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Softpanorama Russian Gas Wars Bulletin, 2014

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[Dec 29, 2014] A year ago no one even in the most terrible dream could not think that the European integration of Ukraine will turn out to be such a terrible test for the country.

A year ago no one even in the most terrible dream could not think that the European integration of Ukraine will turn out to be such a terrible test for the country. Smart people with different opinions knew that about the Ukrainian industry should be forgotten, because Europe it is not needed. They knew that the Ukrainians in Europe will be in the role of indentured servants, not equal brothers. But...

No one expected the war, atrocities and chaos which will plunge the country. War is terrible, but genocide is even worse, especially if it is done by compatriots. Many naive romantics of revolution still don't understand that the USA architects of this color revolution will bring Ukraine through all the circles of hell. And the difficulties that they see on the horizon is not the last obstacle before a bright future, and the next turn on the road down.

I would like to attract readers' attention to the energy problems. I believe that this is where the main battlefront lies. Moreover, the results of this struggle can be much more disastrous for the people rather than shelling cities of artillery.

To understand the depth of the problem, the energy needs of the country to be considered comprehensively including such components as all types of fuel, fixed assets, human resources, finance, and logistics. It is difficult to get a complete picture, not by combining together all these components into a single picture, as the net result of thier coordinated is power provided to the population and industry -- the power which is the engine and the blood of th modern civilization. Yes it is the energy. Not only oil and gas ultimately determine the quality of life of the population, as well as ability to support life in some areas (mainly this applies to big cities). Hence, this mechanism should work like a clock. Let's see how new Kiev authorities (aka jinta) dealt with this complex task.


Ukraine is an importer of energy resources. First of all this fuel Rods for nuclear power plants, gas and coal for thermal power plants. And this situation existed for many years. Over the last decade, various governments have managed to achieve some success in achieving energy self-sufficiency of Ukraine. The funny thing is that most progress was achived duting the regime of "bloody turant". It was during Yanukovych presidency Ukraine started to used "Kyoto money" to imporive its energy efficiency. As a result they managed to cut consumption of natuiral gas from 70 billion cubic meters to 50 (approximately). Also developed (albeit alowly) the program will provide Ukraine with its own nuclear fuel (together with Russia). Uranium mining volume was to be raised to the required 3500 tons per year for 5-10 years (instead of 1000). Plant for creation of fuel assemblies would also be located in Ukraine. Russia would only enrich uranium to the required concentration. Such a destructive plans of the bloody anti-people Pro-Russian regime.

What the junta has been done in this field. You can forget about this nuclear program for political (and economic) reasons. That means the dependence on foreign uranium fuel remains almost 100% (in the same asset 1000 tons of uranium mined in the mines of Ukraine). With no options then to buy them from USA for higher prices with with more problems for old reactorss which were not designed for USA type of fuel.

Natural gas consumption is a more controversal topic. On the one hand junta managed to reduce gas consumption. But at what cost? The decrease in the consumption corresponds to the decline in industrial production in the country. Befoire the government of Yatsenyuk came pot power, previous goverment managed to save 5-7% of the gas (adjusted for temperature) each year. This was achieved through the introduction of energy-saving technologies and the translation of certain objects to domestic alternative fuel (mostly coal). This year, preoccupied by war, Pro-European government is not concerned about how to continue undertaking his predessors. Rather the opposite. Many of the groundwork has already been lost. But that's not all. The current government will likely go down in history as the government that was able to turn everything on its head. In Ukraine power station are close to running out of coal.

What happened. Why a country that has ALWAYS had a sufficient quantity of high quality coals, suddenly found itself in such a position. It was well described in the video Ukrainian journalist Anatoly Shariy. As you can see, the problem is that Prime Minister of Ukraine Arseniy Yatsenyuk does not remember what he said a few weeks ago about coal miners and coal mining industry as a whole. In the summer this industry was not that necessary, and the miners were parasites, as in winter coal suddenly form the Yats has become a strategic raw material. With such a Prime Minister no war is needed to bring the country to the energy collapse. As strange as it sounds, starting the war in Donbass junta had no idea that the Ukrainian coal will not be available in winter. Although in't not exactly true, as they planned for an easy blitzkrieg, like Germans before.

But despite all their cocky posture, in August they realized that the blitzkrieg failed, and the coal reserves in the Ukrainian TPPs began to rapidly deteriorate. And it was still summer. Contracts were signed for the supply of coal from South Africa and Russia. But corruption of the Yats junta and impotence fo the Prime Minister was manifested in this transaction in all its glory. Yatsenyuk's government , who came to power on the slogan of struggle against corruption, royally fucked up. It purchased low-quality coal at a higher price. So glorious victory turned into huge scandal. The contract was broken. Now Ukraine has no coal ... and can find itself without electrical lights on New Year eve.. Because the second contract with Russia, after calling behavior Ukrainian partners that one day managed to call Russia a partner, then the aggressor, began to "slip": the bandwidth of the rail roads of the Russian Federation will fall sharply, then are there any other reasons. But the fact remains. Coal ceased to cross the border (except for a few cases when it was necessary to prevent a humanitarian catastrophe).

[Dec 23, 2014] External debt of Ukraine in 2014 remained at the level of 72 billion

In five years the national debt of Ukraine has increased almost twice and amounted on 31 October 2014 72,995 billion dollars, that 33,182 billion. or 1.8 times more than on January 1, 2010.
December 22, 2014 |

The Ukrainian government has maintained the amount of external debt at year-end level 72 billion, which corresponds to the beginning of the year.

This was stated by Prime Minister of Ukraine Arseniy Yatsenyuk on December 22, during the ceremony, the signing of two loan agreements with the European investment Bank, wrote, "UNIAN".

"We managed to keep the volume of external debt at the level of 72 billion dollars, " said Yatsenyuk. Perhaps by the end of the year the picture will change, but we keep the balance of all the forces that are in our hands."

As reported, the gross external debt of Ukraine in the second quarter of 2014 compared with the first quarter fell by 0.4%, or 592 million, to 136,790 billion.

According to the IMF, and international rating agencies in Ukraine in 2015 for the payment of external debt obligations will require about 11-15 billion.

In five years the national debt of Ukraine has increased almost twice and amounted on 31 October 2014 72,995 billion dollars, that 33,182 billion. or 1.8 times more than on January 1, 2010.

The state budget of Ukraine for 2014 has set a cap on the level of debt at year end in the amount of 806,962 billion UAH.

[Dec 22, 2014] Moody's assumes 6% fall in GDP of Ukraine in 2015

December 22, 2014 |

Real gross domestic product of Ukraine in 2014 will be reduced by 7.5% and in 2015 for another 6%.

This is stated in the press release of the international rating Agency Moody's Investors Service.

[Dec 16, 2014] Moscow shifts to tougher economic relationship with Ukraine PM

"We will no longer support the Ukrainian economy. It is a burden for us and to be honest, we are tired of it"

Moving closer to the European Union offers no panacea for Ukraine's financial problems and will mean big losses in economic ties with Moscow, Russian Prime Minister Dmitry Medvedev said in an article published on Monday.

He said Moscow had for many years provided generous terms in deals with Kiev which had helped build up Ukraine's economy but the relationship would from now on be based on purely "rational and pragmatic" terms that put Russian interests first.

"We will no longer support the Ukrainian economy. It is a burden for us and to be honest, we are tired of it," he wrote in Nezavisimaya Gazeta, a privately owned daily newspaper.

... ... ....

Reiterating earlier threats, he said a customs union grouping Russia and some other former Soviet republics would have to restrict the flow of goods from Ukraine to prevent cheap goods flooding their markets - costing Kiev about $15 billion.

Medvedev, who was president for four years until 2012, made clear Moscow would be tough in enforcing visa rules for Ukrainians working in Russia, causing this group a potential $11 billion-$13 billion loss of earnings.

[Dec 14, 2014] Russian Prime Minister claims that the danger of economic collapse in Ukraine is not "Kremlin" fiction, as Kiev is about to face the 1990s over again

December 15, 2014 |

The danger of economic collapse in Ukraine is not "Kremlin" fiction, as Kiev is about to face the 1990s over again, Russian Prime Minister Dmitry Medvedev said Monday.

"Apparently, our neighbors [Ukraine] are going to face the 90s all over again. And, unfortunately, the problem of a default – and, on a larger scale, the looming threat of social and economic collapse in Ukraine – is not fiction made up by 'Kremlin' or someone else,"

Medvedev said in his opinion piece in the Monday issue of Russia's Nezavisimaya Gazeta newspaper.

[Dec 11, 2014] Russia confirms decision to abandon South Stream

ThatJ, December 10, 2014 at 12:37 pm

In one way or another, whether the delivery comes through South Stream or Whatever Stream, the EU is still dependent on Russian gas and this dependence will only grow stronger in the coming decades. So yes, the EU is (was?) bluffing:

EU's Juncker Folds To Gazprom On South Stream Pipeline

And then today…

"Russia not excluding EU partners in Turkish gas link"

After watching the EU rhetoric soften, we can expect "talks" to resume shortly. Can't the pipeline to Turkey be directed through another branch to Bulgaria with Gazprom controlling it? I think so - but in this case Turkey won't be a distributor (hub) to Europe.

marknesop, December 10, 2014 at 9:05 pm

The EU is able to make special rules and exemptions for its own pipelines so that they can maintain a proprietary right, and I think it is clear to Russia at last that the intent is to wrest Russian control of its energy industry from it. The EU wants Russian gas, but on its own terms, so it seems pretty straightforward that anything which denies them that but keeps them as a customer is worth trying. The key thing to remember is that regardless the solidity of any partnership Russia strikes now – such as the one with Erdogan – the terms will last only so long as Erdogan is in power. It would be relatively simple to remove him, and even if the west does not, he can't last forever. And at the point he goes, now or later, the west will try to maneuver a leader into power who will alter the terms of the agreement (which the west would loudly champion whether it was legal or not) or even nationalize the hub (or perhaps the intent is that Turkey will own it outright in the first place, although I can't see russia paying for it if that is to be the case). That might seem to be cutting one's nose off to spite one's face, because the hub would not be much use without gas in it, but we have already seen that the USA can strike bargains and maneuver leaders into place who will work directly against their country's own interests in order to help the USA achieve its geopolitical goals. I hope Putin has a plan in mind for that, because the USA must be getting a little antsy. It looks at present as if Putin will run again at the completion of this term and probably serve another, and the USA cannot wait that long; something serious in its own situation will crumble before that time runs out.

colliemum, December 10, 2014 at 9:48 pm

It just occurred to me that what you're describing shows a mental attitude in the ruling classes of the US and Eu that is indistinguishable from colonialism. In the heydays of that time, it was accepted that the poor benighted black or brown people were too stupid to exploit their natural resources, so the White Man had to shoulder that burden for them, with a nice fat reward, naturally.

That's how they now look at Russia and Putin: a horrible 'native emperor' who must be squashed so that the White Man can finally shoulder the burden of exploiting Russia's riches

Moscow Exile, December 10, 2014 at 10:28 pm

Not to mention the fact that Russians are "Asians" who have been pre-conditioned to subservience and are, by nature, lehargic and indolent.

[Dec 11, 2014] German Finance Minister Wolfgang Schauble has been obliged to telephone Anton Siluanov, Russia's Finance Minister, to ask him not to call in Russia's $3 billion loan,

Moscow Exile, December 11, 2014 at 11:04 am
Take a look at this!

Alexander Mercouris in Russian Insider on an FT article:

Germany, Stuck with Massive Bill for Ukraine, Asks Russia for Help

The last two paragraphs in the article show that the German Finance Minister Wolfgang Schauble has been obliged to telephone Anton Siluanov, Russia's Finance Minister, to ask him not to call in Russia's $3 billion loan, which becomes automatically repayable when Ukraine's debt exceeds 60% of its GDP, something which everybody knows has now happened. ..

… In other words in order to "save" Ukraine (and their own political reputations) the European leadership is now being forced to turn to Russia for help – the same country they accuse of invading and destabilising Ukraine and which they have sanctioned.

[Dec 11, 2014] Ukraine needs financial aid to avoid default Yatsenyuk


Ukrainian Prime Minister Arseniy Yatsenyuk says the country is in urgent need of financial aid to avoid a default.

On Thursday, Yatsenyuk made the remarks in an address to Ukrainian lawmakers, who approved a series of government proposals for severe austerity cuts. The reforms aim to secure USD 27 billion promised by the country's Western backers, including the International Monetary Fund and the World Bank.

The Ukrainian premier, however, noted that the country needs to receive more money from international lenders to head off a default.

"In order to survive, in order to prevent a default, we need an international donor conference, the adoption of a Ukrainian recovery plan at this conference and the help of our Western partners," Yatsenyuk told the parliament.

Ukraine has been told by its international lenders to slash welfare services and raise energy prices in order to receive billions of promised loans and grants.

"No one will provide assistance for nothing. In order to receive assistance, we must accomplish those harsh reforms.... Now it's high time to press the buttons for these reforms. And they are clearly written," he said.

The prime minister further noted that Ukraine has lost a quarter of its revenues over the crisis in the eastern regions of Donetsk and Luhansk.

"As much as 20% of our economy is concentrated in the Donetsk and Luhansk regions. We have lost 20% of the economic potential, foreign currency proceeds and revenues," Yatsenyuk said, adding, "Today, the situation in the economy is more complex than 9 months ago. But a key threat that remains is a threat to Ukraine's independence."

The two mainly Russian-speaking regions of Donetsk and Luhansk have been the scene of deadly clashes between the pro-Russians and the Ukrainian army since Kiev's military operation started in mid-April in a bid to crush pro-Moscow protests.

Violence intensified in May after the two flashpoint regions held local referendums in which their residents voted overwhelmingly in favor of independence from Ukraine and joining the Russian Federation.

Some 4,300 people have reportedly lost their lives in eight months of deadly conflict in eastern Ukraine.

Russia will go to international court if Ukraine doesn't settle gas debt – Medvedev

RT Business
Russia's Prime Minister Dmitry Medvedev says Moscow will take Ukraine to court if it fails to pay is gas debt. Even though the country is teetering on the brink of default he left the door open for possible negotiations.

An EU-mediated agreement in October says Ukraine owes Russia $3.1 billion for gas it has already bought, and it has to pay up by the end of the year.

"I think that we can reach an agreement, and there is always room for compromise," the Russian Prime Minister said during an interview with domestic TV channels in Moscow.

"But if we can't, there are already several lawsuits at the International Court of Arbitration in Stockholm, we'll see them there."

Despite concluding what it calls an 'interim' deal, Kiev has also threatened to take Moscow to the Stockholm tribunal over the payments.

On Tuesday, Russia began to deliver gas to Ukraine for the first time in six months, following a payment of $378 million. The delivery of 1 billion cubic meters is part of a $1.5 billion deal, also signed in October, which allows Ukraine to buy enough fuel to last through winter at slightly below-market prices.

"We've agreed a discount of $100 dollars, because we do not want the Ukrainian economy to choke," said Medvedev.

READ MORE: Russia resumes gas deliveries to Ukraine after six-month hiatus

Despite the ongoing fallout between the two countries over the status of Crimea, and the uprising in eastern Ukraine, Medvedev told Kiev that Moscow "gifted more than $80 billion dollars in subsidized gas between the early 90s and 2000s."

Russia also bought a $3 billion bond, issued by the now deposed government of Viktor Yanukovich, as part of a wider rescue package, which Medvedev said Kiev is honoring, with interest payments.

"So far Ukraine is paying, and I hope they continue doing so," said Medvedev.

"If they stop, they will suffer a potential default, which will have devastating consequences for the Ukrainian economy, which is already in a lamentable state."

The Financial Times reported that Ukraine, which was allocated a $17 billion rescue package by the IMF in April, will now require a further $15 billion to stave off default, according to Fund officials.

The extra shortfall has been prompted by the severe contraction of GDP following the breakout of armed hostilities, and the collapse of trade with Russia, which has embargoed entire groups of Ukrainian goods. The secessionist eastern regions make up about 16 percent of the country's GDP.

The country's gold reserves have nearly halved since May, and its foreign currency stockpile has dropped from $16.3bn in May to a paltry $9bn.

Further aid may be hard to obtain from confidence-stricken European nations.

"It's not going to be easy. There's not that much money out there," a senior official negotiating with the Ukrainian government told the Financial Times.

Juncker calls Putin's bluff on South Stream

European Commission chief Jean-Claude Juncker on Thursday (4 December) called Vladimir Putin's bluff on a ditched gas pipeline project, South Stream.

Juncker said the commission's view is that "South Stream can be built" and that this is "nothing new."

"The ball is in Russia's court," Juncker said.

He also said he will not accept that Bulgaria, who already started construction on its part of the pipeline, be blackmailed by Russia…

…Juncker, who took office on 1 November, said that "as regards South Stream, the European Union and Bulgaria are working together to solve the outstanding issues. These outstanding issues are not insurmountable."

Asked whether he also ceased to consider Russia as a "strategic partner" but rather a "strategic problem", as the new EU council chief, Donald Tusk, recently put it, Juncker said: "Yes, Russia is a strategic problem. But I hope it can soon become a strategic partner again, we will do our best to achieve this."…"

You would from this article think that Brussels sees itself in a position of strength here whilst begging for South Stream to go ahead at the same time! It is just such a stunning piece of bald-faced artistry that flies in the face of fact. Is Brussels so dumb that they think they can offer Russia some mild concessions on South Stream and Russia will rush to accept? Game over.

The Vineyard of the Saker The Importance Of The Cancellation Of South Stream by Alexander Mercouris

The reaction to the cancellation of the Sound Stream project has been a wonder to behold and needs to be explained very carefully.

In order to understand what has happened it is first necessary to go back to the way Russian-European relations were developing in the 1990s.

Briefly, at that period, the assumption was that Russia would become the great supplier of energy and raw materials to Europe. This was the period of Europe's great "rush for gas" as the Europeans looked forward to unlimited and unending Russian supplies. It was the increase in the role of Russian gas in the European energy mix which made it possible for Europe to run down its coal industry and cut its carbon emissions and bully and lecture everyone else to do the same.

However the Europeans did not envisage that Russia would just supply them with energy. Rather they always supposed this energy would be extracted for them in Russia by Western energy companies. This after all is the pattern in most of the developing world. The EU calls this "energy security" - a euphemism for the extraction of energy in other countries by its own companies under its own control.

It never happened that way. Though the Russian oil industry was privatised it mostly remained in Russian hands. After Putin came to power in 2000 the trend towards privatisation in the oil industry was reversed. One of the major reasons for western anger at the arrest of Khodorkovsky and the closure of Yukos and the transfer of its assets to the state oil company Rosneft was precisely because is reversed this trend of privatisation in the oil industry.

In the gas industry the process of privatisation never really got started. Gas export continued to be controlled by Gazprom, maintaining its position as a state owned monopoly gas exporter. Since Putin came to power Gazprom's position as a state owned Russian monopoly has been made fully secure.

Much of the anger that exists in the west towards Putin can be explained by European and western resentment at his refusal and that of the Russian government to the break up of Russia's energy monopolies and to the "opening up" (as it is euphemistically called) of the Russian energy industry to the advantage of western companies. Many of the allegations of corruption that are routinely made against Putin personally are intended to insinuate that he opposes the "opening up" of the Russian energy industry and the break up and privatisation of Gazprom and Rosneft because he has a personal stake in them (in the case of Gazprom, that he is actually its owner). If one examines in detail the specific allegations of corruption made against Putin (as I have done) this quickly becomes obvious.

His agenda of forcing Russia to privatise and break up its energy monopolies has never gone away. This is why Gazprom, despite the vital and reliable service it provides to its European customers, comes in for so much criticism. When Europeans complain about Europe's energy dependence upon Russia, they express their resentment at having to buy gas from a single Russian state owned company (Gazprom) as opposed to their own western companies operating in Russia.

This resentment exists simultaneously with a belief, very entrenched in Europe, that Russia is somehow dependent upon Europe as a customer for its gas and as a supplier of finance and technology.

This combination of resentment and overconfidence is what lies behind the repeated European attempts to legislate in Europe on energy questions in a way that is intended to force Russia to "open up" its the energy industry there.

The first attempt was the so-called Energy Charter, which Russia signed but ultimately refused to ratify. The latest attempt is the EU's so-called Third Energy Package.

This is presented as a development of EU anti-competition and anti-monopoly law. In reality, as everyone knows, it is targeted at Gazprom, which is a monopoly, though obviously not a European one.

This is the background to the conflict over South Stream. The EU authorities have insisted that South Stream must comply with the Third Energy Package even though the Third Energy Package came into existence only after the outline agreements for South Stream had been already reached.

Compliance with the Third Energy Package would have meant that though Gazprom supplied the gas it could not own or control the pipeline through which gas was supplied.

Were Gazprom to agree to this, it would acknowledge the EU's authority over its operations. It would in that case undoubtedly face down the line more demands for more changes to its operating methods. Ultimately this would lead to demands for changes in the structure of the energy industry in Russia itself.

What has just happened is that the Russians have said no. Rather than proceed with the project by submitting to European demands, which is what the Europeans expected, the Russians have to everyone's astonishment instead pulled out of the whole project.

This decision was completely unexpected. As I write this, the air is of full of angry complaints from south-eastern Europe that they were not consulted or informed of this decision in advance. Several politicians in south-eastern Europe (Bulgaria especially) are desperately clinging to the idea that the Russian announcement is a bluff (it isn't) and that the project can still be saved. Since the Europeans cling to the belief that the Russians have no alternative to them as a customer, they were unable to anticipate and cannot now explain this decision.

Here it is important to explain why South Stream is important to the countries of south-eastern Europe and to the European economy as a whole.

All the south eastern European economies are in bad shape. For these countries South Stream was a vital investment and infrastructure project, securing their energy future. Moreover the transit fees that it promised would have been a major foreign currency earner.

For the EU, the essential point is that it depends on Russian gas. There has been a vast amount of talk in Europe about seeking alternative supplies. Progress in that direction had been to put it mildly small. Quite simply alternative supplies do not exist in anything like the quantity needed to replace the gas Europe gets from Russia.

There has been some brave talk of supplies of US liquefied natural gas replacing gas supplied by pipeline from Russia. Not only is such US gas inherently more expensive than Russian pipeline gas, hitting European consumers hard and hurting European competitiveness. It is unlikely to be available in anything like the necessary quantity. Quite apart from the probable dampening effects of the recent oil price fall on the US shale industry, on past record the US as a voracious consumer of energy will consume most or all of the energy from shales it produces. It is unlikely to be in a position to export much to Europe. The facilities to do this anyway do not exist, and are unlikely to exist for some time if ever.

Other possible sources of gas are problematic to say the least. Production of North Sea gas is falling. Imports of gas from north Africa and the Arabian Gulf are unlikely to be available in anything like the necessary quantity. Gas from Iran is not available for political reasons. Whilst that might eventually change, the probability is when it does that the Iranians (like the Russians) will decide to direct their energy flow eastwards, towards India and China, rather than to Europe.

For obvious reasons of geography Russia is the logical and most economic source of Europe's gas. All alternatives come with economic and political costs that make them in the end unattractive.

The EU's difficulties in finding alternative sources of gas were cruelly exposed by the debacle of the so-called another Nabucco pipeline project to bring Europe gas from the Caucasus and Central Asia. Though talked about for years in the end it never got off the ground because it never made economic sense.

Meanwhile, whilst Europe talks about diversifying its supplies, it is Russia which is actually cutting the deals.

Russia has sealed a key deal with Iran to swap Iranian oil for Russian industrial goods. Russia has also agreed to invest heavily in the Iranian nuclear industry. If and when sanctions on Iran are lifted the Europeans will find the Russians already there. Russia has just agreed a massive deal to supply gas to Turkey (about which more below). Overshadowing these deals are the two huge deals Russia has made this year to supply gas to China.

Russia's energy resources are enormous but they are not infinite. The second deal done with China and the deal just done with Turkey redirect to these two countries gas that had previously been earmarked for Europe. The gas volumes involved in the Turkish deal almost exactly match those previously intended for South Stream. The Turkish deal replaces South Stream.

These deals show that Russia had made a strategic decision this year to redirect its energy flow away from Europe. Though it will take time for the full effect to become clear, the consequences of that for Europe are grim. Europe is looking at a serious energy shortfall, which it will only be able to make up by buying energy at a much higher price.

These Russian deals with China and Turkey have been criticised or even ridiculed for providing Russia with a lower price for its gas than that paid by Europe.

The actual difference in price is not as great as some allege. Such criticism anyway overlooks the fact that price is only one part in a business relationship.

By redirecting gas to China, Russia cements economic links with the country that it now considers its key strategic ally and which has (or which soon will have) the world's biggest and fastest growing economy. By redirecting gas to Turkey, Russia consolidates a burgeoning relationship with Turkey of which it is now the biggest trading partner.

Turkey is a key potential ally for Russia, consolidating Russia's position in the Caucasus and the Black Sea. It is also a country of 76 million people with a $1.5 trillion rapidly growing economy, which over the last two decades has become increasingly alienated and distanced from the EU and the West.

By redirecting gas away from Europe, Russia by contrast leaves behind a market for its gas which is economically stagnant and which (as the events of this year have shown) is irremediably hostile. No one should be surprised that Russia has given up on a relationship from which it gets from its erstwhile partner an endless stream of threats and abuse, combined with moralising lectures, political meddling and now sanctions. No relationship, business or otherwise, can work that way and the one between Russia and Europe is no exception.

I have said nothing about the Ukraine since in my opinion this has little bearing on this issue.

South Stream was first conceived because of the Ukraine's continuous abuse of its position as a transit state - something which is likely to continue. It is important to say that this fact was acknowledged in Europe as much as in Russia. It was because the Ukraine perennially abuses its position as a transit state that the South Stream project had the grudging formal endorsement of the EU. Basically, the EU needs to circumvent the Ukraine to secure its energy supplies every bit as much as Russia wanted a route around the Ukraine to avoid it.

The Ukraine's friends in Washington and Brussels have never been happy about this, and have constantly lobbied against South Stream.

The point is it was Russia which pulled the plug on South Stream when it had the option of going ahead with it by accepting the Europeans' conditions. In other words the Russians consider the problems posed by the Ukraine as a transit state to be a lesser evil than the conditions the EU was attaching to South Stream .

South Stream would take years to build and its cancellation therefore has no bearing on the current Ukrainian crisis. The Russians decided they could afford to cancel it is because they have decided Russia's future is in selling its energy to China and Turkey and other states in Asia (more gas deals are pending with Korea and Japan and possibly also with Pakistan and India) than to Europe. Given that this is so, for Russia South Stream has lost its point. That is why in their characteristically direct way, rather than accept the Europeans' conditions, the Russians pulled the plug on it.

In doing so the Russians have called the Europeans' bluff. So far from Russia being dependent on Europe as its energy customer, it is Europe which has antagonised, probably irreparably, its key economic partner and energy supplier.

Before finishing I would however first say something about those who have come out worst of all from this affair. These are the corrupt and incompetent political pygmies who pretend to be the

d of course have been an almighty row within the EU as Bulgaria openly flouted the Third Energy Package, but Bulgaria would have been acting in its national interests and would have had within the EU no shortage of friends. In the end it would have won through.

Instead, under pressure from individuals like Senator John McCain, the Bulgarian leadership behaved like the provincial politicians they are, and tried to run at the same time with both the EU hare and the Russian hounds. The result of this imbecile policy is to offend Russia, Bulgaria's historic ally, whilst ensuring that the Russian gas which might have flown to Bulgaria and transformed the country, will instead flow to Turkey, Bulgaria's historic enemy.

The Bulgarians are not the only ones to have acted in this craven fashion. All the EU countries, even those with historic ties to Russia, have supported the EU's various sanctions packages against Russia notwithstanding the doubts they have expressed about the policy. Last year Greece, another country with strong ties to Russia, pulled out of a deal to sell its natural gas company to Gazprom because the EU disapproved of it, even though it was Gazprom that offered the best price.

This points to a larger moral. Whenever the Russians act in the way they have just done, the Europeans respond bafflement and anger, of which there is plenty around at the moment. The EU politicians who make the decisions that provoke these Russian actions seem to have this strange assumption that whilst it is fine for the EU to sanction Russia as much as it wishes, Russia will never do the same to the EU. When Russia does, there is astonishment, accompanied always by a flood of mendacious commentary about how Russia is behaving "aggressively" or "contrary to its interests" or has "suffered a defeat". None of this is true as the rage and recriminations currently sweeping through the EU's corridors (of which I am well informed) bear witness.

In July the EU sought to cripple Russia's oil industry by sanctioning the export of oil drilling technology to Russia. That attempt will certainly fail as Russia and the countries it trades with (including China and South Korea) are certainly capable of producing this technology themselves.

By contrast through the deals it has made this year with China, Turkey and Iran, Russia has dealt a devastating blow to the energy future of the EU. A few years down the line Europeans will start to discover that moralising and bluff comes with a price. Regardless, by cancelling South Stream, Russia has imposed upon Europe the most effective of the sanctions we have seen this year.

Anonymous said...

SOFIA, December 2. /TASS/.

Bulgaria accepts Russia's unilateral decision to halt the South Stream project, Bulgarian Foreign Minister Daniel Mitov said on Tuesday.
Russia's refusal to implement the South Stream project with the European Union demonstrates that Russia is not going to observe the laws existing in the territory of the European Union, he said.
He said that to withdraw from the project Russia would have to denounce the interstate agreement on the pipeline construction. "Let us wait and see whether the Russian side will make such a step. So far, we don't have any document certifying this position," he added.

Excuse me, what did you say? In civilized world they have something called legal system. This legal system is built on principles. 2 of those fundamental principles is Retroactivity and Ex post facto. After you get sober must look at 2 facts:1, by 3rd energy package EU, by applying it on signed agreement, put this contract to void if other party in the agreement will not willing to proceed with those new conditions. 2, cowards in EU did not have courage to cut gordian knot they created. Putin did it for them.

03 December, 2014 04:53

Anonymous said...

What do you think?

Anonymous said...


O-O. Heroes got sh÷t in pants. Hey, NY Times, who was diplomaticaly defeated? Diplomaticaly defeated Putin, but if they do not get what they want Pyrrha comes to mind. Good advices from Washington.

Redirecting South Stream toward Greece is aimed toward elections in Greece and toward Italy with Balkan detour. EU already said they plan connect pipe in Turkey. NYT call diplomatic defeat of Putin.

John 97205
Only to supplement this excellent post (i.e. ditto first comment by StevenStarr), two posted today at Fort Russ:

"We turned out to be the same stupid prostitutes as the poles" - outrage and anger on Bulgarian forums

The West will never allow Bulgaria to have cheap energy and, as a consequence, a strong economy. They want us just as a colony and a source of cheap labor and cheap resources…

The truth is that Putin and Erdogan are statesmen and work for the good of their countries, not like our assholes, unfortunately…

The "taming" of Europe or Putin's new compromise

...Ritual slaughter of South Stream, made before the eyes of the entire European press is a stark and clear message…

…Putin seems to say to the Europeans: "Be afraid of your desires, they can be fulfilled."…Europeans are in panic and shock that Putin painted a very unpleasant future for them…a "Groundhog Winter" - endless nightmare which will not be solved by supplies of expensive American LNG…

…Putin calls Europeans "friends" not for nothing, and a friend is revealed in trouble. Europe has a problem - it is sick with "Americanism"…A good friend and doctor Putin had prescribed the best medicine…

Erika said...


For a Turkey perspective of the deal:
03 December, 2014 05:24

Anonymous said...

Very nice post Saker.

What are your opinions on the Qatar pipe that was supposed to run through Syria?

Whilst having Turkey as a partner is beneficial it also seems like shaky ground when looking at the US plans for the region.

To be frank .. the direction this is going seems to be scarier than the Ukraine conflict in a way.
03 December, 2014 05:25

David Chu said...

KUDOS to this amazing writer! What an amazing article!

He wrote another recently on the real causes of the high and low prices of oil and that article was an eye opener too!

If he uses twitter, I am going to follow this guy!

[Dec 02, 2014] In Diplomatic Defeat, Putin Diverts Pipeline to Turkey

This is a victory for the US, not for Europe. From comments: "Drop in oil won't help us anymore than Europe: Slow growth, high unemployment, and social fiscal policies in the EU will not be affected. And in the US, this must be sustained for at least two-three years--ain't gonna happen. Good Christmas headlines but the problems go so much deeper. "
Dec 02, 2014 |
norman pollack
is a trusted commenter east lansing mi Direct link

What "Diplomatic Defeat"? How Putin's decision can be construed as a defeat at the hands of the US/EU reveals an NYT deep bias against both Putin and Russia (Roth's aside, "rhetorical twist of the knife," should have been flagged as rancid hate-mongering, not the first for that reporter.) Try for once an objective appraisal. This route-shift will directly hurt Western Europe, encourage closer Sino-Russian relations, and increase Turkey's role in the Middle East (to the obvious consternation of Israel--after the aid-altercation to Gaza).

If anything, Putin took the principled stand, as evident by the original route which, given the opposition, he was forced to change. I may sound bitter, but I think the US is steering toward a renewed Cold War under Obama, taking on Russia and China as putative interrelated THREATS. Ultimately, this will backfire, as the global geopolitical framework experiences a decentralization from US unilateral hegemony.

Europe will shiver. But The Times will gloat at what it takes as the West's having given Putin a black eye. Meanwhile, both Russia and China are dramatically strengthening, not only because of their respective internal development, but also US go-for-broke diplomatic/military shortsightedness.

By all means, Keystone uber alles, fracking and all.

DanGood, Luxemburg

Who is the "loser" here: Bulgaria, EU or Russia? This article grabs at straws to make the obstacles presented by EU into a "defeat" for Russia. But who needs the gas?

It borders on pathetic to see the bastion of capitalism using the capitalist system as a weapon. Not only does this go counter to the idea of free enterprise but it shows the west for being what it has become: the world's new bully and poodle to USA.

Russia can sit on its gas for a long time. Meantime EU is weakened by its need to import ever more expensive energy. And can any one blame Russia for wanting to bi-pass Ukraine?

Thomas, Singapore

A defeat for Putin?

That must be a different planet, the NYC writes about.
In fact, the only losers are the Europeans who now ill have to purchase more expensive oil and gas from their own sources in the North Sea and from the Middle East.

The winners are Turkey and, on the other side of Russia, China, who will now get cheaper oil and gas from Russia.

Putin has just done what every business would do, find other buyers when one or more buyers are gone.

So energy costs in Europe will rise.
And that is a victory?

T. Anand Raj, Madras, India

I think, we need a strong person like President Putin, to take on the U.S. and Europe. Let not the fate of this world be decided by the U.S. and its allies. Whatever the U.S. says is not gospel truth, to be strictly adhered to by the rest of the world. Mr.Putin was forced to defend his country because of NATO's decision to encircle Russia. This is a direct threat to Russia. Any President, with a strong will power, would have taken such steps to safeguard his nation.

