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The New Year heralded in record cold temperatures across Europe and the all-too-familiar sounds of another gas-fueled conflict between Russia and Ukraine. Russia cut gas flows to Ukraine on January 1 after political tension caused annual gas price negotiations between the two countries to fall apart. Five days later, amid
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mutual accusations, Russia stopped the flow of gas to Europe, leaving a number of Eastern European nations with scarce supplies. Despite threats and pleas from the European Union (EU), only on January 19 did the two countries arrive at an agreement. The agreement differs little from the "Memorandum of Agreement" on gas prices reached between Prime Ministers Vladimir Putin and Yulia Tymoshenko in October 2008. Problems persist though supplies to the EU have been restored and Russia and Ukraine have agreed on gas prices and transit fees. Russia and Ukraine have damaged their reputations as responsible international actors and international trade partners, and the EU's unity and political will have been weakened by the futility of its efforts.
Can future gas wars between Russia and Ukraine be prevented? What steps should be taken by the EU, Russia, and Ukraine to ensure that political disputes do not have commercial repercussions--and will the parties find the will to take such steps when some of them could be politically unpopular at home? At this AEI event, a group of leading experts on European, Russian, and Ukrainian energy politics will discuss these and other questions.
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3:15 p.m.
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Registration
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3:30
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Panelists:
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Anders Åslund, Peterson Institute for International Economics
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Angelos Pangratis, European Commission to the USA
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Steven Pifer, Brookings Institution
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Moderator:
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5:30
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Adjournment |
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WASHINGTON, FEBRUARY 4, 2009--Energy security
is an increasingly vital concern for Europe, as demonstrated in
January's gas conflict between Russia and Ukraine. The clash over gas
prices led to the two-week cessation of gas flows to Europe during a
time of extremely cold temperatures. As Kiev and Moscow exchanged
accusations and wrangled over details, residents in Eastern and Central
Europe shivered. Though an agreement on prices was reached on January
19 and gas flows were restarted, there is little certainty that it will
prevent future similar conflicts. Experts at a February 3 AEI event discussed the causes of the gas crisis for Russia, Ukraine, and the European Union and what is likely to happen in the future. Anders Åslund of the Peterson Institute for International Economics
explained that the dispute was not commercial, but political. The
difference in the price that Russia asked and the price Ukraine offered
was only twenty dollars per thousand cubic meters--"not much to argue
about." The real issue was the intermediary company, RusUkrEnergo,
which is connected to top Kremlin and Gazprom officials, including
Gazprom's export director Alexander Medvedev, and top Ukrainian
legislators in the pro-Kremlin Party of Regions. It is the main
financier of Ukrainian politics and has funded members of President
Viktor Yushchenko's party. According to Åslund, RusUkrEnergo's main
function is to siphon money off from Ukraine's gas company, Naftogaz,
and from Gazprom. The January 19 agreement between prime ministers
Vladimir Putin of Russia and Yulia Tymoshenko of Ukraine removed
RusUkrEnergo from the Russian-Ukrainian gas trade. This was "a complete
victory for Tymoshenko," Åslund argued, since she alone did not benefit
from the intermediary's involvement. Former U.S. ambassador to Ukraine Steven Pifer agreed that the
dispute was political. He pointed out that commercially, both Naftogaz
and Gazprom depended on one another. Russia started a fight it could
not win for political reasons: to discredit Ukraine as a partner for
the European Union (EU) and NATO, increase support for Russia's Nord
and South Stream pipeline routes that bypass Ukraine, and punish
Ukraine for its interest in EU and NATO membership and support for
Georgia in 2008. Ukraine responded with posturing intended to paint
Moscow as a bully and replicate the sympathy it received from the West
during its 2006 gas conflict with Russia. Ukraine's actions also
reflected the internal jockeying in Kiev and a lack of concern about
the hardships the gas shutoff would impose on its neighbors downstream.
