians themselves will start playing games. After all, they did so with the ‘Orange’ regime in 2006, and even more seriously in 2009. So what Ukraine would need to do, in order to reassure both Russia and Europe, is to stop saying ridiculous things like “We don’t recognize the new pricing regime, we want to buy gas at discounted prices,” because that sounds like a veiled threat. Yes, they do have a weapon in the ability to turn off the pipeline, but at the same time it would be up to the Europeans to make their judgment on whom to blame.

Let’s face it: the Ukrainians can’t have it both ways, or three ways. It reminds one of one of the old Pushkin story about the goldfish and the ever-escalating demands. “We want a European Ukraine, we want Ukraine with the association agreement, Ukraine and NATO, Orange Ukraine, West Ukrainian Ukraine and in the end we want also a gas discount.” Come on…

RT: What about money? $16.6 billion are to be paid to Moscow. If Ukraine can’t even pay for discounted gas, how is it going to pay now when it’s virtually bankrupt?

ST: I don’t think Moscow will see any of that money any time soon. But at the same time I don’t think that the Ukrainians will see much money from the West either, because a billion from Kerry here and a couple of billion from the EU there, a credit line of X-billion from the IMF for so many years… is not going to resolve the structural problems.

RT: Should Russia stop the gas supplies then?

ST: The optimal strategy would be to say “At this moment we are willing to continue supplying you with gas on credit, but that credit will be calculated on the basis of regular, and not discounted prices.” In other words, from Moscow’s point of view it would not be politically advisable to turn off the pipeline, but it would to say, “You owe us $16.6 billion and we will continue calculating what you owe us on the basis of the new prices.”

The difference between the old price and the new one is of relatively minor import, but at the same time it’s essential for the Europeans to realize that if they follow the U.S. hard-line, with this ridiculous notion of “punishing Russia,” that there is an indirect punishment coming back. This is not using the gas weapon, the energy weapon, but simply the financial weapon of “Please, can we have our money?” If you want to help Ukraine, by all means do so – but you are the ones who are going to bear the burden. And I can tell you that Angela Merkel’s party and the German voters wouldn’t like that one little bit. 

Comments

 

 
Nicholas Stabinski
OKC
4/12/2014 05:47 PM
 

  Mr. Srdja Trifkovic, I greatly appreciate your excellent analysis on Eastern European Geopolitical issues. I would just like to comment that I believe you are missing a very important event or debate hat is taking place in Moscow as we speak. The debate revolves around the issue of Russia possibly converting to a Rubble based payment system for its natural gas and oil. I'm not an expert economist by any means but I believe that if Russia converts to this payment system it will have profound geopolitical and economic consequences for the United States (and its Western partners). The debate has been taking place in Moscow (Government and universities for years). Putin, however, has been concerned that the switching to such a system may have a negative impact on the Russian export and industrial sectors of the economy (due to a strengthened Rubble). On the other end of the debate, officials in Putin's administration have pointed out that implementation of such a system would decrease inflation (interest) and encourage people and businesses to take rubble based loans (instead of Euro or dollar based ones).

 
 
Gilbert Jacobi
Chicago
4/14/2014 12:01 AM
 

  As it becomes apparent that Ukraine can't "have it" either way – that it is about to be swallowed whole by Russia – we see who was all along under the real "existential threat". Pray for Ukraine

 
 
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