Whatever maybe America and Europe's definition for Russia's intervention in Crimea and Ukraine, the fact remains that Russia was forced to take certain steps for its defence. If the U.S. could justify its intervention in Iraq, so can Russia. Just because a pipeline is re-directed it does not mean that Russia has been defeated, at least diplomatically. This may be a set back. But Mr.Putin is not out.

Mikhail, city of Sudak, Crimea

Who will pay bigger price for Gas in Europe shipped by gas tankers?
Who will be in charge after Ukraine will steal gas from Europe pipeline ( as it already did 3 years ago) .

Why Europe buy Russian gas through Nord stream and do not like do the same with the South stream , who are interested in that? German companies who trade it to South countries?

Why Europe buy anything in Russia ? It should buy in and pay everything to US, why to trade with other countries?

I m tired of politicals and well paid journalists who hurt business. Let's see results of future elections in Germany, lots of EU businesses lost money thanks to this new policy. People should understand that Russia (as any other independent country) had its own interests. Ok , you like to make coups in Kiev and invite it to NATO, you like bomb Serbia, Liviya, invade Siria, Iraq, Afganistan? - ok , please pay for it. Common people must understand that this is not devil-putin, as media color him, it will be another putins, because russians have own interests and vote for this. Please mention75-85% of Russian population support mr Putin efforts . Probably we need to seat and agree?

Todd S., Ankara

> "Russia is the most important international ally of President Bashar al-Assad of Syria, while Turkish-Syrian relations are tense."

Turkish-Syrian relations tense? That is an understatement - Turkey is actively hostile against Syria!

Iggy, Natich

I don't see EU winning much here. They don't get what they wanted - direct access to central asian gas through Russian pipeline. Money from gas transit won't save Ukraine economy anyway (if EU cares, but they don't) and Russians can still close the valve if they feel threatened enough. Loose-loose situation if you ask me.

You'll be surprised to know that many Russians actually welcome falling oil prices and ruble. They hope it will force government to improve as focus on strong energy sector wasn't healthy for the rest of economy. This is who they are - willing to survive hardships if they see greater purpose in it, just like in the soviet era. I don't think regime change hopes the West has have much ground, it could take decades to weaken this resolve.

abo, is a trusted commenter Paris

This is a victory for the US, not for Europe. Europe will pay more for its energy and lose out on jobs. It will also have to depend more on the US - surely the least reliable trade partner in the world. Too bad European leaders are so spineless they can't or won't stand up to America.

AmateurHistorian, NYC 6

So it is a diplomatic victory for EU by preventing its member from buying gas at a discount? I can understand US and EU big-oil/gas having a victory parade as they can now sell fracking gas from the US at a premium but how is this a victory for people in Southern Europe? Looks like Brussels only cares about core Europe again.

TR2, San Diego

Same-same here in the US. Politics is the same Putin's world or Obama's, just different metaphors for the same ills.

Ukraine is bankrupt getting IMF money, i.e., US tax dollars by other means, covering much debt bought by Americans who are working on backdoor payments from the EU and the US.

Drop in oil won't help us anymore than Europe: Slow growth, high unemployment, and social fiscal policies in the EU will not be affected. And in the US, this must be sustained for at least two-three years--ain't gonna happen. Good Christmas headlines but the problems go so much deeper.

What happens, for example, when all that debt acquired over the last five or six years must be serviced at higher interest rates? Oil at $21 a barrel forever, which is what Saddam promised if we'd let him have Saudi Arabia, will not help.

Until the middle class comes back with strong manufacturing growth, a strong dollar, and Fed not buying everything but the shoes off your feet, there is no light in that tunnel.

[Dec 01, 2014] But why does Russia want to build a new pipeline via Turkey to Europe?

Dec 01, 2014 |

karl1haushofer, December 1, 2014 at 3:19 pm

South Stream is now dead and Russia now wants to build a new pipeline to Turkey (and from Turkey to Europe?).

The reason for the decision to stop South Stream's was that the EU made it impossible for Russia to build it. That one is clear. But why does Russia want to build a new pipeline via Turkey to Europe? If the EU could block South Stream it can block any other Russian pipeline going to Europe. The pipeline from Turkey to Europe would have to again bypass Bulgaria, or Russia could build an undersea pipeline from Turkey to Greece. But Greece is another EU member that is very weak economically like Bulgaria and can be easily bullied by Brussels. If the EU can pressure Bulgaria to block a Russian pipeline it could likely pressure Greece do the same.

Or is the new pipeline intended only for Turkish market?

marknesop, December 1, 2014 at 3:25 pm
I think it was intended that Turkey be a new distribution hub; something it would be very hard for Turkey to resist, as it would give it enormous clout and leverage with Brussels.

ThatJ, December 1, 2014 at 3:47 pm

I hope Turkey never becomes a distribution hub, because I don't want Turks to have any leverage with Brussels.

If this is indeed the plan, that is, if the condition required for Europe to buy more Russian gas is for Turkey to be the new distribution hub, then there's an agenda conctated somewhere with the ultimate aim of giving the Turks more leverage (but also income dependence) over Europe.

It's too early to call, but an interesting hypothesis nevertheless.

marknesop, December 1, 2014 at 5:09 pm

And it's just a guess on my part – Turkey on its own cannot substitute for the demands of all of Europe, and the proposed pipeline's capacity looks far in excess of local demand only. But if Turkey were the hub, pipelines going onward from there would be Turkish pipelines, not Russian, although Russia could still sell just as much gas to the hub. Brussels would find more resistance, I think, to stopping Turkish pipelines, although Erdogan would likely be receptive to EU oligarchs who wanted their cut. But that wouldn't be Russia's problem, either.

cartman, December 1, 2014 at 3:46 pm

Do you have any opinion polls from Bulgaria about South Stream? Borisov's plan was to stonewall forever, making those jobs and lower utility costs seem possible. Does he have any plan to deliver either?

marknesop, December 1, 2014 at 5:04 pm

Bulgaria looks like the prize ass now, because all those small countries that would have been transit countries, making money just for letting gas cross their territory while they would have had a solid gas supply themselves, will be livid with fury. But I don't think any of the stores of pipe have been moved yet. When you see those being returned to Russia, then South Stream will be dead.

Bulgaria can blame it on EU pressure, and there is lots of truth to that, but other leaders who stood up to it will be withering in their opinions of him. And I don't think the EU will hail him as the hero who killed South Stream, because I don't think Brussels really wanted it killed. They just wanted to run it themselves and have all kinds of say in who used it.

Last year only 5% were opposed, so I expect Borisov will shortly have a political crisis on his hands.

[Dec 01, 2014] Obama Reverses Policy As US-Turkey Set To Agree On Syrian No-Fly-Zone

Dec 01, 2014 |

Obama Reverses Policy As US-Turkey Set To Agree On Syrian No-Fly-Zone

With the apparent goal of 'protecting civilians' from ISIS and Syria's al-Assad, the US and Turkey appear to be close to agreeing on the creation of a no-fly-zone along a portion of the Syrian border. As WSJ reports, U.S. and Turkish officials have narrowed their differences over a joint military mission in Syria that would give the U.S. and its coalition partners permission to use Turkish air bases to launch strike operations against Islamic State targets across northern Syria. The no-fly-zone would provide sanctuary to Western-backed opposition forces and refugees. As Bloomberg notes, this is a significant reversal of Obama's earlier policy (fearing it would be a significant strain on the U.S. Air Force and put fliers in mortal danger) pushing US closer to outright proxy war with Russia via direct confrontation with al-Assad's airforce.

As WSJ reports,

U.S. and Turkish officials have narrowed their differences over a joint military mission in Syria that would give the U.S. and its coalition partners permission to use Turkish air bases to launch strike operations against Islamic State targets across northern Syria, according to officials in both countries.

As part of the deal, U.S. and Turkish officials are discussing the creation of a protected zone along a portion of the Syrian border that would be off-limits to Assad regime aircraft and would provide sanctuary to Western-backed opposition forces and refugees.

U.S. and coalition aircraft would use Incirlik and other Turkish air bases to patrol the zone, ensuring that rebels crossing the border from Turkey don't come under attack there, officials said.

Turkey had proposed a far more extensive no-fly zone across one-third of northern Syria, according to officials. That idea was, however, a nonstarter for the Obama administration, which told Ankara that something so invasive would constitute an act of war against the Assad regime.

Which the US could never admit to – putting the US in direct conflict with al-Assad's airforce and thus engaging the proxy war with Russia.

As Bloomberg adds,

Ever since the Syrian civil war broke out in early 2011, U.S. President Barack Obama has resisted calls from Congress to establish a no-fly zone in the country. Now we have learned that one of Obama's top envoys is negotiating just such a plan with Syria's neighbor Turkey.

The new proposal would be called an "air-exclusion zone," a buffer area inside Syria along the Turkish border that would be manned by Turkish troops and protected by U.S. air power, according to three senior U.S. officials who have been briefed on the discussions. The goal would be to give some Syria rebels and civilians protection from both Islamic State and the regime of Syrian President Bashar al-Assad and increase the flow of humanitarian aid to Syria through the zone. The idea was last floated in 2012 by the French government, and then-Secretary of State Hillary Clinton was reported to support it at that time.

John Allen, the retired Marine general who is the Obama administration's lead coordinator for the international coalition against IS, discussed the air exclusion zone with high ranking Turkish officials during his trip there earlier this month, according to these three officials.

If Obama approves the plan being negotiated by Allen, it would mark a reversal from his earlier policy. Since 2012, the White House has resisted calls from both parties in Congress to establish such protected areas in Syria, in part because it would be a significant strain on the U.S. Air Force and put fliers in mortal danger. But the White House has also been wary that a no-fly zone could drag the U.S. into a shooting war with the Syrian regime at the very moment it is trying to wage a war against the Islamic State and al-Qaeda, two groups that have also fought the regime.

"You can't have an exclusionary zone and not be in conflict with the regime," said a former Obama administration Pentagon official who worked on the Middle East. "You can't have your cake and eat it too."

"Ultimately, I'm not sure this division of labor between sectarian rebels against ISIS but not against the regime is sustainable," he said. "Ultimately if we are going to arm a moderate rebel force, we are going to have to protect them. That means if the regime goes after them, we are going to have to take the necessary steps to protect them."

* * *

We can only imagine the quid pro quo Kerry had to offer to get Erdogan in on the deal given his recent strong anti-American rhetoric. However, the crucial point is Obama's reversal and more explicitly aggressive stance against al-Assad that will likely warrant a Russian response (in words or deeds).

Latina Lover

Sounds like the Obamation got bored with the Ukraine crisis, and so is stirring up shit in Syria and ME. If only the Nobel War Prize winner would stick to golf and Reggie's rear, the world would be much safer.


No Fly Zone, hmmm, where have i heard that before? Time to bug out Syrians, a storms a comin.


Do you now what I wonder? I wonder which one of these sociopaths is the one who will be sacrificed when it is time to kick off the big war. They have to know that the master they serve might demand their lives in the service of its ultimate goal, and that one or more of them will be sacrificed in some false flag brouhaha to start the newest (and humanity's final) war.

[Dec 01, 2014] Euro zone factory growth stalls in November as new orders sink

Dec 01, 2014 |

Euro zone factory growth stalls in November as new orders sink: PMI

(Reuters) – Euro zone manufacturing growth stalled in November and new orders fell at the fastest pace in 19 months despite heavy price cutting, painting a bleak picture for the coming months, a survey showed on Monday.

Also worryingly for policymakers at the European Central Bank, who are struggling to bolster growth and drive up dangerously low inflation, factory activity declined in the bloc's three biggest economies of Germany, France and Italy.

"The situation in euro area manufacturing is worse than previously thought… There is a risk that renewed rot is spreading across the region from the core," said Chris Williamson, chief economist at survey compiler Markit.

[Dec 01, 2014] Russia drops South Stream gas pipeline plan

Paradoxically BBC coverage is less far right then DW...
Dec 01, 2014 | BBC News

Russian officials accused the commission of blocking the work for purely political purposes.

"Taking account of the fact that until now we have not received permission from Bulgaria, we believe that in the current conditions Russia cannot continue with the realisation of this project," said Mr Putin, speaking alongside Turkish President Recep Tayyip Erdogan in Ankara.

"If Europe does not want to carry out (South Stream), then it will not be carried out, We are now going to focus our energy resources in other directions."

Relations between Russia and the EU have been badly hit by the crisis in Ukraine.

... ... ....

The EU and the US have imposed sanctions on a number of Russian individuals and companies following Russia's intervention in Ukraine, but Gazprom has not been targeted.

Gazprom supplies 30% of Europe's gas - some 15% of it via Ukraine.

Bulgaria, an EU state, has said it feels it is being targeted by Brussels as a means of retaliating against Russia over the situation in Ukraine.

Russia and Turkey are major trading partners. Russia provides the bulk of Turkey's gas requirements and is set to build Turkey's first nuclear power plant.

[Dec 01, 2014] Russia axes South Stream project Business DW.DE 01.12.2014

For some reason DW positions itself to the right from even BBC and US MSM. Looks more like Rupert Murdoch controlled news source then German news source...
Putin was in Ankara to meet with Turkish President Recep Tayyip Erdogan, where the two leaders inked a deal to boost Russian gas exports to Turkey by 3 billion cubic meters. Putin also promised Erdogan a discount of 6 percent on gas future gas supplies. Last year, Turkey received 13.7 billion cubic meters of Russian gas.

Erdogan and Putin also agreed to triple their countries' bilateral trade volumes - a contentious move on the part of Turkey, a NATO member, as the Western military alliance and Moscow position themselves on different sides of the Ukraine conflict.

[Dec 01, 2014] Putin blames EU as Russia abandons plans for South Stream gas pipeline by Shaun Walker

It's interesting to what extent content of Guardian correspondents correlate with Reuter, and the latter, in turn, with State Department talking points ;-). No there is nothing to quote here (and Shaun Walker is the last person, who can write something valuable about this complex subject as he does not have enough education to cover this topic), but readers comments , as usually, are pretty interesting. Guardian discussions in comments is usually much more interesting and informative then the articles and I generally stopped reading guardian articles that do not have a reader discussion. Not everybody is brainwashed :-)

Dec 01, 2014 |

Anette Mor, 1 Dec 2014 19:39

Europe was rading Gasprom and creating problems on all fronts for years. Russians offered gas, investment and a good diversion plan. Europe offered fass and abuse.

Now EU left to deal with fassy Ukraine to eat each other over the transfers. The same story as with 15 bln cheap loan to Ukraine - they just could not believe it is a good deal and honest partnership chosing an expensive IMF loan conditioned by a war. Paranoia is not a good friend of business. EU will pay 3 times for liquid gas or pay for Ukraine endless stealing thier gas. Two bad options instead of one good.

thingtwo 1 Dec 2014 19:37

Same old same old, centuries of strategy power games form our global leaders, resulting death and poverty starvation and wars, for the proletariat. Not at war then substitute, energy, currency, water, food, fear, ideology, religion territorial disputes etc for guns and bombs. America are the good guys, no it's Russia the USA's the problem, no it's China, Israel the PLO no it's the EU. Imagine if the planet was threatened by a common problem where all the major players had to cooperate, bigger than Ebola. We're F*********D.

A scientific theory is that we could farm cheap solar energy from the moon, cheap energy for the benefit of mankind. But it would require cooperation. F OFF! MY GOD, DO YOU WANT TO START WW3. We still live in F******G Dr Strangelove's land. One of the best films ever. Ye Haw!

Arcosanti skepticaleye 1 Dec 2014 19:34

They can't afford to be dependent upon someone as mercurial as Putin either. At least the price issue can be predicted.

irgun777 -> Arcosanti 1 Dec 2014 19:34

Putin was in power for long time . It was quiet , there was no " invasion " or " little green men " until Mrs Nuland decided to bake coockies for the snipers and cherry pick up nationalists .

BTW , the term " invasion " is kind of misleading given the 2000 miles border and the number of the Russian divisions who can be in Kiev quicker than we were In Baghdad .

hfakos -> NikoNista 1 Dec 2014 19:33

According to Wikipedia and the South Stream website Croatia is a partner. But I am happy to be corrected.

Standupwoman -> Arcosanti 1 Dec 2014 19:28

Of course he doesn't matter. That'll be why the US has been screaming and wailing about him non-stop for a year. It's why every western newspaper has been doing its best to demonize him, and there are more headlines devoted to him than anyone else in the world. It's why the last G20 summit will only be remembered for whether or not Putin stayed for dinner. It's why even a story about a tiger eating a goat is suddenly newsworthy if the tiger was once photographed with Putin.

It's why he's been voted Forbes' Most Powerful Person of the Year for two years running. It's why his image is everywhere, from a special cartoon exhibition in Russia to toilet paper in Ukraine. It's why the US and EU have been shrieking ever more shrilly 'Stop Putin! Stop Putin!' until they're frankly red in the face. Because he just doesn't matter.

There's only one person who sticks his hands in his pockets and says sniffily that a game doesn't matter - and that's the one who's losing it. Whoever that is, it certainly isn't Vladimir Putin.

Roodan -> Arcosanti 1 Dec 2014 19:24

I don't blame anyone in particular they are all as bad as each other, the history of the GFC did nit start with Russia. The continued pretence that it is all the fault of the bad Putin is just the most stupid thing I ever herd how this contest will turn out know one known. It not so much what might happen to the Russian economy it's more about what is happening to everyone else's economy it may be that "Russia isn't that big of an economy. It's collapse would be manageable."

Just the same the realities on the streets of European nations are still bad for the people who live there and that has nothing to do with Russian leadership and everything to do with our own and all the ranting about Putin wont fix that.

hfakos -> JonCymru 1 Dec 2014 19:23

We will still rely on Russian gas, but it will keep flowing through a bankrupt Ukraine, which will steal our paid-for gas, as she did in 2006 and 2009.

skepticaleye -> Arcosanti 1 Dec 2014 19:20

But poorer countries in Europe may not be able to afford the alternatives. Take the deal Putin gave Turkey for example. Even before the new discount, natural gas from Russia is already cheaper than the alternate sources that Turkey have.

irgun777 1 Dec 2014 19:18

" the European commission has said the pipeline needs to conform to European competition rules, and has put pressure on Bulgaria not to back the project in its current form. "

Bulgaria violates European competition rules ? Apparently , the project is in the Bulgarian
and the Russian national interests. Alternative supply to Europe is also in EU interest.
Who is pressuring EU to impose " competition rules " if there are no European competitors
between Russian and Bulgarian Black Sea coasts ?

NikoNista -> hfakos 1 Dec 2014 19:18

Nope, our government wasn't interested in South Stream.Our government is more interested in building LNG terminal on Krk.I just wonder why should anyone have interest in using it, since it can't be profitable.Not mentioning Krk is major tourist destination.

skepticaleye -> Tepluken 1 Dec 2014 19:17

The EU Commission has objections over the South Stream pipeline for a while now. And with the new Prime Minister of Bulgaria who wants to stop the pipeline project through his country, the South Stream's viability is shaky at best. Putin's statement wasn't a "retaliation" against the EU. It's merely stating a fait accompli, as there is no point for the Russians to pour money into the project.

hfakos -> AMArmy 1 Dec 2014 19:44

I didn't join it. And the current Hungarian government is against the sanctions as well, but as a periphery country its room for maneuver is limited. We have the same sovereignty as Bulgaria. However, even this very mild opposition is sacrilege in Western eyes. Try to find an article about Orban in the Western press that does not call him a dictator and Putin's Trojan horse.

The yanks denied visas to 6 Hungarian officials due to "corruption". The screw is also turned on Hungary. I expect that the next thing the holy EU will try do is to torpedo the contract we signed with Russia about the upgrade of our sole, Russian-designed, Russian-built, and Russian-supplied nuclear power plant in Paks. Which, incidentally, generates 40% of our electricity. You see, we are totally free in the EU.

hfakos -> skepticaleye 1 Dec 2014 19:54

Right. The German Herr Oettinger had a very nasty role in it. His hypocrisy wasn't lost on Hungarians. Somehow this great champion of Ukraine did not want to punish Putin by shutting down his own country's Russian gas pipeline. He apparently has multiple talents too, because after energy, he is now commissioner for the digital economy and society. Given Germany's meek response to wholesale NSA spying, this does not bode well for our civil rights. It is amazing how similar the current EU is to the Warsaw Pact and COMECON, what with the constant recycling of monumental political failures.

psygone -> Oskar Jaeger 1 Dec 2014 19:53

Under EU law, energy firms are not allowed to own both the fuel and its means of distribution in one bundle. They also have to let competitors use their pipelines to stop monopolies inflating prices.

South Stream simply contravened the law. Why Putin is blaming the EU is rather comical.

But to your point, there's another reason for all this whining from Putin. The same Gazprom analyst appeared on both Bloomberg and CNBC and he agreed the sanctions may have been a factor.

"By invading Crimea, Putin has created a major barrier for the South Stream project," said Mikhail Korchemkin

"Gazprom was unable to raise money for the project" after the sanctions went into place, he said.

And now it looks like Putin may have his hands already full with Turkey.

While Russia backs Syrian President Bashar al-Assad, Turkish President Tayyip Erdogan is really the most vocal critic of Russia at the UN for stalling on an international response to the war.

Greece is already against to any pipeline coming from Turkey as long it continues to occupy Northern Cyprus.

Gazprom (Russia) is becoming desperate for revenue - I'm not sure Putin has a Plan-B.

[Dec 01, 2014] Putin Russia forced to withdraw from S. Stream project due to EU stance

Several interesting questions arise here. Is Germany now a big loser in this geopolitical game and the USA huge winner? What if Russia will have not enough gas to supply to Europe after redirection of its gas flows? What if Russia will force Baltic countries to buy liquidities gas as volumes to them are low and countries are pretty hostile?
Dec 01, 2014 | RT Business

Russia is forced to withdraw from the South Stream project due to the EU's unwillingness to support the pipeline, and gas flows will be redirected to other customers, Vladimir Putin said after talks with his Turkish counterpart, Recep Tayyip Erdogan.

"We believe that the stance of the European Commission was counterproductive. In fact, the European Commission not only provided no help in implementation of [the South Stream pipeline], but, as we see, obstacles were created to its implementation. Well, if Europe doesn't want it implemented, it won't be implemented," the Russian president said.

According to Putin, the Russian gas "will be retargeted to other regions of the world, which will be achieved, among other things, through the promotion and accelerated implementation of projects involving liquefied natural gas."

"We'll be promoting other markets and Europe won't receive those volumes, at least not from Russia. We believe that it doesn't meet the economic interests of Europe and it harms our cooperation. But such is the choice of our European friends," he said.

READ MORE: Gazprom to build new 63 bcm Black Sea pipeline to Turkey

The South Stream project is at the stage when "the construction of the pipeline system in the Black Sea must begin," but Russia still hasn't received an approval for the project from Bulgaria, the Russian president said.

Investing hundreds of millions of dollars into the pipeline, which would have to stop when it reaches Bulgarian waters, is "just absurd, I hope everybody understands that," he said.

For now, the supply of Russian gas to Turkey will be raised by 3 billion cubic meters via the already operating Blue Stream pipeline, he said. Last year, 13.7 bcm of gas were supplied to Turkeyvia Blue Stream, according to Reuters.

Moscow will also reduce the gas price for Turkish customers by 6 percent from January 1, 2015, Putin said.

"We are ready to further reduce gas prices along with the implementation of our joint large-scale projects," he added.

[Dec 01, 2014] Putin drops South Stream gas pipeline to EU, courts Turkey By Darya Korsunskaya

South Stream was "closed. This is it". The EU urged in mid-April that South Stream be scrapped as a rebuke to Moscow for its actions in Ukraine. Now they got their wish fulfilled.
Dec 01, 2014 |

Russia on Monday scrapped the South Stream pipeline project to supply gas to southern Europe without crossing Ukraine, citing EU objections, and instead named Turkey as its preferred partner for an alternative pipeline, with a promise of hefty discounts.

The EU, at loggerheads with Moscow over Ukraine, and keen to reduce its energy dependence on Russia, had objected to the $40 billion South Stream pipeline, which was to enter the EU via Bulgaria, on competition grounds.

The proposed undersea pipeline to Turkey, with an annual capacity of 63 billion cubic metres (bcm), more than four times Turkey's annual purchases from Russia, would face no such problems. Russia offered to combine it with a gas hub at the EU's southeastern edge, the Turkish-Greek border, to supply southern Europe.

Alexei Miller, the chief executive of Russia's state-controlled gas exporter Gazprom , told reporters in Ankara, where he was on a one-day visit with President Vladimir Putin, that South Stream was "closed. This is it".

Putin accused the EU of denying Bulgaria, heavily dependent on Russian gas, its sovereign rights, and said that blocking the project "is against Europe's economic interests and is causing damage".

He announced that Russia would grant Turkey a 6 percent discount on its gas imports from Russia for next year, supplying it with 3 bcm more than this year.

Miller said Gazprom had signed a memorandum of understanding with Turkey's Botas on the pipeline under the Black Sea to Turkey.

But the plan remains at an early stage. Russian Energy Minister Alexander Novak said that "energy ministers and companies (on both sides) were ordered to look into these proposals in detail ... It is hard to assess the costs, financial mechanisms, terms of fulfilment for now."

He also said Turkey was seeking a 15 percent discount for Russian gas.


Russia now is busy with 2 new pipelines to China, that will supply combine $ 700B of gas.
If Europe wants continue to use Ukraine for transit , let it be.
But Ukraine is not a liable partner , plus their gas pipeline infrastructure is very old and need
big investment . New South Stream pipeline will give EU new reliable supply line.
But EU play to much political games , and now they shoot themselves in leg.


Even with Pressure from the New Roman Empire ( The USA ) ...the president of Russia continues to make agreements without starting Wars and removing sovereign governments. Looks like some countries still have democracy ...? Guess who?

Stevie Ray

Isn't it wonderful when the media is owned by the same oligarchs that own your government?

This means that there is no need for a fascist "Ministry Of Propaganda."


Key phrase.

"Washington saw the project as entrenching Moscow's energy stranglehold on Europe"


isis brother, nato member turkey will buy discounted gas from Russia and resale it to eu with a huge profit margin.


The europeans are a conquered people, they have no sovereignty and they simply do what we, their american masters tell them to do..... they have never known freedom so it seems natural for them to take orders from their masters in Washington


Too bad. If EU was serious about peace in Ukraine, they would have been begging for South Stream.

Ukraine is in chaos because that single major pipeline basically gives it a monopoly over the ability to hold ransom either EU or Russia or both. Its like a pipeline of whiskey flowing through a multiracial AA centre. OF COURSE the two sides are going to fight for control.

But EU did all if could to kibosh South Stream, which means they are content with status quo.

Which means a destabilized perpetual economic wasteland on Russia's border was the EU and USA's goal this entire time.

Russia to close South Stream gas project and introduce 100% gas prepayment for the EU, as tit-for-tat sanctions - ABC.AZ

To prepare Russian and the world public for its decision to put an end to the period of European stability basing on the gas pipeline project between the USSR and Western Europe, Russia allowed leak of information on a package of proposals supposedly submitted by Rosneft (Russian Oil Company) to President Putin. The proposals were supposedly considered by Andrey Belousov, Advisor to Russian President, and passed for interdepartmental consideration, which is still in process.

Thus, "Rosneft" (in inverted commas, as the authorship of Rosneft has not been officially confirmed) proposed the following:

At the same time it's planned to provide access to Gazprom Asia pipelines for independent gas producers from Eastern Siberia and Far East, limit international cooperation in use of Russian modules at the International Space Station (MSS) and ban disposal of nuclear wastes from the EU and US.

"Rosneft" also proposed to provide state support for the real sector of economy and introduce retaliatory measures against the countries, which imposed sanctions against Russia.

"Introduction of 100% prepayment for gas supplies to the EU will improve the economy of Gazprom and worsen the situation of European gas buyers, as it will require to raise large volumes of working assets", - "Rosneft" says.

The Company also believes that in spite of evident resistance, the EU is extremely interested in implementation of the South Stream project, as the problem of European energy security can be solved only by means of Russia.

Instead of the European market "Rosneft" proposed to focus on the Asia-Pacific region and promote export to this region by introduction of privileged rates for gas customs duties (10% instead of today's 30%).

[Oct 31, 2014] Russian gas set to flow to Ukraine again after new supply deal agreed

Oct 30, 2014 |

Ukraine's Naftogaz company has set aside $3.1bn in a special escrow account to pay the debt.

Kiev says it is working to raise more money from all possible sources of financing, including the EU. The commission is considering Ukraine's request, made last week, for a further loan of €2bn.

Russia provides around a third of the European Union's natural gas, roughly half of which is pumped via Ukraine.

Ukraine in turn relies on Russia for around 50% of its own natural gas. However, despite having storage, Ukraine has a winter shortfall of around 3bn to 4bn cubic metres, depending on the weather.

For Russia, the natural-gas sector contributes approximately a fifth of the national budget.

Sanctions on Russia, which EU officials decided to leave unchanged on Tuesday while the conflict in Ukraine continues, are sapping an already weak economy.

Bert Buursink

So we in the EU have to pay so the Ukraine has gas? Putin wins again.

This western backed coup in Kiev has worked out great for us hasn't it?

My respect for our unelected EU leaders has dropped to new lows.

Trudi Goater
Maybe if the still corporate oligarchs who still rule Ukraine should pay for the gas! I'm sure they can afford it! The sooner we get out of the EU the better
Putin to western elite : playtime is up.

Victor999, ermalink
So let's sum this up.

The US engineered a coup in Kiev with the aid of its UK/EU vassal states.

Kiev was then taken from under its traditional Moscow influence and given over to Brussels.

Ukraine is essentially bankrupt, so the US influences the EU to pour money into its corrupt system whose oligarchs are more than happy to receive it, as they did from Russia. So now the EU must pay for Ukrainian gas and likely other expenses over the coming years (ask Poland - they are still waiting for Ukraine to pay for the coal they purchased).

In the meantime, a financially beleaguered EU is in recession and just about to crawl out of it when this all happened. The US stepped in and convinced EU leaders to bring sanctions against Russia. This resulted of course in return sanctions by Russia. The EU's relationship with Russia, much to the pleasure of the US, was destroyed, and the EU was plunged into recession again, again much to the pleasure of the manipulative USA.

In the end Russia gets paid for its gas by an economically struggling EU who must now pay Ukraine's bills for the foreseeable future, Russia begins its turn from the West to the East possibly threatening future supplies of various natural resources, and the USA is sitting fat and happy having taken a huge step towards protecting its markets in Europe and dividing the EU from Russia.

And after all the economic havoc these sanctions continue to work on the EU, they still stubbornly insist on keeping them in place to please their US masters, I suppose.

You really couldn't make this stuff up.....

andyoldlabour , permalink

If I was Putin, I would tell Ukraine and the EU to go take a running jump, because they have made their bed - now go and lie in it.

What would be the reaction of the UK if we were supplying oil to France, and they had got behind with the payments, and then refused altogether unless we adjusted the already agreed price? Would we then be happy if the same country then caused sanctions to be applied to us, despite the fact that we were still supplying them with gas?

To be honest, I think that Russia have been overly patient with Ukraine with regard to the gas supply.

midnightschild10, permalink
I am sure that the citizens of the member states of the EU are thrilled that their leader's are guaranteeing that they will pay for the gas that Ukraine uses. They can add that to the ongoing austerity measures they are currently living under.

What a coup for Putin. He gets the money owed and makes the EU look utterly ridiculous at the same time.

The US is also laughing at the outcome because they led in sanctioning Russia and don't have to pay a dime for the gas Ukraine will use.

Poroschenko will show the Ukrainians that besides killing Southeastern Ukrainians he now has Europe picking up the tab for Ukraine. What a deal.

I wonder how long the citizens of Germany, France and others will support their leaders after striking this deal. It's like following the US to the rabbit hole while Obama steps aside and pushes the members of the EU in. I didn't think anything would make Cameron look good, but this certainly would go along way in supporting his position to break from the EU. Poroschenko can play the "poor Ukraine card" for years to come. It will be the gift that keeps on giving.

philipf , permalink

Great. So WE have to take a hit if Ukraine doesn't pony up the dosh? Why should we support this Ukrainian govt which has hamfistedly done its level best to alienate its own minorities? And who gave the EU the permission to carry out US foreign policy by imposing sanctions on Russia? Now farmers in Eastern Europe watch their fruit rot in the fields...
ID075732 philipf , permalink
Global Capitalism Rule 101: Do as Uncle Sam tells you!
oleteo ID075732 , permalink
Otherwise we'll come to you with our democratic bombing for your sake

oleteo , permalink

You can't be a little pregnant. For Europe there is a long way ahead to pay for Ukraine though the main instigator was US
Peter Cedergren , permalink
Are the sanctions really a bad thing for Russia or the fact that the roubel has been devalued by 28%.Less imported luxury cars, Yes. But perhaps an upswing for the domestic industry.Just asking.
Derreck Man , permalink
Maybe Ukraine should raid the bank accounts of its many billionaires to pay for some of this bill. I don't see why the EU has to raise the fee we pay just so they can guarantee such things.

It's just wrong. I get the humanitarian side of it but Ukraine is full of corrupt state officials and maybe the help should come with conditionalities. That's what the west does in Africa

Antidyatel Derreck Man , 38m ago
Yes, it will be great if they just arrest all the corruption money in the western banks from all the countries in the world and return it back to the original countries. The problem is that then western banks will loose 50-90% of the money on their accounts.
moncur , permalink
Better "slavery dressed up as democracy" than serfdom in Putin's Russia.
oleteo moncur , permalink
It's a pity October ended. You might send them money for another revolution or it would be better if you came yourself
Antidyatel moncur , 28m ago
Do you know that serfdom originated in German Kingdoms and in Poland?

I wish that you went to 18th-19th century and showed slaves under western "democrats" the conditions of serfs in Russia and see which one they'd prefer.

Robert Sandlin moncur , 21m ago
You might want to reread your comment. I don't think it came out "exactly" the way you meant it.Because if it did most people I think would go for the Putin option.
Georgeho , 2h ago
Big talking Yats is quieter now. Ukraine is in a bad bad way.

Relying on IMF to pay your gas bills or Eau's goodwill.

