Clarion Content

Russia turned off the taps on much of the Ukraine's natural gas supply yesterday. The Russians are peeved. We group them as a state because the Clarion Content will tell you that in our opinion the cult of Putin is overrated as a tool of foreign policy analysis, many other apparatchiks would be functioning in essentially the same manner. Why are they mad? The Russians are threatened by the Ukraine's lurch westward. Post the Orange Revolution, Ukraine has been creeping closer to the European Union and angling to join NATO. The Russians disapprove. They have perceived the Ukraine as in their sphere of influence since Russia's inception as a modern state.

For more than half of the last century when the Ukraine was part of the enveloping blanket of the Soviet Union, (read: a totalitarian state that annexed Russia's imperial satellites) its natural gas was subsidized. It was technically and literally part of the same country as Russia. Ukraine paid well below market prices for Russian gas. Post the dissolution of the Soviet Union in the early 1990's, the leadership of the Ukrainian state hewed closely toward the Russian course and the Russian will in foreign policy, until very recently, and Russia continued to subsidize the natural gas. In 2004-5 the Orange Revolution in the Ukraine brought national upheaval. The country of Ukraine has been characterized by some analysts as split between a pro-European integration western half and a pro-Russian eastern half. Or split between young and old. Or between traditionalist conservatives and liberals. Or between the law abiding and the corrupt, the gangsters. The Clarion Content isn't qualified to judge if any of those categorizations are accurate, but it is impossible to ignore the din from all commentators which agree at least that their are seismic shifts occurring in Ukrainian society.

Russia turned off the taps because ostensibly the Ukraine refused to pay closer to market prices for Russian natural gas. Russia has been raising the prices on the Ukrainians each of the last several years. The Ukraine has of course been yelping, as any state being weaned off of fuel subsidies might. The tricky sitch as we learned the last time this dispute boiled over, is that a great deal of the natural gas supply of Poland, Germany, France and Italy comes from Russia across the Ukraine. The last time the Ruskies cut the gas supply to Ukraine in 2006, the Ukrainians simply stopped the flow of gas across their country to Europe from Russia and appropriated it. It freaked Europe the heck out, and brought into renewed question Russia's reliability as an energy supplier. Unfortunately, alternative pipelines by-passing the Ukraine have not yet been brought on-line in any significant capacity. The Europeans squawked last time but didn't solve the problem. Unless there is a quickly negotiated solution, get ready for the redux.

A few questions for further thought... will Russia's punitive actions push the Ukraine closer to the West? Will Europe embrace Ukraine or ignore it in a desperate pursuit to secure Russian gas by any means necessary? (Like say from totalitarian Belarus) What role does a discredited America play? Mediating? Encouraging the Ukraine with loans and other aid ala Georgia? Does America scold the Europeans? The Russians? Both?

Read more here from Reuters.

Labels: Economy, energy policy, Politics