January 5, 2006
That Scoundrel Putin

By David Warren

It is not every day I quote Le Monde with approval, so mark it on your calendar. I agree with the Le Monde editorial from Monday that described the Russian cut-off of natural gas to Ukraine the day before as a “declaration of war”. Not the first in the 21st century, as they put it -- they are typically forgetting about 9/11 -- but in its nature a portentous act of aggression.

France’s leading serious leftwing daily went on to note: "One country cuts off the energy supply of another because it doesn't give into its demands. … Russia, the largest natural gas producer in the world, pushed the button on the gas weapon."

For those who haven’t been reading the papers over the holidays (and I envy you), the event happened on New Year’s morning. The Russian government, on short notice, told the Ukrainian government that it was unilaterally revising the easy contractual terms on which the Ukraine had been receiving most of its natural gas. The price would increase by 460 percent, and the only thing the Russians would negotiate was a three-month phase-in. The Ukrainians replied that they could not sign. They could not come up with that kind of money. The government of Vladimir Putin was then as good as its word, leaving Ukraine to freeze in midwinter.

This is the same Russia who’s previous leader, one Josef Stalin, murdered many millions of Ukrainians in a man-made famine.

The matter is further entangled. Most of Russia’s natural gas exports to Western Europe pass through Ukrainian pipes. The Russians began alleging that the Ukrainians were tapping into supplies meant for Europe (at “market rates”), within several hours of the cutback. In other words, before they could be in a position to know. This was an incredibly crude and cynical attempt to isolate Ukraine from its European allies.

Which didn’t work: for the Europeans, and especially the Germans (whose ex-chancellor, Gerhard Schoeder, just took a well-paid job, fronting for the Russian oil and gas monopolies), are seriously upset, and not with Ukraine. At a moment when they are enjoying an exceptionally cold winter, they see that the Russians can do this to them, next.

They grasp that the Russian act was pure extortion. It had nothing to do with “a move to market prices”, but was rather a payback for the Orange Revolution in Kiev, in which a democratic government came to power in Ukraine in defiance of overt Russian meddling. Extremely favourable prices for natural gas continue to be offered to other ex-Soviet republics (the cheapest being to Belorus, the most backward and authoritarian of them all), who accept Russian tutelage and are willing to root out domestic democracy movements. There is nothing subtle in the Russian use of gas and oil as a geopolitical weapon. They have the grace of a big stupid bear.

With less clarity, the Europeans and Americans may now review Mr Putin’s major overtures to the Chinese dictatorship, and the technological support he has consistently offered for nuclear developments in Iran. Fifteen years after the collapse of state Communism, Russia is again forging an alliance against the West.

The same message is coming from Russia internally. Mr Putin’s former house “liberal reformer”, Andrei Illarionov, has resigned in protest. Mr Illarionov said, “It is one thing to work in a partially free country, as Russia was six years ago. It's another when the country has stopped being politically free."

Take note: this man was the bravest and most impressive in Mr Putin’s circle, and among the few Russian statesmen trusted in the West. As part of his job, he was asked to make a public argument, defending the New Year’s act of extortion against Ukraine as a “free market reform”. He refused. It may now be seen that his very presence in the Putin administration was cosmetic.

It was Mr Illarionov, incidentally, who boldly called attention to the totalitarian premises in the Kyoto agreement -- which Putin’s Russia so suddenly and mysteriously bought into, in such a big way. It was Mr Illarionov who, long before that, took a clear view of the political dimension of the cartelization of energy supplies. And Mr Illarionov who suggested that the whole concept of “free market prices” for the world’s oil and gas is problematic: for what we have is only a free secondary market, after the machinations of various authoritarian states that sit on the supplies.

Paradoxically, high prices are just what we need, to accelerate technological developments that will make our economies less dependent on e.g. Arab and Russian energy sources -- opening new fields such as the tar sands of Canada’s West, while moving eventually beyond carbon. But such transitions bring suffering.

It is an odd thing when the single biggest and most consequential event in a year happens on January 1st. The year 2006 may well prove odd like that.

Copyright 2005 Ottawa Citizen

David Warren

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