It is risky and likely end up in slavery dressed up as democracy.

oleteo Allbuks Allbuks , permalink

Now it's a turn for Europe.Good American play of suzerain and vassal

oleteo , 2h ago

The Europeans don't know yet what a headache Ukraine is and will be.Welcome to pay the feast of freedom and true democracy in Ukraine

Asimpleguest , 2h ago

What a great deal EU did! Ukraine, a failed state, is asking daily-basis more money from us... and the corrupt parasites from Bruxelles - America's bootlickers - comply...
Mrnickvl , 2h ago
"this assures a supply till next spring".....what about next winter?..who has faith that Ukraine will get it's act together and not come running with its hand out for a few billion more? and once this is taken care of what else do they need money for? Putin heard a long time ago that there is a sucker born every minute and this minute it's the EU. Putin got what he wanted and EU got a white elephant while US contributed 50 Million and Poroshenko took the money. That was an insult.
Antidyatel Mrnickvl , 19m ago
Nobody is sure that Ukraine will managed through winter as a state, even with gas. that was not the only problem in their country. So they want to see.

If it doesn't survive they will have to negotiate with someone else in any case.

kesler , 2h ago
He who controls energy(the gas) controls the economy


Haha A defeat for the NWO

Nokaoi , 3h ago

Ukraine will get gas either way. Especially that the alternative is the fracking that the Biden junior is up to. There are also GMO products they have been peddling behind the scene to Ukraine for years and now they have no obstacles left. It is ironic but if you are an environmentalists in Ukraine now days are pro Russian too and can be assaulted violently on the street by the brown shirts.

They just going to ruin soil and water at some the best top soil lands in the world.. (the rest is in Russia). Nobody is interested in supporting heavy manufacturing industries bad enough for Germans and Italians now days, Poles and Czechs.. Sooner or later the Ukrainians will sort it all out with the Russian brothers just as Prague and Budapest, Slovenia and Slovakia did. Only Poles that hate Russian guts since the Jesuits and Teutonic orders have twisted their West Slavs soft brains in hate to their "inferior" Slavic Orthodox brothers (Russian, Ukrainian Belorussians are alike on the Polish Slavic Subhuman list).

But what would be left to Ukranian after the West's Intervention in "National Democracy for Oligarchs building? - Gastarbeiter arbeite schnell?!

Now in the Anglo-Saxon at the theaters new you.. Polish plumbers have to be challenged by Ukrainian... Compete for the work place.. Keep the lid on the Plumbers wages. SAD

Antidyatel Nokaoi , 13m ago

Actually for GMO, Ukraine is the last chance. The soil is so fertile that they might show fantastic returns for 5 or even 10 years. While on other soils the nutrians are sucked out within 3 years and to get similar returns you need more and more fertilizers. So GMO can use Ukraine as a poster card enough time to dupe easily and willingly gullible politicians.

Hottentot , 3h ago

Kiev says it is working to raise more money from all possible sources of financing, including the EU. The commission is considering Ukraine's request, made last week, for a further loan of €2bn.

How much more money is the EU going to give Kiev? and who ultimately pays for it? the people of the respective EU membership countries.

As for the EU still keeping sanctions on Russia, that's just stupid, but what can one expect, when they are the US poodle

Jpmoz999 Hottentot , 40m ago
Probably quite a bit more in return for contracts opening up fracking in the country to US and EU countries. It will pay for itself eventually.

[Oct 30, 2014] Russia and Ukraine agree gas supply deal

BBC News

Ukraine's Prime Minister Arseniy Yatseniuk said that the EU had agreed to serve as guarantor for the gas price Kiev would pay to Russia.

Ukraine will pay $378 per 1,000 cubic metres to the end of 2014, and $365 in the first quarter of 2015.

Mr Yatseniuk said Kiev was ready to pay off debts for gas immediately after any deal was signed.

A total of $1.45bn would be paid immediately, and another $1.65bn by the end of the year, he said.

Mr Novak insisted that Ukraine would still have to pay in advance for new deliveries.

Mr Oettinger, who steps down as European energy commissioner on Friday, said: "We can say to the citizens of Europe that we can guarantee security of supply over the winter."

[Oct 30, 2014] Russian gas set to flow to Ukraine again after new supply deal agreed

Oct 30, 2014 |

Ukraine's Naftogaz company has set aside $3.1bn in a special escrow account to pay the debt.

Kiev says it is working to raise more money from all possible sources of financing, including the EU. The commission is considering Ukraine's request, made last week, for a further loan of €2bn.


The US to the EU, "The US will contribute $40 million for Ukraine, UK should stay in the EU; Scotland should stay in the UK, Ukraine must join the EU and Nato, UK must not legalise drugs, the EU must spend a lot more on our [US] wars in the world, the cross-Atlantic trade agreement signed on our terms will honour the EU."

HollyOldDog cheetah43

Ah the generosity of the U.S. money grabbers is legendary.


Two hoots for the sanctions. The EU has just had a glimpse of the bottomless pit called Ukraine but they have not yet grasped the depth of it. The fun with the Kiev elements whom the US/EU coalition have planted is just starting now in serious while the Europeans are struggling with stagnation.

hdc hadeze cheetah43

have you checked the RF stagnation figures lately? 1% is not accelerated growth. In fact, considering inflation you are regressing ... to whereabouts I do not know, but deflated, inflationary Ruble exchange rates is a plausible certainly ... like sooner, not later.


So all Kiev has to do now is actually make a payment to Russia...
We still don't really know if they have the money to pay...
Froth and bollocks...
No money no honey.

HauptmannGurski Kaiama

It is not going to be their money anyway. They did not even have money for soap for their soldiers a few months back. I think also, that the EU will never get out of funding the Ukraine because there can be no prosperity and ability to pay because ..... well, better not say it.


Some critics of Russia question whether its motivation is financial or whether prolonging the wrangling with ex-Soviet Ukraine and its western allies suits Moscow's diplomatic agenda.

As Putin made crystal clear in the Valdai presentation Q&A from the 24th the two issues blocking the deal before now was the EU point-blank refusal to underwrite Kiev's repayments as well as the issue of Kiev siphoning off (stealing) gas in transit.

Perhaps Barosso ("please don't leak the rest of our phone conversation president Putin, it wasn't me that leaked that thing you said as a joke, it was that woman!!") finally managed to unblock the EU's intransigence, which I suspect was leveraged by the US State Dept, as well as the Americans perhaps warning Yatsenyiuk to behave:

Ukrainian prime minister Arseniy Yatsenyuk said in Kiev that the EU had agreed to serve as guarantor for Kiev in holding Russia to an agreement, notably on the price Ukraine would pay.

... which is doublespeak for "in holding Ukraine to its agreed repayments, no naughty trousering by any oligarchs!"

He's such a poor "spinmaster", our man "Yats"!


"Kiev says it is working to raise more money from all possible sources of financing, including the EU"

The taxpayers of the European Union must be overjoyed that they are now the "Bank of Mum and Dad" for Ukraine.

Hopefully, Brexit will happen soon enough for the hit on UK taxpayers to be limited.

Alderbaran serjeantbuzfuz

Britain exiting Europe to avoid funding Ukraine sounds ludicrous - UKIP despite the publicity it has received is still only a minority party and does not reflect the views of most people here in the UK.


no wonder so many countries want to join the EU- to get all their bills paid for them

Alderbaran HAL911

Most recent joiners seem to be doing quite well without bailouts.


Now I wonder how they will pay, rubles or gold, perhaps.

HauptmannGurski Popeyes

Whatever the EU and the IMF gives them I suppose. One day, Ukraine is going to be Argentina 2.0 - maximum 10 years, I guess, and those who wanted to destroy the EU will pop the champaign.


He's laughing because he's out manoeuvred Nuland, The State Department, the Wall St puppets (Boroso) at the EU, and the Fascist Junta (CIA toys) in Kiev. Pretty good day at the office I reckon....

LeDingue Alderbaran

Meanwhile, thousands remain dead in Eastern Ukraine of all ethnic backgrounds

The blood and trauma in east Ukraine is on Nuland's and Brennan's hands.

And nobody in Russia is rejoicing.

The mood in Langley is probably "resigned" too, but for completely other reasons...
The military attacks by Kiev need never have happened -- the original demands for regional autonomy, before there was any shelling, mass civilian death and refugees, have since been agreed to by Porochoc.

Why did Kiev launch military attacks against a rebellion of barricaded buildings? This strategy was never, ever, going to do anything other than make the impasse much, much worse: 5+ months of war crime attacks, to try and achieve what?
Any military counter insurgency expert will tell you that dialogue and dialogue alone would solve the rebellion.
So why do it?? Why not a stand-off and negotiation on day 1?

The "war" has come at such a huge and pointless cost to all of Ukraine, so what was it for and in who's interests was it launched by Kiev, on who's orders?
Was another state merely using Ukraine as a "lever" to create the justification conditions to launch an economic war on Russia?

Hint: the attacks were launched by Kiev within days of a supposedly covert visit (he was recognised despite travelling on a false passport!) by none other than John Brennan himself:
Wayne Madsen, April 14, Ukraine's Secret Recipe: "Brennan Kiev"

Central Intelligence Agency director John O. Brennan has been cooking up a storm in Ukraine and "Brennan Kiev" is the entrée on the menu. Brennan recently paid a secret visit to the Ukrainian capital to discuss with coup leaders their response to the insurgency sweeping eastern Ukraine. It has been reported by various European news agencies that Brennan landed on April 12 in Kiev with a diplomatic passport under a false identity.

Brennan reportedly urged members of the "Council of National Security and Defense," the supreme authority created by the leaders who ousted President Viktor Yanukovych in a February coup, to put down the rebellion by pro-Russian Ukrainians in the east with extreme force. Brennan and other U.S. government officials have also been responsible for identifying secessionists in the east as "terrorists," which is part of a major U.S. and western intelligence propaganda war against eastern Ukrainian secessionist leaders and the Russian government.

The intelligence on Brennan's secret visit to Kiev primarily came from Yanukovych loyalists who remain embedded in the Ukrainian government, as well as Ukrainian Communist Party officials still serving as members of the Ukrainian parliament. Brennan has coordinated the CIA's counter-Russian activities with the intelligence services of America's NATO allies in eastern Europe, particularly those of the Baltic states, Poland, the Czech Republic, and Slovakia.

HollyOldDog LeDingue

The U.S. probably got what it wanted, the EU to buy more US weapons by demonising Russia. Funny the EU has to buy more useless American high price tanks designed for a previous era.

HauptmannGurski maninBATHTUB

Not necessarily. There are quite a few age pensioners on the Crimea and the extremely low pensions from Kiev nurtured their desire to be part of Russia where pensions and other social services are higher.

It's quite a bill for Russia, and off the books of Kiev. Putin coming to power was also triggered by age pensions. Age pensions in Russia were just not paid, syphoned off apparently. I have heard it left right and centre, the banking system was 'now you see it, now you don't'. I saw one Russian women on TV saying that all she had to eat for the week was one apple after paying for the roof over her head. Since Putin came to power pensions are paid on the days they are due, regularly and in full. That is an issue with bite.


Nice to know the 2 billion Euros we've been ordered to pay to Brussels is going to support yet another bunch of crooks.

Ides_of_November Alderbaran

MH17 was most likely shot down by Ukrainian forces - either ground-based or air-to-air.

Even the German BND admit there was no Russian BUK launcher being used by the pro-Russian rebels.

You should read up on MH17. Can I ask - are you someone that believes that there were/are WMDs in Iraq that we will find? One day?

Antidyatel Alderbaran

No need to rely on other's opinion. Best thing is just to take a piece of paper and pen. And then calculate for yourself uf the specifications of the BUK system in question match the situation in terms of time intervals. Also interesting is a llok at possible trajectory of BUK missile and question why the pilot didn't see it coming (according to Dutch report).

[Oct 30, 2014] Ukraine and Russia Reach Deal on Natural Gas Supplies

A week ago the two men were at loggerheads when Mr. Novak demanded that the European Union help Ukraine pay $1.6 billion to help cover its debts, and after Mr. Prodan demanded that Russia sign a binding agreement to sell gas until next spring at $385 per 1,000 cubic meters.

Thursday night, the ministers signed a deal guaranteeing Russian gas deliveries to Ukraine until March 2015 against a backdrop of the Russian and Ukrainian flags. A second signing took place between the chief executive of Gazprom, Alexei Miller, and his counterpart at Ukraine's Naftogaz, Andriy Kobolev.

Mr. Barroso said the agreements also covered Ukraine's outstanding debts to Russia.

[Oct 30, 2014] Russia, Ukraine agree on gas supplies until March 2015

RT Business
Russia, Ukraine, and the European Commission have signed an agreement on gas supply and transit conditions until March 2015 during talks in Brussels.

The agreement was signed by Russian Energy Minister Aleksandr Novak, Ukrainian Energy Minister Yury Prodan, and vice president of the EC in charge of energy, Guenther Oettinger. The signing was witnessed by European Commission President Jose Manuel Barroso and the EC's new vice president in charge of energy, Marosh Shefchovich.

Ukraine will be able to receive the needed volumes of Russian gas until the end of March based on a pre-payment plan at a price of $385 per 1,000 cubic meters, Oettinger said during the press conference.

Speaking at a briefing after the signing of the deal, Oettinger assured that Ukraine said it is ready to pay $1.451 billion of its gas debt to Russia "immediately."

According to Oettinger, Kiev will be able to pay back $3.1 billion of its gas debts before the end of the year. However, he added that the final figure will depend on the decision of the international Stockholm court of arbitration on the gas debt dispute.

Ukraine will get the money it is lacking with the help of the International Monetary Fund (IMF) and the European Union, the EC official announced. Oettinger expects that the promised financial assistance from the IMF and the EU will be used by Kiev to pay for Russian gas.

"The advantage for Ukraine is that it confirms the role of a reliable partner in the center of Europe and IMF and EU's programs of assistance would be used correctly to pay its gas debts," Oettinger stressed.

Gazprom will not enforce take-or-pay mode for Ukraine from November to March, Novak said, adding that Russia has given Kiev a discount of $100 per 1,000 cubic meters of gas.

"The Russian side is providing a discount during this period in the amount of $100 per 1,000 cubic meters...which would allow the price for November and December be around $378 per 1,000 cubic meters," Novak said. "Also, it was agreed that the take-or-pay mode would not be implemented during this period."

Novak stressed that summer gas prices for Ukraine were not discussed during the meeting in Brussels. He stated that the figures announced by Ukrainian Prime Minister Yatsenyuk earlier must have been a forecast.

Russian Energy Ministry confirmed the agreement on necessary documents for the winter package of Russian gas supplies to Ukraine.

Ukraine's Energy Minister Yury Prodan also stated that the gas agreement on supplies of gas to Ukraine between Russia, Ukraine and the European Commission has been reached.

Thursday's meeting in Brussels was another attempt to settle the gas dispute between Russia and Ukraine. The parties have been struggling to agree on the final gas price and the payment schedule.

While Novak said earlier on Thursday that key parameters of the gas deal, including a $385 price, had been agreed, it had remained unclear where Ukraine was going to get money.

Before the deal was reached, Gazprom left Brussels insisting Ukraine and the EU must first agree on the financial points between themselves. Russia rejected all payment schemes proposed by the EU, saying all of them were a hidden form of another gas loan to Ukraine.

Having smooth gas supplies from Russia is crucial for both Ukraine and the EU.

Kiev needs around 4 billion cubic meters of Russian gas to survive the coming winter, and over 15 percent of Russian gas to Europe travels via Ukraine.

Before Ukraine can begin receiving Russian gas again, it must first pay off its $1.45 billion debt in the coming days, and another $1.65 billion in an advance payment by the end of the year, making it a total of $3.1 billion.

Gas Standoff.

Julian said...

Gas Standoff.

Current EU Commissioner responsible for Gas is Gunther Oettinger (German). He leaves office on Friday.

Oettinger will be replaced by Maros Sefcovic (Slovakian).

We have heard Slovakian Prime Minister Robert Fico come out against some of the tougher EU rhetoric on sanctions - and obviously Slovakia is very reliant on Russian gas.

Would it be a stretch to say the incoming EU Energy (Gas) Commissioner would naturally be more inclined to be sympathetic to the Russian point of view?

A Slovakian?

Surely the new fellow will be an improvement for the Russian side of things in the gas dispute.

Russia should not bend to any agreement on the gas at least before the G20 (November 16) and also the French Mistrals (???? Soon??? Maybe also November 16).

Forget about gas for Ukraine in November. Maybe December if things on the ground don't deteriorate first.

[Oct 24, 2014] Gas Deal Eludes Russia and Ukraine, but Talks Will Continue By JAMES KANTER

Oct 21, 2014 |

Key sticking points in the gas talks have been how to calculate the size of Ukraine's debt and how quickly it should be repaid. One remaining question is whether the European Union will step in to help Ukraine pay its bills.

Of the $3.1 billion that Ukraine was agreeing to pay toward settling its debt, an amount of $1.6 billion "is still lacking," Alexander Novak, the Russian energy minister, told reporters.

"This cash gap requires funding," said Mr. Novak, who suggested that the European Union "should examine the situation and share some of that burden."

Hungary may be unsuitable to remain U.S. ally ;-)

marknesop , commentmetadata"> October 22, 2014 at 6:48 pm
Naturalgaseurope is an interesting site; the authors do not always write like native English speakers, but there are frequently startling insights. For example, the west is currently incandescent with fury at PVMikhail's country, Hungary. That much we knew, but along with the other measures of defiance from Orban, who seems suddenly to have gone rogue – at least from a western viewpoint – was this surprise (for me).

"However, there were interesting developments also during the filling up process, for instance, a proposal submitted by Fidesz MP Roland Mengyi a few days after the Orbán-Miller meeting. The MP, who is a stranger to energy issues, proposed the amendment of the gas law, as a result of which Gazprom was allowed to transmit natural gas into Hungarian storage facilities without obtaining a trade permit.

On paper it will have several hundreds of millions of cubic metres of gas abroad so it will not have to pay taxes until it sells this volume to a Hungarian company. If it wants to sell it that is. In case the flow of Ukrainian transit gas is stopped neighbouring countries could also be queuing up for this stashed gas reserve."

Now that is some smart thinking, right there. The significance of it completely escaped me, which just goes to show it is smart thinking that is out of my reach, although I don't know how much of a challenge that is. I feel smart enough just grasping what an ace in the hole that could be, for both Hungary, and Gazprom.

Additional articles in the sidebar show just how the USA is smoldering with rage over this, including "Hungary may be unsuitable to remain U.S. ally", and the USA's imposition of a "Hungarian Magnitsky List".

But perhaps more ominous is the announcement in the original article of a visit by the Hungarian Foreign Minister to Washington today, where he met with chief U.S. State Department kneebreaker Victoria Nuland and special energy envoy Amos Hochs. The article deadpanned, "South Stream is likely to be discussed there."

You think?

I imagine what will also be on the agenda for discussion is a frank recitation of the numerous ways the USA will put a hurtin' on Hungary if it does not behave itself and play ball the American way. Soft power is something the USA likes to talk about in an abstracted way, but it has forgotten everything it might once have known about it, and Victoria Nuland is to soft power what sand is to vaseline. American foreign policy is now all stick and no carrot.

Alexander Mercouris: Deadlock and Gas Talks in Milan

Dear friends,

It is a huge pleasure to announce today, specifically in response to the request of many of you, Alexander Mercouris has agreed to send me his his FaceBook analytical posts for posting here. I have a huge respect for Alexander and I am delighted to welcome him here as a regular contributor.

The Saker
Alexander Mercouris: Deadlock and Gas Talks in Milan
by Alexander Mercouris

Deadlock in Milan
News from the Milan summit is still trickling through but it is clear that there has been no breakthrough and the Ukrainian crisis remains deadlocked. Poroshenko said that the "parameters" of a gas agreement have been agreed but it seems that nothing of the sort has happened.

The most fatuous comment of the day has come from van Rompuy, who called it "progress" because Putin is supposed to have said that he does not want a frozen conflict in Ukraine or for eastern Ukraine to become another Transdniestria. To see the absurdity of that comment just try to imagine Putin solemnly telling the Europeans the opposite: that he does want a frozen conflict in Ukraine and that he does want eastern Ukraine to become another Transdniestria!

Not for the first time Putin comes over as a man surrounded by dwarfs.

As I understand it the idea of a breakfast meeting between Putin and European leaders came from Merkel. With the German and European economies tanking in part because of the very sanctions policy she has imposed, Merkel needs this crisis to end. At the same time she remains utterly unwilling to take on the US and its European allies or the Atlanticists within Germany. She therefore looks to Putin to extricate her from the mess she has got herself into. However because she is not prepared to face up to the US and its allies or the Atlanticists she wants Putin to get her out of trouble by capitulating to all their demands. She tries to do this by applying "pressure" on Putin (that was what today's breakfast meeting was all about) and then looks sullenly angry and baffled when it doesn't work.

Accustomed to bullying other European leaders and getting her way, it's as if Merkel, when faced by an adversary her own size, doesn't know what to do. She reminds me of Obama who came away similarly baffled and angry after facing off with Putin two years ago at a summit when they discussed the Syrian crisis.

Meanwhile as the European and German economy tanks the Russian economy accelerates despite the falling oil price whilst the Ukraine's disintegration gathers pace. In politics and diplomacy as in war it is necessary to know when to retreat before the situation becomes a total rout. The Europeans show no such ability or understanding so we are looking at a rout.

The Gas Talks in Milan

More information is trickling out about the gas talks in Milan and they make for an ugly picture.

Ever since June the Russians have been saying that the contractual price of gas supplied to the Ukraine is $485/1000 but that they are prepared to offer on a temporary basis a $100/1000 discount, bringing the price of gas supplied to the Ukraine this winter down to $385/1000, on condition that Ukraine pays its outstanding arrears and prepays for all gas actually supplied.

The Russians have never wavered from this position. The Ukrainians have never wavered from rejecting it.

As I understand it the Ukrainian position is that the "proper" price for Russian gas is the $269/1000 Yanukovitch achieved through the discounts he negotiated with Putin last December. The Ukrainians insist that all gas arrears should be recalculated on the basis of this price and that only when that happens will they consider paying them. In the interim, under European pressure, they have said they would agree to pay a higher price on a temporary basis (apparently $320/1000) until the dispute is settled. However they insist that any payments they make during the period of this price should be treated as payment for gas supplied according to this price and not payment of arrears.

I am not going to discuss here in any detail the absurdity of the Ukrainian position, which treats a discounted price offered to Yanukovitch in return for conditions the Ukraine never fulfilled, as the "proper" price in substitution for the agreed contractual price. I don't think anyone apart from the Ukrainians believes in it. Certainly the Europeans don't.

Anyway, returning to what happened in Milan, one of the great mysteries for me about Ukrainian politicians is that though in public they compete with each other in being tough on Russia, the moment they actually have to deal with Putin face to face over gas issues they come immediately apart and turn out to be spectacularly bad negotiators. We saw this happen with Tymoshenko in 2009 and we have just seen it happen again with Poroshenko in Milan.

Briefly, earlier in the day Poroshenko said that the "parameters" of a gas deal with Russia had been agreed. This led to a brief flurry of hopeful claims and headlines including a statement from Hollande that the two sides had almost bridged their differences.

It then turned out as the day progressed that the "parameters" Poroshenko was saying had been agreed with Russia were the same as the original Russian offer. In other words Poroshenko capitulated, perhaps without understanding, to what Putin asked of him.

Putin even said that the only remaining outstanding issue was how the Ukraine would find the money to discharge the obligations it had just taken on. His suggestions amount to a proposal that the Europeans pay for the Ukraine's gas and arrears either directly or via a further IMF loan. This is something the Europeans by the way have always refused to do.

Anyway, when it finally seems to have dawned on Poroshenko that the "parameters" he had agreed to were simply what the Russians have been demanding all along, his response was to flounce out of what looks like a hurriedly arranged meeting with Putin to announce that there had been no agreement after all.

Putin for his part stuck to the Russian position and publicly declared that Russia would not supply the Ukraine with gas on credit (which is what the Ukrainian counter proposals amount to) and that "that was final".

It appears therefore that we have deadlock with no actual progress made despite some of the earlier headlines that appeared during the day. Along the way Poroshenko has been made to look a fool in front of all the leaders of Europe and Asia and the gas talks on 21st October 2014 have just been made more difficult.

Putin said just before he went to Milan that Russia would reduce the amount of gas pumped through the Ukraine if the Ukraine starts stealing gas destined for other customers. That is what Russia did in 2009 and I have no doubt it is what it will do again. Unless the Europeans now give Poroshenko an ultimatum to accept the Russian offer a total cut off looms.

Posted by VINEYARDSAKER: at 11 comments:

Tacu said...

A bit too much of wishful thinking.

Milan proceedings have not been made public, so nobody can be sure of what was agreed - if anything was.

However, even RT reports that Putin expressed his will to help Ukraine with gas and, discounting diplomatic niceties, this may mean something. He should have plainly said that he saw no reason to help a country whose only goal seems to be enslaving and massacring Russians.

This not to mention the agreement about holding Ukie elections in Donbass, which is tantamount to recognizing it as a part of Banderastan in full right.

And not to mention the supposedly agreed euro-control of the border. Europe, on her side, made no concessions of any kind.

The dust still has to settle down, and it is likely that we will never know what was said exactly, but first impression is that in this tug of war it was Putin who lost a step, not the opposite

Anonymous Veritas said...

Dear Alexander,

Welcome :). Wonderful to have your contributions here.

Just one thing about Merkel - I don't think she is even of the same stature as Putin (maybe in her dreams) - he is way above her! I personally find her quite a weak character.



Ludwitt said...

The problem that the Europeans have is that while they know Ukraine is in the wrong on the gas prices, they also know Ukraine has zero money to pay for it.

Putin has firmly told the Europeans that well that's not my problem that's yours: Russia is already doing its part by a discount. The Europeans have to come up with the rest of they want Ukraine to remain solvent.

And that's the rub: Europeans want to embrace Ukraine politically and militarily while asking Russia to fund this endeavor (all the while with Poro and his goons hurling epithets at Putin and Russians). Russia has called their bluff. You want Ukraine? Fine: you pay for it.

Anonymous the pug said...

This an episode of Crosstalk, with Mr. Mercouris on as a guest, entitled "The Putin Phenomenon"
Beginning at 6:10 and running until 7:10 in the video, Mercouris describes why Putin enrages the US so much, is that "Putin CAN say no.

Anonymous bjmaclac said...

I don't know if I have commented on this site before - but here I go.

I think the Milan talks are tantamount to theatre of the surreal - never mind, absurd. Here we have that usual contingent of puppies (otherwise masquerading as Eurpopean heavyweights) all subservient to Brussels and Washington, treating the Ukrainian contingent as their "equals". Maybe there is some truth in regards to the equality they share in the sheer blindness they display regrading just how much of a basket-case the Ukraine really is. Never mind the fact that it is effectively bankrupt; the real troubling aspects of Ukraine is that its political system is in tatters. Imagine, broke as it is financially, it is using whatever "extra" cash it can get hold of to wage war on its own citizens. Now if that ain't crazy, surreal and absurd, I don't know what is.

And whatever is being said about Putin making the odd mistake in this huge challenge facing him, he has yet to blunder in such spectacular fashion as those pulling the strings in Washington and Brussels.

20 October, 2014 00:56

18 October, 2014 12:06

Ukraine, Russia gas deal may be just enough to get through winter


...Not all details of the agreement are known, but below is a summary of the main points.


Ukraine will pay $385 per 1000 cubic meters of gas for the winter period lasting until March 31, 2015.

The price for Russia's gas over the following summer period will fall to $325 per 1000 cubic meters.

That is roughly in line with what most western European utilities pay for imported gas from Russia.

Russia says that Ukraine owes it around $5 billion in unpaid bills for gas supplied at the end of 2013 and in 2014.

Kiev has said it will be prepared to repay Russia $2-$3 billion by the end of the year, if the remaining figure could be negotiated later.

Ukrainian state-run energy firm Naftogaz and Russian state-controlled gas firm Gazprom have both lodged cases with the Stockholm arbitration tribunal to review their gas transit contracts.

All debt payments, on which Russia has been insisting, will be made only after a verdict from the International Court of Arbitration in Stockholm.

(Additional reporting by Barbara Lewis in Brussels and Vladimir Soldatkin in Moscow; editing by Jane Baird)

[Oct 04, 2014] American Business Media depicts Kiev as crazy for the first time

ucgsblog, October 1, 2014 at 12:58 pm
American Business Media depicts Kiev as crazy for the first time:

(QN: the article's on "", but because Yahoo knows that their news section blows, as opposed to their finance section, they pulled that stunt.)

"Kiev failed to pay" – note the language. "Failed to pay" not "didn't pay".

"Russian and Ukrainian negotiators are expected to resume talks this week in Berlin on a gas deal proposed by the European Union. But Kiev is continuing to talk tough, despite the fact that it previously has relied on Russia for about 60 percent of its gas."

Kiev is continuing to talk tough, not Russia. Kiev.

"But Ukrainian officials have protested the proposed price of $385 per 1,000 cubic meters, and Prodan has said he would stick by his stance that Ukraine should pay only $268. Despite the risks to its economy and citizens, Kiev is going to continue playing hardball, says Neff, the analyst. Russian state gas company Gazprom took a major hit in profits and reputation when, in 2009, it retaliated against Ukraine by turning off supplies to much of eastern and central Europe during a bitterly cold winter."

There's some attack on GazProm, but it's weak by Western standards. On the other hand, Kiev is depicted as sticking to its crazy demands. The article ends with "Kiev, why you so crazy? Oh yeah, you're Kiev!"

"If no deal is found with Moscow, Ukraine is likely to siphon off gas from the supplies meant for the EU. Ukraine has little to lose, Neff says. Russia has already annexed the Crimean Peninsula, separatists control large parts of east Ukraine, and the economy is in free fall. "Ukraine has already lost."

O'Bummer. What? If I didn't make one punny reference, how could you tell that it was me who made that post?

marknesop, October 1, 2014 at 8:06 pm
I liked the part about Russia ruining its reputation by cutting off Ukraine's gas in 2009. Big bad Russia playing energy politics. In fact Ukraine was doing what it always does, siphoning other people's gas, except they were reselling it that time. And that's when they had a subsidy and were getting it cheap. Cheap is not as good as free, evidently.

Did The Winter War Just Begin Russian Gas Supplies To Europe Plunge 15%, Ukraine Transit Slashed 54% Zero Hedge
Did The Winter War Just Begin? Russian Gas Supplies To Europe Plunge 15%, Ukraine Transit Slashed 54%

Just a week ago, the Russian energy minister made the first public 'threat' of gas supply "throttling" disruptions to Europe but judging by the data that has just been released, it appears the 'throttling' has begun. Bloomberg reports that Russian gas supplies to Europe fell 15% year-over-year in Q3 – the most in over two years – as natural gas transit through Ukraine plunged 54% year-over-year. In 2013, Gazprom sent 60% of its supply via Ukraine pipelines, in August that dropped to 39%, and in September only 34%. Of course, Europe remains confident its storage efforts will buffer any "Winter War" disruptions, as we noted here, but as Citi warned previously, "if colder weather arrives, storage levels will be drained," and then there is the Spring (and German industry needs).

[Sep 29, 2014] The IMF revised estimate says a staggering bailout of $55 billion is needed as external financing for Ukraine

Looks like Ukraine need to sell not only their gas transportation system, but much more...

ThatJ, September 27, 2014 at 11:08 pm

West beats retreat in Ukraine

Considering the huge lift that the White House gave last week to the visit by the Ukrainian President Petro Poroshenko - 'rare honor' of addressing a joint session of the US Congress, et al - one would have thought the Barack Obama administration was getting into a heightened mood of belligerence vis-a-vis Russia. But a close reading of President Obama's remarks after the bilateral meeting with Poroshenko last Thursday in Washington creates doubts in the mind.

Obama is a smart politician who can make a retreat appear a victory. He's done it in Afghanistan. Is he doing it in Ukraine? Consider the following. Obama who poured scorn at the Minsk dialogue has now become its votary.

He is also advocating that Ukraine should have "good relations with all of its neighbors, both east and west," and he recommends that Ukraine should continue its strong economic links and people-to-people relations with Russia. This is vintage Obama.

Are we seeing the signs of Obama all but counseling Poroshenko to sort out issues directly with Moscow? It seems so. On returning to Kiev, Poroshenko disclosed today that US will only supply "non-lethal" military items to Ukraine, which of course falls far short of his wish list.
And, as for economic assistance, White House agreed to give the princely amount of $50 million to help Poroshenko see through the year 2015. It's rather tragi-comic, coming at a time when according to the IMF, UKraine needs around $19 billion next year, if the civil war continues, by way of financial assistance to survive through next year, on top of the global bailout program for Ukraine.

Meanwhile, the IMF has revised its own estimate six months earlier and now says a staggering bailout of $55 billion is needed as external financing for Ukraine. Experts forecast that this figure could eventually turn out to be somewhere closer to $100 billion than $55 billion.

It's a macabre joke - handing out a measly amount of $50 million after egging on Ukraine to go to war with Russia. Where is the remaining $18450 million to come from to see Ukraine through next year?

Well, from Europe, where else? And who will pay from Europe? Not Poland, not Lithuania, not Estonia. It has to come from 'Old Europe'. In essence, Germany has to loosen the purse strings. Chancellor Angela Merkel must be hopping mad.

Contrary to earlier estimates, Ukraine's economy's contraction this year could turn out to be in double digits. All this may go a long way to explain certain intriguing developments relating to Ukraine in the recent weeks: a) European Union's summary decision to consign its hurriedly-signed Association Agreement with Ukraine in the freezer at least until end-2015; b) the robust EU backing for the Minsk accord between Kiev and the separatists in southeastern Ukraine; c) the top secret meeting between the foreign ministers of France, Germany and Russia on the sidelines of the recent international conference in Paris regarding the Islamic State; d) NATO's belated acknowledgment that Russia has pulled troops back from Ukraine border; and, e) meeting between the foreign ministers of Russia and US in New York later today.

Suffice to say, Russia's President Vladimir Putin may be pulling off a major diplomatic victory in getting the West to recognize that Moscow has legitimate interests in Ukraine. The West has no option but to accept that Ukraine's economy is connected to Moscow with an umbilical cord and without whole-heatred Russian cooperation, it cannot be salvaged.

In retrospect, Moscow did well to ignore the EU's latest round of sanctions announced three weeks ago. The signs are already there that Poroshenko is eyeing Putin as, perhaps, his most consequential interlocutor.

Concurrently, Washington too should begin to realize that engaging Moscow is becoming a necessity for effectively mobilizing an international campaign against the Islamic State. It could be a sign of the way the wind is turning direction that the former British defence secretary and Conservative MP, Liam Fox today explicitly cautioned Europe and the US against making threats against Russia over Ukraine.

Fox said, "I think it's very important not to pretend that you [West] can or will do things that you clearly won't. Making false threats, I think, is a big problem. We have to look at different ways of dealing with the Ukrainian situation." Bravo !

