The Peak Oil Myth

[ThatHawaiiGuy]

Russian Gas Cuts: US-Afghanistan Connection?


http://www.middle-east-online.com/english/?id=29650

Russia has made a serious mistake on this occasion both in hasty action and in failing to perceive the probable hand of the US and a trap, notes Christopher King.


You will probably have heard of the present situation – you might well be suffering from it. Russian gas for Europe is being disrupted in transit through Ukrainian pipelines. Ostensibly it is about payment by Ukraine for its gas and renewal of the Ukraine-Russia contract for transit of the gas.

Russia says that Ukraine has not paid for its gas and in retaliation has reduced the amount pumped into the pipeline by the Ukraine proportion. Ukraine, it is said, nevertheless continued to “steal” gas from the pipelines, so reducing the amount available to European Union customers. As a further escalation, Ukraine restricted the quantity of transit gas to the EU and, Russia says, finally closed the pipelines.

The Ukrainians say that they are not stealing gas and there are “technical difficulties” that have caused problems with the onward flow of gas. Russia, they say, has now shut down the pipelines.

Ukraine does seem to have been using gas after Russia reduced supplies by its proportion but it is a legal question as to whether Ukraine is paying and complying with terms of its contract etc. It is not clear whether Russia believes that Ukraine is taking more than its contractual proportion, which would in fact be theft. As it is mid-winter, this is the best time for Ukraine to attempt to force more favourable gas prices and transit terms from Russia. There was a similar dispute in the winter of 2006. By reducing the supply of gas to the pipeline and expecting Ukraine to stop using gas, the Russians have been heavy-handed and unwise even if all they say is correct. What is more important is who has closed down the pipeline. Russia and Ukraine accuse each other. This is question of fact that will be determined on investigation. Pipeline issues rely entirely on the integrity of the participants. Gas, oil or whatever is put into the pipeline at one end and hopefully it arrives at the other end as expected.

We should note, however, that it is absolutely not in Russia’s interests to close off the pipelines to the EU since the reliability of Russian gas supplies was an important issue in the 2006 dispute. Russia has been at pains to reassure the EU on this. The Ukrainian position is not so clear. Apart from a cash shortage, Ukraine has other issues with Russia, for example, Russia’s use of Sevastopol for its Black Sea Fleet. If the EU were to find alternative gas supplies due to Russian unreliability, so reducing Russia’s European market, Ukraine would be in a stronger position as a buyer of Russian gas. Ukraine is also engaged in discussions for joining the EU and NATO so a dispute with Russia might have advantages. In these circumstances the Russian version of the pipeline closure is more credible. This might be the entire position.

I wish to examine, however, if other parties might benefit from this dispute. It would be a simple matter to plan this dispute and to predict Russia’s response. It is a re-run of the 2006 dispute but has been made more severe than 2006 by the closure of the pipelines. The extreme concern in the EU, I repeat, is far from Russia’s best interests. However, from an EU viewpoint it is irrelevant whether the unreliable party is Russia, Ukraine or both. If the supply is unreliable the EU will seek alternative supplies. Who could gain from this?

As it happens, the United States wants to build a gas/oil pipeline through Afghanistan and, as you read, is slaughtering its inhabitants to gain control of that country for this purpose. As it also happens, the US’s new president ,Barack Obama, has stated that he will increase US troop levels and will ask the EU and NATO to contribute more troops to Afghanistan. The EU countries are increasingly reluctant participants. By contrast, our unelected prime minister, Gordon Brown, has already rushed to send 300 additional UK soldiers to risk their lives and kill more Afghans in this occupation that, along with Iraq, has disgraced the UK.

A perfectly credible scenario, therefore, is that the US is behind this dispute, with the objective to renew wavering EU support for its war in Afghanistan.

Why should anyone believe this? As I have outlined previously, Russia and the EU have developed close economic links and have been on track to create greater economic integration. It is in the interests of the US to prevent what could become an EU-Russian economic and military superstate. The US seeks confrontation with Russia, as evidenced by bringing former Soviet satellites into NATO, contrary to agreements, abrogation of the ballistic missile defence treaty with Russia, installation of a missile system in Poland and the Czech Republic on Russia’s borders and support for the Georgian invasion of South Ossetia. The US needs trouble in Europe to maintain its own military and failing economic position. NATO officers and ministers are happy to support the US’s trouble-making in Europe and elsewhere, since peace means loss of jobs, promotion prospects and careers. NATO ministers, of course, get lucrative directorships and consultancy contracts with the defence industry after their periods in office. This is why NATO is in Iraq and Afghanistan and is rearming Georgia, none of which is in EU interests. There can be no doubt that the US is following a “spoiling” strategy with regard to EU-Russian relations.

