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The Orthodox Nationalist: Gas Wars in Eastern Europe – TON 092717

This picture requires some explanation. MP Oleh Barna had just heard the Jewish prime minister Yatseniuk say that Kiev has no authority to pursue and prosecute corruption cases. The result was that Barna sought to carry him out of the Rada and throw him in the trash. He failed. Barna is on the left, with the mustache.

Dr Matthew Raphael Johnson talks about the gas war between Russia and Ukraine and the US military build up against Russia which has been the result, for this week’s podcast.

The Russo-Ukrainian “gas war” has been going on since the fall of the USSR. Since 2013, Kiev has been convulsed by riots which unseated Viktor Yanukovych. The new government, having come to power by force, was rejected in many areas of the country, especially the highly industrialized areas of Donetsk, Kharkov and Luhansk. This has led to armed clashes as Ukrainian regulars fight the militias of the east. These regulars have largely deserted and mercenaries have now taken their place. This issue has substantial legal, economic and moral consequences.

The focus of this lecture is to show that Russia and her main gas company, Gazprom, are morally, legally and economically correct in their position against Ukraine and the West. In terms of economic rationality and international law, the Russian view of this conflict is unassailable. Ukraine's position in these negotiations is untenable and amounst to poorly orchestrated tantrums that veil economic and political bankruptcy.

The “gas crisis” can be described in fairly simple terms. Russia, as one of the largest suppliers of natural gas in the world, has pipelines linking it to Ukraine, and from there to the rest of the world. Ukraine is dependent on Russian gas, as is most of Europe. However, given the implosion of the Ukrainian economy in the 1990s, the debt Ukraine owed Russia for her gas grew. As infrastructure and administration declined just as radically as the economy, Ukrainian transport became riskier and loaded with official corruption. Presently, Ukraine owes Gazprom roughly $5 billion as prices rise. Since prices, transport and the obligations of both parties have been spelled out in great detail, Ukraine is committing a simple act of contract breach and the antics of Kiev – based on her international humiliation – have made the situation worse.

Russia has been looking east, to China and India, in her attempt to reshape the global market. Eurasia as an economic area containing complimentary economies is both rational and defensible. Ukraine has sought support from western powers including the European Union and the USA. This does not mean that the population at large seeks salvation from the EU, nor does it mean that “Ukraine” is anti-Russian. It means that the group who seized power in 2014 is looking for aid, trade and recognition from western power centers.

In essence, Ukraine's elite are using promises of western support to pursue reckless policies in both the political and economic realms. They created the coup in 2014 because there is no trust in the future of Ukraine. They traded sovereignty for debt relief. Capital was sold off for almost nothing so that debt would be ignored.

We should note that Poroshenko's real name is Peter Pytor Waltsman and he presided over the Rothschild takeover of the Ukrainian bank from 2007 to 2013. The overwhelming number of oligarchs both in and out of government in Ukraine is Jewish.

The Ukrainian position is that Russia cannot unilaterally stop or change the terms of gas flow. The present government claims that since the price is under international arbitration that Russia has no power to demand anything. These two arguments have no prima facie plausibility. First, there is no country that would permit the price of its strategic resources to be set by “international arbiters.” Secondly, Ukraine's economic disaster, high risk, antiquated equipment and a history of skimming gas for free is the cause of Russian demands that payment be made in advance. While Gazprom is quite willing to negotiate, these sort of arguments do Ukraine no favors.

In claiming that legal norms prohibit any interruption in service while it is under “arbitration” only begs the question. It assumes that any international organization has any right whatsoever to decide how much Russia may collect for its own gas, specially since it is a price based on reason, risk and Ukraine's incompetence. And this is apart from the long standing claim that Ukrainian oligarchs have been siphoning Russian gas for many years.

There are no tariffs between the two Slavic states, but the rise in prices is easily explained by the increased risk of Ukrainian instability, the war in the east and Ukraine's ill will towards Moscow. Yet, Ukraine is still in arrears from the Spring. The Energy Minister of Ukraine, Y. Prodan, flatly refused to continue with the pre-payment plan, though this is because there is nothing to pay with. In 2017, the EU charges $230, Russia $186 for 1000 cubic meters of gas. Russian gas would be cheaper, yet Ukraine cannot buy it for political reasons.

Ukraine is demanding that the price be reduced to absurd levels. Yet again, Kiev is unaware of the nature of markets and the assessment of risk. A buyer, especially one who had enjoyed decades of subsidized energy, cannot “demand” a price from the seller. Since Ukraine now has a new loan from the IMF this money can be used in part, to pay for its basic energy needs, but so far this has not been the case.

In early Summer of 2014, the acting executive of Ukraine, Prime Minister Yatsenyuk announced the start of preparations for the establishment of an international firm that will become the main transport operator of the gas system.  The controlling stake remains among Ukrainian oligarchs, while no more than 49% will be allotted to foreign oligarchs. Russia is banned from having any stake whatsoever.  Needless to say, this policy is opposed to all WTO documents, legal norms and basic rationality.

These antics could not be more prejudicial or provocative to Russia, adding more fuel, so to speak, to the conflict. Add to this the fact that Ukraine has also reneged on its obligations to act as a transit state for Russian gas in Europe, and Ukraine is in poor legal shape.

Unfortunately, this is part of the cause for the US military build up in Ukraine, Poland, Romania and the Baltics. Is this worth hundreds of thousands of American lives?

Presented by Matt Johnson

The Orthodox Nationalist: Gas Wars in Eastern Europe – TON 092717


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