While Ukraine achieved more of its objectives than Russia did, both
countries now face the risk that Europeans will find a solution to
their energy concerns that bypasses Russia and Ukraine completely. Angelos Pangratis, deputy head of the EU delegation to the United
States, declared this the most serious energy crisis that the EU has
ever faced. He offered two lessons from the conflict: the EU must
implement a comprehensive energy strategy with integrated markets and
intensify efforts to diversify both sources and routes. Improving its
crisis response capacity and reacting in unison in the short term,
Pangratis added, will allow the EU to integrate energy markets,
establish an energy security plan, improve cooperation with Russia and
Ukraine, explore Caspian Sea development, and develop alternate source
and transit options, such as the Nabucco pipeline project that will
connect southern Europe to the Caspian via the Caucasus and Turkey. AEI's Gary J. Schmitt identified
the EU's biggest obstacle to energy security: the specific dependence
of individual countries. He recommended that, in the short term, the EU
focus on building storage capacity, reserves, and pipeline connectors
to protect against future crises. Diversification of supplies and an
integrated market should be the EU's most important priorities. The
Nabucco pipeline is only a valid option if the EU can secure
Turkmenistan's interest in supplying it before Russia interferes,
Schmitt said. Other alternatives the EU should consider are liquid
natural gas and nuclear power. While the EU has identified important
steps toward energy security, it remains to be seen if it has the
political will to implement them successfully. --KARA FLOOK
Leon Aron is a resident scholar and director of Russian studies at AEI. Mr. Aron was born in Moscow and came to the United States as a refugee from the Soviet Union in June 1978. He has taught at Georgetown University and has contributed numerous articles on Russian affairs to newspapers and magazines, including the New York Times, the Wall Street Journal, and the New Republic. Mr. Aron also writes Russian Outlook, AEI's quarterly essay on economic, political, social, and cultural aspects of Russia's post-Soviet transition. He is a frequent guest of television and radio talk shows and has been interviewed on 60 minutes, The NewsHour with Jim Lehrer, and NPR's All Things Considered and Talk of the Nation, among others. Mr. Aron is the author of the first full-length scholarly biography of Boris Yeltsin, Yeltsin: A Revolutionary Life (St. Martin's Press, 2000), and Russia's Revolution: Essays 1989–2006 (AEI Press, 2007). He is at work on a book about ideas and ideals that inspired and shaped the latest Russian revolution (1987-91), to be published by Yale University Press.
Anders Åslund is a senior fellow at the Peter G. Peterson Institute for International Economics. From 1994 until 2006 he worked at the Carnegie Endowment for International Peace as a senior associate and then director of the Russian and Eurasian program. A leading specialist on post-communist economic transformation--especially in Russia and Ukraine--Mr. Åslund has served as a senior economic adviser to the governments of Russia, Ukraine, and Kyrgyzstan and as a Swedish diplomat in Kuwait, Geneva, and Moscow. From 1989 to 1994, he was a professor at and founding director of the Stockholm Institute of East European Economics at the Stockholm School of Economics. Mr. Åslund is now an adjunct professor at Georgetown University. A prolific writer, he has authored eight books, including two this year, and edited twelve. He has also published widely, including in Foreign Affairs, Foreign Policy, The National Interest, the New York Times, the Washington Post, the Financial Times, and the Wall Street Journal.
Angelos Pangratis is the deputy head of the Delegation of the European Commission to the USA. Previously, from 2003 until 2005, he was the ambassador and head of the European Commission’s delegation to Argentina. Between 1995 and 1997 he worked in senior positions in the delegations of the European Commission in South Africa (1995-97) and South Korea (1990-94). In his career at the EU headquarters in Brussels, he has headed various units, including the unit responsible for relations with China, Hong Kong, Macao, Taiwan, South Korea, and Mongolia (1998-2003); the unit for personnel and budget of the directorate general for external relations and trade policy (1997-98); and the investigation teams of the antidumping and anticircumvention division (1987-90). Mr. Pangratis has also represented the European Commission at numerous multilateral organizations, including the World Trade Organization, the Organisation for Economic Co-operation and Development, and the Club de Paris. Mr. Pangratis has lectured at universities in the Czech Republic, France, Belgium, the United Kingdom, Korea, South Africa, Argentina, and the United States and he has had articles and interviews published in many countries.
Steven Pifer is a visiting fellow at the Brookings Institution, where he focuses on Ukraine and Russia, and a senior adviser with the Center for Strategic & International Studies. A retired foreign service officer, he spent more than twenty-five years with the U.S. Department of State, where he served as the deputy assistant secretary of state, with responsibility for Russia and Ukraine; ambassador to Ukraine; special assistant to the president; and senior National Security Council director for Russia, Ukraine, and Eurasia. Ambassador Pifer also served at the U.S. embassies in Warsaw, Moscow, and London, as well as with the U.S. delegation to the intermediate-range nuclear forces negotiations in Geneva.
Gary J. Schmitt is a resident scholar at AEI, where he is director of the Program on Advanced Strategic Studies. Prior to coming to AEI, he helped found and served as the executive director of the Project for the New American Century, a Washington-based foreign and defense policy think tank. Previously, Mr. Schmitt was a member of the professional staff of the U.S. Senate Select Committee on Intelligence and served as the committee’s minority staff director. In 1984, he was appointed by President Ronald Reagan to the post of executive director of the President's Foreign Intelligence Advisory Board at the White House. Mr. Schmitt is the coeditor, with Thomas Donnelly, of Of Men and Materiel: The Crisis in Military Resources (AEI Press, 2007). Mr. Schmitt has written books and articles on a number of topics, including the founding of America, the U.S. presidency, intelligence, and national security affairs.
