Category: Former Soviet Union

There is Only One Side Here Acting Like a Thief

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And it is not the Russians.

So we have an “agreement” 2 days ago, and Russia puts a little gas into the system, in order to verify that the Ukrainians are not tapping the gas going to Europe, and they get the following:

Ukraine’s state energy firm said it could not ship the gas without cutting off several of its own regions.

So, why do I believe that this points a finger at Naftogaz and the Ukrainians?

Because rerouting some of the gas in one direction, and some in another is how these networks are supposed to function.

I would also add that the fact that the Ukrainians are refusing to route the gas to Europe and refusing to allow monitors into dispatching centers and control rooms as agreed to by both sides.

This is not how an honest broker behaves.

Meanwhile, the governments on the EU side of the pipeline are freaking out, and Medvedev has called for an emergency summit on this in 3 days in Moscow.

OK, so I Finally Have a Handle on What is Going on in the Ukraine Gas Fiasco

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First, the prior contract on natural gas prices, which covered both gas and transit fees across Ukraine expired.

So Gazprom its Ukranian counterpart Naftogaz were negotiating, and then, because there was no deal on prices, Russia reduced shipments to the Ukraine but shipped more to the EU, on the far side of the pipeline, along with routing as much gas as possible via Belarus.

Russia then shut down the feed Ukrainian pipeline, because they said that the Ukrainians were stealing the gas, which has led to gas disruptions across Europe.

So they are now in negotiations, and there are a number of sticking points:

The first is that Ukraine wants to cut the contracted agent for the gas sales, RosUkrEnergo, because they believe it to be corrupt, which is probably true, but it also gives them the ability to monitor just how much gas enters the Ukraine from Russia.

The next big issues are over price. Ukraine was paying $179.50/tcm (thousand cubic meters) with a transit fee of $1.70/tcm/100 km, and has offered $201/tcm with a transit fee of $2.05/tcm/100km.

When you consider that a lot more gas goes through Ukraine than is used there, it sounds like a wash in terms of cost to the Ukranians.

Gazprom wants to keep the transit fee the same, and charge $480/tcm, which is much closer to the market rate, it’s selling gas to the EU at around $420/tcm.

So the numbers offered by Gazprom seem to be in line with the market, plus about 20% because you always start negotiations that way as the seller.

In any case, the EU has gotten agreement from both sides to act as an independent monitor of gas flows, because they want their gas:

After phone conversations with Prime Minister Vladimir Putin of Russia and his Ukrainian counterpart, Yulia Tymoshenko, on Wednesday, the European Commission president, José Manuel Barroso, said both leaders had agreed in principle to allow monitors to verify gas movements. But he also warned both countries — and particularly Ukraine — that failure to help restore supplies could have consequences for their relationships with the European Union.

(emphasis mine)

It turns out that the best guess here is that reductions of gas leaving the Ukraine side were far greater than the reductions that the Russians reported on their side, and the implication is that the Russians are actually telling the truth when they are saying that the Ukrainians are stealing gas from the pipeline.

Also Wednesday, Chancellor Angela Merkel of Germany spoke with Putin by phone, and in Moscow, Putin met with a former German chancellor, Gerhard Schröder, who now serves as chairman of the board of a Gazprom-controlled company planning to build a pipeline from Russia to Germany under the Baltic Sea, cutting out Ukraine.

(emphasis mine)

It appears that the Germans certainly think that the Ukraine is taking more than it buys from Russia, and I’m inclined to agree.

Much of recent Ukrainian economic expansion, before the world wide recession hit, was driven by below market gas supplied with the implied quid pro quo that Ukraine would be an ally of Russia, and having to pay fair market value for the gas is a real hardship, particularly now that FSU countries’ economies seem to be in free fall.

Like the chicken said, “You knew the job was dangerous when you took it.”

That being said, we are not seeing a punitive price, and best evidence is that the Ukrainians are stealing the gas.

So My Prediction on the Ukraine and the Crimea…..

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So, I make a prediction that Russia will use the Ukrainian gas debt to get the Crimea, and it looks like I’ve been proved wrong in less than a week…..Narf!

