Both the Europeans and the Ukrainians are going to have a long ans cold winter.<\/p>\n
While it is clear that the hostilities between the Ukraine and Russia would put a crimp in gas supplies, it turns out that the current billing dispute is almost certainly going to be a bigger problem<\/a>.<\/p>\n You see, the Ukrainian Government has taken the dispute to arbitration, and any deal that they might cut with the Russians could be used against Gazprom in that proceedings:<\/p>\n But let\u2019s not get into that again today. In the slipstream of the talks this weekend in Minsk between Putin and Poroshenko, a precious little detail seems to have escaped the western press entirely. But I think all our fine journalists will soon have to address it.<\/span> ou see, a pending case before the Arbitration Institute of the Stockholm Chamber of Commerce can apparently take 12-15 months to resolve. And perhaps Europe doesn\u2019t have that much time. Which is what Putin hinted at at a press-op he did after the weekend Minsk talks. What it comes down is that even if Russia wanted to accommodate Ukraine, it can\u2019t. On strictly legal terms, nothing political.<\/span> The E.U. has suggested an interim agreement on the gas supplies between Russia and Ukraine without waiting for a Stockholm arbitrary court decision, E.U. Energy Commissioner Gunther Oettinger said in a news conference following his meeting with Ukrainian President Petro Poroshenko late Tuesday Two cases are before the Stockholm court, but the hearings will take 12-15 months, which is too long, while Europe needs an interim solution for this winter, Oettinger said In June, Russian gas giant Gazprom switched Ukraine off gas over the unpaid debt and filed a $4.5 billion suit to the Stockholm arbitration court. Later, Kiev reciprocated by sending a suit to the court against Gazprom for making Ukraine overpay $6 billion for gas since 2010, setting too high prices in its contract.<\/span><\/p><\/blockquote>\n<\/blockquote>\n The Russian Legal Information Agency has this:<\/span><\/p><\/blockquote>\n Putin: Naftogaz Suit Against Gazprom Axes Discount For Ukraine <\/a><\/span><\/p><\/blockquote>\n The fact that Ukraine\u2019s Naftogaz has invoked arbitration proceedings against Gazprom prevents Russia from giving Ukraine a gas price discount, President Vladimir Putin said in Minsk where he met with Ukrainian President Petro Poroshenko. \u201cWe cannot even consider any preference solutions for Ukraine since it pursues arbitration,\u201d Putin said. \u201cRussia\u2019s possible actions in this sphere could be used against it in the court. We couldn\u2019t do it even if we wanted to.\u201d After Gazprom switched to a prepayment system for gas deliveries to Ukraine on June 16, Naftogaz turned to the Arbitration Institute of the Stockholm Chamber of Commerce. Naftogaz wants Gazprom to cut the price for gas and to get back $6 billion that Ukraine has allegedly overpaid since 2010.<\/span><\/p><\/blockquote>\n<\/blockquote>\n <\/span><\/p><\/blockquote>\n Gazprom in turn is seeking to recover Ukraine\u2019s $4.5 billion debt for gas deliveries. Putin said Russia offered a compromise solution during the talks held before Gazprom switched to the prepayment scheme. \u201cWe reduced the price by $100,\u201d Russian President said. Gas talks between Russia, Ukraine and the European Union went on from April to mid-June. Kiev said it would not repay its $4.5 billion debt unless Russia agreed to supply gas at a lower price. Russia offered a discount, but Ukraine turned down the offer. Russia then said it would only resume gas supply talks after Ukraine paid off its debt.<\/span><\/p><\/blockquote>\n More signs of German nerves are here in a piece from the European Council on Foreign Relations \u2013 I kid you not, they exist -, along with a nice but curious admission:<\/span> As Germany takes over leadership of the European Union\u2019s efforts to solve the Ukrainian crisis, Poland is questioning the motivations and strategies behind Berlin\u2019s new diplomatic activism. The initiatives of German Foreign Minister Frank-Walter Steinmeier and Chancellor Angela Merkel are being followed closely in Warsaw \u2013 and often with mixed feelings. Is Berlin trying to mastermind a compromise with Russia on Moscow\u2019s terms, ignoring Kyiv\u2019s vital interests? And as Poland is increasingly edged out of the conflict resolution process, has Berlin-Warsaw co-operation on EU Ostpolitik broken down?