Don't be surprised, therefore, if one of these days Putin comes to the aid of Obama once again in Syria. Russia can help Obama legitimize the international campaign against the islamic State by getting a UN Security Council mandate for it; Russia can be helpful in the US' dealing (or the lack of it) with Syria's President Bashar Al-Assad. Make mo mistake, Russia's stance (here, here and here) on the Islamic State threat is unequivocal and broadly supportive of the US-led international campaign.

Russia's only caveat is that the US operations in Syria should have the concurrence of the Syrian government and/or should have a UN mandate, but then, what stops Obama from seeking a UN mandate is also the apprehension that Moscow may not cooperate.

Quite possibly, the ice will be broken regarding Syria today at the meeting between Sergey Lavrov and John Kerry in New York. The New Cold war, which started with a bang, might be ending with a whimper.

[Sep 27, 2014] Russia, Ukraine Nearing Interim Gas Deal

Russia and Ukraine are moving closer to a preliminary agreement, with Ukraine to pay $3.1 billion in existing debts to Gazprom and receive deliver of another 5 billion cubic meters at $385 per 1,000.

Ukraine has a bad history of not paying its debts, but the price is in keeping with an EU-brokered agreement. Such a deal was likely inevitable, and as winter gets closer, the pressure is on the rise to finalize the pact and ensure gas supplies to not just Ukraine, but the EU as well.

[Sep 27, 2014] Hungary suspends gas supplies to Ukraine under pressure from Moscow

Violation of contract is punishable in civilized countries, is not it ?

Hungarian prime minister Viktor Orban announces move after Russia threatens to cut off countries re-exporting its gas to Kiev

... ... ...

"Hungary cannot get into a situation in which, due to the Russian-Ukrainian conflict, it cannot access its required supply of energy," Orban said on state radio following threats from Moscow.

Hungary's gas pipeline network operator FGSZ said late on Thursday that it had suspended supplies to neighbouring Ukraine indefinitely for technical reasons, a move Ukraine's state-owned gas firm Naftogaz described as "unexpected and unexplained".

Orban's statement followed a warning from Moscow that it could cut off European countries that have been re-exporting gas to Ukraine to help Kiev cope with Moscow's energy sanctions.

[Sep 27, 2014] A Brussels Spokeshole for the EC openly backing a deliberate and illegal breach of contract between Russia and EU member states

Al, September 27, 2014 at 4:40 am
Dirty Lady: Under Pact, Russians to Give Gas to Ukraine

"…Mr. Oettinger said the European Union would guarantee a loan from the International Monetary Fund to help Ukraine meet its debt payments. The deal foresees an initial installment of $2 billion due by the end of October, with the outstanding $1.1 billion due by the end of December…

…The urgency of reaching a deal was made clear hours before the talks concluded, when Hungary made a surprise announcement that it would not sell natural gas back to Ukraine that it had obtained from Russia but did not need…

…Helen Kearns, a spokeswoman for the European Commission in Brussels, noted that Brussels expected "all members to facilitate reverse flows," as was agreed to by the European Council…."

A Brussels Spokeshole for the EC openly backing a deliberate and illegal breach of contract between Russia and EU member states?? Where is the much vaunted 'EU Rule of Law'?

[Sep 25, 2014] No More Foreplay Russia Threatens European Gas Supply Disruptions

09/25/2014 | Zero Hedge

It appears Vladimir Putin is willing to hit'em while they're down. Early European equity weakness (and safe-haven flows) on asset-freeze threats have accelerated as Bloomberg reports, Russian energy minister Alexander Novak threatens gas supply disruptions if the EU continues to re-export Russian gas to Ukraine. 3Y German bond yields have plunged to -4.1bps, a record low close and European stocks are closing on their lows of the day.

3Y yield at record (negative) lows...

As Bloomberg reports, Russia Threatens Gas Supply Throttling to Europe: Handelsblatt

EU re-exporting Russian-purchased gas to Ukraine exceeds existing treaties, Novak tells newspaper

Novak says only adherence to negotiated agreements can guarantee undisrupted gas supplies to Europe: Handelsblatt

Novak says Ukraine has rejected constructive offers from Russia on pricing, reducing Ukrainian gas debt and future pre-payments ahead of talks tomorrow in Berlin: Handelsblatt

[Sep 18, 2014] More Than Just Gas: Is This Natural Resource The Reason For The Ukraine Civil War?
Submitted by Tyler Durden on 09/18/2014 11:25 -0400

Earlier today, we got a definitive confirmation that when Obama was talking about "costs" when jawboning on the ongoing Ukraine civil war, he envisioned not only Germany, and thus Europe, both of which are teetering on the edge of a triple-dip recession due to Russian sanctions, but Ukraine itself. The reason: the Ukraine economy appears to have ground to a halt following an overnight report that the war-torn country's industrial output plummeted 21.4% Y/Y in August, above the 18% estimate, and some 12.7% on a monthly basis. As the chart below shows, this was the biggest drop in industrial production since the global crisis of 2009 and followed a 12% fall year-on-year in July.

As the FT further added, according to an EBRD forecast earlier today, the Ukrainian economy will contract 9% this year, a far greater contraction than assumed in the IMF's bailout (odd how that always happens). Accordingly, this "makes sustainability of Kiev's government debts much more doubtful, and has sparked concerns that the country will eventually be forced to default and restructure."

As skepticism grows that Ukraine will be the next Greece, only without the backstop safety net of the EUR currency, bondholders are starting to get skeptical, and overnight the yield on Ukraine bonds due April 2023 slid to 10.61%, the highest in 4 months on rising fears of a default.

And while the collapse, in either the economy or the bonds, were not surprising and were predicted here and many other places, what did seem out of place was the following observation by Reuters:

The statistics office said the main industries of Ukraine's Donetsk region, one of the areas where the war is most intense, had suffered, with coal extraction down almost 60 percent and steel production down by 30 percent.

In other words, while the most important commodity for Europe is gas, whose supply Russia largely controls on the margin, for Ukraine the one commodity, located deep within the perimeter of the raging civil war, and which it desperately needs to regain access to to stop its economic collapse, is the following (courtesy of Stratfor):

Which begs the question: are the massive stores of coal in the Donetsk region the main reason why Russia continues to support a civil war in just that region, a war which with every passing day means the Ukraine bankruptcy, and inevitable regime change, is also one day closer?


I wish the Russians would just take it all already.

Take the good parts of Ukraine. Leave Chernobyl to the EU -- and the EU should be happy about it because, after all, for them if its just about spreading democracy, then it shouldn't be that big of a deal.


"spreading democracy" is what Bush Junior was preaching, if I remember correctly. in fact, here it is


"[P]olitically, this enlargement was a leap for our Union, a leap that renewed its core

meaning. It reminded all European citizens of what our Union, as a political project, is

about. That at heart it is about spreading peace, spreading democracy, spreading prosperity.

It was a leap that showed confidence, and openness, and ambition..."

Herman Van Gollum, April 30 2014

Paveway IV

Ukraine's industrial production and related coal consumption has been declining for years - nobody is fighting for coal.

Ukraine industrial production has been dropping for so long that they're borrowing money to export their cheap electricity west to neighboring countries.

Unfortunately, it's cheap because they run outdated and undermaintained (but heavily subsidized) nuclear power plants. Chernobyl was only a warm-up exercise for future Ukrainian nuclear plant disasters.


[Sep 14, 2014] Germany is the target of tremendous pressures on both sides. A large part of German MSM and establishment were scandalised seeing that Merkel was carrying water for the Ukies …

patient observer, September 13, 2014 at 6:38 am
Nord Stream comes ashore in Germany and its capacity is about 55 billion m3 annually:

Per the following, virtually all imported natural gas consumed in Germany is via Nord Stream.

Thus, the gas distribution system in Germany is already configured for Nord Stream gas. This suggests that some farsighted individuals were involved with this project.

In any event and per the forgoing, Germany is simply a transit country for Russian gas via Ukraine.

If Ukraine were to stop transit gas, Germany supplies would not be affected. Although much is made of Germany dependence on Russian gas, in reality it is secure relative to disruption in transit gas. German solidarity with the EU regarding Ukraine is not driven by energy concerns but rather by political forces. This means Germany can talk tough to Russia regarding Ukraine and Ukraine can make threats to disrupt transit gas without fear of a Germany backlash. This makes Germany the indispensable nation in the US plans for the push against Russia (apredicated on an untouchable Nord Stream supply).

On the other hand, Russia counter-sanction sanctions can severely damage the German economy. If Russian really wants to hit Germany where it hurts, they need to direct sanctions their way – cancellation of high speed train contracts, banning Lufthansa from overflights, banning auto imports etc. The result could be that Germany switches – becoming a compliant partner to Russia with a secure gas source and trade while the rest of Europe sinks tied to the US-Ukraine anchor. This is only conjecture but still a possibility.

james@wpc, September 13, 2014 at 7:18 am
That is a very pertinent fact about Germany's gas supply. I'd say the whole raison d'etre for Nord Stream was to safeguard Germany's gas supply from third party interference. So what you say makes a lot of sense, Patient Observer.

Medvedev did mention overflight restrictions at the announcement of Russia's first response to sanctions but I think it would lead onto a lot of tit-for-tating. I would think restrictions on imported cars are much more likely with European parts suppliers for European assembly plants in Russia encouraged to set up shop in Russia.

I wouldn't be at all surprised if a joint Chinese-Russian car is announced with its own dedicated plant in the near future. China is the number one car manufacturer in the world today!

I think it is also very likely there will be moves against the dollar and in ways that directly help Russia which will entail changes to the legislation that covers Russia's central bank. But we'll see soon enough.

marknesop, September 13, 2014 at 11:14 am
And a well-supported possibility, from my viewpoint, That's a convincing argument, that Germany mostly does not depend on Ukraine for its supply of Russian gas. Most people only look at the figure for the degree of dependence on the gas itself, and not at the source or the pivotal position Germany enjoys, although most everyone understands on some level that Germany is the target of tremendous pressures on both sides. I wish they had a wiser, or perhaps less compromised leader than Merkel. The next turn of the carousel she will probably be gone, and there is every chance this struggle will still be going on at that time.
colliemum, September 13, 2014 at 1:27 pm

Footnote to the North Stream: it was initiated by the then Chancellor Gerhard Schroeder, Merkel's predecessor, who became a director or something with Gazprom, involved with building that pipeline. That earned him the nick 'Gas Gerd'.

He's friends with Putin, and IIRC, just before the St Petersburg economic meeting earlier this year, he had a birthday party there, which Putin attended. There were photos of the two hugging each other, I think.

The German MSM and establishment were scandalised, of course, seeing that Merkel was carrying water for the Ukies …

[Sep 13, 2014] The production rates of fracking wells decline, on average, 85 percent over three years.

Fern , September 13, 2014 at 12:52 pm
VICE News is reporting the findings of Canadian geologist, David Hughes, on the life cycle of fracking wells and it's not good news for the 'good riddance, Gazprom' lobby:-

"Hughes meticulously analyzed industry data from 65,000 US shale oil and natural gas wells that use the much-ballyhooed extraction method of hydraulic fracturing, colloquially known as fracking. The process involves drilling horizontally as well as vertically, and then pumping a toxic cocktail of pressurized water, sand, and chemicals deep underground in order to break apart the rock formations that hold deposits of oil and gas.
Hughes found that the production rates at these wells decline, on average, 85 percent over three years.
"Typically, in the first year there may be a 70 percent decline," Hughes told VICE News. "Second year, maybe 40 percent; third year, 30 percent. So the decline rate is a hyperbolic curve. But nonetheless, by the time you get to three years, you're talking 80 or 85 percent decline for most of these wells."

[Sep 13, 2014] Sweeping new US and EU sanctions target Russia's banks and oil companies by Dan Roberts in Washington
Aleksandr Romanovich Podgaets -> SirDeadpool, 12 September 2014 7:21pm
Yep. that's the plan.

It's going to be a big surprise when it will appear that Russia isn't "autocratic" and isn't all "Putin" - in fact Putin has been braking Russia hard for the last half a year. Overthrow him if you want an endgame. Cause the nation is really pissed off.

BarneyQ -> peacefulmilitant, 12 September 2014 7:46pm

In Europe

It is ok to break international law outside Europe?

NATO countries went on a global rampage invading and partitioning countries without a UN mandate. They established an international torture network with secret jails and kidnapping. Now these NATO countries are going to ignore the core value of international law and violate a sovereign state's borders to bomb their stooges who turned bad.

Kaiama, 12 September 2014 6:35pm
The US really wants to destroy Russia.
I am beginning to feel very pessimistic about the future.
The Russians are extremely unlikely to back down.
It's going to be a cold cold winter.
lids, 12 September 2014 6:35pm
A few years ago there were two super powers in the world. Now there is only one. And America is now slapping around the former super power Russia and showing her who is Boss.

Putin needs balls of steel to go forward from here. Rothschild will net be pleased, the child needs to behave itself, central bankers rule the world, didn't you know,,,,

StrategicVoice213 -> lids, 12 September 2014 6:56pm

A few years ago there were two super powers in the world.

More like 2.5 decades ago.

StrategicVoice213 -> lids, 12 September 2014 6:56pm

A few years ago there were two super powers in the world.

More like 2.5 decades ago.

secondiceberg -> lids, 12 September 2014 7:50pm
Superpowers tend to implode at home, from within. The U.S. is showing signs of doing just that.
StrategicVoice213 -> secondiceberg, 12 September 2014 10:03pm
Been hearing that since the 50's.
MasonInNY -> secondiceberg, 13 September 2014 12:51am
The U.S. is showing signs of doing just that.

Neo-Marxists and Trotskyite students at my university were telling me that 40 years ago: America is about to implode. So "showing signs" is a definite improvement, all told. The US still remains the only real superpower in the world.

arpito, 12 September 2014 6:36pm
this move is no doubt is intended to suffocate Russia economically in hopes that the CCCP's collaple of the 1990 will repeat itself. But it is a different Russia and a different, multi polar World today. So i do look forward to the boomerang effect, which is not so much the Western economies harming themselves, but the third World and competing economies suceed
ChristopherMyers, 12 September 2014 6:37pm
The propaganda pile is getting deeper. Not to worry Putin, they are probably doing you a favor in the long run, and they hate the long run, heck, they thought Ukraine would be short and sweet, just like Iraq.. Again I have to agree with him, The less time officials and business leaders spend overseas and the more time they spend dealing with current issues the better.
voicelessbritain, 12 September 2014 6:37pm
One senior administration official in Washington claimed the measures were in response to recent incursions by Russian troops and were "about restoring respect for international law and state sovereignty".
Meanwhile in Syria...
You couldn't make this stuff up!
I hope I'm wrong but I've a horrible feeling we're about to find out we're more dependant on them, than them on us...
phakorr -> panpipes, 12 September 2014 7:48pm
They've been taking the mickey out of Mc.Donalds and US for a long time now..

Scandalous reality about "McDonald's (Russian - 2011, viral campaign)"!

AuObserver -> panpipes, 12 September 2014 7:55pm

I guess Putin needs to ban some more McDonalds

Might be the most useful thing he's done for the wellbeing of his people.

Robert Michael, 12 September 2014 6:44pm
So who is going to sanction the U.S. and EU for their illegal wars? These idiot hypocrites are trying to shipwreck the world's economy for something they've been doing already for over 10 years now, and it's only the poor that will continue to suffer.

NATO and the EU need to be disbanded.

These morons still haven't come to understand that their actions continue to foment more unrest and radicalism throughout the world. ...Or they do understand very well and are behind the chaos for they are in the business of war!

voicelessbritain -> Robert Michael, 12 September 2014 6:52pm
War is business...
JoeyTe, 12 September 2014 6:49pm
Kind of a head scratcher here. Why add sanctions if Russia is removing its troops and aiding in bringing peace to eastern Ukraine? Would have thought that act would come with removing sanctions, not adding. I must be living in a parallel universe or something, because this semms illogical.
Вэ Ка -> JoeyTe, 12 September 2014 7:15pm
Here is a kicker... Russia never had its troops in Ukraine. The one time they were "close" is during an exercise, but still hundreds of miles away from the border.

How about those Ukrainian BMPs caught crossing into Russian territory on multiple occasions and getting stuck? Or the provocative shelling of Russian territory by Ukrainian artillery? I bet Psacky "has no such information"?

Aleksandr Romanovich Podgaets -> JoeyTe, 12 September 2014 7:15pm
Everything is going according to plan.

The plan was to make Russia invade, impose sanctions, cut trade, make Russian economy crash, and then overthrow Putin.

Too bad, we were too slow to send even volunteers.
Too bad, sanctions aren't working on a country which has principles.
Too bad, even cutting trade doesn't work as planned.
As for the last one, I'm sorry to say this, but it's thanks to Putin we have a planet to chat on by now. If somebody weaker would be charge - nuclear exchange would already happen some time ago.

Everyone agrees by now that the plan is crap. But they don't have another plan in the West, so they keep going. Good luck guys! Success to your endeavours!

Beckow, 12 September 2014 6:51pm
And sweeping Russian sanction will target EU exporters to Russia and possibly the energy supplies from Russia. Than EU will retaliate, Russia will respond. Sooner or later, the economic activity will drop and drop. We will all be happier, I have always argued that what is needed is less work and more yelling at each other, it is more fun.

And then maybe, just maybe, some reason will be re-introduced into the system. We will revisit the same places on the way up as we are on the way down. A pointless symbolic exercise.

Ukraine and EU have just agreed to "postpone the EU Association until the end of 2016". In other words, what Yanukovitch did last November - postponed because Ukraine cannot afford to lose its Russia trade. There is a deal that is being obscured by western PR and propaganda.

Like small boys way over their head, Western leaders will agree to anything as long as it doesn't look like they are losing. Thus the PR. But they are losing this one. So is Ukraine. Why was this madness of a coup in Kiev during Sochi Olympics organized by the West? Is the Peace Price winner so powerless or so clueless?

allexxx -> Beckow, 12 September 2014 8:44pm
ah yes. the 850 million people of the european union and
the united states will be brought to their knees by the might of 143 million russians and an economy 6% the size of the unprincipled west. can one laugh.

... ... ...

Shrimpandgrits, 12 September 2014 6:57pm
If we could get passports and travel visas confiscated from all of our banksters, arms merchants, Nobel Piss Prizers, "states(wo)men" et al. -- regardless of what nationality or religion they claim-- the world would be a kinder and gentler place.

Вэ Ка, 12 September 2014 7:03pm

No, what IS ridiculous is us talking about how Russia should "respect international law and sovereignty" and yet we ourselves have been invading other nations constantly! Just last night on the news I saw a guy saying "oh yes we definitely! need to bomb Syria"... WHAT!?

It is sad that we are allowing our government to treat us like dumb cows.

We lie to the world, we make conflict after conflict, we invade, we bomb, and yet we talk about international law? We, the US, poke our nose everywhere in other's business, we have purposefully nurtured the fascists in Ukraine, have created this conflict, we lie about "evidence" that we don't really have, as always, and WE? talk about respect and sovereignty?
Oh, that's right, those stupid laws don't apply to us, we are the United States! As Obama said at West Point, we are special.

The hypocrisy and and double standards are mind boggling. Makes me want to stop paying taxes to these bastards so they can't use my hard earned money to make war and stuff their own pockets.

Aleksandr Romanovich Podgaets -> Вэ Ка, 12 September 2014 7:08pm
umm... interesting that you mention that.

As of today, the price for giving away American passport rose 5 times.

It seems many are feeling your way.

Scaramouch, 12 September 2014 7:05pm
What a shower of idiots, you would think that Obama, Cameron and the rest would get off their asses and go and visit Putin face to face instead of poncing about hiding .

AlfredHerring -> Scaramouch, 12 September 2014 7:29pm

you would think that Obama, Cameron and the rest would get off their asses and go and visit Putin face to face instead of poncing about hiding

Why would I think that?

reclaimlocalgovt -> Scaramouch, 12 September 2014 7:42pm
They would if they wanted to solve the problem - clearly they don't want to, That is why they keep stoking the fire and poking the Bear. What I don't understand is what EU/US's goal is. I can only guess it has to do with competing pipe lines from the gulf and the petro$ but unfortunately our press never ask any of the important question.
Aleksandr Romanovich Podgaets, 12 September 2014 7:06pm
Russian stock market reacted on European sanctions with a rise - presumably on expectations of our response. Even shares of sanctioned RosNeft rose.
Jacob Schønberg -> Aleksandr Romanovich Podgaets, 12 September 2014 7:19pm
This market is too small not to be manipulated - anyway Rosneft will be persecuted all over the world to repay the assets to Yukos and they willk loose so much money you better not have money in that company! greetings jacob Schonberg
Martin1008 -> Aleksandr Romanovich Podgaets, 12 September 2014 8:08pm
The market rises because for the oil in north Russia was agreement in big USA company, now the USA company is prohibited by USA alone to work there and Rosneft will get it.
InoWis1, 12 September 2014 7:13pm
Shaking in your boots? Think again --

You wanna be Uncle Sam's bitch? Pay the price!

There is a basic rule which every Russian kid learns in school, in street fights, in the military or elsewhere: never promise and never threaten - just act.

alazarin, 12 September 2014 7:34pm
Surely most of the stuff Russia buys from EU businesses is either already made in China or else there's a passable substitute / knock-off available. So basically all we're saying is: 'Hey, cut out the middleman and go straight to the source.' And that's meant to be threatening? How?
Felix Cruz, 12 September 2014 7:34pm
That's not fair what the EU/U.S is doing to Russia. It's OK for the EU/U.S to have military intervention against Syria, Iraq, Yemen and Afghan for its own economic interest but its not OK for Russia to give a hand to nation who desperate need humanitarian aid such as Ukraine. Bad bully EU/US
Ivan Borisov, 12 September 2014 7:36pm
Why is EU Association Agreement implementation postponing is still not in the news? Funny how originally it was what brought Yanukovich down, but now is not even worthy of writing about? Ouch...

savingUK -> Ivan Borisov, 12 September 2014 8:07pm

It's just appeared on the WSJ.

It seems completely crazy that the US and EU impose more sanctions on Russia but are willing to agree to this delay (with Russia in the tripartite talks) so that Moscow can hold off on threatened retaliatory trade measures.

grimaldi442, 12 September 2014 7:40pm
I'm probably wrong but it may be that this whole Ukraine business has shifted from being a crisis in the making to a "lets all find a way out without losing face" negotiation phase.
After all, if Russia and the West want a public squabble there is still always Syria to grab the headlines.

Alcimar Luiz Callegari -> grimaldi442, 12 September 2014 7:43pm

Lets all you mean all US/NATO/EU...because Russia won on the ground...
Steve Redmond, 12 September 2014 7:41pm
Baloney as the EU slides into full blown depression. Expect new elections and possible EU defections in the months ahead as unrest sweeps Europe. Russian counter moves will cause numerous bankruptcies and especially injure the German economy giving the US a leg up as Germany is put in her place while US companies feel less pain initially. Net result will not change Russia's course since for them it is a matter of survival as the west tries to dismember Russia piece by piece.
Boyaca -> Steve Redmond, 12 September 2014 8:58pm
And why would they change course? As the senior official in Washington said this about teaching Russia a lesson and that lesson is that when the West says jump, Putin`s only answer can be " How High".

What Russia is learning is that the West is all bluster and hype. There is no fire under all that smoke.

Alcimar Luiz Callegari, 12 September 2014 7:42pm
No matter what West does , Crimea remains as Russian territory. Donetsk and Lugansk will never return to Kiev either.

They lost the war big time. It is a mater of time to digest the defeat.

Bombing Syria is a ''showing of respect'' from US responding to the successful Russia campaign in Ukraine.

Syrian war which US has never won.. On the other hand.. in Ukraine...

Doug Salzmann, 12 September 2014 7:52pm
'Sweeping new sanctions' despite a Russian-initiated ceasefire threatened mostly by Kiev-sponsored neo-Nazis who openly announce they will use the lull in fighting to prepare further attacks on the people of Donbass.

It has been quite obvious to many of us, from the beginning of this mess, that what we are witnessing is the execution of the West's longstanding policy of isolating, surrounding and -- ultimately -- dismantling Russia, the better to destroy competition and secure control of resources. It should be becoming more obvious, to more people, with each passing day, that this is exactly what is happening.

Vladimir Slaviansky, 12 September 2014 7:53pm
The Guardian: "The US Treasury and European Union announced on Friday that Russia's largest bank, SBERBANK, would be barred from accessing... "Russia's economic and diplomatic isolation will continue to grow as long as its actions do not live up to its words," said US Treasury secretary Jack Lew."

... Probably very few people know, that "Sberbank" is one of the few banks that has successfully worked in the Soviet era as the "Savings cash desk" or "Sberkassa". It was a truly people's bank, which exists on deposits of the ordinary people. The current leadership of Sberbank believes, that successful operation of the bank is due to their credit. However, I think that the Russian people are still in need of mutual assistance and consider this bank as their own bank. That is why, the American sanctions cannot undermine the well-being of the bank. However, they certainly cause people's anger and hatred towards those people who interfere in their affairs from a distance of 10,000 km.

Вэ Ка -> Vladimir Slaviansky, 12 September 2014 8:09pm
Hell, I'm IN the US and even I am hating :) My tax money is being used to fund stuff i am against and to stuff someone else's already deep pockets, meanwhile we Americans can't afford universal health care and are in deep debt with education loans, bank loans, housing loans, and etc.
freeandfair -> Vladimir Slaviansky, 12 September 2014 8:35pm
Sanctioning Sberabank is a slap on the face of every average Russian. The US and EU make themselves look really bad with this one. It is like stealing pennies from orphans.
theonionmurders -> Вэ Ка, 12 September 2014 10:50pm
I don't know if this is true, but recently I read that one-tenth of the US annual military budget could eliminate poverty and provide universal healthcare for all Americans.
HAL911, 12 September 2014 7:56pm

[If] Russia chooses to continue its violations of international law, the costs will continue to rise."

what sanctions will be imposed upon the USA for violating syrian borders?

vivianvivian, 12 September 2014 8:01pm
Now that Ukraine forces and separatists have the peace deal, what is the point of more sanctions? Backing Russia to a corner won't bring peace to Ukraine. On the contrary, it will result in a sanction war from both sides.

No one benefits. If Russia feels whatever they do will always bring sanctions, they won't sit down with EU to discuss a Ukraine solution. That would be a point of no return.

Boyaca -> jsw2011, 12 September 2014 9:11pm
Well actually they tried. remember all the US companies and politicle hacks that were in Russia after the breakup of the Soviet Union? Russia`s economy promptly shrunk by 40% with all of theri expertise. Only Putin saved the country from the western thieves.

No he has another opportuniy, to kick out the American and British oil companies. he should do it right now while the iron is hot.

Oh and sanctions? Well if I were Putin I would make a list of the most belligerent EU countries and I would place them on a priority list and I would begin at the top and turn off the gas to one country at a time until the EU regains the balls to stand up to the US:

jsw2011 -> Boyaca, 12 September 2014 9:18pm

"I would begin at the top and turn off the gas to one country at a time until the EU regains the balls to stand up to the US:"

It would be interesting to see how long the Russian oligarchy lasts, at least in its present form, without oil and gas revenues.

Вэ Ка -> jsw2011, 12 September 2014 9:20pm
Wow! I mean, really... Wow.

Did you mean to say that Russia should have continued on the path to becoming America's bitch like all other European countries, and keep letting American oligarchs to ravage it like under Yeltsin?

And by the way... we the US are the LEAST democratic nation. We are a Police State and our elections are a farce. There is a reason they are often referred to as "the greatest SHOW on earth".

freeandfair -> jsw2011, 12 September 2014 9:30pm
The stupidity is that after throwing off the yoke of communism, instead of becoming a mainstream democratic, prosperous and (largely) peaceful European country like France, UK, or Germany, Russia has chosen oligarchs as leaders who have lead Russia into a confrontation with the West. The mismatch in economic strength between Russia and the US/EU/Japan means Russia is going to come out the looser

ROTFL, the US is an oligarchy -- The biggest one! Russia did exactly the same. The only difference is that in the 90s Russians were naive and let the US and European corporations pillage it, in addition to its own oligarchs, which promptly led to a complete economic collapse despite such people as Larry Summers advising Russia.
Putin protected Russian interests and forced oligarchs to behave.

Gray Liddell, 12 September 2014 8:10pm
Aren't we the original bad faith actors in this drama? Didn't Clinton dishonor a 'gentleman's agreement" with Gorbachev, crafted during the reuniting of Germany. At the time the Russians were negotiating from a position of strength, they had 350,000 troops in Europe. Yet they agreed to let Germany reunite if we agreed NOT TO EXPAND NATO!

How well have we honored our end of this bargain? I think there are ten more NATO members, all of whom bear a historical brief against the Russians.

Talk about Janus-faced Capitalistas!

Why did the US whine about the Monroe doctrine if there is no need of buffer states? I know Kerry declared it dead but we were squealing as late as the 90s. Does anyone seriously think we would let Al Qaeda take over Cuba?
It is easy to make moral pronouncements when you have two huge oceans between you and everyone else, not so easy if they are right across some little river.

Isn't there a double standard going on here? We invoke the Monroe doctrine to keep Russian missiles from our borders but we can get so close via NATO, the Russian bear's hairs tickle our nose?

Remember the Monroe doctrine which Kennedy cited in 1962 over the Cuban Missile Crisis? Look at it from Putin's point of view, this noose of NATO is tightening around Mother Russia, when Gorbachev had an implicit guarantee it wouldn't.

From a 2009 NYT article, by Mary Elise Sarotte, Enlarging Nato, Expanding Confusion, discussing the 'gentleman's agreement' that Gorbachev understood as meaning no NATO expansion, applying to his agreeing to German reunification.

NYT says "Did the United States betray Russia at the dawn of the post-cold war era? The short answer is no. Nothing legally binding emerged from the negotiations over German unification. In fact, in September 1990, an embattled Mr. Gorbachev signed the accords that allowed NATO to extend itself over the former East Germany in exchange for financial assistance from Bonn to Moscow. A longer answer, however, shows that there were mixed messages and diplomatic ambiguities.

By acknowledging that there might be some substance to Russian grievances, the Obama administration would strengthen our relations with Moscow. Given that NATO enlargement has already taken place and efforts for further expansion are stalled, little would be lost with such an acknowledgment but much could be gained." Unquote

We, in the West, are the original bad faith actors, we come from a dishonorable world…and we act accordingly.

Dramarkette, 12 September 2014 8:19pm
How leaders see their Lies as Truth. The west has never stopped battling for propaganda to be as accurate as possible.

THEY prefer being cynical and brutal to being caught in a lie people say

Do not let yourself be disconcerted by the worldwide clamour that will now begin. There will come a day, when all the lies will collapse under their own weight, and truth will again triumph."


SocialDemocratie, 12 September 2014 8:24pm
The winter will prove harsh for Eastern and Central Europe.

I hope the Poles are getting ready to ask the EU for more subsidies over the winter, as they already have for their agricultural sector after the "shocking" ban by Russia hurt their fruit production.

Honestly, I for one, see no reason why my country in crisis needs to further spend itself down the hole for the sake of the Eastern Europeans' centuries old grudge against and amongst themselves.

The Poles, hardly the most generous and communal people in good times, are annoyingly good at asking for solidarity and aid in bad times.

I clearly remember the extra subsidies from the EU that the Poles demanded when they first joined in the early 2000s, only to go off and spend that money acquiring American armaments.
I recall that Jacques Chirac was livid.

skepticaleye -> SocialDemocratie, 12 September 2014 9:04pm
Part of the Polish economic miracle has been due to 220+ billion Euro aid package. The sum is bigger than the aid packages provided by the Marshall Plan.
Leondeinos, 12 September 2014 8:36pm
Sanctions are the coward's weapon. (As against Iraq, Iran, Cuba, Burma, ...) Who will pay for these this time around? People in Europe, Ukraine (especially), and Russia. Probably not the US, as it has far more experience in dishing out sanctions, always keeps the domestic costs low, and sets them up favorably for its banks and arms merchants.
politicaltoo, 12 September 2014 8:49pm

said the Treasury department's under secretary for terrorism and financial intelligence

A completely trustworthy department . Wonder if they gave input to the Joint Inquiry into Intelligence Community Activities Before and After the Terrorist Attacks of September 11, 2001

Whatever they think I guess we'll never be sure. Not where powerful financial interests lie anyway. *

*NB satire on economic hypocrisy

Anthony Martin, 12 September 2014 9:02pm
Russia has control of most of the oil and gas, these sanctions will have little affect on Russia if any , but they will cause long term damage to the USA and Europe. These sanctions really fail to under the basic idea of the balance of power or understand Russia ..

DELewes -> Anthony Martin, 12 September 2014 9:18pm

Hah. Russia, with its $2T GDP, will not only struggle to withstand an economic standoff with the US and EU, combined GDP's $34t, it will also face an acute problem involving hard currency liquidity. Just as the costs of Putin's Ukraine folly begin to weigh heavily on Russia's budget, Putin will find it harder to find the revenues to sustain it.

It turns out 70% of Russia's exports consist of gas and oil, coming to $350b in 2013. That accounts for fully 17.5% of Russia's entire GDP. As they say, Russia is basically a big gas station with nukes. That lack of economic diversity is a huge Achilles heel, one even Palin can see it from her house. If that weren't enough of a problem, half of Russia's budget revenues come from gas and oil sales.

Who does Russia rely upon for that lifeblood of its economy, i.e., revenues from oil and gas exports? You guessed it, the EU. While Europe imports less than half its energy from Russia, about 40%, its purchases comprise around 80% of Russia's oil and gas exports. That's $280b, or fully 14% of Russia's total GDP, not to mention 40% of Russia's budget revenues.

That means, even a relatively small change in European purchasing habits will have considerable impact on Russia's economy. A 10% reduction would amount to a 20% loss, to the tune of $28b in hard currency revenues for Russia. That's 1.4% of Russia's total GDP.

Until that pipeline to China is complete, some 3 years hence, Putin is in no position to withstand the economic consequences of his folly. There is nothing the 'BRICS' can do to help him out here. Even then, it will provide little succor. By the time that pipeline is up and running, Russia will be in such dire straights, China will be able to set the price.

In the end, Putin's folly will make Russia China's gas station and nothing more. He just lost his best counter balance to the dragon rising to Russia's East, the West.

The above data can be found here.

Milogrim -> DELewes, 12 September 2014 9:30pm
You forget that although it will hurt Russia's revenues if they turn off gas, it will simply devastate the EU.

Gas is a fraction of total Russian energy exports, most income comes from oil exports, which will continue regardless (oil is traded on tankers).

Aside from heating households, gas is a main input of many industries like chemicals, refineries and so on. When there was a hickup in winter deliveries a few years ago, some EU countries had to shut down whole industries to keep their citizens warm.

