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Putin Applies The Economic Thumbscrews on Ukraine

Despite global energy prices not going his way, Russian president Vladimir Putin continues to press his advantage, this time by making strides towards a settlement to the long-festering energy dispute between Gazprom and the Ukrainian government. The Wall Street Journal:

The two sides tentatively agreed that Ukraine would pay $3.1 billion in debt by the end of the year in return for OAO Gazprom the Russian state-owned gas giant, resuming some deliveries—but only for the winter months and at an above-average price, according to European Union and Russian energy officials.

Ukraine’s energy minister was more cautious about the deal, which still needs approval in Kiev and Moscow. But he didn’t dispute the size of the payment and signaled Ukraine would be willing to agree to Russia’s price for now. […]

Russian threats of a trade war led Brussels and Kiev to agree on Sept. 12 to delay a major part of a landmark trade-and-political association deal between Ukraine and the EU that Moscow opposes.

Despite that concession, the Kremlin has demanded the terms of the deal be changed, threatening to impose tariffs on a wide range of Ukrainian imports if its wishes aren’t taken into consideration.

Fearing further conflict, EU officials this past week backed off previous assurances the deal wouldn’t be reopened, a move likely to increase Russian pressure on Kiev.

Putin is dancing on the face of the West, and in Tehran, Beijing and across the world, the message is clear: Western statesmen are not serious, they don’t think before they act and they don’t mean what they say.

Ukraine continues to pay the penalty for standing up to Russia at the instigation of a ditzy, incoherent and vainglorious EU. History’s contempt for this generation of european leaders—authors of the euro disaster, disarmers of Europe as threats grew to the east and the south, creators of the worst mass unemployment in Europe since the depression—will be harsh and deep. The price for two decades of policy incompetence is going to be high, and the bill is already coming due.

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  • reader1

    I wonder why WRM gives American leaders a pass?

    • wigwag

      American leadership has been far from perfect under George W. Bush and Barack Obama, but as bad as its been, both were better leaders than the Europeans; better in fact, by far. The United States spends approximately 4 percent of GDP on defense; that’s double and in some cases triple what our NATO allies spend. France spends 2.3% of GDP on defense; the United Kingdom spends 2.4%. Germany spends 1.3%, Belgium spends 1.1%, Denmark spends 1.4% and so does the Netherlands. Italy spends 1.7% and Norway spends a whopping 1.5%

      The United States under Presidents of both political parties has done a good job at integrating Muslim immigrants into our county; these immigrants from Arab nations, Pakistan, India Bangladesh, Malaysia, Indonesia, Bosnia, Albania and Kosovo become loyal and hardworking American citizens. Compare the U.S. experience with the European experience; it’s not a pretty picture for the Europeans.

      The United States still has the most productive, most flexible and most entrepreneurial economy in the world; the European economy is sclerotic, depressed and rigid.
      European nations are riven with separatist movements and angry and besieged minorities and anti-Semitism is rearing its ugly head throughout the European continent. The European right hates Jews; the European left hates Jews and Europe’s Islamic immigrants hate Jews. Not only don’t we see the same thing in the United States, the United States is the antidote to European provincialism, bigotry and revanchist tendencies.

      American leaders aren’t great but they’ve been far better than European leaders. The United States still leads the world; even know.
      Europe is dying.

      • mf

        I do wonder how often do you visit Europe?
        I was born and raised there (in Eastern Europe) and I have been living in the US for over thirty years now. Just to avoid misunderstanding, I do like it here (in the US), and the US has treated me well, with no reason for personal complaint. Having said this, I think much of today’s economic problems in developed world can be attributed to neoliberal economic theories which originated in the US and in which the US exercised an unfortunate leadership. As a result we are back in great depression territory, moderated by institutions of the welfare state, hence less extreme socially. As a tradeoff, we have a mountain of likely unpayable debt, so things could still turn ugly as nobody knows how to get out of this financial conundrum, or in other words we are in uncharted territory. And then, if that was not enough, when left alone on a geopolitical scene for a few short years, US suddenly began to behave like Russia ,invading another country with shock and awe while lying profusely about actual reasons. So, to economic confusion we added moral confusion, ensuring that what was once known as a canard of moral equivalence looks a lot less so today.
        So, take it easy please on the theory of US superiority. Europe has been trying to do something extremely difficult, namely integrate very disparate economies, including multiple post-soviet economies, into a single economic entity. It is a terribly unfortunate irony of history that this attempt occurred in the midst of grand neoliberal economic experiment which meant that benefits of economic transformation that Europe undertook were less than stellar. When I visit my home town of Warsaw I can’t help but notice that the only truly nice district in Warsaw is a financial district while most of the industry that supports real people took a hike to somewhere. Needless to say, things are even worse in Ukraine. Not a terribly fertile environment for beneficial political transformations.
        And they did underestimate the dangers of failed reform in Russia. So did the US. GWB went to Russia, looked into Putin’s eyes, and saw a kindred soul. Obama cancelled antimissile shield and sought a reset. Let’s remember this before we condemn Europeans too harshly. Now the US needs to lead again. Why? Because US is safely distant. Unaffected by the threat of gas cutoff during the winter and far less affected by the economic damage of sanctions. The US can better afford the moral impulse.
        And finally, why should you visit Europe more often? Very superficially, if I compare average European airport to, say, JFK or La Guardia, or even look at the neighborhood nearby, I would say that if Europe is dying, she sure has a beautiful funeral.

  • ttaerum

    Following Obama has been like watching a drunken sailor… full of vinegar but nothing of substance… in spite of promises to punish Russia, the latest GDP readings for Russia are better than Denmark, France, Brazil, Norway, Switzerland, Austria, Greece, Italy, Brazil… Whatever the policies, the Euro is punishing itself. Of course, BHO doesn’t care so long as our economy keeps chugging along – there’s an election in November and he’d prefer to not have to do any work. If the Repubs take the Senate, Reid won’t be able to play the joker and there’ll be bill after bill on Obama’s desk.

    • ttaerum

      And what astonishes me is the data is out there for everyone to see – but no one bothers to look, they just believe the party line. The same applies to the middle east… it is so hard to believe that a government which has so much data at its finger tips is this analytically illiterate.

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