It appears that Ukraine has agreed to pay their old gas bill, and a new deal for 2009 is ready….Only both sides are disputing whether Ukraine has actually paid the debt:

Russia has said it will turn off the taps to Ukraine if it
does not receive $2 billion in arrears and conclude a new supply
deal, a threat that has alarmed European states which receive
their Russian gas via pipelines passing through Ukraine.

OK, maybe I haven’t been proved wrong yet…..Narf!

Gazprom is threatening to cut off gas to the Ukraine, it appears that the dispute is now their late fees, and not the actual gas themselves.

I’m wondering when Russia will construct a pipeline through Belarus.

Crazy Misha

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So on the way out, one group of batsh%$ insane people, Bush and His Evil Minions™, are going to saddle us with someone who is even crazier, Mikhail Saakashvili, President of Georgia, because they intend to sign a sign a strategic partnership treaty on January 4.

Just another of those gifts to America from George W. Bush….Because leaving all 300 million of us barefoot and pregnant is logistically difficult.

This is a bad idea because the Georgian state security apparatus has been completely penetrated by the Russians, so any information that we give to the Georgians is heading straight to Moscow, and it’s a bad idea because President Mikhail Saakashvili is simply crazy.

When I say crazy, I’m not speaking metaphorically. We have a report of Saakashvili throwing punches and a telephone at his Prime Minister.

While the above report is Fox News, and should thus be treated as if it came from…well…Fox News, we are seeing similar reports of erratic behavior in the New York Times, which reports his statements of grandiose plans (teaching every Georgian to speak and read English in the next 2 years), and pulling facts out of the air (claiming that the Russians invaded before he attacked).

The article also raises concerns about his increasingly dictatorial grip on the apparatus of the state, and his comparing himself to Georgian King, and Saint, David the Builder and George Washington.

I think that this report is saying, in a low key way, two things, that he’s nuts, and that his continued political survival is in doubt.

Will Russia Buy the Crimea from Ukraine?

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This is all pure speculation on my part, and my record on predictions is only marginally better than that of the Detroit Lions with regards to football, but I think that there is a distinct possibility that this might happen.

We have a number of developments going on simultaneously, with Medvedev and Gazprom playing hardball on a $2.1 billion debt and warning of a cutoff of gas if there is no resolution.

Then we have Edward Hugh’s amusingly named essay, “As The Politicians Battle It Out Ukraine’s Economy Tunnels South In Search Of Australia,” (H/T, Paul Krugman Blog for the link) which provides us with the included chart pr0n.*

You see industrial production falling by nearly 25%, and inflation and the central banks both topping 20%.

Simply put, this is an economic meltdown that starts looking like something out of Mad Max.

When you juxtapose this with reports that Russian PM Vladimir Putin Ukrainian PM Yulia Timoshenko are holding talks to resolve the issue, it appears to me that the Ukrainians have very little leverage.

About the only thing that I think that the Ukrainians can offer Russia is the Crimea, which is already primarily a Russian speaking province, and had been a part Russia until Khrushchev gifted it to Ukraine in 1954.

I’m not sure whether a “sale” of the Crimea to Russia would involve an actual negotiated transfer of territory. We could see extensions regarding treaty rights for the Russian naval base at Sevastopol, increased autonomy for the region, and perhaps agreements to protect the “heritage” of the province, which would mean that the Russian speaking nature of the the Crimea would be preserved.

In the long run though, a full separation of the Crimea from the Ukraine might be beneficial for both sides. For the Russians, the benefits are obvious, the protection of ethnic Russians and national pride, and for the Ukrainians, it creates a less ethnically diverse state, which means that you will likely have real issues of governance, as opposed to the current paralysis which is driven by the Russian minority being largely disengaged.

