The New Year has arrived, and the East European gas war has begun. Two of the continent's most closely-related countries, the former Soviet republics Russia and Ukraine, have squared off in a nasty dispute over how much Kiev should pay for Moscow's natural gas.
The inter-Slavic conflict carries the alarming potential of a total halt to nearly one-third of all of Europe's natural gas imports.
It is also, already, the worst spat in nearly two decades of almost always friendly relations between the two close neighbors -- Ukraine and Russia's economies and populaces are more closely intertwined than just about any other pair of nations on the modern European continent.
Yet now, with this year's very first trade war suddenly gone hot, two of Europe's newest nations, independent Ukraine and its former colonial master Russia, are employing traditional tactics.
Russian President Vladimir Putin, on the face of it, should be negotiating from a position of strength. The Ukrainians use about 80 billion cubic meters of natural gas every year, and only produce 20 billion domestically.
The remainder is imported, roughly 24 billion cubic meters from Turkmenistan, and 36 billion cubic meters from Russia itself. Ukraine's economy is dependent on low-cost manufacture of industrial energy-intensive commodities like steel and chemicals, and the cheaper the natural gas, the more competitive those industries become.
"It makes no economic sense for Russia to sell Ukraine gas at a subsidized price, so that Ukrainian steel manufacturers can dump their product back in Russia," Putin said last week at a press conference. "We need to place relations between both our countries on a rational basis, and that means an international market price for our [Russian] gas."
The European price for natural gas, as Putin has repeatedly pointed out, is around US$230. If that price doesn't suit the Ukrainians, he reasoned, they should certainly do without.
"The days of subsidized gas are gone," Putin said. "All customers will pay the market rate."
And if you ask the Ukrainians they will agree, only, they will insist Putin's view of a fair market isn't very fair at all.
Yushchenko only hours before the boycott went into effect pointed out to countrymen, and Gazprom customers Europe-wide, that other energy-poor customers in the region, the Baltic states and the Caucasus nations, pay Gazprom around US$100.
"So why is Ukraine singled out for special treatment?" he asked.
More worrying for the Kremlin were last week's comments from Ukrainian Prime Minister Yury Ekhunarov, who declared: "Ukraine guarantees transport of Russian gas to European markets ... but not for free."
Ekhanurov's innocuous statement hides, only barely, a multi-billion dollar veiled threat to Russia's biggest company, Gazprom, whose 2004 revenue was US$36 billion. Half of that cash torrent, Gazprom executives know painfully well, was generated by Gazprom gas sold to Europe via pipelines controlled by Ukraine.
"This gives Ukraine leverage on Gazprom in price negotiations, and Russia doesn't like that," said Ihor Tkach, an energy industry analyst.
The biggest fortunes of post-Soviet Ukraine, by no coincidence, were made by importing Russian gas into Ukraine at a Socialist rate, and then selling to Europe at a capitalist rate.
Ukrainian energy tycoons raised the "redirection" of Russian gas to an art form, using shell companies, faked Ukrainian consumers and inflated transportation contracts. And, according to the authoritative Korrespondent magazine, they also used black market gas reservoirs holding billions of cubic meters of reserves.
The actual size of Ukraine's debt to Gazprom for gas used and pilfered is unknown, and has been the main feature of negotiations between the two states since, literally, they were created.
Now that the Russian boycott is in effect, both sides are pointing fingers the same old way. Only hours after the cut-off Gazprom spokesmen accused the Ukrainians of pilfering gas. Spokesmen from Ukrnafta, Gazprom's Ukrainian counterpart, blithely retorted the only gas "diverted" from the flow would be gas fairly due Ukraine -- in Ukrnafta's opinion, of course.
Industry analysts generally agreed that Ukraine's economy might manage a gas cut-off with difficulty, but successfully, by increasing domestic production, fuel efficiency and by using of alternative energy sources.
Ukrainian skill at obtaining Gazprom gas for their own needs (the Ukrainians call it "fair payment") make Gazprom hopes that Kiev can be brought heel soon quite low, they said.
"The real question is what Gazprom wants more," Tkach said. "Its European profits, or to teach the Ukrainians a lesson?"
In their recent op-ed “Trump Should Rein In Taiwan” in Foreign Policy magazine, Christopher Chivvis and Stephen Wertheim argued that the US should pressure President William Lai (賴清德) to “tone it down” to de-escalate tensions in the Taiwan Strait — as if Taiwan’s words are more of a threat to peace than Beijing’s actions. It is an old argument dressed up in new concern: that Washington must rein in Taipei to avoid war. However, this narrative gets it backward. Taiwan is not the problem; China is. Calls for a so-called “grand bargain” with Beijing — where the US pressures Taiwan into concessions
The term “assassin’s mace” originates from Chinese folklore, describing a concealed weapon used by a weaker hero to defeat a stronger adversary with an unexpected strike. In more general military parlance, the concept refers to an asymmetric capability that targets a critical vulnerability of an adversary. China has found its modern equivalent of the assassin’s mace with its high-altitude electromagnetic pulse (HEMP) weapons, which are nuclear warheads detonated at a high altitude, emitting intense electromagnetic radiation capable of disabling and destroying electronics. An assassin’s mace weapon possesses two essential characteristics: strategic surprise and the ability to neutralize a core dependency.
Chinese President and Chinese Communist Party (CCP) Chairman Xi Jinping (習近平) said in a politburo speech late last month that his party must protect the “bottom line” to prevent systemic threats. The tone of his address was grave, revealing deep anxieties about China’s current state of affairs. Essentially, what he worries most about is systemic threats to China’s normal development as a country. The US-China trade war has turned white hot: China’s export orders have plummeted, Chinese firms and enterprises are shutting up shop, and local debt risks are mounting daily, causing China’s economy to flag externally and hemorrhage internally. China’s
During the “426 rally” organized by the Chinese Nationalist Party (KMT) and the Taiwan People’s Party under the slogan “fight green communism, resist dictatorship,” leaders from the two opposition parties framed it as a battle against an allegedly authoritarian administration led by President William Lai (賴清德). While criticism of the government can be a healthy expression of a vibrant, pluralistic society, and protests are quite common in Taiwan, the discourse of the 426 rally nonetheless betrayed troubling signs of collective amnesia. Specifically, the KMT, which imposed 38 years of martial law in Taiwan from 1949 to 1987, has never fully faced its
RSS