One can easily see that wherever in the world there is trouble, the US is there as well, with troops, advisors, weapons or money. The US needs enemies, not only to feed its military-industrial complex that efficiently transfers public funds to private pockets, but because wars give opportunities. Peaceful business competition has now become very difficult for the US now that Asia has taken over most of the world’s manufacturing and it has undermined its own and the rest of the world’s financial system with its debt and worthless securities. For the time being, the US has an unchallengeable military force. Well, unchallengable in nuclear terms anyway, as the Afghans with a military budget of almost zero are demonstrating. It is seeking means of turning this to economic advantage. This is, after all, the only justification for having such a force. It needs to be used and preferably show a return.

We have seen how the US has used military power to its advantage in Iraq, where it has been stealing oil since the invasion. There is Afghanistan and US ambitions for Iran, stalled for the moment due to the good work of the International Atomic Energy Agency and the Israeli-Palestinian conflict, the US’s firmest foothold in the Middle East. All trouble. This is before we consider Pakistan, India, the rest of Asia, North Africa and South America. The US creates trouble everywhere.

The Russians have probably fallen into an American trap. They were predictable because of the way they dealt with the 2006 dispute and that was used against them to get EU support for the war in Afghanistan for America’s pipeline there. Merely a conspiracy theory? On the US’s record of lies and deceptions that gave rise to the invasions of Afghanistan and Iraq, absurd charges against Iran and the ruthless killing of people in their own countries everywhere – the pattern fits.

The reality is that the US is no-one’s friend. It seeks only its own interests. Here’s a UK example. UK and US soldiers fought together from their bases in the UK against Germany and spilled blood as comrades during World War II. The UK entered into a lend-lease purchasing agreement for equipment and supplies from the US that exhausted the UK Treasury. After the war, the UK did not have the funds to rebuild. The UK government sent the eminent economist J.M. Keynes to the US to attempt to have these obligations converted to a grant. Keynes and the UK government believed that the Americans would be sympathetic to their plight due to their recent experience as comrades-in-arms. Keynes wanted either a grant to cover the balance of payments deficit or an interest-free loan. The US negotiators were entirely unsympathetic, gave Keynes a very difficult time (he was ill and died soon after) and would only agree to giving the UK interest-bearing loans, although at a low 2 per cent interest. These, equivalent to about GBP 50 billion, were repaid in 2006.

Germany, which had created the trouble, received about GBP 20 billion (2005 RPI basis) of which 60 per cent was grants, 30 per cent economic loans and 10 per cent military aid. The Germans had cleverly argued that it was in the US’s interests to give them grants. Japan received about GBP 10 billion (2005 RPI basis) of which 77 per cent was grants and 23 per cent loans. That the US gave no consideration to the relationship forged in war between the US and UK appears to have affected Keynes deeply. This is the key to understanding US strategic considerations. It does nothing unless to its own perceived benefit.

It is highly probable, therefore, perhaps 90 per cent probability, that the US has offered inducements for Ukraine to disrupt gas transit to the EU in order to create insecurity about Russian supplies and gain support for its Afghanistan war. This would be very easy. One million dollars each in the Swiss accounts of, say, 20-40 key politicians and officials and Ukraine’s performance is guaranteed. And cheap. Paul Craig Roberts, who was assistant secretary of the Treasury in the Reagan administration, says that in post he learned that simply giving cash is the preferred means of getting other countries, including Europe, to do what the US wants.

Perhaps I am too harsh on Ukrainian politicians. If they are true patriots the US can offer them strong support in joining the EU and NATO, as it has given the other former Soviet Union (FSU) countries. These countries, still recovering from Soviet occupation, have not thought through their obligations in the EU. They all have a grudge against Russia so a US offer of cash or benefits to land a punch on Russia would be irresistible.

Here’s an example of how the FSU politicians think. Recently, the Czech parliament voted to bring the country’s troops home from Afghanistan and Kosovo. Prime Minister Mirek Topolanek condemned the vote and declared that he was “ashamed of being Czech”. On 18 December I attended a lecture by Mr Topolanek at the London School of Economics (LSE). (This lecture has not been made available on the LSE website) Unhappily, it was very general and uniformative. In the course of responding to a question from the audience, however, Mr Topolanek said, through an interpreter, “It was in 1991 that the last Russian soldier left my country. I lived 30 (?) years under communism and repression. The missiles are now my security.” This is a reference to the US missile system to which Russia objects so strenuously. Now Mr Topolanek is a mechanical engineer. It is possible that he really believes that there is a simple, mechanistic system by which a Russian attack on his country will be met by an automatic NATO attack on Russia. That scenario is extremely unlikely. Whatever else might happen in that event, he can be certain that if NATO does respond militarily, there would be a devastating, possibly nuclear war on Czech territory. Russia and NATO will choose their battleground carefully. He is either gravely politically naïve or has been bought (bought = 20 per cent probability. Fairly low) Watching him, I concluded that he:

