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A Chilling Specter Looms Over Europe

There has been plenty of talk about talks being held between Russia and Ukraine over a potential gas deal this week, as the two sides attempt to hash out disputes over the price at which Gazprom will sell Kiev natural gas, and the little matter of an unpaid bill that runs in the billions. But while some remain optimistic that some kind of agreement will be worked out before temperatures drop this winter and demand spikes, Czech energy security ambassador Václav Bartuska poured cold water on the notion of some kind of détente. Reuters reports:

“I would say it would be foolish to expect business as usual this winter vis-a-vis transit through Ukraine,” said Bartuska, who has served as the EU country’s top energy envoy for the past eight years. “Our baseline scenario for this winter is that there will be no gas through Ukraine, no transit this winter. That is the baseline scenario, that is the expectation.”

The Czech Republic, like the rest of Europe, has a very tangible stake in this stand-off. Roughly a third of Europe’s Russian gas supplies crosses Ukraine on its way west. When Russia has cut off supplies to Ukraine in the past, as it is doing now, Kiev has responded by siphoning off these transiting flows for its own consumption. It’s telling, then, that the Czechs appear to be pessimistic about the emergence of any kind of lasting deal this winter.

Ukrainians, too, are gearing up for a cold winter, likewise operating under the assumption that the Russian taps will remain closed. The AP reports:

Ukrainians are rushing to insulate their walls, seal up drafty windows and snap up heating equipment as the possibility sets in that they may be about to experience their first winter without Russian gas. […]

“People are afraid they will turn off the gas supply entirely,” said Polezhai. Demand for his water heaters is about 15 times higher than normal, and sales for wood-burning stoves are also up dramatically. The warehouses where he buys the water heaters have hiked up prices by up to 50 percent.

Slovakia reported that its Russian supplies were halved earlier this week, a claim Gazprom has since denied. Bratislava is already laying out contingency plans of its own, signing back-up gas supply deals in preparation for the cold months ahead.

Moscow is using one of his biggest levers over Europe to great effect, stoking worries well beyond Ukraine. From the Russian perspective, a best-case scenario would involve some sort of Western intervention on Kiev’s behalf to pay off debts and meet hiked-up prices in an attempt to stave off widespread supply disruptions this winter. If that happens, Europe will be pouring money straight into Putin’s pockets.

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  • Andrew Allison

    It isn’t going to happen, but Europe should treat this as hostage taking and not pay Ukraine’s past due bills. Doing so will simply embolden Putin. Ukraine did, after all, use the gas and owes Russia the money. The EU’s money would be better employed building LNG terminals to reduce Europe’s dependence on Russian gas.

  • ShadrachSmith

    Thank Heaven that we have Obama as president, he is sure to sort out this mess 🙂

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