<\/span><\/p><\/blockquote>\n<\/blockquote>\n As an aside, if I were trying to make sure that there wasn’t someone actively trying not to be a turd in the punchbowl in negotiations with Russia, I would sideline Poland as well.<\/p>\n The (historically justified) political culture of Poland, and many other former Warsaw Pact nations is such that they are more driven a desire for payback than a realistic evaluation of their long-term interests.<\/p>\n Poland was, along with France and Germany, one of the countries that orchestrated the political shift in Ukraine in February<\/b>. Since then, Warsaw has played a central role in forging a bolder EU response to Russia\u2019s aggression and in providing meaningful assistance to the Ukrainian government. However, as the conflict has worsened, Warsaw has become less visible as an actor in crisis diplomacy. Polish Foreign Minister Radek Sikorski was not invited to join his German, French, Russian, and Ukrainian counterparts in the negotiations on conflict resolution held in Berlin in early July and early August. Before Ukrainian President Petro Poroshenko and Russian President Vladimir Putin agreed to meet at the Customs Union summit in Minsk on 26 August, the idea had been floated of holding another high-level meeting in the \u201cNormandy format\u201d of France, Germany, Russia, and Ukraine. <\/span><\/p><\/blockquote>\n<\/blockquote>\n Kiev is either so high on the EU, US and NATO support it was promised, or so desperate over its latest battlefield losses, that it goes for all on red, probably thinking, and probably rightly so, that the western press will swallow anything whole. Tyler Durden: <\/span><\/p><\/blockquote>\n Ukraine Accuses Russia Of Imminent Gas Cut-Off, Russia Denies, Germans Anxious <\/a><\/span><\/p><\/blockquote>\n So much for the Russia-Ukraine talks bringing the two sides together as even Germany\u2019s Steinmeier could only say it\u2019s \u201chard to say if breakthrough made.\u201d Shortly after talks ended, Ukrainian Premier Yatsenyuk stated unequivocally that \u201cwe know about the plans of Russia to cut off transit even in European Union member countries,\u201d followed by some notably heavy-on-the-war-rhetoric comments. The Russians were quick to respond, as the energy ministry was \u201csurprised\u201d by his statements on Ukraine gas transits and blasted that comments were an \u201cattempt at EU disinformation.\u201d<\/span><\/p><\/blockquote>\n<\/blockquote>\n Here\u2019s what Putin said at the press op after the talks:<\/span> Currently, we are in a deadlock on the gas issue. You see, this is very serious matter for us, for Ukraine and for our European partners. It is no big secret that Gazprom has advanced payment for the transit of our gas to Europe. Ukraine\u2019s Naftogaz has returned that advance payment. The transit of our gas to European consumers was just about suspended<\/b>. What will happen next? This is a question that awaits a painstaking investigation by our European and Ukrainian partners. <\/span><\/p><\/blockquote>\n<\/blockquote>\n <\/span><\/p><\/blockquote>\n<\/blockquote>\n We are fulfilling all the terms of the contract in full. Right now, we cannot even accept any suggestions regarding preferential terms, given that Ukraine has appealed to the Arbitration Court. Any of our actions to provide preferential terms can be used in the court. We were deprived of this opportunity, even if we had wanted it, although we already tried to meet them halfway and reduced the price by $100.<\/span><\/p><\/blockquote>\n<\/blockquote>\n The ball is squarely in the western court. Of course many will think and hope that Russia will give in because it needs the revenue, but the problem with that is it could cost the country too much (admittedly, that\u2019s not the only problem). $6 billion to Ukraine for starters, then potentially many more billions on future deliveries to Kiev, and then there\u2019s the rest of its contracts with two dozen or so European nations.