Uh oh, here we go again. The showdown between East and West over natural gas is working back to where we were in 2005 when Russia cut off natural gas supply to Germany in the middle of winter.
Last week Russia cut natural gas supplies to EU member Slovakia by 50% on Wednesday. Slovakia, an EU member country, had been helping Ukraine build gas supplies ahead of the coming winter. Slovakia’s prime minister, Robert Fico, was quoted as saying the supply cut is “a politically driven message to the EU as it negotiates fragile gas talks between Moscow and Kiev…What’s interesting in the case is that it isn’t about a lack of gas, but this is about playing with gas supplies as an instrument of political posturing.”
It is, of course, Russian natural gas from Siberia that provides almost half the energy that heats the EU in the winter. The last time the EU tried to play hardball with the Russians over natural gas transported from east to west through Ukraine Putin turned the gas flow to Germany off on New Year’s Day 2005. That move was enough to generate serious alarm in Germany.
With winter is settling in, Russia, suffering under western sanctions, is pushing back against the pressure.
So while Russia deals with the fall-out from sanctions imposed by Western countries over the Russian occupation of Crimea and eastern Ukraine--the sanctions have been said to have effect…it is being reported this morning that inflation in Russia is up sharply—but if the Russian bear can hold on until winter settles in, presumably it will have the leverage it needs, a threat to turn off the gas, that will get the west to back off the sanctions.
So far, the United States and Canada have been much more demanding on Russia over the Crimea. The EU states know their dependence and have been less demanding of sanctions. Why anger the Russian bear when it’s getting cold?
With winter settling in, it will be interesting to see what side gives in first. Who gives first the West or Russia? So far Harper has been happy to rattle the sabre. But energy typically trumps any other concern.
"The situation is very hard. Even if the deal is signed under those conditions which we are talking about, it does not 100 percent guarantee that there are no disruptions of gas transit to Europe," Andre Miller, the head of Russian gas-giant, Gazprom, said last week.