*I tend to disagree with Hugh’s thesis that demographic issues are at the root of much of this problem. While the Ukrainian population has fallen by a remarkable 11% since 1992, and with the death rate exceeding the birth rate by over 50%, I do not believe that a growing population is necessary for economic well-being.†
†Case in point what happened in Europe following the Black Death, which had a with a mortality rate of around 50%. There was a marked increase in social mobility and wages for the average worker, largely at the expense of the landholders and other members of the economic elite, despite largely ineffective anti-labor laws that were instituted. The lesson here is that if population falls, the total GDP may fall, it certainly did during the black death, but per capita GDP went up, and if you can pry this out of the hands of the economic elites, life can be better for everyone.

NATO Meeting Finds Compromise at Meeting

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So NATO agrees to resume limited ties with Russia while also allowing for better ties with Georgia and the Ukraine without any road map to NATA membership.

Obviously, it makes sense to resume ties with Russia. They are geographically and historically very important in dealing with Iran and Afghanistan.

As to kicking NATO membership down the road for the two former Soviet Republics, that’s just stupid, but the best that could be had with Bush and His Evil Minions™ still in power.

NATO does not need expansion, and the idea that a nut job like Georgia’s Mikheil Saakashvili, or a man who seems to be actively in the running for nut job like Ukraine’s Viktor Yushchenko to have the ability to mandate actions on the part of three nuclear powers is absurd.

One of the great diplomatic missteps of the 1990s was the expansion of NATO.

Just imagine how bad it would have been if Georgia had been a NATO member when it launched its assault on civilians. Do governments in the rest of Europe want to be held hostage by someone like Mikheil Saakashvili?

Do the militaries in the rest of Europe want to have to share data with a country whose military was so completely penetrated by Russian intelligence?

The expansion of NATO has been driven by 3 things:

  1. The US desire for new markets for defense equipment.
  2. The desire by some players to treat Russia as a conquered nation, and to use NATO rub their face in their current status.
  3. The European goal of continental union.
  4. Dick Cheney and His Evil Minions™ want to recreate the bad old Russian bear, because it gets Republicans elected, so they keep poking Russia with a number of sticks, of which NATO expansion is one.

I will note that the rapid expansion of the EU, which is, after a civilian institution hasn’t gone well either.

One need only look look at Bulgaria, a virtual Mafia state whose accession to the EU was driven by pan European triumphalism, to a lesser degree places like the Baltic republics, which are engaging in genteel ethnic cleansing, and that whole “twins” thing in Poland.

Both the EU and NATO have over expanded because of this, and the possibility of adding Ukraine and Georgia gives me the willies.

If the road to a unified Europe is inevitable, and I think that it is near inevitable, then expansion can take part at a measured pace.

The greatest threat to a real European super-State policy is the EE’s collapse from overambitious expansion.

The Last Refuge of Well Connected Nuts: The WSJ Ediitorial Page

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In this case it’s Georgian President Mikheil Saakashvili, who continues to pimp the lie that the Rissians attacked first.

No, they didn’t. They knew that you would attack, and they knew when and where you would attack almost before you did, and so massed troops on their side of the border waiting for the balloon to go up, but you attacked first.

Being stupid, and having your state security apparatus thoroughly penetrated by a large unfriendly neighbor does not make you the victim of an attack. It just makes it either stupid or insane to launch an attack against their troops and allies.

You sir, notwithstanding your vaunted Western education, are both stupid and insane.

Stupid Lame Ducks

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Well, the US is threatening Russia over it not complying completely with the cease fire agreements, in this case my guess would be over their disinclination do withdraw from portions of Abkhazia that Georgia seized a year of so ago:

Russia is still failing to meet its ceasefire obligations with Georgia and Washington’s European allies must not overlook this and rush to embrace Moscow, a senior U.S. official said on Tuesday.

Matthew Bryza, Deputy Assistant Secretary of State for European and Eurasian Affairs, said Moscow must pull back its forces as agreed in a French-brokered ceasefire that ended the war in August before there could be “business as usual.”

Mr. Bryza, you are a complete idiot.

No one cares what you thing. You will be gone in 8 weeks, along with the rest of your skeevy incompetent associates, and the Russians and the Europeans know this too.

Please, just have a steaming helping of STFU.

Russia Makes Offer on Euro Missile Defense

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They won’t place missiles in Kaliningrad if the US terminates its ABM installation in Poland and the Czech Republic.

