Factories in southern Europe cut their production and ordinary cities began to lose their heat. After the cutoff of Russian gas supplies through Ukraine, German Chancellor Angela Merkel is quite right to state “searching for the causes is not the first priority. The first priority is for gas to reach Bulgaria, Serbia and Bosnia again.” But she is also right to observe that once the immediate crisis is over, hopefully via the deployment of European Union monitors at Ukrainian transit stations, it will be essential to think seriously about “consequences for European policy.”

Unfortunately, so far there has been little analysis about the underlying causes of the Russian/Ukrainian gas-price dispute, which clearly goes beyond commerce alone. All parties—including not only Russia and Ukraine, but also the EU and the United States—share blame for a situation that has deteriorated into an international emergency.

The divided and dysfunctional government in Kiev acted in a truly delusional fashion, assuming that it could pursue a hostile policy toward Russia (or at a minimum a policy they knew Russia considered hostile), and still expect to get Russian gas at a heavily subsidized rate. During the first gas conflict with Ukraine in 2006, the Kremlin made abundantly clear that it was not prepared to accept any such arrangement. Yet President Viktor Yushchenko, despite some hesitation on the part of Prime Minister Yulia Tymoshenko, not only insisted on bringing Ukraine into NATO as soon as possible, but sided fully with Georgia during its August war with Russia. Moreover, as a commission of the Ukrainian parliament, the Rada, has established, Yushchenko repeatedly authorized secret Ukrainian military assistance to the Georgian army. The Russian government claims that most Russian combat aircraft destroyed in the conflict were hit by Ukrainian-made anti-aircraft missiles, crewed by Ukrainian advisers. The Ukrainian government is entitled to determine its own foreign policy, but would be reckless to assume that Russia would provide multibillion dollar subsidies to an adversary.

Yet this was exactly how Yushchenko positioned Ukraine vis-à-vis Russia. With European countries paying in excess of $400 per thousand cubic meters of Russian gas, why on earth would Mr. Yushchenko think that Russia would accept his offer of $201? In the context of the Russian/Ukrainian relationship, Russia reportedly offered $250—if anything, it sounds generous. Yushchenko’s gamble was to count on the leverage Ukraine holds by serving as a transit route for 80 percent of Russian gas to Europe as well as anticipated support of the EU and the United States. He also thought that this time, unlike in 2006, Ukraine had enough gas in storage to prevent a dramatic Russian gas cutoff. Yushenko should have known from his previous experience with Vladimir Putin and Russia’s handling of Western-supported Georgia in August that a gamble like that was unlikely to work—especially when, because of the global financial crisis and subsequent drastic loss of energy revenues, Moscow genuinely needed to get as much cash from Ukraine as possible.

Russia, for its part, had no clear game plan. Moscow had every reason to anticipate that once Russia’s supplies to Ukraine stopped, Kiev would start siphoning gas designated for Europe. Yet until the last moment, the Russian government provided unrealistic assurances to European customers that they would not be affected by the dispute. Moscow failed to realize or accept the self-evident principle that a reliable supplier simply cannot take the position that it is not responsible for its product actually reaching consumers.

At the same time, Russia’s diplomacy was for weeks essentially outsourced to Gazprom, which argued that once its gas crossed the Ukrainian border, the company has no further responsibility. And despite relatively good relations with French President Nicolas Sarkozy and German Chancellor Angela Merkel, Russia’s top leaders did not reach out to these heads of state early on to explain their position and to ask for help in preventing the conflict from reaching the boiling point. As Ukraine had the right to develop a sovereign foreign policy, Russia had the right to insist on a fair price for its gas—but should not have done so with a cavalier disregard of EU interests. After all, being seen as a reliable supplier and a responsible great power is first and foremost in Moscow’s own interest.

The EU also cannot escape its share of responsibility. European leaders saw the escalating Russian/Ukrainian dispute but preferred to stay on the sidelines under the futile pretense that it was a purely commercial disagreement. More fundamentally, the Bush administration and some Europeans, particularly in the so-called New Europe, encouraged Kiev’s belligerence vis-à-vis Moscow for years without thinking of the consequences. This blind support of Russia’s neighbors against Russia contributed to Georgian President Mikhail Saakashvili’s disastrous decision to use force in South Ossetia, and it similarly contributed to President Yushchenko’s miscalculation in the gas dispute with Moscow.

Fortunately, because the Ukrainians need gas, the Russians need to sell it and both states need to maintain a degree of credibility in Europe, chances are that Russian gas supplies across Ukraine to Europe will resume soon. But no arrangement will be sustainable for weeks, let alone months, unless Kiev and Moscow reach their own agreement on gas prices. It is accordingly in the EU’s fundamental interest to facilitate such an agreement and—without apportioning blame—to make clear to both parties how much their relationship with the EU may suffer if they do not resolve the problem promptly and reliably. Second, there can be no better argument for the need to diversify Europe’s energy supplies by bringing more North African gas to Europe, building more pipelines from Central Asia bypassing Russia, as well as creating a more unified EU gas market and putting a new emphasis on nuclear power. In the same vein, Ukrainian conduct lends additional credibility to Moscow’s argument that it needs new pipelines bypassing its post-Soviet neighbors, like North Stream and South Stream, to deliver gas reliably to the rest of Europe.

Last but not least, the Russian/Ukrainian dispute should make the incoming Obama administration and the European Union reassess the policy of aggressively co-opting Ukraine into Euro-Atlantic structures in a way that triggers fears of a new containment in Moscow. The West needs a secure, stable and sovereign Ukraine, but it does not need to turn Ukraine into a perpetual battleground with Russia, to create a new dividing line in Europe or facilitate conflicts that become major distractions from other international priorities—including the need to work constructively with Moscow on nonproliferation, counterterrorism and—yes—energy security.

Posted by National Interest at 01/08/2009 06:51:09 PM |