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Thursday, December 14, 2006

Russia Still Turning The Energy Screw?

Well obviously news like this doesn't exactly send me off jumping up and down with glee:

Russia is preparing to cut off natural gas supplies to neighbouring Belarus and Georgia unless the two former Soviet republics agree by the year-end to pay much higher prices in 2007.

As the FT notes this comes nearly exactly a year after the Russia actually did cut of supplies to the Ukraine, this sort of news is in no way reassuring:

Coming a year after Gazprom, the Russian gas giant, briefly cut gas to Ukraine in a similar pricing dispute, such a move could provoke further international criticism that Moscow is using energy as a political tool. It might also intensify pressure on Russia to ratify the European Energy Charter treaty, which would require such disagreements to be resolved through arbitration.

Personally I have no great confidence that the signing of an agreement would be any real guarantee of gas supplies for the EU in a push comes to shove situation. The fact that Iran is the other major gas supplier on which the EU hopes to rely also somehow doesn't inspire an enormous amount of confidence either:

Georgia says it can replace Russian gas with supplies from neighbouring Azerbaijan and from Iran. But as well as trying to raise prices to $230 to Azerbaijan, Russia is reducing its gas exports to the country next year, limiting Azerbaijan’s scope to re-export surpluses to Georgia.

What we need is some really serious and coherent political assessment of where Russia and Iran are headed, and what kind of situations might arise if these two suppliers were ever to decide to try to collude in some way or other.

Obviously the path on which both countries seem set only threatens to produce more problematic situations in the future, and with the demographic outlook for Russia being so bleak (and here) I cannot help fearing that most observers are underestimating the potential for instability and consequent problems.

Certainly this kind of debate is to the point, but still leaves far too many questions unanswered for my linking. Russia certainly at this point could in no way be called a fascist stead, but where is it headed, and just what kind of socio-economic dynamic is operating in Russia right now? These are big questions, and at the present time they remain questions without answers.

Above all what the EU seems to lack is any clear energy strategy which doesn't involve dependence on Russia and Iran, and maybe this is the most worrying detail of all.

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