It’s not surprising that the Russians consider this a direct threat.

It’s also not surprising that they consider the expansion of NATO a direct threat.

Their worst case scenario is, “What would have happened if Georgia had been a NATO member?”

There are people in positions of power, or one election away from a position of power, in many of the former Soviet Union and Warsaw Pact nations who would be inclined to be just as crazy as Georgian President Saakaskvili, only when they launch an assault on an unarmed populace that is inclined toward the Russians.

Georgian Aggression Makes the NY Times

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Honestly, I think that they got the green from Bush and His Evil Minions™, or at least Dick Cheney before cluster bombing cities, but cluster bomb cities they did, and they did it before the Russians moved in.

Even without consideration as to right or wrong, it would be catestrophically stupid to allow Georgia into NATO for one simple reason: It will give the Russian FSB unprecedented access to NATO secrets, because the Russians have completely penetrated the Georgian state security apparatus.

That’s why the Russians were able to launch a devastating counter attack: they knew that it was coming, to the minute and individual battalion level battle plans, and so could respond quickly.

Iceland,Ukraine, Hungary to get IMF’d

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Icelnad has gotten a deal for a $2 billion loan from the IMF. That’s about $6250.00 for every man, woman, and child on the island. They could not cut a deal with the Russians who, my wild-assed guess here, wanted some naval basing consideratins.

There are conditions, such as, “Iceland said it would use the funds to reintroduce a flexible interest rate regime and revise its financial regulation, particularly insolvency laws.”

What does that mean, for a start it means that Iceland’s central bank just raised rates to 18%.

As to the insolvency laws, my guess is that they were told to change the laws so that foreign investors are at the front of the line, and that those debts could not be discharged at all.

Iceland has just become 320,000 people working for foreign masters.

Ukraine is well along the way to the same fate, with the IMF demanding budget cuts in the middle of an economic downturn.

This is the sort of policies that created the Great Depression following the stock market crash.

There has also been a deal cut between the IMF and Hungary, but I don’t have details.

As I’ve said before, let’s see how free market fundamentalist the IMF goes on white people. I think that it will be far more gentle than it would be if the people were black, brown, or yellow.

Some Insight on the Russian Psyche from a Russian

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From Stanislav Mishin‘s blog Mat Rodina, we find The Sixteen Reasons Why Russia Should NEVER Trust the West.

You can go to the site to get a bit more in exposition.

About half of the reasons are true, or at least true as one can when one is talking about international relations:

  • Western banks and institutions raped Russia in the 1990s, which is true. The bankers made money, the pensioners were out on the street, and teen aged girls were selling themselves as prostitutes in order to keep from starving.
  • Western Governments did cheer when Yeltsin shelled his own parliament
  • The West, particularly western oil companies do want control of Russian oil
  • NATO was expanded to the Russian border, despite promises to the contrary
  • NATO bombed Serbia, though I would argue that there were legitimate reasons, a genocidal regime, for doing so.
  • The West has a policy of explicit and extensive support to political enemies of Russia in the nations of the former USSR.
  • That the West’s moves into Central Asia following 911 were accompanied by attempts at regime change, or regime foreign policy change to create states generally hostile to Russian interests.
  • That the west abrogated treaties as soon as they were no longer convenient, most notably the ABM treaty.
  • That the west has provided fairly explicit aid to opposition groups in Russia. Clearly true, though I think he lists this one item as two on his list of 16.

Then there are those that I have doubts as to their significance or veracity. Either I have no knowledge of the truth of the statements, or I think that he is conflating basic international Realpolitik with explicit hostility:

  • That the west has been backing secessionist and Islamist movements within Russia, most notably in Chechnya. Certainly, given the consequences and how they might effect access to Caspian oil make them plausible, particularly when it appears clear that the US gave tacit approval for Saakisvili to launch assaults in South Ossetia.
  • That the Polish missile defense silos for could be used for the deployment of short range nuclear missile….Technically true, I put this in the paranoid section, it’s easier/safer to use SSBNs firing missiles on depressed trajectories.
  • That the West is giving asylum to people wanted by Russia, while demanding extradition of Russians to face western courts…Technically true, but meaningless, as a pretty standard standard state of diplomacy.
  • That the west went soft on the Taliban, and pressured the Russians not to respond militarily to them prior to 911 because they wanted an oil pipeline that avoided both Russia and Iran. True, but I don’t see it as overtly hostile, it’s just the Texas oil men running the US government. To quote The Godfather, it’s not personal, it’s, “Just Business”.

