Gas flows, everything ok or…?

January 22, 2009

After three weeks dispute Russian gas is heating European homes. Talks ended agreement, it was even signed, bills are paid, prices fixed, EU monitors are checking implementation and everything seems to be ok next ten years. I would not like to be bird of ill omen but I must state to have serious doubts and fear that on the end of year 2009 the situation is the same as three weeks ago.

I base my gloomy forecast to three main factors related to Ukraine, which are

  • Financial situation,
  • Questions related to domestic policy, and
  • International policy.

Financial situation

The price of Russian gas to Ukraine almost doubled in situation of international financial turmoil where inflation in Ukraine has been over 50 % last year, its currency has lost most of its value compared to Euro, steel (one of the main export products) is down and the signs of better future are unseen in near future.

Domestic policy

Domestic political sphere is in stagnation, everybody is waiting new elections which outcome with great possibility is not bringing any solutions. Same time The Security Service of Ukraine (SBU) has finished pre-judicial investigation and directed to court the criminal case of two activists of association Popular Front Sevastopol-Crimea-Russia, has launched new operations against separatist Rusin movement (Subcarpathian Rusin parliament, Carpathian Ruthenians, Rusins of Carpathian Rus), has prevented recruitment of mujahedeens and is speeding its work on revealing streamsof financing of the extremist radical Muslim organizations. An of course the Russian population in East Ukraine and Crimea is ready to activate if needed.

International policy

Ukraine is in cross-swell of declining U.S. hegemony and rising Russian sphere of interest and the country itself is divided which direction is the best. One part of playground is the energy policy of EU, but also U.S. and Russia. The latest gas dispute made it clear that Ukraine is not reliable transmitter of Russian gas to Europe. This boosts EU’s Nabucco –plan to new level. The same is true also with Russia’s South Stream, Nord Pipe and plans to increase more Liquefied natural gas (LNG) production and transport facilities. When impleneted – probably until 2015 – the new line(s) are invalidating the significance of Ukraine as transit route of energy.

Alternative paths

I believe unforeseeable future in social developments so the scenario I described above is not predestined the alternative paths are possible as well. E.g. in next elections Viktor Yanukovich’s the Party of Regions can win or lead ruling alliance in future, reconstruct better relations with Russia and minimize the impact of old parties of Orange revolution.

It is also possible that despite results in election separatist movements are gaining more support and one compromise can be creation some kind of federation with strong minority rights which also can block Ukraine’s former western dreams.

The bottom line

Whatever happens, interesting year is starting in Ukraine.  To the end I take second opinion by Czech intelligence agency as follows:

The Security Information Service (BIS), state intelligence agency of the Czech Republic, have warned members of parliament of the country that gas dispute between Russia and Ukraine most likely will repeat and it is only a matter of time, Prague-based newspaper Pravo reports.

“We have received overwhelming information from intelligence and counterspionage services”, said the head of the Czech parliament’s lower chamber committee on security issues, Frantisek Bublan. He marked that these data testified to presence of commercial and political factors which could provoke the next gas conflict between Russia and Ukraine. “It is impossible to guarantee that both sides will come to an agreement and the situation will normalize”, noted Bublan, having pointed out that there was lack of transparency of the contracts concluded by Gazprom and Naftogaz. (Source: http://www.axisglobe.com 21.1.2009)

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Serbia’s European Perspective developing – energy deal with Russia signed

December 25, 2008

On Spring 2008 Serbia signed two strategic agreement. The one was a Stabilization and Association Agreement (SAA) with European Union and the second one was a preliminary energy deal with Russia. The first is since then suspended but the second one got some flesh on the bones on Xmas-week. Both deals are implementing Serbia’s European perspective although from different angels.

Pipes are comingSAA paperwork

SAA could be described as a roadmap guiding Serbia’s way into EU. When implementation really starts it means starting long negotiations where some 80.000 pages of EU regulations are applied to Serbia’s legislation. During the process and especially afterwards with membership the carrots include e.g. access to EU’s structural funds and different (~500) development programmes. With these promises or visions EU is using its sc. “soft power” to integrate the key player of West Balkans under the influence of EU.