So if Russia really wanted to hurt the EU very badly, it can do it with a 100% certainty.

Anthony Martin -> DELewes, 12 September 2014 9:31pm
I take on broad your view but find it unbalance because it lack the understanding of the demand for gas and oil from Europe, have you been wondering why they are fracking the hell out of the UK and the USA ? And how low the supplies are? It's really like a druggie telling it supplier to stop selling him drugs, could happen but very unlikely. Yes Russia now selling it power to china, it really does not want to sell it Europe anymore and the lights go out all over Europe what a petty ..
Anthony Martin -> Milogrim, 12 September 2014 9:38pm

that is how bad the supply is for the UK ...

DELewes -> Milogrim, 12 September 2014 9:58pm
Sorry Milogram, but you are mistaken. I note that unlike my post, you cite to no source for your assertion.

That said, Russia's oil production is in jeopardy for lack of technology to maintain the productivity of current oil fields and to open new ones. You know where that technology comes from? You guessed it.

Anthony Martin -> DELewes, 12 September 2014 11:02pm
I respect your view however your theory is biased of free market ideas, and not taking into account theory of scarcity. If the world market was able to balance itself the price of gas and oil would be falling. You could say that fracking in the USA has made the price drop in the USA, but as you may know such gas extractions costs are being masked by the printing of the dollar and the cleanup costs are going to have be paid one day .

I also remind you that Saudi Arabia have lied about their reveres, the oil will run out soon. And we are unlikely to able to access Syria gas at this time. Which leaves Iran; that's not going to work, just look at who supplied them with that nuclear tech.. Also let take into account politics and history , OPEC and their pasted history, free market , I real do not think so ..

unended, 12 September 2014 9:05pm
The US wants to "restor[e] respect for international law and state sovereignty."

You believe that?

Vocalista -> unended, 12 September 2014 9:31pm
Funny that only yesterday Obama was talking up renewed bombing of Syria, a sovereign state...
Milogrim, 12 September 2014 9:19pm
EU delays implementing Ukraine free trade deal

Brussels (AFP) - The European Union said Friday it will delay implementation of a free trade deal with Ukraine by more than a year until the end of 2015.

Well, Yanukovich lost his presidency for proposing such a delay, which led to a certain chain of events resulting in current mess. Can it now get even messier?

bilejones, 12 September 2014 9:33pm
As always the Grauniad betrays its biases and prejudices. "defiant" of course is defined as
"a daring or bold resistance to authority"

And just who is this this "authority"?

Barry the Kenyan and his tools?

Black Cat -> DELewes, 12 September 2014 11:22pm
The neocons are still in charge in the US and are about to launch another war in Iraq and possibly Syria. It's the US neocons who want to bring Russia to its knees, as per the Wolfowitz Doctrine.

Your attempt to pretend that somehow Obama's warmongering is different from Bush's because he's a Dem, even though his administration is still stuffed with neocons and following neocon policies, is simply the insane self-delusion of the old style Democrat who doesn't want to admit he's been conned. Your attempt at claiming Russia are the new neocons is simply projection.

SAEZ, 12 September 2014 9:45pm
Provocation, provocation, provocation.

The arms industry still not happy and dissatisfied?

May I suggest Mexico as the next target? It would make it so easy and it is just there.
Something not in Europe, preferable. And since the Middle East is an old affair better to add a special tickle to it.

Lots of fun . . . for the big corporations and Wall Street, as usual.

Bluebird101, 12 September 2014 9:46pm

America and the EU just wants to get their hands on Ukraine and...especially the east and south-east of Ukraine; in order to get their hands on the very abundant natural gas reserves there, which is suitable for fracking. US Vice President, Joe Biden's son has already been installed in Ukraine's gas (whatever it is called) company.

The reality is...I doubt the US doesn't even know where exactly the fuck Ukraine is:

"Lost: 7 US Geo-gaffes that should worry us all."

And, our lives safe in the hands of these neo cluster fucks...??? Yeah, right.

Just wait until Russia closes off its air corridors and the Afghan-NATO supply transit routes.

The UK shall then be presented with a logistical nightmare of getting all of our military hardware back. And, guess who shall then be picking up the tab for those extra costs involved? Yep...the UK tax payer.

Then there is always the thought of preventing the US and EU from using its rockets, for hitching a ride to the space station.

Вэ Ка -> joeblow9999, 12 September 2014 10:28pm
The short answer to your question is 1) to disappear, and 2) to allow american oligarchs to pillage it again and become America's unworthy slave and 3) pay to American taxes, preferably at those high European rates?, just for the privilege of being America's btch.
THEN Russia will be a "good" country and its US-appointed leaders will not be called "psychopaths" by media and some commenters.
Rhapsodin, 12 September 2014 9:54pm
This now seems to have little to do with Ukraine and a supposed "invasion," The west is hell-bent on picking on Russia now. So it's punishing Russia no matter what Russia does (much to Merkel's chagrin, I guess because Russia can hit back at Europe.
vgnych, 12 September 2014 9:58pm
This round of sanctions is a "spectacular" and "well timed" "thank you" to Putin for his ceasefire initiative for Ukraine and follow through on it, as well as for humanitarian assistance that Russia provides to the devastated areas.

The West really "knows" how to reward the desirable actions.

Bluebird101, 12 September 2014 10:03pm
I can't wait to see Coca Cola, Pepsi and Nestle have their huge assets frozen Russia.
FlangeTube, 12 September 2014 10:09pm
Shock horror. I'm astounded by this news. Still no UN/US/EU humanitarian aid to the east of Ukraine. Still no western condemnation of the killing of civilians. Still no encouragement and/or praise of the ceasefire and prisoner handover.

Syria was a wake up call for America, for the first time in 25+ years it couldn't get its own way, and this is the response. Following the Wolfowitz Doctine to the letter.

America protecting it's "interests" with bomb and banks is nothing new, the really pathetic thing is the conduct of the EU. Slashing their own wrists for some imaginary moral high-ground. America has set the tune, and the EU dances it's feet bloody for scant applause and rancid table scraps. It's embarrassing.

Robert Looren de Jong -> FlangeTube, 12 September 2014 10:33pm

12 September 2014 – The United Nations World Food Programme (WFP) is rolling out its first operation in Ukraine, providing food assistance to vulnerable people affected by the conflict with distributions in transit centres and public shelters in Donetsk and Luhansk in the country's east.

Since the beginning of September, WFP in cooperation with local partners has distributed food boxes containing ready-to-eat canned food such as meat, fish, vegetables as well as biscuits, jam and tea. So far, 10,000 daily rations, enough to feed 2,000 people for five days, have been distributed, the agency said in a news release.

fedupwiththeliesalso -> Robert Looren de Jong, 12 September 2014 10:55pm
2000 for 5 days there's over 250000 people there. And why is it dated today's date this conflict is months old now. Too little too late.
FlangeTube -> Robert Looren de Jong, 12 September 2014 11:14pm
Wow. Enough food to feed 2000 people.

What are the other 498,000 getting? And the Million in Donetsk? And the 1million+ refugees?

And it's dated today. Adorable. So it takes the UN 6 months to notice a warzone.

You shot down my point admirably. What a brilliant riposte. Well played sir.

Bah Alic, 12 September 2014 10:13pm
don't worry about international independent experts..

if bbc, cnn and guardian say it was Russians it must have been so..after all it's not like cnn and friends are run by CIA...

Вэ Ка -> Bah Alic, 13 September 2014 12:06am

Yeah, its funny how when MH-17 was shot down The US was so quick to blame Russia and Putin, even before ANYTHING could be inspected, based on some "evidence" that they "have, but can't show" other than some sloppy photoshopped picture released by Kiev? And now stalling and hiding results.
vgnych, 12 September 2014 10:17pm
Obama is the "best", so is the rest of his administration of the Democrats...

Apparently they gave Victoria Nuland a raise for setting Ukraine literally on fire.

She is the Assistant Secretary of State for European and Eurasian Affairs at the United States Department of State now.

So the rest of the Europe get ready to be set on fire as well, the professional is appointed.

Voting the Democrats again anybody?

vgnych -> vgnych, 12 September 2014 10:24pm
Note: it the very same Victoria "Fuck the EU" Nuland

Adornox -> vgnych, 12 September 2014 11:26pm
Senator George McGovern ran an anti-war campaign against incumbent Republican President Richard Nixon in 1972. He was the last of the New Deal, Democrats to run for President. This is how much the Democratic Party has been transformed. From Democracy to Fascism. In the schools today they do not teach about the New Deal; in fact it has been scrubbed from the textbooks like in Stalinist times in the Soviet Union. The New Deal is never talked about and or never referenced in movies, tv shows, it is a taboo subject today? If you watch tv shows from the early 70's like Maude; she called herself a McGovern Democrat on the show. She talked openly about being against the War; and how evil the the military industrial complex was. It's eerie watching this today knowing there are no tv shows where characters talk like this. Maude would be considered an enemy of the state today!
titeuf, 12 September 2014 10:50pm

To paraphrase Gray Falcon on blogspot:.." Watching the American neoconservatives (a deranged cadre of warmongers) and their European puppets escalating the economic war against Russia..It's like watching the coyote from the old cartoons, chasing the road-runner bird over a chasm. Once he realizes he's running on air - but not a moment sooner - he immediately plummets to the ground. It now appears as if the Imperial government has convinced itself that so long as it pays no attention to the chasm, the law of gravity does not apply.

Newsflash: it does."

stevesharrison, 12 September 2014 11:20pm
Over e400bn lost in trade & 140,000 EU Jobs undermining EU Economic Recovery threatened by Russia Sanctions despite a major Peace Effort by Putin-Poroshenko albeit early is holding.

This show Obama-NATO-Defence Companies / military infrastructure don't want Peace but Dollar making opportunities

Ukraine: As Economic War Escalates, Fighting May Resume Soon

September 11, 2014 | | Comments (246)

The ceasefire of Minsk between the Ukrainian coup-government and the federalists of east Ukraine was something both sides needed.

The Ukrainian army was on the verge of completely loosing it. It was temporarily defeated and needed to rearm and reorganize. While the federalist insurgents were successful and probably able to continue their fight for a few days their forces were overstretched and needed to consolidate.

But many on the insurgent side did not like the ceasefire. It did not give them the federal autonomy they demanded. The neo-nazi "national-guard" battalions on the other side also criticized the ceasefire. They want the total destruction of their enemy and ethnic cleansing of all Russia-affine Ukrainians.

Russia had pressed for the ceasefire to avoid further sanctions. It was an offer to the "western" side to step back from the cliff of an economic war. Obama and NATO tried to sabotage the ceasefire through false claims of a Russian invasion and other propaganda. But the Ukrainian president had to ignore the pressure from Washington and Brussels or he would have lost another city, Mariupol, to the insurgents.

The main Russian reason to support the ceasefire, to hold back sanctions, has now vanished. Three days ago the EU, against the will of several of its members, decided on new sanctions on Russia:

The European Union adopted new sanctions against Moscow on Monday despite the leaders of Russia and Ukraine vowing to uphold a truce aimed at halting a devastating five-month war.
In Brussels, the EU formally approved fresh sanctions against Russia but said they would not come into force for a few more days, effectively delaying the measures to see if the current truce will hold.

The truce held and despite that facts and its earlier claims the EU today announced that the new sanctions will be implemented immediately:

The European Union has agreed to impose further sanctions on Russia on Friday over its role in the Ukraine crisis, diplomats say.

The move is aimed at maintaining pressure on Russia, the sources said.

Russia says it is preparing a response "commensurate with the economic losses" caused by the EU sanctions.

This is another catastrophic and escalating EU move with regards to Ukraine and Russia. This turns the conflict into an economic war between the EU and Russia in which no side can win. Only the United States and China will profit from it.

Additonally Poland had the crazy idea of supplying gas which it purchases from Russia to Ukraine which is not willing or able to pay for direct deliveries from Russia. This is a breach of contract as the deliveries from Russia to Poland are not allowed to be resold to other Russian gas customers. Russia allegedly responded by lowering the volume of gas it supplies to Poland and Poland immediately folded and stopped the reverse gas flow to Ukraine:

Russia's OAO Gazprom limited natural gas flows to Poland, preventing the European Union member state from supplying Ukraine via so-called reverse flows.

Polskie Gornictwo Naftowe i Gazownictwo SA, or PGNiG, got 20 to 24 percent less fuel than it ordered from Gazprom Export over the past two days and is compensating flows with alternative supply, the company said today in an e-mailed statement.

Poland halted gas supply to Ukraine at 3 p.m. Warsaw time today, according to Ukraine's UkrTransGaz.

We can be not sure that this is the whole story though. Gazprom says it provides all the gas Poland ordered through its pipelines but hints that Ukraine, where those pipelines cross, may be the party which is taking the gas:

Russia has denied that its state-run gas giant Gazprom has been limiting flows to Poland.

"Reports by news agencies on the reduction of volumes of gas supplies by Gazprom to Poland's PGNiG are incorrect," Itar-Tass reported Gazprom spokesman Sergey Kupriyanov as saying. "The same volume of gas as in previous days – 23 million cubic meters a day – is being supplied to Poland now."

Before Gazprom issued its statement, Uktransgaz's Prokopiv blamed Russia for trying to "derail" the plan for Poland to supply Ukraine with "reverse" gas, while Ukraine refused to pay its debt to Gazprom and is currently cut off from Russian supplies, and accused Russia of limiting the supply of gas.
In August, Russia's energy minister, Aleksandr Novak, warned that in the upcoming winter Ukraine may begin siphoning off Russian supplies intended for Europe if it fails to build up its reserves.

There is more conflicting news. The Ukrainian president Poroshenko claimed that most of the "Russian troops", which no one, including the OSCE observers in the area, has ever seen, have left Ukraine:

"Based on the latest information I have received from our intelligence services, 70 percent of the Russian troops have moved back across the border," Poroshenko said. "This bolsters our hope that the peace initiatives enjoy good prospects."

NATO, likely fearing that Poroshenko was again moving towards a peaceful solution, disputed the claim:

"The reported reduction of Russian troops from eastern Ukraine would be a good first step, but we have no information on this. The fact of the matter is there are still approximately 1,000 Russian troops in eastern Ukraine with substantial amounts of military equipment and approximately 20,000 troops on the Russian border with Ukraine," the NATO military officer said.

Push, push, push for war ...

But some parts of the "western" media are slowly waking up to the fact that not all is well with Ukraine and the "western" strategy. They note that Ukraine can not afford the IMF's 'Shock Therapy' and needs money without conditions which it will likely never pay back:

Absent this "bail-in" of foreign creditors, Ukraine will simply be taking on more debt that it lacks the capacity to service, risking a long-term compound debt spiral for the country and practically guaranteeing a wholesale default down the road -- and continuing political instability.

After months of ridiculing anyone who pointed to neo-nazis within Ukraine's regime and military forces as "Putin lover" reports about those neo-nazis now pop up in several "western" media.

Russia best reason to hold the insurgents in east Ukraine back from further fighting has vanished. The economic war is escalating no matter what Russia does or does not do. As the media have more time to look into the real issues in Ukraine the state of the sorry affair will become more clear and "western" public support for Ukraine will decline. This is a threat to "western" warmongering and to again escalate to fighting is the best method to suppress such news.

Hawks on both sides now have reason to restart the fighting. Expect the ceasefire to completely fail very soon.

james | Sep 11, 2014 2:28:41 PM | 2

somebody - thanks for your posts on the last thread.

thanks b.

b quote "This turns the conflict into an economic war between the EU and Russia in which no side can win. Only the United States and China will profit from it."

the way i see it, this is first and foremost an economic war.. the financial empire (under the guise of the usa) are pissed at russia's independence and strength.. they want to isolate it economically and pillage it.. ukraine is an important wedge between russia and the rest of europe. the usa rightly sees how creating havoc in ukraine will create greater havoc with it's neighbours.

war has always been about money. no matter how it gets justified, that is my simple view on it. someone wants something and they will use war to get it.

the ugly state of capitalism is on display for anyone interested. their is no 'trickle down' effect.. the end phase of capitalism is what we are witness to now. capitalism is like a rabid dog at this point, seeking to devour whatever it can find.. no alternative economic systems can be tolerated.. it is a unipolar, not a multipolar world that the usa is aiming for with it's view of exceptionalism.. i hesitate to say it is the usa, as i mostly see them as a front for the financial empire that demands full obedience to it's demands. russia hasn't played along and must be punished by the logic of this.

[Sep 12, 2014] Spiralling out of control cycle of sanctions, counter-sanctions and gas wars

Looks like US plan of destroying the EU ties with Russia works well...
yalensis says: , September 11, 2014 at 2:44 am
On the Gas-War front:

Definition of "reverse flow":

Ukraine is schnorring gas from Poland, Slovakia, and Hungary. Gas which those countries paid for, but Ukraine didn't, but expects to receive hand-outs of their spare gas.

Russia is dealing with each nation in its own way. For example, Russia ships X amount of gas to Slovakia. Slovakia "donates" a portion of this gas to Ukraine (via "reverse flow"), Russia allows them to do this, and neither increases nor decreases the amount of gas it sends to Slovakia.
If Slovaks are willing to sacrifice their own needs to help a neighbour, then glory be to them.

Poland is treated differently. For every drop of gas that Poland "donates" to Ukraine, Gazprom decreases by that amount its shipments to Poland. (Although Gazprom denies that and says it continues to send the same amount every day: 23 million cubometers.)

However, Poles say that for the days September 8-9, Russian gas flow into Poland dropped dramatically, and Poles saw this as punishment for donating their gas to Ukraine.
When Russian gas supplies dipped, the Poles hastily stopped their "reverse flow" of siphoning gas to Ukraine.

Meanwhile, the head of Ukrainian gas firm, Igor Prokopiv, announced yesterday that all is well:
He says the Poles have found another source of gas besides Russia, and will start to ship this "found gas" to Ukraine very soon.

kirill, September 11, 2014 at 8:27 pm
The Polish yapping about Russian supplies dropping is a bald face lie. They are actually talking about extra supply from Gazprom that they demanded and Gazprom refused to supply. This all makes perfect sense. In order for reverse flow to work, there has to be spare capacity since all the gas comes from a single source. In the summer, Poland and friends had gas to spare but winter is coming and the slack is disappearing. So these fuckers decided to play smart and wanted Gazprom to supply them more, which they would then ship to Ukraine.

Gazprom needs to reduce supplies for real and see these haters flail in the wind.

Al, September 11, 2014 at 5:07 am
via Vinyard the Saker:

Analogies between Yugoslavia and the Ukraine
by Stephen Karganovic


My only comment is that it goes to show how strength and lessons learned count. In the Yugo case, the Serbs were their own worst enemies, constantly fighting amongst each other, reinforcing divisions and reliving history (Četnik v. Partisan) when if they had stuck together, buried the differences and worked on Regan's "Trust, but verify", they would have been much better off rather than believing over and over again any promises that came from the West and stopping short of wreaking a decisive military victory from the outset. Either you do it properly or you don't do it at all.


September 11, 2014 at 5:45 am

On Friday, Ukraine's 'sanctions' against Russia come into effect including a ban on the transit of Russian gas to European customers. The collective stupidity of the EU leaders in backing Ukraine must be without parallel.

NorthernStar, September 11, 2014 at 10:20 am
What a difference a couple of decades makes!!!

I would like to see a cogent analysis of how the proposed sanctions-and those already in effect-are legally enforceable in terms of their compelling private entities e.g. Exxon Mobil not to conduct business with Russia.
Has the US Congress passed any legislation comparable to Hill-Burton in terms of sanctions against Russia.?

I suppose they would appeal to Title II Sections 202, 203 and 204 of RAPA. The rabid foaming at the mouth lunacy not yet enacted (I think)

But here's the thing….RAPA defines what Russian entities are to be targeted and arrogates to Obama power to initiate sanctions against the targeted individuals or business/commercial entities

But even so I think Exxon Mobil could argue that the proposed curtailment of *its* Russian business is constitutionally impermissible unless the absence of said curtailment would present a clear and imminent threat to US national security. Why?

I know's kind of a reach..but ..might be worth a shot in District Court!

I guess I just don't see where in the Constitution Obama derives the authority to bind and gag Exxon Mobil-or anyone else- from doing business with Russia.

ThatJ, September 11, 2014 at 5:52 pm
Russia Responds To The Latest European Sanctions: "You Leave Us No Choice"

As usual, every European snaction (sic) has an equal and opposite Russian reaction. Here is how the Russian Foreign ministry responded to what van Rompuy announced earlier today would be a new round of Russian sanctions, which wil finally be enforced tomorrow. First from the Russian foreign ministry:


And from Russia's European ambassador:



Ukraine Admits Resurgent Separatists Extend Control All The Way To Sea Of Azov

The Ukraine "ceasefire" may be raging, but don't tell that to the "rebel", "separatists", "pro-Russian terrorists" or whatever it is that the ethnic Russians in east Ukraine are called nowadays, because a few short hours ago even Kiev finally admitted that the insurgency, with or without Russian backing, has finally hit the beach of the Azov Sea, which implicitly means that the only thing that is prevent the formation of a land connection from Russia to Crimea is the city of Mariupol, which as Ukraine reported overnight, it is now massing heavy weapons for what may be the most critical fight of the entire Ukraine civil war to date.


Poland Says Russian Gas Deliveries Tumble By 45%; Europe To Launch Sanctions On Friday, Russia Will Retaliate

Yesterday, when Gazprom was supposedly "troubleshooting its systems", we reported that in what was the first salvo of Europe's latest cold (quite literally, with winter just around the corner) war, Poland complained that up to 25% of its usual gas deliveries from Russia had been cut. Russia indirectly hinted that this was also a result of Ukraine using "reverse flow" to meet its demands, with Europe allowing Kiev to syphon off whatever gas it needs without paying Gazprome for it. It also led Poland to promptly admit it would halt reverse flow to the civil-war ridden country. Fast forward to today when Polish financial website Biznes reports that things are going from bad to worse in Russia's energy retaliation war, after Poland claimed a 45% shortfall in Russian natgas imports as of Wednesday.


Full European Commission Statement On Next Round Of Russian Sanctions

From Europe's Chief Haiku Officer, Herman van Rompuy (now that he is president only in legacy terms, replaced by the guy who will lie – and allegedly drink – every time it gets serious):

Statement by the President of the European Council Herman Van Rompuy on further EU restrictive measures against Russia

The set of measures adopted on Monday will enter into force on Friday 12 September 2014.

At the same time, it is my understanding that the Permanent Representatives Committee (COREPER) before the end of the month will carry out a comprehensive review of the implementation of the peace plan on the basis of an assessment carried out by the European External Action Service (EEAS).

We have always stressed the reversibility and scalability of our restrictive measures. Therefore, in the light of the review and if the situation on the ground so warrants, the Commission and the EEAS are invited to put forward proposals to amend, suspend or repeal the set of sanctions in force, in all or in part.

It is expected that the Council will consider these proposals urgently with a view to take action if appropriate.

It goes without saying that the market is far more interested in the Kremlin counterstatement which should be due shortly.

kirill, September 11, 2014 at 6:43 pm
Can you believe these Polish fuckers and their screaming? They are claiming that they got 45% less gas. What actually was the case is that they want 45% MORE gas and Gazprom, as per its rights under contract, refused to supply them.

So you can expect the same BS from the west as during 2006 and 2009. When Ukraine starts to siphon gas flowing to the EU this winter, the EU fucktards will start screaming at Russia. The amount of hate from these self-righteous vermin makes me sick.

kirill, September 11, 2014 at 6:43 pm
Can you believe these Polish fuckers and their screaming? They are claiming that they got 45% less gas. What actually was the case is that they want 45% MORE gas and Gazprom, as per its rights under contract, refused to supply them.

So you can expect the same BS from the west as during 2006 and 2009. When Ukraine starts to siphon gas flowing to the EU this winter, the EU fucktards will start screaming at Russia. The amount of hate from these self-righteous vermin makes me sick.

james@wpc, September 11, 2014 at 8:19 pm
Kirill, This makes more sense. I'd like to quote this. Do you have a source handy that you can link me to?
kirill, September 11, 2014 at 8:40 pm,update:-poland-claims-45–shortfall-in-russian-natgas-imports-as-of-wednesday

In particular:

"A spokesperson for PGNiG, Dorota Gajewska, refused to indicate if the level of Russian deliveries constituted a reduction from any prior periods, reiterating only that delivered volumes are below the contractually requested level, she said in an interview for broadcaster TVN24."

No confirmation of any reduction, just yapping about less than *requested*.

Gazprom has denied it is shipping less gas. Currently it is at 23 million cubic meters per day. (

colliemum, September 11, 2014 at 10:54 pm
One can't help but think that these Polish screams about baaaad Gazprom turning off their gas was theatre so that recalcitrant EU members had to agree to give the go-ahead for more Sanctions, to start today.
The hypocrisy of the EU, in case anybody needed more proof, was the rationale. This time, Russia 'must work for a peaceful solution' for the sanctions to be dropped.
Just remind me who was instrumental in setting up that meeting in Minsk …?
ThatJ, September 11, 2014 at 6:47 pm

#Ukraine law banning transit of #Russian gas to enter into force Friday @ria_novosti #cdnpoli

- Rock Solid Politics (@BradCabana) September 11, 2014

#Ukraine banning the transit of #Russia natural gas to #Europe starting Friday is. for all intense and purposes, an act of war. #cdnpoli

- Rock Solid Politics (@BradCabana) September 11, 2014

[ThatJ: Wow, they are really going for it! Am I the only one who thinks this move was pre-approved by the US? Europe obviously doesn't want to take too much economic pain by banning Russian gas, but the US would rather see the European economies suffer under expensive LNG imports - even if it meant another great recession or worse, depression - than allow any rapprochement between them and Russia. Let's be honest here, if the US said no to the ban on Russian gas transport, Kiev would have obliged, because if the West abandons Ukraine due to its non-cooperation, the country will simply collapse, and the junta knows it. So Kiev does what the US Deep State neocons want it to do. The US is in full charge of Ukraine]


It's obvious now that #Ukraine is attempting 2 lure #Russia into an all out war. #Poroshenko and the people behind him,must be nuts #cdnpoli

- Rock Solid Politics (@BradCabana) September 11, 2014

[ThatJ: Today's Russia is the 30s Germany, plus the nuclear weapons and a vastly superior military and population and land and resources. In other words, it's despised as much, but it's not a foe to take directly on]


BREAKING #Ukraine army has killed 30 of its own soldiers, who reportedly wanted to defect from the army unit located in #Donetsk. #cdnpoli

- Rock Solid Politics (@BradCabana) September 11, 2014

[ThatJ: If true, these soldiers have proved their unreliability for being bad goyim. When your foreign-controlled government demands you to fight for the interests of non-gentile neocons who want "full spectrum dominance", you just can't say no and go unpunished]

ThatJ, September 11, 2014 at 6:47 pm

#Ukraine law banning transit of #Russian gas to enter into force Friday @ria_novosti #cdnpoli

- Rock Solid Politics (@BradCabana) September 11, 2014

#Ukraine banning the transit of #Russia natural gas to #Europe starting Friday is. for all intense and purposes, an act of war. #cdnpoli

- Rock Solid Politics (@BradCabana) September 11, 2014

[ThatJ: Wow, they are really going for it! Am I the only one who thinks this move was pre-approved by the US? Europe obviously doesn't want to take too much economic pain by banning Russian gas, but the US would rather see the European economies suffer under expensive LNG imports - even if it meant another great recession or worse, depression - than allow any rapprochement between them and Russia. Let's be honest here, if the US said no to the ban on Russian gas transport, Kiev would have obliged, because if the West abandons Ukraine due to its non-cooperation, the country will simply collapse, and the junta knows it. So Kiev does what the US Deep State neocons want it to do. The US is in full charge of Ukraine]


It's obvious now that #Ukraine is attempting 2 lure #Russia into an all out war. #Poroshenko and the people behind him,must be nuts #cdnpoli

- Rock Solid Politics (@BradCabana) September 11, 2014

[ThatJ: Today's Russia is the 30s Germany, plus the nuclear weapons and a vastly superior military and population and land and resources. In other words, it's despised as much, but it's not a foe to take directly on]


BREAKING #Ukraine army has killed 30 of its own soldiers, who reportedly wanted to defect from the army unit located in #Donetsk. #cdnpoli

- Rock Solid Politics (@BradCabana) September 11, 2014

[ThatJ: If true, these soldiers have proved their unreliability for being bad goyim. When your foreign-controlled government demands you to fight for the interests of non-gentile neocons who want "full spectrum dominance", you just can't say no and go unpunished]


September 11, 2014 at 9:29 pm

Saying that the European economies will suffer to the point of they slippling into another great recession or even a depression because of 'expensive LNG' may sound a bit dramatic, but it's not.

The problem with LNG is that:
1) It's more expensive than piped gas,
2) Europe has no terminals to receive and process all of this import,
3) Many European countries are already struggling with their economies,
4) To add insult to injury, there is not enough elasticity in global production to substitute Europe's 35% dependence on Russian gas. To satiate Europe's needs in face of limited global supply, the price of the already expensive LNG will skyrocket,
5) Global oil supply is even worse, and if Russia were to withhold its exports, we could be seeing $200,00+ oil really soon. Russia won't do this, though.

ThatJ, September 11, 2014 at 7:26 pm

#Russia's new package of retaliatory measures to impose restrictions on imports of cars, textile -Kremlin via @Ria_novosti #cdnpoli #Ukraine

- Rock Solid Politics (@BradCabana) September 11, 2014

[ThatJ: What about closing the airspace for Western flights to Asia? I think this one may come in the next response to more sanctions, which IMO will come. It's not just the EU who's running out of cards, Moscow also has limited leverage, so it has to apply them carefully and slowly]

cartman, September 12, 2014 at 2:37 pm
I would ban German cars. At least that would onshore production of German cars, and maybe allow spare parts to flow through.

For cars, tractors, mining equipment, etc. it is difficult – if nearly impossible – to recover in a market once you leave and substitutes roll in.

[Sep 11, 2014] Sergey Lavrov Throwing Russia off balance is ultimate aim


Over the more than ten years in office as Russia's foreign minister Sergey V. Lavrov has appeared at thousands of news conferences and granted hundreds of interviews. Minutes before the interview that follows (which lasted for more than two hours) he first loosened and took off his necktie. Then he unbuttoned the top button of his shirt, but only the top one.

On the feeling of despair and the boiling point

- Sergey Viktorovich, you've had a really hot time for the past six months.

- And it's not all over yet. Generally speaking, there has been no calm in foreign politics for a long time. But in summer I did have some time for recreation. In Russia, mind you.

- Don't you get despaired due to the lack of calmness in foreign affairs?

- No, never ever. That's not the type of feeling I may have deep down in my heart. We cannot afford to get desperate. We must keep doing our job right.

- But sometimes one cannot but reach the boiling point.

- That's no good, either. The two things go hand in hand. Only a novice, who suddenly thinks he has reached the dead end, can be forgiven for losing self-control and for not knowing what to do next. Yours truly has had a chance to see a lot over the decades in the diplomatic service, thank God. Any person needs patience, and in our profession this quality has a double value. Making me jump out of my skin is a hopeless task. But it's not worth trying, though.

- Can you mention some really tough guys you've chanced to have in front of you across the negotiating table?

- Come on, how do you think I must go about this business? I may name some, but all the others will get insulted… All were real professionals!

- Not all, I reckon…

- Why not all? Of course, all. But each of them has certain professional strengths. Some are quite professional when it comes to grandstand play, to blocking everything, to shirking the search for a compromise and to avoiding direct answers. People of this sort address some very different tasks. And nearly all of them lack an independent foreign policy. There are only strict instructions from this or that high office that have to be followed. And they scrupulously toe the line.

Naturally, you always expect your partners to be consistent in their actions, to observe common standards. After all, the United States and the European Union have been demanding all the way that all countries should stick to the principles of democracy and the rule of law in their home affairs. But as soon as we get to the international level, none of them ever mentions these basic values any more. That's natural, of course. A democratic world order does not fit in with the policies the Western world is pursuing these days in its bid to retain its centuries-old foothold. But this is an ever trickier task.

Both the Americans and the Europeans prefer to keep quiet about the supremacy of law in international affairs, or at best they pay lip service to it. Mind you, any attempts to apply this rule in practice, for instance, in Libya, where the UN Security Council's resolution was turned inside out, or in Iraq, which fell victim to an act of outright aggression without any UN SC resolution being taken, are harshly suppressed.

For our western partners "the law is an axle – it turns the way you please if you give it plenty of grease," as a Russian saying goes. I would like to drive the message home: international law requires both development and interpretation. Someone said with a good reason there are as many opinions as there are lawyers. But certain things are indisputable. Either you refrain from supplying weapons to Libya and thereby honor the UN Security Council resolution, or you sell them… It was both NATO countries and some countries of the region that have abused the embargo. The United States is positioning itself as the citadel of freedom, but quite often it is very far from truth, to put it mildly... In other words, the international system is in commotion, its basics are being shaken loose and rather strongly…

- With our help?

- The other way round. Russia has been consistently pressing for the consolidation of international law. We have never deviated from this policy just an inch. We have urged compliance with the achieved agreements and creation of new instruments facilitating proper response to the modern challenges. Take, for instance, our proposal for codifying the principle of indivisibility of security in Europe and making this principle legally binding for all. This political declaration of ours was aimed at preventing crises like the one in Ukraine. The draft of such a treaty, which Russia proposed a while ago, implied that as soon as any of the signatories (and we had hoped that practically all Euro-Atlantic countries would put their signatures to it) has any fears about their security, consultations should instantly follow, with evidence and arguments put on the negotiating table, a collective discussion held and eventual measures taken to de-escalate the crisis. Our proposals fell on deaf ears. We were told that an extra treaty was utterly unnecessary. In other words, everybody was saying that security in Europe was inseparable, of course, and that in terms of international law NATO would provide proper protection for all of its members. But it does not guarantee the security of all those unaffiliated with it! Possibly, the original plan was to use this pretext for pulling all post-Soviet countries into the alliance and thus bringing the division lines closer to our borders. But the idea proved an abortive one.

- Really?

- Experience has shown that this a vicious logic and it leads to a dead end. Ukraine has demonstrated this to the full extent. To make NATO and CSTO countries and all neutral countries not affiliated with any political and military alliance (let me remind you that Ukraine had proclaimed its non-aligned status, just like Moldova) feel comfortable and secure, a dialogue should have been started precisely the way we had proposed long ago. Then there would have been nothing like today's tug-of-war situation, in which Brussels told Ukraine to choose between the West and Russia. Everybody knows the root causes of the crisis: we were not being listened to, Kiev was forced into signing arrangements with the European Union, which had been drafted behind the scene and, as it eventually turned out, were undermining Ukraine's obligations on the CIS free trade area.

