Russia has been repeatedly condemned over the past few years in international political and media circles for using energy as a weapon. The Kremlin, it is often alleged, has sought to leverage political influence throughout its former empire via the carrot and stick method of granting or withholding cheap gas supplies.
While this strategy may seem unreasonable to many international observers, it could hardly be described as surprising. What would you do if your former vassals decided to jump ship and started playing for the other team? At the very least you would stop giving them handouts. So it is with Russia.
There is admittedly much that is morally repugnant about Putin’s regime, but asking turncoat neighbours to pay their own way is hardly unreasonable. What is harder to justify is the almost complete absence of any strategy in Kyiv to counter this ongoing and ever-present threat.
Inevitable energy inflation
Since the Orange Revolution Ukraine has had no option but to prepare itself for the economic realities of mounting gas bills. And yet each new round of gas price negotiations has been coloured by the same threats and accusations together with an alarming lack of transparency which has served to undermine the legitimacy of the Orange parties’ reformist credentials.
The role energy has played throughout this period in the country’s domestic political scene has been exclusively negative, offering as it does considerable leverage for pro-Russian parties and incentives to big business bosses who wish to maintain the old status quo.
The polluting influence of energy issues has also reached to the very top of the Ukrainian state, with President Yushchenko the most high-profile but by no means only Orange figure to have seen his reputation tarnished by allegations of involvement in murky deals.
Addicted to cheap Russian gas
The real problem here is the continued practice of seeking energy-sector favours from Russia and cutting opaque backroom deals with the Kremlin. This has long been justified as a necessary evil to prevent economic collapse.
Ukraine’s heavy industry is said to rely on cheap Russian energy supplies in order to function. Accepted wisdom generally portrays the country’s industrial giants as hopelessly addicted junkies dependent on cheap gas. It assumes that if subsidies ceased the sector would flounder and die.
This argument simply doesn’t add up. In the past three years the country has experienced a 300% gas price hike and yet heavy industry has proved more than capable of adjusting to the challenges this has presented. Alternative energy sources have been found and energy-saving initiatives introduced. There is little to suggest that a switch to global market prices would therefore bring about the end of the world as we know it. Such a switch would no doubt hurt, but the long-term effect would be particularly liberating. An end to wasteful energy practices would also make Ukrainian industry more competitive.
Disarming the giant
With the Ukrainian economy in rude health and the road to Euro-Atlantic integration once more opening up, now is surely the time to consider taking this final step away from the shady world of post-Soviet energy deals. If Ukraine paid full market prices for its energy supplies, the country would become immune to the only real weapon the Kremlin still possesses.
The spectacle of Ukrainian leaders travelling to Moscow, cap in hand, in order to negotiate the latest price rise would become a thing of the past and Russia’s ability to meddle in the affairs of its southern neighbour would be greatly restricted. Relations between the two countries would thus have a far greater chance of becoming civilised.
Officials in Kyiv and Moscow have repeatedly stated that Ukraine must move towards market prices over the next few years, but in the meantime energy politics will continue to have a debilitating effect on Ukraine’s integrationist ambitions. Is it really worth postponing the inevitable? By opting to pay the global price now, Ukraine would be asserting its independence in a manner that both Moscow and Brussels will instantly recognise.