More about SAA & Serbia e.g. my articles “Montenegro and Serbia on the way to EU – maybe”  and “Two approaches from Balkans towards Europe”  and my Serbia’s NPI & SAA documents in my Document library

Serbia will come to an energy hub of West Balkans

Xmas eve Russian and Serbian Presidents and related companies from both sides signed an umbrella agreement including three parts:

  • Under the contract for the sale of NIS, Gazprom will purchase a 51 percent stake in the company for EUR 400mn, and invest a further EUR 547mn in restructuring. The contract, adopted during a government conference call, states that the buyer will secure a loan of EUR 500mn, repayable over 14 years, in order to implement the investment.
  • Second part includes construction the underground gas storage facility in Banatski Dvor that would be able to hold 300 to 800 million cubic metres of gas.
  • Thirdly the Presidents signed an umbrella agreement providing political guarantees that Serbia will receive a stretch of the €10 billion South Stream gas pipeline project is planned to distribute gas from Russia through Serbia and Bulgaria, branching out finally to Western European countries.

Sure NIS was sold under today’s market prices.  However if the two other parts of deal will be implemented the deal will be win-win both to Russia and Serbia.

NIS would also provide Gazprom’s first refineries outside of Serbia. With a network of about 500 gas stations allocated in Serbia (including Kosovo), as well as in Bosnia and Herzegovina and Montenegro, Serbia’s oil monopoly is strategically significant in the supply of neighbouring regions as well. Also when South Stream is completed and fully operational (est. 2015), the pipeline would make Serbia an energy hub in the region.

More over global energy game in my article “Powerplay behind the new Cold War”.

Conclusion

While EU has used its “soft power” and promises to Serbia Russia has used hard currency. In regards of Serbia’s European Perspective this does not necessary mean any swift from pro-Western to pro-Eastern side. From my point of view the situation and its prospected development will allow to Serbia a more balanced approach to its future. While energy will be on the top of EU’s priorities Serbia will have same time more leverage with its negotiations over SAA and other relations with the EU.


Global Trends 2025

November 22, 2008

I just took a glance at very interesting new report published on 21st November 2008 by the United States National Intelligence Council – Washington’s main intelligence body.  The report, Global Trends 2025: A World Transformed, is published every four years to give U.S. leaders insight into looming problems and opportunities. This agency of agencies, formed in 1979, brings together analysis from each of America’s multiple intelligence organizations to develop mid- to long-term strategic thinking for the country’s security community.

Highlights

Here only few highlights of this 120 pages analysis:

  • The whole international system—as constructed following WWII—will be revolutionized. Not only will new players—Brazil, Russia, India and China— have a seat at the international high table, they will bring new stakes and rules of the game.
  • “Europe by 2025 will have made slow progress toward achieving the vision of current leaders and elites: a cohesive, integrated, and influential global actor,” but not be a major military player. The European Union will be a “hobbled giant” crippled by internal bickering and a eurosceptic citizenry.
  • “Europe will remain heavily dependent on Russia for energy in 2025, despite efforts to promote energy efficiency and renewable energy and lower greenhouse gas emissions.”
  • “Crime could be the gravest threat inside Europe as Eurasian transnational organisations – flush from involvement in energy and mineral concerns – become more powerful and broaden their scope.”
  • By 2025 “One or more governments in eastern or central Europe could fall prey to their domination,” the authors believe about Eastern European organised crime.

(The full report can be downloaded from http://www.dni.gov/nic/PDF_2025/2025_Global_Trends_Final_Report.pdf)

My view

Intelligence Services do not have very high respect in my mind, but this report anyway has some noteworthy observations or views for further consideration.