<\/p>\n From a legal point of view, this may not be about what Moscow wants to do anymore, but about what it can. The Arbitration Court case may have tied its hands. And unless Europe wants a cold winter, it must seek a solution. Putin, who holds degrees in both judo AND law, understands this. But he didn\u2019t set this up. Western and Kiev hubris did. Certain people got first too pleased with, and then ahead of, themselves.<\/span><\/p><\/blockquote>\n BTW, I also learned another reason that the Russians do not like the EU deal, it has the effect of severely curtailing Russian exports to the Ukraine:<\/p>\n Putin pointed to another rather difficult but highly interesting legal \u2018technicality\u2019 as well, which involves Ukraine moving closer to the EU economically: We once again pointed out to our partners \u2013 both European and Ukrainian partners \u2013 that implementation of the association agreement between Ukraine and the EU carries significant risks for the Russian economy. We have shown this in the text of the agreement, directly pointing to specific articles in that agreement. Let me remind you that this concerns nullifying Ukraine\u2019s customs tariffs, technical regulations, and phytosanitary standards.<\/p>\n The standards in Russia and Europe currently do not correspond. But, as you recall, the most classic example is the introduction of EU technical regulations in Ukraine. In that case, we would not be able to supply our goods to Ukraine at all. We have different technical standards. And according to the European Union\u2019s standards, we will not be able to supply our machine-building products there, or any industrial goods. If that happens, we cannot accept Ukrainian agricultural production goods in our territory, because we have different approaches to phytosanitary standards. We feel that many problems would occur.<\/p>\n If we do not achieve any agreements and our concerns are not taken into account, then we will be forced to take measures to protect our economy. And we explained what those measures would be. So our partners must weigh everything and make corresponding decisions. <\/span><\/p><\/blockquote>\n<\/blockquote>\n So, even the EU actions, which were far less bellicose than those of the US State Department, begin to look more and more like a deliberately hostile act, even without considering the traditional Russian paranoia and xenophobia.<\/p>\n I think that Putin considers this a nearly existential threat to Russia, and he is responding accordingly.<\/p>\n
You may remember that in an earlier phase of the dispute between Ukraine and Russia (not to be confused with the Kiev vs rebels fight), no agreement was reached on the payment of a $4.5 billion gas bill that Russian Gazprom said was overdue from Ukraine\u2019s Naftogaz. And Gazprom demanded pre-payment for any future gas deliveries to Ukraine.<\/span>
<\/span> Kiev, instead of paying the bill, claimed Russia had overcharged it for the already delivered gas, by $6 billion, going back to 2010. And brought its argument before the Arbitration Institute of the Stockholm Chamber of Commerce.<\/span>
<\/span> Now maybe, just maybe, someone in the Kiev camp should have paused right before that moment, and consulted with their western backers in Brussels and Washington. Perhaps not so much Washington, but Brussels for sure, and Berlin. And Athens. Rome. Prague. Warsaw.<\/span><\/p><\/blockquote>\n
<\/span> What\u2019s more, Gazprom had already paid Naftogaz in advance for the use of Ukraine pipelines, but the payment was returned. And that can have grave consequences not just for Kiev, but for almost all of Europe. Lots of countries get their gas through these pipelines.<\/span>
<\/span> It looks like the EU, and especially Germany, has started to smell \u2013 potential \u2013 trouble:<\/span>
EU Suggests Russia, Ukraine Sign Interim Gas Agreement <\/a><\/span><\/p><\/blockquote>\n\n
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<\/span> Has Germany Sidelined Poland In Ukraine Crisis Negotiations?<\/a><\/span> <\/p><\/blockquote>\n\n
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<\/span> Answers To Journalists\u2019 Questions Following Working Visit To Belarus <\/a><\/span><\/p><\/blockquote>\n\n
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