Then there is the tinfoil hat stuff:

  • That the West despises “Russian Patriotism and Christianity”
  • That the, “The West back every Jihad aimed at Orthodox Christians”

These are tinfoil hat, but it does reflect the deeply Xenophobic character of the worldview expressed here.

What I see as stupidity, he sees as malice.

I would say that this is particularly the case with NATO expansion, where the Euros were just too busy partying about the fall of the wall, and the US was looking at new markets for their military hardware and saw the need to replace Soviet legacy systems in new NATO members as a profit center.

I do think that Mr. Mishin represents a mainstream view in Russia, which begs the question, how is this addressed.

Unfortunately, many of the things that have been done, the feeding frenzy of the 1990s and the expansion of NATO cannot be easily undone.

As start, a forceful statement that the US is opposed to NATO membership for the Ukraine, Georgia, Armenia, and Azerbaijan would be constructive.

I have little knowledge of the presidents of Armenia and Azerbaijan, but it is clear that the presidents of Ukraine and Georgia have a few screws loose.

Additionally, it’s clear that the state security apparatus of Georgia has been thoroughly penetrated by the Russians, as the speed and effectiveness of the Russian military response shows that they knew of the specifics of the assault on South Ossetia for weeks in advance.

I am not a military man, but the idea of having an ally whose defense establishment is completely penetrated by another country does not fill me with glee.

Viktor Yushchenko Calls Snap Elections in Ukraine

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Fissures in the “Orange Revolution”.

The short story is that Ukranian President Yushchenko and Prime Minister Yulia Tymoshenko are on different sides of the ideological divide.

Yushchenko thinks that they should do everything possible to piss off the Russians, so that they will attack, and Tymoshenko looks at Georgia, and though she hates Russia too, she saw what happened in Georgia, and thinks that needlessly tweaking their nose, and overt hostility to the large Russian ethnic minority in Ukraine is stupid, and will not be to the benefit of the country.

Basically, Tymoshenko is saying that she is not opposed to wars, “just stupid ones,” to quote the next President of the United States and Yushchenko is approaching the issue with the calm demeanor of the current President of the United States.

Speaking from experience here, let me advise the Ukrainian people that having a leader with a messiah complex is a double plus bad thing.

See hrere, here, and here.

While We Are Talking About Republican Incumbents in Trouble

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We can add the contemptible Mitch McConnell to the list.

We have two polls, Mason-Dixon showing McConnell ahead of Lunsford by 45-44, and SurveyUSA having McConnell ahead 49-46:

Those numbers have so encouraged Democrats that the Democratic Senatorial Campaign Committee this week went up with its first TV ad against McConnell — something that even DSCC Chairman Charles Schumer (N.Y.) acknowledged was unthinkable a few weeks ago.

Schumer said Wednesday that Kentucky and Georgia — where GOP Sen. Saxby Chambliss is in an unexpectedly tough race — are now on his radar as potential pickups given recent polling.

I’m sure that it doesn’t help McConnell that his wife, Elaine Chao, is Bush’s secretary of labor and hates the working man.

Heh.

Couldn’t happen to a couple of nicer guys.

Russia Has a Clue on the Ukraine

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It appears that they are offering major shipbuilding contracts to the Ukraine, including the construction of their carriers, in order to better relations.

Unfortunately, it appears that Vladimir Putin is clueless on the Ukraine, or he got a severe attack of the stupids, because he just accused Ukraine of assisting Georgia in the war.

It’s reassuring to know that other nations’ foreign policy can be as f%$#ed up as ours.