• Dislikes the Russians intensely

• Believes that the US stands for freedom and democracy

• Has received specific defence assurances from the US and believes them. He has made deals with the US on the missiles, on Afghanistan and will doubtless support the US in the United Nations and in other respects

• Thinks of the EU purely in terms of economic benefits without regard to the underlying rationale that the EU’s purpose is to make war in Europe impossible through economic integration

• Will pursue his own objectives irrespective of the wishes of other EU members

Mr Topolanek is not a good European and seems to be typical of FSU politicians, whether these are their natural inclinations or whether they have been bought by the US. Mr Topolanek is “ashamed of being a Czech” because he cannot deliver on his deal with the Americans.

If the “Old European” members of the EU do not address these problems, the EU will fail and until they are addressed it should take in no new members:

• NATO acting as an arm of US foreign policy

• The US making unilateral deals with EU members

• The failure of former FSU countries to understand the purpose and implications of EU economic integration

• Formulating a Russia policy independently of the US, both for NATO and in terms of further Russian integration.

Russia also has problems that need to be addressed. Unless it moves in the direction of political reform, further integration will become difficult. Russia also needs to consider the perceptions of the EU countries more carefully. After the South Ossetian debacle it should be clear that the US’s political supporters, for their various reasons, will always put the worst possible interpretation on Russia’s actions. These, particularly our UK politicians, are supportive of the US to a dangerous extent. Their accusations against Russia over Georgia’s invasion of South Ossetia were factually incorrect. This was a critical test case in which our politicians did not base their statements on facts. They rushed around for weeks shouting threats and blame without any knowledge of facts at all. Nor did they base their decisions on facts in their Iraq war vote. It is clear, therefore, that in the event of a real emergency these people will be worse than useless; they will be dangerous to the UK. We could find ourselves in a nuclear war because of their stupidity, as might have been the case if Georgia had been a member of NATO. This scenario, in which one of the FSU NATO members provokes a military response from Russia, conceivably influenced by the US, should be given urgent consideration by the EU.

Russia’s responses do lack subtlety and strategic thought. As its own responses were predictable, so were those of Ukraine. It should not have reduced gas supplies to Ukraine in the middle of winter, no matter what the provocation. It should have maintained supplies under loud protest and sorted the matter out in summer when it would have EU sympathy and appreciation. Clearly, Russia wants to be seen as independent and believes itself to be right in this dispute. It probably is. Nevertheless, its actions do not reassure the EU on energy security.

Here’s a strategy for Russia: This is really a marketing issue. Russia must create a strong brand or reputation that should be for predictability, reliability and factual correctness. It has an advantage here because the US and UK have squandered their trust and are believed by no-one. Russia should create a small informal consultancy group of trusted ministers or former ministers from Old Europe, perhaps Germany, Holland and Belgium – members of the former Iron and Coal Community. I would also include France if President Sarkozy were not a committed Zionist and US supporter, so France after Sarkozy has gone. It should be possible for ministers or Gazprom executives to call a video conference at short notice for the discussion of trade problems. This would be a kind of marketing focus group that would not only advise Russia, but also educate its executives and politicians about EU thinking, which is consultation before confrontation. Russia must learn to work more closely with the EU and with more trust if further economic integration is to occur. Former Russian Prime Minister, Yegor Gaidar’s account (Days of Victory and Defeat) of the reform of the Russian political system and economy gives an indication of the thinking that probably persists in Russia.

I am aware that Russians will consider that this suggestion is asking them to behave with weakness and indecision. They want to project confidence, strength and independence, etc. The position is that everyone knows that Russia is strong militarily and is in a powerful position with regard to energy supplies. It does not need to respond aggressively to every provocation. In this case, consideration for the people of Ukraine’s welfare rather than an attempt to punish their probably bribed politicians would have gained enormous goodwill both in that country and the EU. This is what the true spirit of the EU must be. Russia must develop a more measured, considered and consultative approach. What does if matter if Ukraine is creating problems? The EU should be involved in sorting them out and if there is duplicity, let everyone see it. Russia has made a serious mistake on this occasion both in hasty action and in failing to perceive the probable hand of the US and a trap. It should attempt recovery by immediately restoring gas supplies as far as it can and by adopting measures to avoid similar problems in future.

Christopher King is a retired consultant and lecturer. He lives in London, UK. This article appeared in Redress Information & Analysis.