Monday, January 08, 2007

Ukraine Redux

Russia Cuts off Belarus: NYT Link
In all honesty, I agree with Russia in that it should not charge former Soviet republics below-market rates. USSR is no more, and there are no reasons for these subsidies (as there were during communism, and especially during the Cold War, when Russia would give more money per capita to a Cuban/Vietnamese citizen than to its own). The mistake is that instead of instituting a program that gradually weans a country off the subsidized rates, which are often at over 50% below market, Russia decided to simply hike them in one fell swoop.
The problem is that the pipelines extend to Russia’s wealthy EU customers, and while they may let Putin play his games and assassinate a couple of expatriates with polonium – it’s all over when energy supply is at stake.
Russia’s strategy didn’t work well with Ukraine and it won’t work with Belarus – at least not without an undue amount of ruckus that will further strain relationships and loosen Russia’s chokehold over Europe. You can only push someone so far until they seek other (more expensive, but more reliable) contracts. The EU could always make Kazakhstan an offer that they can’t refuse, even though the country has sworn allegiance to Putin.
On the other hand, Putin is smart and cunning, if completely amoral. Surely he learned from Ukraine, so he must have some plan at work unless he is just completely drunk with power and wants to go on a bender before 2008 when he said he’ll step down (but remain “in a position where he can help the people” – that is become a puppetmaster.)
My guess: Putin no longer cares that much about how he’s seen by the West, he wants to give Gazprom as much power and reserves as possible then take control of the firm once he cedes his presidency. Only time and the markets will tell the truth.

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