When Viktor Yanukovich took a pause for a closer look at the situation, the Maidan protests were staged. Then there followed the burning tires, the first casualties and an escalation of the conflict…

- One of our satiric writers, Mikhail Zadornov, at a certain point dropped this remark: America is prepared to fight a war with Russia to the last Ukrainian.

- What can be said in a situation like this? Cynicism has been part and parcel of politics all along. Possibly, it is inherent in all those who write and speak about politics. We would hate to see Ukraine being used as a pawn. Alas, it has been otherwise so far – not through our fault and contrary to Russia's wish. Some partners in the West – not all of them – have been trying to use the deep crisis of Ukrainian statehood for the purpose of "containing" Russia, for isolating us, and thereby tightening their looser grip on the international system. The world is changing, the share of the United States and Europe in the global GDP is shrinking, there have emerged new centers of economic growth and financial power, whose political influence has been soaring accordingly. As concerns economy, there seems to be growing awareness of that.

The G20 group has been created. In 2010 the G20 made a decision to reform the International Monetary Fund to redistribute quotas from the Western countries so that new, growing economies can receive a little bit more quotas. Then the crisis began to ease somewhat and the United States and the European Union these days are in no mood to stand by those arrangements. Now they are determined to retain positions within the IMF that are by no means proportionate to their real economic potential in the world. A really tough struggle is underway for keeping unchanged the state of affairs in which the Western civilization determines the shape of the world order. This is a faulty policy with no chances to succeed, objective processes are developing in opposite direction.

The world is getting really polycentric. China, India, Brazil, the ASEAN countries, Latin America and, lastly, Africa – a continent with the richest natural resources – all begin to realize their real significance for world politics.

There will be no stopping this trend. True, it can be resisted, and such attempts are being made, but it is really hard to go against the stream. This is the cause of many crises.

[Sep 10, 2014] Russia's Gazprom 'limiting gas supplies to Poland' by Terry Macalister

The Guardian
The Polish state energy group, PGNiG, said it was trying to find out why volumes had been slashed by up to 24% when it had been exporting gas itself to Ukraine to make up for Russian shortfalls there.

Its counterpart in Kiev, Ukrtransgaz, accused Kremlin-controlled Gazprom of penalising Poland and undermining onward gas supplies to Kiev. XpertMan , 10 September 2014 6:55pm

Doesn't Poland have an agreement with Russian Gazprom, in which it stated that it is not allowed to 'reverse flow' gas? Therefore Poland should blame themselves for breaking the contract in the first place.
Think about it as a business. You sell two people apples (A and B). You sell them at difference prices in accordance with the a long-term contract, 'A' for lower price and 'B' for higher. Then A decides to make a himself a profit and starts reselling those apples to the other person (B). Soon, B decides to stop buying apples from you and rather buy them from A. Hence you lose-out on your profits. From the above article you can take A as being Poland, B as Ukraine, and you the apple seller as Russian Gazprom. See the logic?
jose_bode XpertMan , 10 September 2014 7:43pm

The Polish state energy group, PGNiG, said it was trying to find out why volumes had been slashed by up to 24% at a time when it had been exporting gas itself to Ukraine to make up for Russian shortfalls there.

agreed, what's the surprise really? they even state it on the article

axyz1234 XpertMan , 10 September 2014 8:03pm
Restricting buyers right to sell gas to one another is a violation of European Union antitrust laws. Have you heard about the Third Energy Package directive ?
fedupwiththeliesalso axyz1234 , 10 September 2014 8:21pm
Russia is not in the European union.
XpertMan jose_bode , 10 September 2014 8:33pm
The big surprise is that there is no mention of Poland's reverse flow of gas to Ukraine as a violation of the Gazprom contract and is illegal. (this isn't mentioned in the article)
axyz1234 XpertMan , 10 September 2014 8:49pm
Thought you'd be interested to know which European countries are selling Russian gas back to Ukraine:

The IMF's New Cold War Loan to Ukraine by MICHAEL HUDSON

In April 2014, fresh from riots in Maidan Square and the February 22 coup, and less than a month before the May 2 massacre in Odessa, the IMF approved a $17 billion loan program to Ukraine's junta. Normal IMF practice is to lend only up to twice a country's quote in one year. This was eight times as high.

Four months later, on August 29, just as Kiev began losing its attempt at ethnic cleansing against the eastern Donbas region, the IMF signed off on the first loan ever to a side engaged in a civil war, not to mention rife with insider capital flight and a collapsing balance of payments. Based on fictitiously trouble-free projections of the ability to pay, the loan supported Ukraine's hernia currency long enough to enable the oligarchs' banks to move their money quickly into Western hard-currency accounts before the hernia plunged further and was worth even fewer euros and dollars.

This loan demonstrates the degree to which the IMF is an arm of U.S. Cold War politics. Kiev used the loan for military expenses to attack the Eastern provinces, and the loan terms imposed the usual budget austerity, as if this would stabilize the country's finances. Almost nothing will be received from the war-torn East, where basic infrastructure has been destroyed for power generation, water, hospitals and the civilian housing areas that bore the brunt of the attack. Nearly a million civilians are reported to have fled to Russia. Yet the IMF release announced: "The IMF praised the government's commitment to economic reforms despite the ongoing conflict."[1] A quarter of Ukraine's exports normally are from eastern provinces, and are sold mainly to Russia. But Kiev has been bombing Donbas industry and left its coal mines without electricity.

This loan is bound to create even more dissension among IMF staff economists than broke out openly over the disastrous $47 billion loan to Greece – at that time the largest loan in IMF history – prompted a 50-page internal document leaked to the Wall Street Journal acknowledging that the IMF had "badly underestimated the damage that its prescriptions of austerity would do to Greece's economy." staff economists blamed pressure from eurozone countries protecting their own "banks [that] held too much Greek government debt. … The IMF had originally projected Greece would lose 5.5% of its economic output between 2009 and 2012. The country has lost 17% in real gross domestic output instead. The plan predicted a 15% unemployment rate in 2012. It was 25%.[2]

The IMF's Articles of Agreement forbid it to make loans to countries that clearly cannot pay, prompting its economists to complain at last year's October 2013 annual meeting in Washington that their...

UK wants to cut off Russia from SWIFT banking system which could cut Russia off with international trade:

karl1haushofer says: , August 29, 2014 at 10:18 pm
UK wants to cut off Russia from SWIFT banking system which could cut Russia off with international trade:

Stakes are high and the West is furious about losing in Ukraine and making Ukraine a western military base against Russia. But if Russia is cut off from SWIFT wouldn't that basically mean that many EE countries and Germany who are dependent on Russian gas could not buy gas from Russia?

August 29, 2014 at 10:23 pm
The US slapped more sanctions on Iran today, so they are making sure Europe is not going to buy their oil and gas. Clearly one of the goals here is the complete destruction of Europe's economy.
karl1haushofer,014/08/21/how-full-of-shit-would-you-have-to-be-to-be-more-full-of-shit-than-dmitry-tymchuk/#comment-72310"> August 29, 2014 at 10:47 pm
That doesn't make sense for Uncle Satan. If they want to sanction the hell out of Russia it would be better for them to get sanctions off Iran and try to replace Russian gas and oil in Europe with Iranian.

[Aug 28, 2014] South Stream project will remain frozen until Sofia gets an EU green light…

Al August 28, 2014 at 7:49 am

euractiv: Official report: Russia is a threat to Bulgaria

"Russian propaganda, especially via Bulgarian political and economic personalities, and the media, puts the economic and energy security of the country to the test, and undermines its defence capacities, a report published on the website of the Bulgarian defence ministry says…

…In the context of the Ukraine crisis, several Bulgarian media outlets are openly taking side with Russia. It was reported that during the November 2013 Vilnius summit, Plevneliev told a pre-summit meeting of the European Peoples' Party (EPP) political family that "90% of the media in Bulgaria work for Russian masters."

Last April, Plevneliev said Russian reconnaissance and transport planes were frequently flying along his country's Eastern aerial border. This, he said, caused Bulgaria's MIG fighter jets to intercept such flights "two or three times a week". Before the Crimea crisis, such interceptions were extremely rare….

…On 27 August the caretaker Prime Minister Georgi Bliznashki announced that the report "Vision 2020' had created a "mini crisis" in the country and had consequently been withdrawn. The report has indeed disappeared in the meantime from the Ministry's website. The announcement came after Ivailo Kalfin, a politician from the centre-left political force "Alternative for a Bulgarian Renaissance" (ABV) accused the Defence minister of unnecessarily poisoning the country's relations with Moscow and asked for his resignation."


Vision 2020 'have my cake and eat it' to 'Oh shit! Between a rock and a hard place'. The current Bulgarian interim government is still behaving like it has an elected mandate to do wtf it wants (well, wtf Brussels wants). I'm looking forward to the upcoming elections to see how all this shakes out but I suspect that it will be as much of a mess, if not more.

euractiv: Bulgaria's interim government sets up 'energy board'

"Bulgaria's interim government said it had set up an energy board to ensure that badly needed multi-billion energy projects in the poorest EU country are transparent. As Dnevnik, the EurActiv partner in Bulgaria has reported, the European Commisison supports the idea of a currency in Bulgaria…

…The board will be led by Interim Deputy Prime Minister Ekaterina Zaharieva and is expected to bring together market participants, the regulator and experts from the European Commission, the World Bank and the European Bank for Reconstruction and Development…

…South Stream, expected to cost $40 billion (€30 billion), has been designed to carry Russian gas to central Europe via the Black Sea, bypassing Ukraine. Bulgarian President Rossen Plevneliev had said the project will remain frozen until Sofia gets an EU green light…

…tate-owned power company NEK said on Wednesday it would increase electricity prices by 16% from next month for industrial consumers that do not buy energy on the free market.

The move comes just days after NEK said it had amassed debts of 3.53 billion levs (€1.8 billion).

The price hike will affect around 20% of companies in Bulgaria including water utilities, state railway lines, schools, hospitals and universities…"

Not a bad idea as Bulgaria is close to hopelessly corrupt, but the fact that the usual suspects will be in it from the beginning it will be just another instrument for the EU to meddle in Bulgarian affairs..

Last, and least, NATO is looking for a Senior Speechwriter (and manager of the speechwriter team). I think one of us would be good. You'd be writing for Jens 'Zzzzz' Stoltenberg when he takes over as head of the world's most obsolete organization.

On a note, it looks like the vast majority of Ukranians want nothing to do with the current conflict, whatever they say or don't say publicly and have voted with their feet… to stay at home (apart from those terror bombed by the Uke army). It turns out that maybe they well understand the cold, hard truth much better than the blowhards in Kiev. No amounts of propaganda or patriotic zeal will bring them out willingly and nothing the West has offered has made a dent.

They saw what happened to Yugoslavia and how it was 'fixed'.

And then we have the Germans who seem to be paralyzed before the lights of and oncoming automobile. I don't see what Merkel is waiting for but sitting on the fence won't be an option for much longer. They are being split in half. Either go along with the upcoming NATO roadshow in Wales to push for a new Cold War because the US thinks that they can make Russia back down over its own strategic interests, OR, throw Kiev under the bus in the hope that it won't have to subsidize the Ukraine in place of Russia and save its economy from the worry by its business class and drag the whole of Europe down.

The choice is easy for the rest of us, dump the US because it only has its own interests at heart and would quite happily see the whole of Europe dragged down if it prolongs US's imaginary global supremacy for a single day. Putin and co. have played the best of a weak hand, but the US and the Euroatlantists have simply thrown it away carelessly. How bad does it have to get for them to face the truth that the party is over? If whomever the voters chose follow the same destructive path (i.e. the US), then the revolution will start at home. The irony here is that the US is a big fan of creation through destruction, though only if they are on the right side of it.

[Aug 28, 2014] ВЗГЛЯД - Твою половину еще пополам

[Aug 26, 2014] 'With no tangible economy it will be hard for Ukraine to pay off its debt' by Patrick L Young

August 25, 2014 | RT Op-Edge

Nobody is going to invest in an economy when there is no rule of law, and any certainty that assets will not be in some way squandered, taken away through bribery, or indeed outright stolen, global finance expert Patrick Young told RT.

RT:The IMF expects Ukraine's debt to exceed 62% of its GDP by the end of the year. In your view, is that an accurate picture?

Patrick Young: This is, if anything, possibly a conservative picture, but it is certainly overall accurate giving the information we have. The situation in Ukraine is that obviously it is incredibly difficult when you have had some sort of insurrection on the streets, a revolution, and lots of upheaval because this impacts the economy. And therefore, it is incredibly difficult to get your statistics absolutely precise at such a time. But overall, the IMF is generally getting the right picture.

RT:How big of a problem, or otherwise, is this debt for the country's economy?

PY: Of course having a debt to GDP ratio of 62 percent seems like a wonderful thing if you are the US that is over 100 percent, Italy that is 120 percent and growing rapidly, Greece that is somewhere in the stratosphere [with] a couple of hundred percent or more. Obviously that is an issue, but actually when we look at Ukraine in isolation, what we have to understand is the fact that ultimately the Ukrainian economy is very weak. Therefore, Ukraine has historically had very little foreign debt for the simple reason that actually foreign investors are not dumb enough to lend money to economies that do not function. We have seen Ukraine having quite often 20-30 percent to GDP, which is fabulously easy to manage. Now it has reached this point of 60 percent, which a lot of economists regard as being almost a point of no return, it is a point at which the normal functioning economy has difficulty paying its debt. The problem is of course Ukraine is not a normal functioning economy, it is a remarkably backward economy, and an economy that has gone nowhere for 25 years and at the moment is getting appreciably worse.

RT: Given the size of the debt and the rate of interest, how hard will it be for Ukraine to pay off its IMF loan?

PY: It is really a tragedy for the people of Ukraine. What we see at the moment is an economy that is on the verge of a death spiral. We have obviously seen all the sorts of terrible warfare that is happening within the borders of the country that is a tragedy because actually it is the eastern corner of the country around Donetsk, where in fact industry is, that really adds to the overall GDP. Therefore, we have a problem because of course we have the loss of Crimea reverting to Russia, the Ukrainian economy, the Ukrainian nation has shrunken appreciably in the course of the last year but ultimately the amount of debt that it caused is going up. How is it going to pay for that? I really don't know, it is going to be incredibly difficult, because what we need to see is an end to the oligarchy rather than another oligarchic president. A continuation of a sort of economic reform that has been sensationally successful in neighboring Poland. Bear in mind the fact that we are coming today from Torun in Northern Poland, this is the city which is along with the country is thriving. Why? Because it took its economic mechanism, it took its economic medicine 25 years ago; it worked incredibly hard to reach the level of prosperity, where it is breaking through towards the premier league of nations. Tragically, Ukraine is featuring the point at this stage of relegation from being economically viable. That's the tragedy. Can they pay off their debt? It is going to be incredible difficult because let's face it, what is the news we hear from Ukraine all the time? Terrorism, problems. Who is going to invest on the back of that? Nobody. Who is going to invest into an economy when you don't have clear rule of law, where you cannot appreciably believe that your assets will not be in some way squandered, taken away through bribery or indeed outright stolen. Nobody. That's why Ukraine is on the brink of economic collapse, and it is going to take a lot more than simple IMF loans, and indeed lots of money, like half a billion, being poured in to prop up what the EU has given it already. Ultimately we see a terrible situation for Ukraine; it is going to find it very hard to pay off its debt because unfortunately, there is no seriously tangible economy within the country.

RT: Kiev estimates that the country has a natural gas deficit of at least 6 billion cubic meters. What does that mean for Ukrainians? Do you think it's a good idea to resort to gas rationing in such a situation?

PY: Naturally the first thing that I would happen to do if I were unfortunate enough to be Ukrainian president is that I probably wouldn't agitate the people that are actually exporting my gas because I want my pensioners, my citizens being kept warm during the course of the winter. This is a huge problem for Ukraine, but ultimately it is not just about gas, it is the fundamental lack of viability in the Ukrainian economy. Ultimately, if we want to borrow a good old-fashion totalitarian metaphor and mix it up a little bit we could say "Ultimately Ukraine has no economy, therefore there is no problem." That is how great the problem is and we sit at the edge of Europe with a problem. Ukraine is about to disappear into the abyss without fundamental economic reform and that means it needs to get its act together very rapidly.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT

Patrick L Young is expert in global financial markets working in multiple disciplines, ranging from trading independently to running exchanges.

Fighting Back Against Western Sanction | New Eastern Outlook

From - August 25, 7:12 PM
Enrique Ferro's insight:

Instead of viewing the sanctions as an impassable obstacle requiring capitulation to Wall Street and London, Russia has viewed them as a challenge to sever reliance on unstable markets. More so, Russia's quest for alternative markets is a means of applying its own form of pressure back upon the West. While the West attempts to portray the sanctions as "cutting off Russia," the restrictions do at least as much to isolate the West itself.

[Aug 26, 2014] Ukraine Economy Declines, Merkel Sues For Peace

Recent statistics show that the already decaying Ukrainian economy is further turning towards depression. New money from IMF loans, if granted, will solely go into military costs. The European Union will not bail out Ukraine and Germany, hurt by Russian counter-sanctions, is suing for peace with Russia.

Nulandistan's wheels are falling off and no one one will help to repair it.

According to the Ukrainian government statistics production in July 2014 decrease compared to July 2013 (both ex-Crimea). Mining of coal and lignite was only 71% of its former numbers. Manufacture of coke and refined petroleum products was 84% of its 2013 value. Manufacture of chemicals and chemical products 77% and natural gas production and distribution was 78% of its 2013 number. As the government's fight against the people in Ukraine's industrial heartland continues these numbers will continue to go down.

Ukraine's standard of living did not, unlike in Russia, significantly increase over the last 20 years. Since the beginning of the year inflation increased to 19% and the Ukrainian central bank had to raise interest rates from 6.5% at the beginning of 2014 to 17.5% now. This to support the value of the Ukrainian currency as the hryvnya has fallen 40% since early 2014. The banking system is coming apart:

The ratio of banks' non-performing loans will reach 30 percent this year as credit costs rise, Moody's Investors Service predicted in a May report.
Ukraine's lenders are already in a precarious position, according to the IMF, which estimates that the nation's biggest 22 banks would require fresh capital of as much as 5 percent of gross domestic product if the hryvnia averages 12.5 per dollar this year.

The Ukraine is now requesting a third and fourth tranche of an IMF loan but the $2.2 billion it expects to receive is about as much as it plans to additionally spend for military operations. Under the conditions of the new IMF loans Ukraine's standard of living will decrease further and poverty will rise.

Some delusional minds in Kiev may hope that the EU will hand them some money. That is not going to happen. EU economies ex Germany are in serious trouble and Germany is not eager to help either:

There is precious little enthusiasm among the German public for bailout of other Eurozone members. The idea that Germany will consent to spending tens of billions of dollars rebuilding Eastern Ukraine is completely and totally divorced from political reality. Can anyone seriously imagine Angela Merkel, whose country recently had its 2014 growth estimate downgraded to a mere 1.5%, going in front of the German public to demand a substantial outlay for Ukrainian infrastructure? It would be political suicide, and Merkel is clearly a clever enough politician to understand this.

The German government had to cut is GDP forecast because of the insecurity the sanction back and forth with Russia introduced into businesses. The issue will clearly hurt her in the polls. That is likely why she is sending peace signals to Russia:

[Merkel] mentioned Ukrainian "decentralisation", a deal on gas prices, and Ukraine's "trade relations" with Russia as elements that could bring about an accord [between Ukraine and Russia].
"I want to find a way, as many others do, which does not damage Russia. We [Germany] want to have good trade relations with Russia as well. We want reasonable relations with Russia. We are depending on one another and there are so many other conflicts in the world where we should work together, so I hope we can make progress".

This also from an interview Merkel gave to public German TV yesterday:

A solution must be found to the Ukraine crisis that does not hurt Russia and which the Ukrainian people must choose for themselves, German Chancellor Angela Merkel said on Sunday.
"There must be dialogue. There can only be a political solution. There won't be a military solution to this conflict," she said.
On Saturday, her vice chancellor Sigmar Gabriel had suggested that establishing a federal Ukraine was the only viable solution to the crisis pitting Kiev against pro-Russian separatists.

Merkel said that if Ukraine opted to rejoin the Eurasian Union with Belarus, Kazakhstan and Russia, then Europe would not make "a huge conflict" out of it.

Especially the last point is clearly a big step back from the earlier all out "Ukraine is EU" position.

Additionally to the economic side, pressure on Merkel also grows because there is more and more doubt, even in German mainstream media, about the veracity of the Ukrainian propaganda and about the destruction of flight MH17. Why is there is no news about it? Is there a coverup (in German)?

The wheels are coming off in Victoria "Fuck the EU" Nuland's new Ukraine. Her project of capturing Ukraine from Russia while letting the EU pay for it is not going as planned. The likely result of Nuland's coup in Kiev will be a destroyed Ukrainian economy and no winner at all.

Posted by b at 01:30 PM | Comments (87)

Fran | Aug 25, 2014 3:56:25 PM | 20

Susan@13 - I don't know what Putin's gambit is/was. I never had the impression that he wanted part of the Ukraine as such - Crimea is different. I think what was clear for him was no NATO in the Ukraine. I thought his idea to be that the Ukraine is a bridge between the EU and Russia and Ukraine would trade with both. The deal killer was NATO.

As far as I know Russia has always supported the Ukraine with money and special deals on gas. This was also confirmed in April by Lagarde from the IMF:

Russia Helped Ukraine, But Now Ukraine Needs More, IMF's Lagarde Says

Russia wasn't all bad for Ukraine. A 45% reduction in the price of natural gas and what was supposed to be an additional $15 billion in aid was a necessary "lifeline", the International Monetary Fund's Christine Lagarde said on Wednesday.

Speaking to PBS News Hour on April 2, IMF's IMF's Managing Director Lagarde said,

"The economy of Ukraine was against the wall and heading for disaster. It's an economy that needed reforms, that needed profound transformation of its fiscal policy, monetary policy and on its policy on energy to mention just the key ones. Without the lifeline it was getting from Russia a few months ago, Ukraine was heading nowhere."

At the moment I think everything is open. I don't think Russia wants this Albatross - it has enough challenges with the Crimea and the people in the Eastern Ukraine might not want to live with a group of people who considers them subhuman, parasites, dirt and so on. However, with winter coming on, thing have to move forward.

Rhisiart Gwilym | Aug 25, 2014 4:46:34 PM | 28

Dmitry Orlov has been saying repeatedly, lately, that the only thing the Beltway Bozos [my term, not his] can bring themselves to do is to spread chaos and disaster in all the states they touch; and these fiascos always blow back destructively onto the US, and even onto most of the Bozos' real owners amongst the one-percenters.

Also, he's been saying since just after the coup that what Russia is doing is what he would do too: leave Ukraine to stew until the meat just falls off the bone. Just a few days ago he returned to this idea, and opined that it's working pretty well as he - and the Russian rulers - expected. Dmitry reads and speaks both Russian and Ukrainian, is well aware of Ukraine's history, has plenty of contacts in both countries, and understands the intricacies better than most Westerners, even amongst the talking-head 'experts'. Like Saker, he's aware that the immediate prospects for Ukraine are grim, but that the Chocitpot junta, and the alleged state forces which it barely controls, have no chance of over-running and defeating the Novorossiyans, and are being ground down to a total wreck, with continuing massive losses of both men and materiel, by the eastern militias' defence against them. Many in the junta seem to want to ditch the nazi formations; the nazis are threatening a march on Kiev, to oust the politicians they don't like. And Winter's almost here...

brian | Aug 25, 2014 6:11:23 PM | 40

'The wheels are coming off in Victoria "Fuck the EU" Nuland's new Ukraine. Her project of capturing Ukraine from Russia while letting the EU pay for it is not going as planned. The likely result of Nuland's coup in Kiev will be a destroyed Ukrainian economy and no winner at all.'

standard neocon outcome...lucky the goyim are too foolish not to realise this...they believe they are doing something good.

Demian | Aug 25, 2014 10:48:55 PM | 70

Forbes: The European Union Isn't Going To Bail Out Ukraine

Swedish Foreign Minister Carl Bildt, who is well known for his extensive use of social media and for his support of Ukraine's integration into European institutions, hasn't gotten the message though. The other day he tweeted the following:
Important that Germany Chancellor Merkel now raises the issue of EU help in rebuilding of Donbass region. Will be needed. And expensive.

To the extent that Bildt convinces anyone in Ukraine that the EU will ride to the rescue he is being cruel. There is no other word for it. The EU is not going t help rebuild the Donbass. Full stop. Even if the EU (read: Germany) had sufficient funds at its disposal for this sort of effort, which is increasingly doubtful, the recent election made clear that popular enthusiasm for the EU project is evaporating almost in real time. There is precious little enthusiasm among the German public for bailout of other Eurozone members. The idea that Germany will consent to spending tens of billions of dollars rebuilding Eastern Ukraine is completely and totally divorced from political reality.

I have to say that I am sick and tired of Anglophone commentators saying that there is such a thing as "Easters Ukraine". What they are referring to is Novorossiya, which is an independent country. People who still think that the Ukraine will maintain its post-USSR breakup borders are "divorced from political reality".

(h/t to Russian Spring. Unlike socialist blogs, Novorossiyan Web sites gives links to articles they refer to.)

Scan | Aug 25, 2014 11:21:55 PM | 73

@Marc 23

Continuing your post about Sikorski's recorded conversation:

"It is downright harmful, because it Creates a false sense of security ... Complete bullshit. We'll get in conflict with the Germans, Russians and we'll think que everything is super, because we gave the Americans a blow job. Losers. Complete losers. "

plantman | Aug 26, 2014 12:37:20 AM | 77

"Nulandistan's wheels are falling off and no one will help to repair it."

I wish that was true, but I don't think it is.
Look, things are not going well for the US in Ukraine, but I don't see any sign that Obama's gaggle of neocons are giving up anytime soon.
True, Merkel seems to have gone off the reservation, but Merkel has always been a slippery politico able to play both sides of the fence at the same time. When the time comes, she'll throw her lot with Uncle Sam. That's for sure.

This thing is going to drag on for a long time whether Ukraine becomes a failed state or not, because the white house doesn't care how many people die or suffer anyway.

I still think there's a chance that the military could launch a mutiny and we could see the rise of a Hugo Chavez. At least, that's what I'm hoping for.

Demian | Aug 26, 2014 2:51:40 AM | 83

@somebody #82:

do you really believe Novorussia is just Donbass?

What does it matter? The Ukraine is a nonviable, failed state. And Germany, in its various incarnations, had a big hand in creating it, as part of its Drang nach Osten.

Anybody who cares about the welfare of human beings will want as much of the former Ukraine to go into Novorossia, as opposed to rump Banderastan, as possible. A certain portion of the former Ukraine needs to be preserved as a rump, so that it can fail absolutely. I don't see any other means of eradicating the new fascism from Europe, other than Russia invading the former Ukraine and dealing with the fascists in the same way Russia dealt with the Nazis. But 21st century war is different from 20th century war, so that is not going to happen.

ToivoS | Aug 26, 2014 2:59:11 AM | 84

I still do not think that the economic collapse of Ukraine will cause the west to abandon this project. The economic problems were completely predictable at the beginning of this crisis. The costs to the US would be no more than 30 or so billion per year while the crisis goes on. Let us not forget that the US was willing to spend 100 billion per year during the Iraq war. Ukraine certainly has greater strategic importance to the US than Iraq ever did. Politically it would not be possible for congress to appropriate this amount of money but by responding to a series of mini crises this kind of money could be raised.

The decision to continue the current war will be based on other factors: Basically the US will have to decide how badly they want Ukraine in NATO. The costs are not just monetary but also the risk alienating Germany and the risk of a major war.

Russia, EU Energy Chiefs to Discuss Gas Issues in Moscow Friday

MOSCOW, August 25 | RIA Novosti

Russian Energy Minister Alexander Novak and EU Energy Commissioner Günther Oettinger will meet in Moscow Friday to discuss Russian gas deliveries to Europe, the Russian Energy Ministry said in a statement Monday.

"Safe transit of Russian gas to Europe via Ukraine, legal and technical aspects of the South Stream project, Gazprom's access to the full capacity of the OPAL pipeline and issues related to the continuation of the Russia-EU Energy Dialogue will become the main topics for the discussion," the ministry said in a statement.

[Aug 25, 2014] A Fleury of posts from euractiv

August 25, 2014 |

Al, August 25, 2014 at 2:16 pm

A Fleury of posts from euractiv, one or two a few days old.

euractiv: We'd expect Bulgaria to suspend construction of South stream gas pipeline, Commission says

How to loose friends and keep them lost. The Commission doing their best to make themselves popular again.

euractiv: Lithuania breaks Gazprom's monopoly by signing first LNG deal

Lithuania, dependent for 100% for its gas imports from Russian monopoly Gazprom, has signed its first contract with Norway's Statoil for the supply of liquefied natural gas (LNG), the website Delfi announced today (21 August).

"…preliminary valued at 2.5 billion to 3 billion litas (€725-870 million).

Prime Minister Algirdas Butkevičius said after the signing ceremony today that Lithuania had negotiated a competitive LNG price.

Litgas CEO Dominykas Tuckus said that the price would be linked to the UK NBP index and currently stands at LTL 900-1,000 per thousand cubic meters (€260-290 per tcm). That puts the total preliminary value of the five-year agreement at 2.5 billion-3 billion litas…"
It looks like a better deal than the one Poland * is trying to renegotiate with LNG from Qatar, though I'm sure there is something missing from the equation.

euractiv: South Stream 'Plan B' opts for route through Greece and Turkey

A Russian newspaper has published an article suggesting that the Kremlin-favoured South Stream gas pipeline could drop Bulgaria, Serbia, Hungary, and Slovenia for its route, and instead reach its final destinations, Italy and Austria, through Turkey and Greece.

A bit of stirring…

& most interesting about Alternate Germany Party the AfD

euracti: Russia-Ukraine conflict divides Germany's Eurosceptics

Germany's Eurosceptic Alternative for Germany (AfD) is polarised over the Ukraine conflict, with Russian criticism coming from the party's leader Bernd Lucke and Brandenburg's top AfD candidate Alexander Gauland threatening to withdraw from the upcoming regional elections. EurActiv Germany reports.


[Aug 24, 2014] My Money's on Putin by MIKE WHITNEY

August 12, 2014 | CounterPunch
The Latest in the New Cold War

"History shows that the United States has benefited politically and economically from wars in Europe. The huge outflow of capital from Europe following the First and Second World Wars, transformed the U.S. into a superpower … Today, faced with economic decline, the US is trying to precipitate another European war to achieve the same objective."

– Sergey Glazyev, Russian politician and economist

"The discovery of the world's largest, known gas reserves in the Persian Gulf, shared by Qatar and Iran, and new assessments which found 70 percent more gas in the Levantine in 2007, are key to understanding the dynamics of the conflicts we see today. After a completion of the PARS pipeline, from Iran, through Iraq and Syria to the Eastern Mediterranean coast, the European Union would receive more than an estimated 45 percent of the gas it consumes over the next 100 – 120 years from Russian and Iranian sources. Under non-conflict circumstances, this would warrant an increased integration of the European, Russian and Iranian energy sectors and national economies."

– Christof Lehmann, Interview with Route Magazine

The United States failed operation in Syria, has led to an intensification of Washington's proxy war in Ukraine. What the Obama administration hoped to achieve in Syria through its support of so called "moderate" Islamic militants was to topple the regime of Bashar al Assad, replace him with a US-backed puppet, and prevent the construction of the critical Iran-Iraq-Syria pipeline. That plan hasn't succeeded nor will it in the near future, which means that the plan for the prospective pipeline will eventually go forward.

Why is that a problem?

It's a problem because–according to Dr. Lehmann–"Together with the Russian gas… the EU would be able to cover some 50 percent of its requirements for natural gas via Iranian and Russian sources." As the primary suppliers of critical resources to Europe, Moscow and Tehran would grow stronger both economically and politically which would significantly undermine the influence of the US and its allies in the region, particularly Qatar and Israel. This is why opponents of the pipeline developed a plan to sabotage the project by fomenting a civil war in Syria. Here's Lehmann again:

"In 2007, Qatar sent USD 10 billion to Turkey´s Foreign Minister Davotoglu to prepare Turkey´s and Syria´s Muslim Brotherhood for the subversion of Syria. As we recently learned from former French Foreign Minister Dumas, it was also about that time, that actors in the United Kingdom began planning the subversion of Syria with the help of "rebels"' (Christof Lehmann, Interview with Route Magazine)

In other words, the idea to arm, train and fund an army of jihadi militants, to oust al Assad and open up Syria to western interests, had its origins in an evolving energy picture that clearly tilted in the favor of US rivals in the region. (Note: We're not sure why Lehmann leaves out Saudi Arabia, Kuwait or the other Gulf States that have also been implicated.)

Lehmann's thesis is supported by other analysts including the Guardian's Nafeez Ahmed who explains what was going on behind the scenes of the fake civil uprising in Syria. Here's a clip from an article by Ahmed titled "Syria intervention plan fueled by oil interests, not chemical weapon concern":

"In May 2007, a presidential finding revealed that Bush had authorised CIA operations against Iran. Anti-Syria operations were also in full swing around this time as part of this covert programme, according to Seymour Hersh in the New Yorker. A range of US government and intelligence sources told him that the Bush administration had "cooperated with Saudi Arabia's government, which is Sunni, in clandestine operations" intended to weaken the Shi'ite Hezbollah in Lebanon. "The US has also taken part in clandestine operations aimed at Iran and its ally Syria," wrote Hersh, "a byproduct" of which is "the bolstering of Sunni extremist groups" hostile to the United States and "sympathetic to al-Qaeda." He noted that "the Saudi government, with Washington's approval, would provide funds and logistical aid to weaken the government of President Bashir Assad, of Syria"…

According to former French foreign minister Roland Dumas, Britain had planned covert action in Syria as early as 2009: "I was in England two years before the violence in Syria on other business", he told French television:

"I met with top British officials, who confessed to me that they were preparing something in Syria. This was in Britain not in America. Britain was preparing gunmen to invade Syria."
… Leaked emails from the private intelligence firm Stratfor including notes from a meeting with Pentagon officials confirmed US-UK training of Syrian opposition forces since 2011 aimed at eliciting "collapse" of Assad's regime "from within."