The future of EU can very well be like forecasted in report – big economic and weak military player on globe suffering same time from gap between EU (eurosceptic) citizens and EU bureaucracy. I personally think that EU structure will develop in circles. First there is a core around old big players France-Germany, second circle will be the rest EU member states who have strong national interests or exceptions to core’s politics, third circle would be EU’s cooperation neighbours under Northern or Mediterranean dimension (including e.g. Turkey which EU probably can not absorb as member state) and forth circle will be the rest of he world with different cooperation schemes (Partnership agreement with Russia, transatlantic cooperation with USA etc).

The picture of EU’s energy dependency on Russia is surprisingly realistic having in mind EU’s ambitious “Supergrid” plan published mid-November 2008 and US’s and EU’s recent marketing for “southern energy corridor” – Nabucco-line.(More in my article “Powergame in EU-Russia summit” on 14.11.2008 in my Archives:Blog).

Organized crime indeed can be also big thread and my bet is, that Kosovo – if regarded as a state – has good change be first “captured” state; the local government already is leaded by drug lords and crime tribes in the centre of Balkan route.

More my views over Balkans and Caucasus one may find from my Archives:Blog





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Is GUUAM dead?

November 4, 2008

After “Cold War” US has all the while expanded its influence post-Soviet territory with aim to guide those region’s natural resources under US companies.  As stakes have been control over the oil and gas  of the Caspian Sea/Black Sea/Caucasus basin, and the control of multiple key energy pipelines criss-crossing the region.  Economical interests have been linked to political game e.g. Nato enlargement.  While EU has been more bystander Russia has during last couple of years weight down the scale in favour of its own interests by series of successful operations.

GUUAM & SRS

GUUAM (Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova) Group was founded 1999 with help of US to foster favourable conditions conducive to economic growth through development of an Europe-Caucasus-Asia transport corridor.  GUUAM was dominated by Anglo-American oil interests, ultimately purports to exclude Russia from oil and gas deposits in the Caspian area, as well as isolating Moscow politically.

From its part GUUAM was designed to support sc. Silk Road Strategy Act – adopted by US Cogress March 1999 –  which defined America’s broad economic and strategic interests in a region extending from the Mediterranean to Central Asia. The Silk Road Strategy (SRS) outlines a framework for the development of America’s business empire through development of an Europe-Caucasus-Asia transport corridor.  (More about this in my previous article “War on Pipes” Sep. 2008, in my Archive:Blog )

Cracks

Now GUUAM is coming to end of its short road.  Already earlier Uzbekistan withdraw from it leaving behind a stump GUAM.  Then Georgia started its aggressions with false idea of western support leading today’s situation and possibility to escalate to “small intensity war” between present Georgian leadership and separatist regions Abkhazia and South-Ossetia.

Moldova was aiming towards Nato and EU but after conflict in Georgia it started to look other alternatives.  Russia has offered its help to solve Moldova’s long term problem with Transdnistria and if a federation model will be accepted by local stakeholders it probably neutralizes Moldova’s position between US/EU and Russia.

Last weekend was also highlight of tendency where political attitudes of Azerbaijan and Russia have approached each other.  Russia again took the initiative acting as a mediator between Armenia and Azerbaijan to solve long term conflict of Nagorno-Karabakh and a common memorandum signed 2nd November 2008 is first step of solution.

The last piece of GUUAM is Ukraine, which is deeply divided pro-Russian East and pro-Nato/EU West.  When political struggle now has made cracks also inside western orientated part also this last fortress has degenerated to stagnation.

KO

Parallel with Russia’s able foreign policy the US actions have been short-sighted, weak and fruitless.  Waiting for elections and financial turmoil have took their part but in energy sector also some states in South-America have now more independent and selfish position than before.  Same time Iraq occupation is coming to end when also Alaska can keep its energy reserves when new US President takes his office the perspectives of US energy giants are more foggy than for a long time.

If one would like to see a bright side with this depression – or even knock out –  of US foreign/energy policy it could be the need to reduce pollutions and to support alternative energy solutions which at global scale could help to deal with clima change.


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