On October 1, European Commission President Jose Manuel Barroso sent a letter to Russian President Vladimir Putin. Its content showed once more that Brussels still continues to use the language of ultimatums while talking to Russia. The European Union inflicts damage on itself by refusing to see that Ukraine constantly violates its commitments.
The European Union will postpone the implementation of the Deep and Comprehensive Free Trade Area with Ukraine under the Association Agreement until January 2016, according to a press release published on the website of the Council of the European Union. The changes proposed by Russia to protect its market were ignored. Instead the document was ratified by the both parties in its original form. Now the head of European Commission writes that, «I take however this opportunity to underline that the Association Agreement remains a bilateral agreement and that, in line with international law, any adaptations to it can only be made at the request of one of the parties and with the agreement of the other, according to the mechanisms foreseen in the text and the respective internal procedures of the parties». Thus the substance of the previously achieved accords on postponement of the Agreement is distorted and made destitute of substance. Instead of supporting the idea of holding constructive talks Jose Barroso expressed, as he put it, «strong concerns about the recent adoption of a decree by the Russian government proposing new trade barriers between Russia and Ukraine».
On September 19, the Russia’s government issued the directive On Customs and Tariffs Regulations in Respect of Goods with Ukraine as the Country of Origin to become effective in case Kiev implements the economic provisions of the association agreement before 1916. Concerned about possible steps aimed at protecting the Russian market Europe stubbornly ignores the stance of Ukraine. Meanwhile Ukrainian President Petro Poroshenko said that Kiev’s EU Association Agreement would come into force in full in November despite an agreement between Moscow, Brussels and Kiev to postpone full implementation until January 2016. The head of European Commission also prefers to turn a blind eye on the fact that Ukraine led the gas talks into a deadlock. The next round was scheduled on October 3. Instead of calling on Ukraine to comply with the already reached accords the European Union demands that Russia resumes supplies to Ukraine. As Mr. Barroso put it, «It is key that the resumption of energy deliveries to the citizens of Ukraine is ensured and that the fulfilment of all contractual obligations with customers in the EU is secured». But Russia never refused to fulfill its commitments. The ball is on the Ukraine’s side. The only reason for suspending gas supplies is the refusal of Ukraine to pay for the gas already supplied. It puts in jeopardy further transit to Europe.
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This is not the first time Ukraine cheats taking advantage of its position of a transit country. In 2009 it arbitrarily siphoned off 15% of the gas intended for third countries. In response Russian had to suspend deliveries. In accordance with the Russia-EU-Ukraine protocol, an international monitoring commission was formed. Those days Kiev did its best to create obstacles on the way of finding a settlement. It put forward for consideration five amendments to the agreed document that would have changed the very gist of the reached compromise (for instance, the activities of international monitors were to be limited by two months). Under the EU pressure the Timoshenko-led government signed the document without strings attached. At that, on January 13 only limited access was given EU officials to monitoring Russia and Ukraine's gas.
In 2009 Europe said it was ready to provide constant monitoring of the transit across Ukraine. Looks like the conflict did not teach Europe anything. Otherwise how can one construe the decision to block the construction of South Stream by European Parliament, the reluctance to use North Stream at full capacity and the self-damaging connivance at ridiculous claims put forward by Kiev? For instance, this August Russia offered to return the 100-dollar discount and make the price go down to 385 dollars a ton. In turn Kiev offered to establish two different prices: a winter price of 385 dollars, and a summer price equal to 320 dollars. Kiev had planned to make the offer at the Russia-European Union-Ukraine round of talks slated for September 6. But suddenly it all had been changed just a week before the talks started. Now Ukraine wanted the price to be the same as at the spot market minus transit costs before the Court of Arbitration in Stockholm hands down a decision on the dispute according to the Ukraine’s appeal. No such deal has ever been practiced by European states. The spot market prices change according to seasons. It would end up in disaster for Ukraine in winter. The same applies to the Ukraine’s demand to move gas terminals to the eastern border. It would make Gasprom reconsider all the concluded contracts with European partners. All these ridiculous demands have only one explanation – Ukraine pursues the goal to stymie the gas talks.
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Europe has no alternative to Russian gas. Angela Merkel understands it well. She says that Russia provides 38 percent of Germany's natural gas imports. Some countries are almost 100% reliant on Russian gas supplies. Liquefied gas deliveries to Europe are going down, the exporters move to the bigger Asian market. Rerouting supplies to Europe may lead to energy deficit in Asia hiking the price. Then it will become more profitable to re-direct gas deliveries to Asia. To attract suppliers to the European market prices will have to be raised again. It will become kind of vicious circle. Besides there is no supplier in the world ready to provide Europe with such quantities as Gasprom. The Russian gas supplies to Europe account for 160 billion cubic meters a year. No need to waste time on Washington’s shale gas fairy tales. The shale energy boom has already gone bust inside the United States.
According to the Institute of Energy Economics at the University of Cologne, if Russian gas supplies were stopped, Germany would face serious problems in half a year. Many East European states will face real trouble. If Russian gas deliveries were interrupted for more than 9 months, Italy and France would face problems. Russian gas is to generate not heat only but electricity as well. Gas supply interruptions would entail industrial production slump and other macroeconomic implications.
The voices calling for abolishment of anti-Russian sanctions are heard louder in Europe, but the United States makes the old continent suffer losses. For instance, US Assistant State Secretary Victoria Nuland said speaking at the forum devoted to strategic dialogue between the United States and Central Europe, «Today we must maintain that solidarity with Ukraine and unity within the transatlantic community. Implementing sanctions isn’t easy and many countries are paying a steep price. We know that. But history shows that the cost of inaction and disunity in the face of a determined aggressor will be higher». Matthew James Bryza, former ambassador to Azerbaijan, current Director of the International Centre for Defense Studies, a Tallinn-based think tank, and a board member of the Jamestown Foundation, wants Europe to get tough on sanctions and weather the winter without Russian gas. Russia and Europe understand well what the US blackmail language is used for. I don’t know about Europe but Russia refuses to bow and face losses just to please the United States.
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Moscow realizes well that the Ukraine’s stance on gas issue has not only political but also very serious economic reasons. As a result of the «Maidan» government activities the country is on the verge of collapse and Kiev has nothing to pay with for gas supplies. To some extent the cooperation between the European Union and Russia aimed at putting the Ukraine’s economy back on track would have improved the situation. The position of the European Union is hard to understand. It refuses to reconsider some clauses of the association agreement with Ukraine to minimize the Ukrainian economic losses resulting from severing economic and trade ties with Russia.
Agreements are to be complied with. A government of any state has an inalienable right to protect its economy from negative affects coming from outside. No doubt Russian will use this right no matter blackmail and threats. Then Europe will have to shoulder the burden of Ukrainian economy going bankrupt and tackle the problem of energy deficit engendered by the very same Ukraine.
Balanced Russia-Europe agreements could be a way out of the deadlock. They should address monitoring Ukrainian gas transit, cooperation in development of pipeline network, coordination and mutual understanding on the implementation of the association agreement with Ukraine. Is Europe ready for that? Or the «transatlantic solidarity» would prevail entailing another round of confrontation on the European continent?