So what was this unfolding strategy to undermine Syria and Iran all about? According to retired NATO Secretary General Wesley Clark, a memo from the Office of the US Secretary of Defense just a few weeks after 9/11 revealed plans to "attack and destroy the governments in 7 countries in five years", starting with Iraq and moving on to "Syria, Lebanon, Libya, Somalia, Sudan and Iran." In a subsequent interview, Clark argues that this strategy is fundamentally about control of the region's vast oil and gas resources."
("Syria intervention plan fueled by oil interests, not chemical weapon concern", The Guardian)

Apparently, Assad was approached by Qatar on the pipeline issue in 2009, but he refused to cooperate in order "to protect the interests of [his] Russian ally." Had Assad fallen in line and agreed to Qatar's offer, then the effort to remove him from office probably would have been called off. In any event, it was the developments in Syria that triggered the frenzied reaction in Ukraine. According to Lehmann:

"The war in Ukraine became predictable (unavoidable?) when the great Muslim Brotherhood Project in Syria failed during the summer of 2012. …In June and July 2012 some 20,000 NATO mercenaries who had been recruited and trained in Libya and then staged in the Jordanian border town Al-Mafraq, launched two massive campaigns aimed at seizing the Syrian city of Aleppo. Both campaigns failed and the "Libyan Brigade" was literally wiped out by the Syrian Arab Army.

It was after this decisive defeat that Saudi Arabia began a massive campaign for the recruitment of jihadi fighters via the network of the Muslim Brotherhoods evil twin sister Al-Qaeda.

The International Crisis Group responded by publishing its report "Tentative Jihad". Washington had to make an attempt to distance itself "politically" from the "extremists". Plan B, the chemical weapons plan was hedged but it became obvious that the war on Syria was not winnable anymore." ("The Atlantic Axis and the Making of a War in Ukraine", New eastern Outlook)

There were other factors that pushed the US towards a conflagration with Moscow in Ukraine, but the driving force was the fact that US rivals (Russia and Iran) stood to be the dominant players in an energy war that would increasingly erode Washington's power. Further economic integration between Europe and Russia poses a direct threat to US plans to pivot to Asia, deploy NATO to Russia's borders, and to continue to denominate global energy supplies in US dollars.

Lehmann notes that he had a conversation with "a top-NATO admiral from a northern European country" who clarified the situation in a terse, two-sentence summary of US foreign policy. He said:

"American colleagues at the Pentagon told me, unequivocally, that the US and UK never would allow European – Soviet relations to develop to such a degree that they would challenge the US/UK's political, economic or military primacy and hegemony on the European continent. Such a development will be prevented by all necessary means, if necessary by provoking a war in central Europe".

This is the crux of the issue. The United States is not going to allow any state or combination of states to challenge its dominance. Washington doesn't want rivals. It wants to be the undisputed, global superpower, which is the point that Paul Wolfowitz articulated in an early draft of the US National Defense Strategy:

"Our first objective is to prevent the re-emergence of a new rival, either on the territory of the former Soviet Union or elsewhere, that poses a threat on the order of that posed formerly by the Soviet Union. This is a dominant consideration underlying the new regional defense strategy and requires that we endeavor to prevent any hostile power from dominating a region whose resources would, under consolidated control, be sufficient to generate global power."

So the Obama administration is going to do whatever it thinks is necessary to stop further EU-Russia economic integration and to preserve the petrodollar system. That system originated in 1974 when President Richard Nixon persuaded OPEC members to denominate their oil exclusively in dollars, and to recycle their surplus oil proceeds into U.S. Treasuries. The arrangement turned out to be a huge windfall for the US, which rakes in more than $1 billion per day via the process. This, in turn, allows the US to over-consume and run hefty deficits. Other nations must stockpile dollars to purchase the energy that runs their machinery, heats their homes and fuels their vehicles. Meanwhile, the US can breezily exchange paper currency, which it can print at no-expense to itself, for valuable imported goods that cost dearly in terms of labor and materials. These dollars then go into purchasing oil or natural gas, the profits of which are then recycled back into USTs or other dollar-denominated assets such as U.S. stocks, bonds, real estate, or ETFs. This is the virtuous circle that keeps the US in the top spot.

As one critic put it: "World trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy."

The petrodollar system helps to maintain the dollar's monopoly pricing which, in turn, sustains the dollar as the world's reserve currency. It creates excessive demand for dollars which allows the Fed to expand the nation's credit by dramatically reducing the cost of financing. If oil and natural gas were no longer denominated in USDs, the value of the dollar would fall sharply, the bond market would collapse, and the US economy would slip into a long-term slump.

This is one of the reasons why the US invaded Iraq shortly after Saddam had switched over to the euro; because it considers any challenge to the petrodollar looting scam as a direct threat to US national security.

Moscow is aware of Washington's Achilles's heel and is making every effort to exploit that weakness by reducing its use of the dollar in its trade agreements. So far, Moscow has persuaded China and Iran to drop the dollar in their bilateral dealings, and they have found that other trading partners are eager to do the same. Recently, Russian economic ministers conducted a "de-dollarization" meeting in which a "currency switch executive order" was issued stating that "the government has the legal power to force Russian companies to trade a percentage of certain goods in rubles."

Last week, according to RT:

"The Russian and Chinese central banks have agreed a draft currency swap agreement, which will allow them to increase trade in domestic currencies and cut the dependence on the US dollar in bilateral payments. "The draft document between the Central Bank of Russia and the People's Bank of China on national currency swaps has been agreed by the parties…..The agreement will stimulate further development of direct trade in yuan and rubles on the domestic foreign exchange markets of Russia and China," the Russian regulator said.

Currently, over 75 percent of payments in Russia-China trade settlements are made in US dollars, according to Rossiyskaya Gazeta newspaper." ("De-Dollarization Accelerates – China/Russia Complete Currency Swap Agreement", Zero Hedge)

The attack on the petrodollar recycling system is one of many asymmetrical strategies Moscow is presently employing to discourage US aggression, to defend its sovereignty, and to promote a multi-polar world order where the rule of law prevails. The Kremlin is also pushing for institutional changes that will help to level the playing field instead of creating an unfair advantage for the richer countries like the US. Naturally, replacing the IMF, whose exploitative loans and punitive policies, topped the list for most of the emerging market nations, particularly the BRICS (Brazil, Russia, India, China and South Africa) who, in July, agreed to create a $100 billion Development Bank that will "will counter the influence of Western-based lending institutions and the dollar. The new bank will provide money for infrastructure and development projects in BRICS countries, and unlike the IMF or World Bank, each nation has equal say, regardless of GDP size.

According to RT:

"The big launch of the BRICS bank is seen as a first step to break the dominance of the US dollar in global trade, as well as dollar-backed institutions such as the International Monetary Fund (IMF) and the World Bank, both US-based institutions BRICS countries have little influence within…

"This mechanism creates the foundation for an effective protection of our national economies from a crisis in financial markets," Russian President Vladimir Putin said."
("BRICS establish $100bn bank and currency pool to cut out Western dominance", RT)

It's clear that Washington's aggression in Ukraine has focused Moscow's attention on retaliation. But rather than confront the US militarily, as Obama and Co. would prefer, Putin is taking aim at the vulnerabilities within the system. A BRICS Development Bank challenges the IMF's dominant role as lender of last resort, a role that has enhanced the power of the wealthy countries and their industries. The new bank creates the basis for real institutional change, albeit, still within the pervasive capitalist framework.

Russian politician and economist, Sergei Glazyev, summarized Moscow's approach to the US-Russia conflagration in an essay titled "US is militarizing Ukraine to invade Russia." Here's an excerpt:

"To stop the war, you need to terminate its driving forces. At this stage, the war unfolds mainly in the planes of economic, public relations and politics. All the power of US economic superiority is based on the financial pyramid of debt, and this has gone long beyond sustainability. Its major lenders are collapsing enough to deprive the US market of accumulated US dollars and Treasury bonds. Of course, the collapse of the US financial system will cause serious losses to all holders of US currency and securities. But first, these losses for Russia, Europe and China will be less than the losses caused by American geopolitics unleashing another world war. Secondly, the sooner the exit from the financial obligations of this American pyramid, the less will be the losses. Third, the collapse of the dollar Ponzi scheme gives an opportunity, finally, to reform the global financial system on the basis of equity and mutual benefit."

Washington thinks "modern warfare" involves covert support for proxy armies comprised of Neo Nazis and Islamic extremists. Moscow thinks modern warfare means undermining the enemy's ability to wage war through sustained attacks on it's currency, its institutions, its bond market, and its ability to convince its allies that it is a responsible steward of the global economic system.

I'll put my money on Russia.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at

[Aug 22, 2014] Ukraine's economy Broken down By Robin Wigglesworth and Roman Olearchyk

Aug 20, 2014 |

The country's finances have worsened, raising pressure on the International Monetary Fund

... ... ...

While the international focus in recent months has been on the armed strife in eastern Ukraine and the geopolitical stand-off with Moscow, another dilemma is looming large for Kiev and its western backers: Ukraine's economy is in tatters

At best, the International Monetary Fund and other western backers are likely to have to step in with more loans to help the government staunch its fiscal deficit. At worst, the $17bn IMF programme signed in April could fall apart, possibly forcing the country to default and restructure its debts. That would further deepen the economic turmoil in Ukraine and stain the reputation and credibility of the fund in the wake of its problematic Greek programme.

"If the conflict lingers for another several months in its current form the cost for the Ukrainian economy would be huge," says Vitaliy Vavryshchuk, analyst at Kiev-based SP Advisors.

... ... ...

The IMF last month adjusted its economic forecast to a more realistic 6.5 per cent shrinkage for 2014. Even this could be optimistic. Gabriel Sterne, head of macro research at Oxford Economics, predicts it will contract by at least 8 per cent.
Ukraine 2
To add to the worries, the Ukrainian currency is endangering the banking sector. The IMF's own risk assessment warns that if the hryvnia falls to UAH12.5 to the dollar then the stresses on bank balance sheets would require a bailout of at least 5 per cent of GDP. The hryvnia is now even weaker, at about UAH13.

The cumulative effects of the crisis could shred Ukraine's finances. Mr Sterne says debt-to-GDP is rising towards 87 per cent by 2018. That is more than twice the level of earlier this year and enough for the IMF to struggle to argue that it is highly confident Ukraine's debts are sustainable – a requirement for disbursement.

Other complications are looming. One $3bn Ukrainian bond is owed to Russia as part of a support package for the previous pro-Moscow government of Viktor Yanukovich. Russia structured the loan as a normal eurobond with a significant tweak. If Ukraine's debt-to-GDP goes above 60 per cent, as is now inevitable, Moscow can demand immediate repayment. Because of cross-default provisions, Kiev cannot renege on this bond in isolation, handing Mr Putin a potent economic weapon against the country.

The economic reforms required for the IMF to disburse aid are also a risk. Mr Yatseniuk threatened to resign after failing to push through several laws it needed to pass. Parliament swiftly performed a volte-face, but the imbroglio underlined the difficulties of implementing the austerity and governance measures.

Ukraine has a dismal record of adhering to past programmes, and this one is by far the most ambitious. Yet it this week called for the next two IMF tranches of $2.2bn to be paid together by the end of this year.

... ... ...

Some analysts worry that Ukraine's IMF programme could go the way of the ill-fated initial attempts to rescue Greece. Overly optimistic economic forecasts unravelled quickly, and the eventual result was a painful €200bn debt restructuring made worse by initial denial and procrastination. Ukraine could be headed towards a similar predicament, says Mr Sterne.

"We think the Ukraine economy and the IMF programme face such difficulties that a default is likely, possibly imminent," he wrote in a recent report. "It could take the form of a 'precautionary' default in which debt falling due over the next three years is forcibly rolled over. If there is a full-blown Russian invasion then deeper haircuts may be required."

... ... ...

With the programme now in place, Kiev's western backers will be loath to destabilise Ukraine further by seeking a restructuring. Yet the IMF will find itself in a predicament if its economists cannot state confidently that its debts are sustainable, especially since it is lobbying to change policies to address mistakes made in Greece, and reflect concerns that restructurings are often too little and too late.

Many specialists say Ukraine would have been an ideal testing ground for the fund's new "reprofiling" policy being discussed by its board. This would have stretched out repayments but left the overall debt untouched – still a default and restructuring but a soft one that prevents the fund's money from bailing out private creditors, throwing good money after bad.

... ... ...

Tomas Fiala, chief executive of Dragon Capital, predicts that if the conflict calms down by this autumn the IMF programme should remain intact. He argues that excluding its loans, Ukraine's debt-to-GDP ratio is still relatively low and access to bond markets could be re-established.

... ... ...

When Mr Yatseniuk's stand-off forced the Ukrainian parliament to pass the legislation required by the IMF programme, he promised the country would not follow in the footsteps of Argentina and renege on its debts. "There are two pieces of news today. The first is that Argentina has defaulted, and the second is that Ukraine has not defaulted and never will," he told an applauding chamber.Cynics will recall Greek, European and IMF officials repeatedly promised the same before the world's biggest debt restructuring became a fact.

[Aug 21, 2014] Mish's Global Economic Trend Analysis Ukraine Overnight Interest Rates Soars to 17.5%; External Debt Cannot Be Paid Back

From comments: "Ukraine will go under by itself by October, unless significant reduction of violence is achieved. Which does not seem likely at all. "
August 19, 2014 |

Rule: When you have massive (relative to the size of your economy), external debts denominated in foreign currencies, very bad things happen.

Ukraine's external debt as valued in US dollars has risen from under $40 billion in 2005 to nearly $140 billion today. Yet, I hear no mainstream media reporting on how Ukraine is supposed to pay this back.

Here's a hint. It can't.

And that is why interest rates are totally out of control, and why Ukraine will be beholden to the IMF and other creditors for decades unless it defaults.

As we all know ... This is a "small price" to pay for "peace".
And in case you missed it, please consider the Rule of Small Prices.


Selected Comments


By this time the USA and NATO and UN would have sent billions of dollars to the Ukraine Govt, along with drop shipments of fire arms, bombs, missiles, and military advisors and mercs. They got a bit of that, didn't they?

If they stop the fighting now they may not get very much more cash and kill-toys. As for their national debt demand USA, etc. pick it up and refinance them! That is the American Way! ....or Fed Way anyway.
------------ Prophet Atlantis of Olympia, WA political reporter -------------


"Ukraine's government says it will declare a truce only if the pro-Russian rebels lay down their arms and Russia stops supplying them with weapons....Russia denies it's aiding the rebels."

There is no doubt that some Russians are helping the separatists - military retirees, young Russians ready to take up arms for what they see as a just cause. But there is no hard evidence of direct support by the Putin government for the separatists unless one counts the refusal or failure to stop Russian volunteers to go to the help of their brethren.

And the so-called 'West' must know this yet they keep on telling the Russians to stop (what the Russians aren't doing) or more sanctions are coming. And then there is the matter of Ukraine's using crude weapons that result in civilian deaths - which the 'West' also knows about and likely encourages in order to make Russians mad. Why? To get Russia to invade. Why? So they can say "we told you so" to Europe and demand more dollars for NATO. Or perhaps some of them (idiots) really want war with Russia.

And, if they Russians don't invade, the civilians in Donetsk will flee to Russia as refugees and NATO will get what they leave behind of value (if anything). So the 'West' keeps sticking pins in Russia to get it to attack - much as the USG did in 1941 to Japan (which worked as planned).

Please, Putin, don't invade Ukraine as NATO wants you to do. Let them be the bad guys.


First of all I object to everything coming out of Russia being called PUTIN. Yes, he is a very strong politician, but not a tyrant in a common sense of the word. He is supported by 85% of his population and has a very strong and talented team of analysts it seems. Therefore they will not make a mistake of invading Ukraine, don't worry. Mostly because they don't have to. Ukraine will go under by itself by October, unless significant reduction of violence is achieved. Which does not seem likely at all.

Volunteers will keep coming across the border to fight, drawn by horrible pictures of violence against civilians, that Russian TV broadcasts to its citizens every day. I hope smart people in Ukraine already did or will soon realize there will be no winning in this war.

In all of this the biggest loser is Ukraine, by far. Then its the West with its idiotic foreign policy. Russia - I don't see how it can lose much if at all, on contrary. The biggest winners by far though will be China.


separatists reported 800 Polish merc's as well as gathering of murderers-for-rent from several nations in addition to privately financed Waffen SS-copycat units.

2 US military advisors allegedly shot in Mariupol.

What I fail to understand are 'we cannot prove Russia did it-calls' from inside US administration. I start to worry about Team WMD. Buying MSM, politicians, military brass, snipers, executioners and fifth columns wholesale just to hear some intelligence-slob mumbling 'we cannot prove...'


Maybe Ukraine will just convert to the Euro and get some loans from Germany.

[Aug 21, 2014] Why Sheremet has resigned from his post as Minister of the Economy?

According to Ukrainian tradition the Minister of economic development Sheremet announced his resignation in Facebook... Probably the real reason is desperate situation in economy caused by the infrastructure destruction in Donbass and direct consequences of February coup d'état and resulting break-up of economic ties with Russia. Just loss of Donbass coal is a grave threat that is looming over Ukraine now. The boomerang of destruction of Donbass will return to Kiev in winter and will hit Kiev regime hard. The big question is how will the dreamers from Maidan react when the stark reality of the Ukrainian economy intrudes upon their European Hope and Change dreams?

Minister of Economic Development and Trade Pavel Sheremet, yesterday wrote a letter of resignation

Pavel Sheremet perform his duties until his resignation is approved by the Parliament, said Justice Minister Pavel Petrenko.

"According to the Constitution of Ukraine, namely Parliament adopts decision to dismiss members of the Government. Until this event Pavel Sheremet remains acting minister "- said Petrenko.

[Aug 21, 2014] Ukranian economics in august of 2014: Economiccollapse might be just around the corner by Alexandr Rodgers

Yandex translation...

The state of the Ukrainian economy continues to deteriorate rapidly. Moreover, the negative trends for major economic parameters not only did not slow down, but accelerated.

All this is compounded not only by the obvious impompetence of key honchos of the Kyiv regime, but their complete unwillingness to solve socio-economic problems. Instead of trying to correct the economic situation, the government Poroshenko-Yatseniuk has focused all its efforts on providing funds for punitive operations against the rebellious South-East regions, this actually destroying all other areas of national economics

For example, the forecasts for GDP growth (both governmental and made IMF) has changed this year for several times, and each time to lower number. If at the beginning of the year, the forecasts was positive growth of 3-3,5%, then they have consistently decreased initially up to 1%, then to 0%, to -3%, and now -6,5%. And even this last negative forecast is too optimistic, and in fact is the gift of the IMF to the government of Ukraine, in order not to cause panic and further capital outflows.

The devaluation of the hryvnia and the increasing instability and uncertainty in the country after the coup already caused a decline in foreign direct investment (FDI), which from the beginning of the year decreased from 56,79 to 50,02 billion (as of July 1) a drop of almost -12%.

Nominal GDP in the first quarter of 2014 was 313,047 billion UAH. Or 35,422 billion dollars at the average exchange rate for the reporting period (8.8 UAH/USD).

It's already the middle of August, but the data for the second quarter is still not published (this usually happens about a month after the end of the reporting period, or even faster). Because after the publication of truthful information, the disastrous situation in the economy will become obvious even to nonspecialists.

The drop in real GDP in the second quarter is due to several factors - the decline in industrial production in various sectors ( from 6% to 20%), consumption reduction, as well as a significant drop in the exchange rate of hryvnia against other currencies (primarily the US dollar). If at the beginning of the year exchange rate was 8,24 hryvnia to dollar, as at 1 July it reached at the interbank market 11,78 UAH/USD. And this negative dynamics of devaluation of the hryvnia remains strong, because on 14 August, the average weighted exchange rate of the dollar on the interbank market was already 13,11 UAH/USD

Two currency interventions by NBU failed to reverse this negative trend even on the interbank market, in which he sold $150 million of their already meager reserves.

After the failure of attempts to stabilize the new head of the NBU Valeria Gontareva made several statements in which he said not only the probable introduction of the practice of forced 100% sale of foreign currency earnings by exporters (spring, when this provision was introduced by the commandant of the Maidan Kubiev, it provided for mandatory sale of 50% of foreign currency earnings). It also has twice threatened penalties to currency speculators.

Now, about the gold and currency reserves. For the month, from 1 June to 1 July, the gold reserves declined from 17.9 to 17,08 billion (beginning of year value of gold reserves was 20,41 billion, a decrease of six months on 3,332 billion dollars).
And this despite the fact that the government Yatsenyuk obained new loans in May, increasing foreign debt from 36,857 to 41,428 billion dollars. Gross external debt of Ukraine as of 1 April 2014 was 137,4 billion (including 62,677 billion dollars of short-term external debt which has to be repaid within 1 year ).

[Aug 19, 2014] Ukraine's Next Crisis Economic Disaster

naked capitalism
vidimi August 19, 2014 at 5:42 am

i expect a deluge of ukrainians, perhaps as many as 5 million over the next 5 years to flood into an already-xenophobic poland and putting even greater downward stress on low wages there. the influx of ukrainians into poland should have a spillover effect on other EU countries, notably the UK, germany, and ireland. the ultranationalist right will benefit from that as anti-immigrant sentiment rises. if the goal is fracking, then that shouldn't be affected as the far right is generally sympathetic to such forms of exploitation, but the EU doesn't have the framework to absorb another million+ people into its economy. this will certainly mean an increase in unemployment and a decrease in wages and a prolongation of the depression.

looked at cynically the way the psychopathic policymakers might, the conditions will be right for a mowing of the lawn, so a war culling europe's unemployable youth may indeed be on the cards.

MW August 19, 2014 at 6:00 am

"into an already-xenophobic poland" – statement based on what exactly? Explain.
"the influx of ukrainians into poland should have a spillover effect on other EU countries, notably the UK, germany, and ireland" – how? Explain.
"the EU doesn't have the framework to absorb another million+ people into its economy." – why? Explain.

"so a war culling europe's unemployable youth may indeed be on the cards." – no need to explain here. Pure sci-fi.

vidimi August 19, 2014 at 6:21 am


1 – based on the fact that a large segment of the population supports the truth and justice party whose main ideological vision is a poland for poles
2 – there is and long has been a steady stream of emigration of poles to those countries. while this has diminished greatly in recent years, maybe even reversed a bit, it can only pick up once again if there's an influx of cheap available labour into poland.
3 – the EU already has high structural unemployment, especially among the youth, so the fact that a large increase in people would make this worse is a truism
4 – whatever you say, mate. maybe the policymaking class is driven by a noble vision this time.

MW August 19, 2014 at 8:57 am

Ad.1 – when was the last time that party won the election. Also, are you saying that people in the UK are xenophobic because of UKIP? Or people in France because of Le Pen?

Ad.2 – kindly show a logical link or historical support for that thesis (ie increased emigration because of cheap labour influx)

Ad.3 – Explain how an influx of low skilled labour will increase the structural unemployment.

Ad.4 – I guess we agree that there's no need to expand here; a matter of opinion.

Steve H. August 19, 2014 at 6:08 am

"For the gods by that one's loveliness joined Troy and Hellas in battle, causing death so that they might draw off from the earth the outrage of unstinting numbers of mortals."


EoinW August 19, 2014 at 8:35 am

No one is going to Ireland. The Second Great Depopulation of Ireland began in 2008.

Doug Terpstra August 19, 2014 at 8:41 am

Failed states, divide-and-dominate chaos, seems to be the evil empire's overt objective en route to full-spectrum global dominion. Human life is inconsequential, so culling the herd is not certainly not inconceivable.

Veri August 19, 2014 at 5:54 am

A protectionist law designed to exclude foreigners from private nat-gas production. This would benefit those in power – themselves oligarchs like Kolomoisky and those who wish to be the next oligarch – by allowing themselves or their cronies preferred access. It also might mean that for foreigners to get in on the action, they'll have to do what Joe Biden's son – Hunter – did; join a Ukrainian owned joint venture – Burisma – where foreigners are allowed to own only 49% of the company.

Preferred investing status for those on an officially approved list.

Jim Haygood August 19, 2014 at 9:17 am

'The economy is being destroyed, yet Kiev is itself destroying any chance of bringing in Western investment to prop it up. Lip service is paid to developing more resources to build energy independence, but a new tax doubles costs for private producers who will stop producing and pick up stakes.'

Call it the Argentina model:

Ukrainian lawmakers backed a tax increase needed to qualify for a $17 billion bailout by the International Monetary Fund and rejected the prime minister's resignation after warnings that the country risked a default.

"The first major economic news today is that Argentina went into default," Prime Minister Arseniy Yatsenyuk told lawmakers after the vote today. "And the second is that Ukraine didn't default, and it never will."

Ukraine is relying on the IMF's funding for its budget needs and for making about $10 billion in foreign debt payments by year-end. The Washington-based lender's mission urged the government and the legislature to adopt austerity measures before its board decides next month on the second disbursement of a $1.4 billion tranche.


Adopt austerity and raise taxes on an economy whose real production is collapsing - yeah, that oughta work a treat!

Knowing nothing about Ukraine, my uneducated guess is that Ukrainians freeze in the dark this winter. If I were there, I'd be headed west to sneak across borders right now, while it's still warm enough for trekking.

Moneta August 19, 2014 at 7:38 am

We already have proof that The EU will not save the weaker countries. So in this context, why would Russia save Ukraine when 1. it knows this and 2. it can just wait for an economic implosion and then just come in and pick up the broken pieces.

EoinW August 19, 2014 at 8:39 am

Exactly! Though I'm not sure Putin will want to even touch the broken pieces any time soon. It's striking how Russia facing a military opportunity realized it was an economic nightmare expedition and has passed on it. Meanwhile America has never met a military opportunity it could turn down. Even goes out of its way to create new ones for itself.

MW August 19, 2014 at 9:35 am

"realized it was an economic nightmare expedition and has passed on it."

First, he "passed on it" not because of economic, but political reasons. Second, constantly supporting separatists with army equipment and manpower does not exactly spell out "passing" for me.

Moneta August 19, 2014 at 8:01 am

In high school, in our biology class, we soaked celery in very salty water and then looked at the cells in our microscope. The celery was passive or in other words, did not stand a chance. The system was looking for equilibrium.

In university, a teacher in an environmental class explained to us that the wealth discrepancies between the first world and third world countries were so huge, that we would not be able to close our borders. There were so many people out there that our fate would be like the celery… we would be invaded by boat people and because or our civilized nature we would be forced to accept them.

So over the last 2 decades, instead of closing our borders, which would have not worked anyway, we opted for globalization but surprise, surprise, it is not working either.

The reality is that the wealth discrepancies between developed and emerging are too large as well as the world's population. The system is forcing an equilibrium which, contrary to the celery, we are trying to fight off. Humans might feel they have free will but in the grand scheme of things, they don't really.

steviefinn August 19, 2014 at 8:25 am

Microeconomics – In the East there are old age pensioners who are already in great need of some Nuland cookies.

EoinW August 19, 2014 at 8:45 am

Didn't we see this in Russia 20 years ago? The pensioners starved but at least Chelsea got a championship football club out of it. Hurry! Someone invite Kolomoyskyi to Turf Moor. Burnley needs a Sugar Daddy.

Banger August 19, 2014 at 9:31 am

This is why U.S. policy-makers are so furious at Putin. He staunched Russian wounds which were a direct result of Soviet corruption and the plague of "contractors" who descended on Moscow after the fall of the USSR. They ripped the country up, enriched and empowered oligarchs and gangsters and took their loot to Washington where you saw, in the aftermath, an extraordinary growth of luxury housing in the DC suburbs. Putin came along and, for all his obvious faults, brought Russia back as a legit world-power. For this he must be made to pay. In the same way the fall of the Shah of Iran (installed by the CIA) ended the rule of the CIA in Iran–btw, I know personally CIA people who said that Iran was their "playground" during the seventies–CIA people had extra-legal rights there and loved being assigned there. For this the Ayatollahs will never be forgiven.

Linda Amick August 19, 2014 at 8:30 am

Seems to me the US global strategy has become "if I can't have it (control it) then nobody can". Spreading chaos around the globe might, in the future enable confused, desperate citizenry to accept anything better even if "better" is a stable Hitlerian ruler.
I can not cite one positive thing going on globally in the way of nation building and rights of citizenry.

Ukraine's Next Crisis Economic Disaster

In the coal centers of Ukraine's industrial east-Luhansk and Donetsk-fighting has forced the full closure of an estimated 50 percent of coal mines, while overall coal production has fallen 22 percent over the same period last year.

Key industry sources say they will potentially run out of coal in less than three weeks.

For Ukraine, the second largest producer of coal in Europe, this will have a devastating impact on the energy sector, which is in a state of emergency, unable to get coal to thermal power plants that provide some 40 percent of the entire country's electricity.

In the wider energy picture, the halt of coal production sets Ukraine back a decade. The plan was to rely more on coal in order to reduce dependence on Russian natural gas.

But the new reality has insiders wondering how Ukraine will produce more of its own natural gas, after the implementation earlier this month of an amended tax code that targets private gas producers with a tax so high that they will significantly reduce production through the end of the year and beyond that is anyone's guess. (Full disclosure: my firm, Pelicourt LLC, is the majority shareholder of Ukraine's third-largest gas producer, Cub Energy, and I have advised the U.S. and Canadian governments on the potential harm the new tax will cause.)

Economically, the conflict in the east is a disaster for Ukraine, which has traditionally been a net exporter of thermal coal for power generation. Now it will have to increase imports of fuel to make up for the loss. But even then, the destruction of supply routes makes this challenging.

Not only have coal supply routes been destroyed in the conflict, but other critical infrastructure has taken a hit as well, threatening other industries.

Across the board, Ukraine's industrial heartland is reeling from cut-off supply and shipping chains that threaten to destroy as much as 5 percent of Ukraine's gross domestic product in the second half of this year.

In the meantime, observers can be forgiven their confusion over various measures Kiev has taken since the intensification of the conflict. Indeed, the signals coming out of Kiev have been mixed, at best.

While parliament has passed a bill allowing for sanctions against Russia, the state-run Naftogaz leadership has been quick to point out that we probably shouldn't expect sanctions against Russian gas giant Gazprom, and the new bill doesn't implement sanctions of any kind-it simply makes it legal to slap sanctions on Russian individuals should Kiev decide to do so. Another paper tiger.

Parliament has also adopted a bill approving the joint-venture lease of Ukraine's gas-transit facilities with Western firms.

At the same time, however, Kiev passed a new amendment to the tax code that doubles taxes for private gas producers and promises to keep Western investors as far away from Ukraine as they can get.

Each move is designed to negate the other. The economy is being destroyed, yet Kiev is itself destroying any chance of bringing in Western investment to prop it up. Western firms are invited to invest in Ukraine, while at the same time Ukraine makes a mockery of transparency and ensures that the investment climate is suddenly even less attractive than it was two weeks ago. Lip service is paid to developing more resources to build energy independence, but a new tax doubles costs for private producers who will stop producing and pick up stakes.

It's hard not to conclude that Energy Minister Yuriy Prodan is working hard to discourage new investment in the energy sector.

By Robert Bensh for

[Aug 18, 2014] From Breadbasket to Basket Case: A Survey of Ukraine's Economy

Quote: "As Ukraine slides deeper into all-out civil war that began in April 2014, the transformation from bread basket to basket case is almost complete."
Aug 17, 2014 |

... ... ...

Other Observations

Most Ukrainians have become poor since 1991 and there are many social problems such as alcoholism and AIDS. The poverty and social stresses are reflected in life expectancy which decreased during the 1990s. Infant mortality rates increased during the same period. Infrastructure such as roads and utilities are in a poor state; the water supply and its quality in the country are a major concern and diseases such as cholera, typhoid, dysentery and hepatitis are present.

Economic Issues and Problems

The fact that a number of major commercial banks (plus other enterprises in other industries) are owned by wealthy politicians either directly or indirectly poses not just a conflict of interest for the country's governing elite but also a threat to good governance, financial transparency and accountability, and ultimately Ukraine's long-term development potential as local and foreign investors will view the country as hopelessly corrupt. This affects all other sectors of the Ukrainian economy: if Ukrainian business practice and government enforcement of laws that regulate business and finance are seen to be compromised because of the extreme concentration of business ownership and wealth in the hands of a few who also happen to dominate the country's politics, much-needed foreign investment will avoid the country altogether and all major sectors of Ukraine's economy will shrink and starve for lack of capital.

In a country that is virtually a plutocracy, the efficient collection of taxes may well be a pipe-dream and the taxation laws a laughing-stock: if the rich who pull the purse-strings as well as the puppet-strings don't pay their share of tax or resort to tax evasion and don't care that others will notice, ordinary people will follow their example. Essential services and infrastructure that rely heavily on taxation revenue for funding end up undeveloped and run-down, and become ripe for privatisation (which may have been the original intention all along). There's the possibility that in some parts of the country, wealthy oligarch-politicians may spend money on services that would normally be funded by government at national, regional or local level but this means that the people who benefit from this are basically bought by their benefactor and eventually owe him (maybe her) protection money or its equivalent.

It's true that manufacturing in Ukraine does suffer from inefficiencies which make it uncompetitive with Western manufactures; in the early 1990s, such inefficiencies could be blamed on the country's inheritance of centralised state planning which by its nature of top-down decision-making was slow to respond to consumer and enterprise demands. However other European countries that were formerly part of the Soviet orbit, and which gained independence only a couple of years before or the same time as Ukraine, have passed through their baptism of fire faster and successfully as well, though they continue to struggle with problems arising from their transition to market economies. The issue is that in adjusting to market economics and in becoming a market economy, Ukraine was compelled to undergo the kind of neoliberal economic shock treatment (yes, I have read the Naomi Klein book "The Shock Doctrine") that other countries like Poland and Russia had to swallow. The kind of steady transition that a Sweden or a France could afford was not an option offered to Ukraine by a West enamoured of Thatcher-Reaganite economic policies. While many eastern European countries were able to transition successfully to market economies thanks to historic links with Germany or Sweden (which meant that German and Swedish companies invested in those countries and passed on aspects of their corporate, managerial and industrial cultures), Ukraine did not have that kind of luck due in part to its peculiar origin as a patchwork nation of peoples with different cultures, religions and histories. Western Ukraine looks to the West because of its historic links to the Poland-Lithuanian Comonwealth and the Austro-Hungarian empire and Eastern Ukraine looks to Russia due to long-standing historical and ethnic links with that country. In addition, the political elites who have governed Ukraine since 1991 have often proven incompetent, corrupt, arrogant and self-serving.

The country has significant environmental issues including industrial pollution and radiation issues that are a legacy of the 1986 Chernobyl nuclear reactor explosion which released a huge cloud of radioactive particles that drifted as far north as Finland in the immediate aftermath and contaminated soils in and around the town of Chernobyl itself.


From the foregoing, we can see there is tremendous potential for Ukraine to regain its role as bread basket for Russia, much of eastern and central Europe, and even beyond; the main thing holding back the country is its political leadership which seems to be in a permanent state of crisis and chaos. This has many deep consequences that affect the country in many ways: lack of clear political and economic goals translates into lack of investor confidence in the country's leadership which itself means desperately needed local and foreign investment is lacking. As a result, several economic sectors, all of which depend on one another, suffer stymied development. An efficient transport network is needed to transport agricultural and industrial output and the machinery and other capital needed by the relevant sectors to produce goods.

It has to be said also that cronyism is rife and is probably Ukraine's biggest political and economic problem. While President Viktor Yanukovych (2010 – 2014) was associated with cronyism in the Western news media, other politicians in Ukraine – former Prime Minister Yulia Tymoshenko and PrivatBank owner Ihor Kolomoisky come to mind – are equally, if not more so, up to their eyeballs and beyond in corruption. Kolomoisky in particular is an unsavoury character who does not hesitate to use armed thugs in launching takeovers of companies he takes a shine to.

Tymoshenko spent time in the slammer for acting without authority from the Ukrainian government as Prime Minister in negotiating a gas deal with Russia in 2009.

With the overthrow of Yanukovych in February 2014 and his government's replacement by one led by Turchynov and Yatseniuk until mid-May of the same, when presidential elections brought Petro Poroshenko, owner of a major confectionery business, to power, the crony capitalist order seems set to continue. As of this time of writing, Poroshenko still has not divested himself of his interests in the confectionery business despite pledging during his election campaign that he would do so. As Ukraine slides deeper into all-out civil war that began in April 2014, the transformation from bread basket to basket case is almost complete.

jimsresearchnotes, August 17, 2014 at 10:08 pm
Reblogged this on EU: Ramshackle Empire and commented:
Thanks for that excellent summary. It is truly a tragic situation.

yalensis, August 18, 2014 at 3:28 am


Good job, this is an excellent and well-researched article!

I think the main take-away is that, if Ukraine is to become a viable nation, it needs to have an intelligent tax system. And in order for that to happen, they need to have a legal system which draws a firm line between politics and property ownership.

In other words, you can be a capitalist, or you can be a politician, but you can't be both.
They need to remove or at least marginalize the oligarchs.

Jen, August 18, 2014 at 4:42 am

Why, thanks very much! It was a pleasure to do actually – my biggest problem was bringing the post down to size.

Yes it's not always appreciated in the West, probably because of the way economics might be taught in schools and tertiary institutions now and how it's presented in the media, that you need the rule of law, especially commercial law, and respect for the law and its institutions; a taxation system that's seen to be fair and transparent, and whose burden falls equally on the rich and poor alike (a problem that Greece has incidentally – its taxation system is peculiar and the burden of taxation falls most on ordinary people); a properly run banking and financial industry subject to regulation so that banks and other financial institutions don't exploit borrowers, and a psychopath like Kolomoisky wouldn't be allowed to own and run a bank so as to finance a private army among other things; and investor confidence in the government and public bureaucracy's ability to enact and enforce the laws regarding business conduct, to punish wrong-doers promptly and justly, and to be accountable to the public for its actions. The big problem with Ukraine is that because past governments have been dominated by people looting the country's coffers, local and foreign lenders and investors regard investing in Ukraine as a huge risk and consequently all sectors are starved for private and public funding. Because various sectors depend on one another, the consequences of lack of investment compound each other. No investment in road-building or railway development means raw materials and goods take longer to transport from one place to another, transporting them costs more and the higher costs get passed on through factories, retailers and finally to customers.

ucgsblog , August 19, 2014 at 12:12 am

Amazing article Jen! Mark, your blog's encouraging me to start writing again, despite holding onto two jobs. Even though I'm not as active as I should be, I still read this blog, (it's on my hot seven,) and some of the commentary. Now for the specifics.

"the hryvnia – having lost about 40% of its value since the crisis began" – called it. If only there was a way to short currencies like stocks. No, I don't feel guilty about it, because I'm one of those people who try to do everything in their power to prevent a disaster, but once it hits, why not make some money and donate some to the people who actually need it, like the DonBass Republic's refugees?

"the EU promised pots of money in return for Ukraine adopting austerity – which has never worked, not once – and enacting some 2000 reforms." – austerity always fails. When someone suggested that austerity be imposed on California's education system, let's just say that even the hedge fund managers, (yep, not making this up,) were shouting them down. I think it was the only time that college students and hedge fund managers joined forces. Mark Ames had an interesting article on how austerity enabled Hitler to use economics to come to power.

"Inspired by Crimea and Sevastopol's actions, the eastern Ukrainian oblasts of Donetsk and Luhansk also tried to break away from Kyiv's control" – not necessarily. From what I gathered, they started breaking away when two more Oligarchs were imposed by Kiev. Maidan was initially anti-Oligarch, so imposing two more was a very bad move, especially since one of them shut down the kopanki, a move that even Akhmetov wouldn't dare to make. The Odessa Massacre sealed the deal.

"if Ukrainian business practice and government enforcement of laws that regulate business and finance are seen to be compromised because of the extreme concentration of business ownership and wealth in the hands of a few who also happen to dominate the country's politics, much-needed foreign investment will avoid the country altogether and all major sectors of Ukraine's economy will shrink and starve for lack of capital."

So Jen, what do you think about this article?

Don't you just "love" who's exempted?

Jen , August 19, 2014 at 5:43 am
I love the fact that it's Ihor Kolomoisky who not only is part-time governor of Dnepropetrovsk oblast but also the owner of Burisma Holdings, of which Hunter Biden is a director and legal advisor, which has a lease together with Royal Dutch Shell (Royal DUTCH Shell? – I smell a rat; didn't that Malaysian Airlines plane take off from Amsterdam of all places with a passenger list that was at least 1/3 Dutch?) to explore and drill for shale oil in the Donetsk region. There's news that already the Ukie army is installing drilling rigs and other equipment in and around Slavyansk.

I guess this is called making hay while the sun shines, right? While everyone else is preoccupied with a war and all the people who might have complained, held a referendum or protested on the fracking issue have been chased out of Slavyansk, the Dnepr Battalion Banderites had better start drilling and pumping out that precious shale oil and make their boss rich.

[Aug 17, 2014] Pushing Ukraine to the Brink by MIKE WHITNEY

July 09, 2014 | CounterPunch

"The unipolar world model has failed. People everywhere have shown their desire to choose their own destiny, preserve their own cultural identity, and oppose the West's attempts at military, financial, political and ideological domination."

- Vladimir Putin

"While the human politics of the crisis in Ukraine garner all the headlines, it is the gas politics that in many ways lies at the heart of the conflict."

- Eric Draitser, Waging war against Russia, one pipeline at a time, RT

What does a pipeline in Afghanistan have to do with the crisis in Ukraine?

Everything. It reveals the commercial interests that drive US policy. Just as the War in Afghanistan was largely fought to facilitate the transfer of natural gas from Turkmenistan to the Arabian Sea, so too, Washington engineered the bloody coup in Kiev to cut off energy supplies from Russia to Europe to facilitate the US pivot to Asia.

This is why policymakers in Washington are reasonably satisfied with the outcome of the war in Afghanistan despite the fact that none of the stated goals were achieved. Afghanistan is not a functioning democracy with a strong central government, drug trafficking has not been eradicated, women haven't been liberated, and the infrastructure and school systems are worse than they were before the war. By every objective standard the war was a failure. But, of course, the stated goals were just public relations blather anyway. They don't mean anything. What matters is gas, namely the vast untapped reserves in Turkmenistan that could be extracted by privately-owned US corporations who would use their authority to control the growth of US competitors or would-be rivals like China. That's what the war was all about. The gas is going to be transported via a pipeline from Turkmenistan, across Afghanistan, Pakistan and India to the Arabian sea, eschewing Russian and Iranian territory. The completion of the so called TAPI pipeline will undermine the development of an Iranian pipeline, thus sabotaging the efforts of a US adversary.

The TAPI pipeline illustrates how Washington is aggressively securing the assets it needs to maintain its dominance for the foreseeable future. Now, check this out from The Express Tribune, July 5:

"Officials of Pakistan, India, Afghanistan and Turkmenistan are set to meet in Ashgabat next week to push ahead with a planned transnational gas pipeline connecting the four countries and reach a settlement on the award of the multi-billion-dollar project to US companies.

"The US is pushing the four countries to grant the lucrative pipeline contract to its energy giants. Two US firms – Chevron and ExxonMobil – are in the race to become consortium leaders, win the project and finance the laying of the pipeline," a senior government official said while talking to The Express Tribune.

Washington has been lobbying for the gas supply project, called Turkmenistan, Afghanistan, Pakistan and India (Tapi) pipeline, terming it an ideal scheme to tackle energy shortages in Pakistan. On the other side, it pressed Islamabad to shelve the Iran-Pakistan gas pipeline because of a nuclear standoff with Tehran…

According to officials, Petroleum and Natural Resources Minister Shahid Khaqan Abbasi will lead a delegation at the meeting of the TAPI pipeline steering committee on July 8 in Ashgabat.

…At present, bid documents are being prepared in consultation with the Asian Development Bank, which is playing the role of transaction adviser. The documents will be given to the two companies only for taking part in the tender.

Chevron is lobbying in India, Pakistan and Afghanistan to clinch a deal, backed by the US State Department. However, other companies could also become part of the consortium that will be led either by Chevron or ExxonMobil." (TAPI pipeline: Officials to finalise contract award in Ashgabat next week, The Express Tribune)

So the pipeline plan is finally moving forward and, as the article notes, "The documents will be given to the two companies only for taking part in the tender."

Nice, eh? So the State Department applies a little muscle and "Voila", Chevron and Exxon clinch the deal. How's that for a free market?

And who do you think is going to protect that 1,000 mile stretch of pipeline through hostile Taliban-controlled Afghanistan?

Why US troops, of course, which is why US military bases are conveniently located up an down the pipeline route. Coincidence?

Not on your life. Operation "Enduring Freedom" is a bigger hoax than the threadbare war on terror.

So let's not kid ourselves. The war had nothing to do with liberating women or bringing democracy to the unwashed masses. It was all about power politics and geostrategic maneuvering; stealing resources, trouncing potential rivals, and beefing up profits for the voracious oil giants. Who doesn't know that already? Here's more background from the Wall Street Journal:

"Earlier this month, President Obama sent a letter to (Turkmenistan) President Berdimuhamedow emphasizing a common interest in helping develop Afghanistan and expressing Mr. Obama's support for TAPI and his desire for a major U.S. firm to construct it.

…Progress on TAPI will also jump-start many of the other trans-Afghan transport projects-including roads and railroads-that are at the heart of America's "New Silk Road Strategy" for the Afghan economy.

The White House should understand that if TAPI isn't built, neither U.S. nor U.N. sanctions will prevent Pakistan from building a pipeline from Iran." (The Pipeline That Could Keep the Peace in Afghanistan, Wall Street Journal)

Can you see what's going on? Afghanistan, which is central to Washington's pivot strategy, is going to be used for military bases, resource extraction and transportation. That's it. There's not going to be any reconstruction or nation building. The US doesn't do that anymore. This is the stripped-down, no-frills, 21st century imperialism. "No nation for you, buddy. Just give us your gas and off we'll go." That's how the system works now. It's alot like Iraq –the biggest hellhole on earth–where "oil production has surged to its highest level in over 30 years". (according to the Wall Street Journal) And who's raking in the profits on that oil windfall?

Why the oil giants, of course. (ExxonMobil, BP and Shell) Maybe that's why you never read about what a terrible mistake the war was. Because for the people who count, it really wasn't a mistake at all. In fact, it all worked out pretty well.

Of course, the US will support the appearance of democracy in Kabul, but the government won't have any real power beyond the capital. It never did anyway. (Locals jokingly called Karzai the "mayor of Kabul") As for the rest of the country; it will be ruled by warlords as it has been since the invasion in 2001. (Remember the Northern Alliance? Hate to break the news, but they're all bloodthirsty, misogynist warlords who were reinstated by Rumsfeld and Co.)

This is the new anarchic "Mad Max" template Washington is applying wherever it intervenes. The intention is to dissolve the nation-state in order to remove any obstacle to resource extraction, which is why failed states are popping up wherever the US sticks its big nose. It's all by design. Chaos is the objective. Simply put: It's easier to steal whatever one wants when there's no center of power to resist.

This is why political leaders in Europe are so worried, because they don't like the idea of sharing a border with Somalia, which is exactly what Ukraine is going to look like when the US is done with it.

In Ukraine, the US is using a divide and conquer strategy to pit the EU against trading partner Moscow. The State Department and CIA helped to topple Ukraine's elected President Viktor Yanukovych and install a US stooge in Kiev who was ordered to cut off the flow of Russian gas to the EU and lure Putin into a protracted guerilla war in Ukraine. The bigwigs in Washington figured that, with some provocation, Putin would react the same way he did when Georgia invaded South Ossetia in 2006. But, so far, Putin has resisted the temptation to get involved which is why new puppet president Petro Poroshenko has gone all "Jackie Chan" and stepped up the provocations by pummeling east Ukraine mercilessly. It's just a way of goading Putin into sending in the tanks.

But here's the odd part: Washington doesn't have a back-up plan. It's obvious by the way Poroshenko keeps doing the same thing over and over again expecting a different result. That demonstrates that there's no Plan B. Either Poroshenko lures Putin across the border and into the conflict, or the neocon plan falls apart, which it will if they can't demonize Putin as a "dangerous aggressor" who can't be trusted as a business partner.

So all Putin has to do is sit-tight and he wins, mainly because the EU needs Moscow's gas. If energy supplies are terminated or drastically reduced, prices will rise, the EU will slide back into recession, and Washington will take the blame. So Washington has a very small window to draw Putin into the fray, which is why we should expect another false flag incident on a much larger scale than the fire in Odessa. Washington is going to have to do something really big and make it look like it was Moscow's doing. Otherwise, their pivot plan is going to hit a brick wall. Here's a tidbit readers might have missed in the Sofia News Agency's novinite site:

"Ukraine's Parliament adopted .. a bill under which up to 49% of the country's gas pipeline network could be sold to foreign investors. This could pave the way for US or EU companies, which have eyed Ukrainian gas transportation system over the last months.

…Prime Minister Arseniy Yatsenyuk was earlier quoted as saying that the bill would allow Kiev to "attract European and American partners to the exploitation and modernization of Ukraine's gas transportation," in a situation on Ukraine's energy market he described as "super-critical". Critics of the bill have repeatedly pointed the West has long been interest in Ukraine's pipelines, with some seeing in the Ukrainian revolution a means to get access to the system. (Ukraine allowed to sell up to 49% of gas pipeline system,

Boy, you got to hand it to the Obama throng. They really know how to pick their coup-leaders, don't they? These puppets have only been in office for a couple months and they're already giving away the farm.

And, such a deal! US corporations will be able to buy up nearly half of a pipeline that moves 60 percent of the gas that flows from Russia to Europe. That's what you call a tollbooth, my friend; and US companies will be in just the right spot to gouge Moscow for every drop of natural gas that transits those pipelines. And gouge they will too, you can bet on it.

Is that why the State Department cooked up this loony putsch, so their fatcat, freeloading friends could rake in more dough?

This also explains why the Obama crowd is trying to torpedo Russia's other big pipeline project called Southstream. Southstream is a good deal for Europe and Russia. On the one hand, it would greatly enhance the EU's energy security, and on the other, it will provide needed revenues for Russia so they can continue to modernize, upgrade their dilapidated infrastructure, and improve standards of living. But "the proposed pipeline (which) would snake about 2,400 kilometers, or roughly 1,500 miles, from southern Russia via the Black Sea to Bulgaria, Serbia, Hungary and ultimately Austria. (and) could handle about 60 billion cubic meters of natural gas a year, enough to allow Russian exports to Europe to largely bypass Ukraine" (New York Times) The proposed pipeline further undermines Washington's pivot strategy, so Obama, the State Department and powerful US senators (Ron Johnson, John McCain, and Chris Murphy) are doing everything in their power to torpedo the project.

"What gives Vladimir Putin his power and control is his oil and gas reserves and West and Eastern Europe's dependence on them," Senator Johnson said in an interview. "We need to break up his stranglehold on energy supplies. We need to bust up that monopoly." (New York Times)

What a bunch of baloney. Putin doesn't have a monopoly on gas. Russia only provides 30 percent of the gas the EU uses every year. And Putin isn't blackmailing anyone either. Countries in the EU can either buy Russian gas or not buy it. It's up to them. No one has a gun to their heads. And Gazprom's prices are competitive too, sometimes well-below market rates which has been the case for Ukraine for years, until crackpot politicians started sticking their thumb in Putin's eye at every opportunity; until they decided that that they didn't have to pay their bills anymore because, well, because Washington told them not to pay their bills. That's why.

Ukraine is in the mess it's in today for one reason, because they decided to follow Washington's advice and shoot themselves in both feet. Their leaders thought that was a good idea. So now the country is broken, penniless and riven by social unrest. Regrettably, there's no cure for stupidity.

The neocon geniuses apparently believe that if they sabotage Southstream and nail down 49 percent ownership of Ukraine's pipeline infrastructure, then the vast majority of Russian gas will have to flow through Ukrainian pipelines. They think that this will give them greater control over Moscow. But there's a glitch to this plan which analyst Jeffrey Mankoff pointed out in an article titled "Can Ukraine Use Its Gas Pipelines to Threaten Russia?". Here's what he said:

"The biggest problem with this approach is a cut in gas supplies creates real risks for the European economy… In fact, Kyiv's efforts to siphon off Russian gas destined to Europe to offset the impact of a Russian cutoff in January 2009 provide a window onto why manipulating gas supplies is a risky strategy for Ukraine. Moscow responded to the siphoning by halting all gas sales through Ukraine for a couple of weeks, leaving much of eastern and southern Europe literally out in the cold. European leaders reacted angrily, blaming both Moscow and Kyiv for the disruption and demanding that they sort out their problems. While the EU response would likely be somewhat more sympathetic to Ukraine today, Kyiv's very vulnerability and need for outside financial support makes incurring European anger by manipulating gas supplies very risky." (Can Ukraine Use Its Gas Pipelines to Threaten Russia, two paragraphs)

The funny thing about gas is that, when you stop paying the bills, they turn the heat off. Is that hard to understand?

So, yes, the State Department crystal-gazers and their corporate-racketeer friends might think they have Putin by the shorthairs by buying up Ukraine's pipelines, but the guy who owns the gas (Gazprom) is still in the drivers seat. And he's going to do what's in the best interests of himself and his shareholders. Someone should explain to John Kerry that that's just how capitalism works.

Washington's policy in Ukraine is such a mess, it really makes one wonder about the competence of the people who come up with these wacko ideas. Did the brainiacs who concocted this plan really think they'd be able to set up camp between two major trading partners, turn off the gas, reduce a vital transit country into an Iraq-type basketcase, and start calling the shots for everyone in the region?

It's crazy.

Europe and Russia are a perfect fit. Europe needs gas to heat its homes and run its machinery. Russia has gas to sell and needs the money to strengthen its economy. It's a win-win situation. What Europe and Russia don't need is the United States. In fact, the US is the problem. As long as US meddling persists, there's going to be social unrest, division, and war. It's that simple. So the goal should be to undermine Washington's ability to conduct these destabilizing operations and force US policymakers to mind their own freaking business. That means there should be a concerted effort to abandon the dollar, ditch US Treasuries, jettison the petrodollar system, and force the US to become a responsible citizen that complies with International law.

It won't happen overnight, but it will happen, mainly because everyone is sick and tired of all the troublemaking.

MIKE WHITNEY lives in Washington state. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion (AK Press). Hopeless is also available in a Kindle edition. He can be reached at

[Aug 17, 2014] Why Obama Wants Maliki Removed


Oil, that's why. Let's put it this way: There are 10 reasons why Obama bombed ISIS positions outside of Ebril. They are:

  1. Exxon Mobil
  2. Chevron
  3. Aspect Energy
  4. Marathon Oil Corporation
  5. Hillwood International Energy
  6. Hunt Oil
  7. Prime Oil
  8. Murphy Oil
  9. Hess Corporation
  10. HKN Energy

So what's the message here? What is Obama telegraphing to ISIS about US policy?

It's simple. "You can kill as many Arabs and Christians as you want, but if you lay a finger on even one oil well, we'll nuke you into oblivion." Isn't that the message?

[Aug 15, 2014] Ukraine Passes Law to Give 49% Operation of Gas Transport System to EU, US

August 14 | RIA Novosti

The Ukrainian parliament on Thursday passed a law that allows the government to hand over up to 49 percent of the country's gas transport system to investors from the European Union and the United States.

The law was passed by 228 'yes' votes, slightly above the required minimum of 226.

The law gives foreign operators the right to "the management and/or concession or lease" of the gas pipelines and underground storage facilities. The law also allows Ukraine's government to establish a company to operate underground storage facilities, in which American and European investors would be able to own up to 49 percent.

The lawmakers insisted on amending the bill, including a requirement for the Verkhovna Rada, Ukraine's parliament, to approve the shareholders of the country's gas transport system operator.

According to Ukraine's Prime Minister Arseniy Yatsenyuk, a company registered in the European Union or in the United States would have to disclose information about its shareholder structure and beneficiaries at the first stage of the tender competition.

Then the company would have to get Ukraine's consent to alter the shareholder structure and would be required to report on its activities every five years, including to the Verkhovna Rada.

Yatsenyuk noted, however, that so far, there are few interested in investing in the Ukrainian gas transport system and the law is just the first step in attracting investors from the United States and European Union. Yatsenyuk also believes that the law will hinder the construction of the South Stream pipeline.

The legislation was submitted for the parliament's consideration at the beginning of July. The Ukrainian parliament on Thursday rejected it in the second reading, with only 94 lawmakers supporting the bill, less than half of the required 226.

Prime Minister Yatsenyuk has asserted several times that Kiev is ready to discuss the joint exploitation and modernization with investors from the European Union and United States.

[Aug 14, 2014] Finland President Heads to Russia to Meet Putin; Phone Rings in Switzerland Over Cheese

August 14, 2014 | Mish's Global Economic Trend Analysis

All that needed now to defeat Warmongers United is a statement by Russia that natural gas will not be shut off, but rather prices will triple if sanctions are not removed in one week.


Fert Bert

"a statement by Russia that natural gas will not be shut off, but rather prices will triple if sanctions are not removed in one week"

That is not how you play plan to the last piece; with that being yours.

Obama has shown he's not going to be beaten with a "Two-Move Checkmate"..but extend the moves out to 20 and now he's in trouble....which is what Putin is doing...rather than futile retaliation directly against the US, he's targeting the US's supporters...all pain for them and all gain for the US...that won't last long...just keep tightening the screws ever so slowly and the last, and only, nation is support of the sanctions will be the USA.

"Hopefully all the sanctions collapse in a month or two..."

Yes, but it may come to late for the EU countries if the sanctions don't collapse really soon. Once Russian buyers have lined up other sources, they are unlikely to go back unless there is compelling advantage.

[Aug 13, 2014] Cutting gas pipeline with an axe

Today the Verkhovna Rada of Ukraine is considering a draft law giving the national security Council and defense the right to fully or partially terminate the transit through Ukraine for Russian gas. As reported yesterday by Bloomberg, citing an anonymous official of the EU, the termination of transit as one of the possible sanctions against Russia is actively supporting by individual members of the Ukrainian government. Prime Minister of Ukraine Arseniy Yatsenyuk voiced his support for sanctions against Russia can include transit resources.

"Naftogaz of Ukraine confirms its readiness to ensure the transit of gas to the EU - but on two conditions. First, "transportation of natural gas through the territory of Ukraine may be provided to counterparties that are not subject to sanctions. To do this, they need to enter into direct contracts with the operator of the Ukrainian gas transport system". Secondly, the transit can be continued without problems, if this gas will be bought on our Eastern border, for example, European companies," Reuters quotes an anonymous representative of "Naftogaz".

Now the entire transit gas going through Ukraine, belongs to "Gazprom". The property of buyers it goes only on their boundaries. The transfer of the delivery point of gas in Ukraine's Eastern border would allow Kiev to formally abandon purchases of gas from Russia at all and go on a virtual reverse from Europe. According to this scheme, the EU would buy from Russia is certainly more gas than it needs, and "surplus" would leave Ukraine. The creation of a European gas hub in Ukraine tightly bind Brussels to Kiev politically, which Washington has long sought. In addition, Gazprom would lose control of gas flows in Europe and would have lost billions of euros for transit through Eastern Europe.

Today implement such a scheme without the consent of Gazprom legally impossible. But the war is a perfect tool to overcome legal restrictions. If the transit through Ukraine physically stop in the winter, Europe will be forced to agree to Kiev conditions. That is, to buy a share in the GTS and to buy gas on the border with Russia. And the U.S. will receive an additional argument for the emergency transfer of Europe on alternative sources of gas supply and further reduce its energy dependence on Moscow.

Recall that since mid-June, Gazprom does not supply gas to Kiev because of debts, continuing its transit to the European Union. Meanwhile, Ukraine continues to pump gas into its underground storage facilities. According to "Interfax", now there is about 15 billion cubic meters less than needed for the winter transit in the EU. But, according to the expert of the Union of lesopromyshlennikov Russia Rustam Tancheva, in the winter of Ukraine will spend these stocks not in transit, but on themselves. That is, Kiev prepares to a complete stop for gas transit to Europe.

According to some experts, guaranteed to eliminate these risks Russia today can only by military means. But in Moscow still there is hope to convince Europe to save transit status quo. There is hope that the current scheme is very comfortable for Europeans, and they don't want to ruin it even under pressure from Washington. This is indirectly confirmed by the comments of a major gas companies in the EU, such as EON and RWE. But how will they behave, if you will have to enter the number of owners of the Ukrainian GTS, is unclear.

on August 29, this topic will be discussed at the negotiations of the EU Commissioner for energy günther Oettinger and the head of the Russian Ministry of energy Alexander Novak. And on 5 September the planned tripartite talks between Ukraine, Russia and the EU debt and gas prices.

[Aug 13, 2014] Russian aid convoy 'will not be admitted into Ukraine'

Aug 12, 2014 |

hoshtokolosh , 12 August 2014 11:59am

The first reading of the anti-Russian sanctions by Ukraine has passed with 243 votes in favour. To see what this in effect means:

The bill contained 26 restrictions on Russia, but the most controversial was a ban on energy transit. Yatsenyuk hopes this will help halt his country's dependence on Russian gas, but the EU might be hurt the hardest. Europe gets about 15 percent of its gas requirements from Russia, with the Baltic States, Finland, Bulgaria and the Czech Republic a hundred percent dependenton Russian supplies. How you like them apples now EU ? LOL
kidimaro -> hoshtokolosh , 12 August 2014 12:01pm
Looking forward to Winter, when all these Ukrainian fascists who are shelling these towns disproportionately start to get cold, and realize their families back in Kiev will have no warmth during Christmas.
dion13 -> hoshtokolosh , 12 August 2014 12:04pm
Ukraine's Nuland-appointed Government wants a Russian invasion, so under that pretext they can prolong their rule little bit more. Russia is frustrating them by not invading, as Russia knows, heads or tails Ukraine is gone. So why wasting resources?
12 August 2014 12:22pm
Barack Obama, has said any Russian intervention without Kiev's consent would be unacceptable and violate international law.

Obama and Nato need to stick a sock in it, as the US has most certainly broken international law many times. The people in eastern Ukraine need humanitarian aid, however, it would seem that it is the intention of the US and its puppets for these people to die, because the US did not, and does not like it that it has been outflanked by Russia on various matters. The US is an utter disgrace.

Skalla , 12 August 2014 12:26pm
Could some nice American start a petition on the White House website to ask for the US government to stop meddling in European Affairs and to stop its expansion into politically sensitive countries ? Ukraine was OK until the US government and the despicable Nuland started the Mailand business and installed the Junta in Kiev ...
Europeantoo Skalla , 12 August 2014 12:32pm

Just a suggestion, ok? Write this in an americain newspaper as chances are much higher of finding an americain audience.

Skalla Europeantoo , 12 August 2014 12:44pm
Lots of Americans read the Guardian late at night (when it is evening in the US) ...

[Aug 11, 2014] Naftogaz may terminate the cooperation with Gazprom

National joint stock company Naftogaz of Ukraine admits that, in sanctions will be imposed on the Russian gas monopolist "Gazprom", the NAC will stop all the cooperation, including the provision of services on transit of gas through Ukraine to Europe. This was reported in the press service of NJSC "Naftogaz of Ukraine".

"In case of introduction of sanctions against "Gazprom" we will not be able to work with it. Then European companies will need to enter into contracts for the purchase of gas at the Ukrainian-Russian border directly with Gazprom, but also with the operator of the Ukrainian gas transportation system for the transit of this gas", - said in the message.

Naftogaz notes that the adoption of the draft law of Ukraine "On sanctions", which was submitted to the Verkhovna Rada, the Cabinet of Ministers on August 8, will not mean automatic implementation of special restrictive measures referred to in the document.

The law creates the legal basis for restrictions in respect of introduction of certain types of economic activities, including the provision of transportation services of resources. Such limitations may be introduced by the Council upon submission of the Verkhovna Rada, President, Cabinet of Ministers, National Bank or the security Services.

As reported, Prime Minister of Ukraine Arseniy Yatsenyuk predicts the voting of the law in the Verkhovna Rada about sanctions against Russia on August 12.

[Aug 11, 2014] Before the fear of war, fear of fracking in Ukraine by Anna Nemtsova

August 10, 2014 |

People in the embattled Donbass know the shale beneath their feet could be the real reason for conflict in their towns.

A hot July day, and the neighbors and children of a half-ruined five-story building on Bulvarnaya Avenue gathered around a bench for a long discussion of their daily fears.

Locals seemed to have consensus on who's at war: the U.S. and Russia over control of Ukraine, they all agreed. But even now, three months past the day the first shell fell on Slovyansk, they still had trouble comprehending why their green, sleepy hometown still was trapped in this conflict.

Residents of the bombed building remembered how in April, local and Russian-assigned rebel commanders chose to set up the capital for their forces in this town.
shale, Donbass, Ukraine.

In a small village in the Donbass, Alexander, a former soldier, and Tatiana say they can't afford gas, even though a gas line runs right by their home. Stanley Greene / Noor

The people of the Donbass, the country's gritty industrial region in the east, were not naive. They realized that gas pipelines crossing the border with Russia and the shale gas fields near Slovyansk - with a potential reserve of about 3 trillion cubic meters of gas - were the cause of constant tension between Russia and Ukraine.

But with pipes in their backyards or running right next to their homes, with their feet firmly on ground that stands over a vast shale deposit, they knew the struggle was not really over Ukraine itself. They were in the middle of a war about energy.

Depending on the political winds blowing between Kiev and Moscow, the Russian gas giant Gazprom cut off natural gas to Ukraine or turned it on again. The shale gas is an important potential source for Ukraine and possibly southeastern Europe. If it proves possible to tap, Ukraine hopes this supply would undercut Gazprom's monopoly, a move that could change Europe's energy map and its political contours as well.

That's how, in this region, shale gas became a political and nationalistic issue as well as an economic one. A visitor to the Donbass in February or March wouldn't have heard fear of war but fear of fracking, with residents fearful their land would be destroyed.

Something worse than fracking

Some experts speculate that Gazprom could have fanned those fears.

"Since recently, Gazprom bosses have been worried about shale gas production in Europe and financed propaganda campaigns against the evil of shale gas," said Mikhail Krutikhin, a senior energy expert at RusEnergy, a Moscow-based consulting firm.

The campaign was effective. But after Flight MH17 fell from the sky packed with innocent passengers from around the world, the fear of something bigger than a local Russian-Ukrainian conflict gripped many hearts.

"If you asked me last month, I would tell you right away that gas was the real reason for our hate for Kiev and for this war,'' said Ivan Vailyevich, a pensioner from the building on Bulvarnaya Avenue when recalled how he participated in mass street protests in February and March.

"We'd kill and die but never allow production of shale gas here," he said. "That would poison our land." Now he doesn't know what to say. "After our house was bombed this month, we realized that shale gas was not as scary as shells."

Oksana, a young shop assistant selling swimsuits at a department store on a corner of Lenin Avenue, said that she and her family became scared of "foreigners coming" to drill for shale gas in Slovyansk after then-President Viktor Yanukovych signed an agreement with Royal Dutch Shell in January 2013.

Kiev's plan was to set up a joint venture with Shell and drill for shale gas around Slovyansk to eventually produce 8 billion to 11 billion cubic meters of gas yearly - nearly 20 percent of what Ukrainian consumers need. (Later that year, a similar $10 billion deal was reached with Chevron for exploration in western Ukraine.)

For activists of the self-proclaimed Donestk People's Republic, any potential Western presence in the Donbass could be used to spark anger, such as when Hunter Biden, U.S. Vice President Joe Biden's son, joined the board of Ukraine's largest private gas company.

Videos of the "natural catastrophe" caused by shale production in Pennsylvania gave birth to increasing concerns among the Internet users in the Donbass. In one of the most popular horror videos, an Italian politician, Giulietto Chiesa, predicted that Shell and Chevron shale drilling would eventually cause the expulsion of Slovyansk's population of about 116,000. The rumor was passed along, increasing people's anger with Kiev.

On top of the "fascist junta" and the "Russia haters" in Kiev, people in the Donbass now dreaded the contracts signed with Shell and Chevron for producing shale gas. At the time, they appeared to be one of the best shale bets in Europe.

Gas paranoia?

Even after Yanukovych was ousted and the new government promised to revisit all his business deals, many people in the Donbass believed the shale exploration would go ahead. The same people also believed that Europe didn't care about potentially destructive shale production in Ukraine or whether the people in a region so opposed to Kiev would have water that stinks or gas bursting out their taps.
Donbass, fracking, shale, Ukraine
Denis Pushilin, a onetime leader of the Donetsk People's Republic, in Donetsk, June 7, 2014. He vowed never to allow fracking in the Donbass. Evgeniy Maloletka / AP

On June 20, Denis Pushilin, then an official in the Donestk People's Republic, declared that the "USA unfolded significant activity" in Slovyansk to make money on shale gas and promised that under his authority, nobody would ever allow "dangerous for the ecology" shale gas development in the Donbass.

With the republic often changing its leaders and agendas, Pushilin soon vanished, and anti-shale-gas demonstrations stopped.

"Gas paranoia stopped as soon as Pushilin left the Donetsk People's Republic. It must have been a well-organized campaign that manipulated with people's minds," a Donetsk entrepreneur and civil society organizer, Enrike Menendes, said in an interview about the causes of the war and the future of eastern Ukraine.

Gas pipes, locals believed, were a reason behind the daily fighting over Amvrosyevka, since a Gazprom main line from Siberia to Europe that runs right outside the home of the Ivanovs, 16 kilometers from the border with Russia, passes around the corner from a Ukrainian checkpoint that is attacked by rebels continually.

The Ivanovs were torn by fear and ideologies. The father, Igor, is Russian but sympathized with the Maidan revolution. The mother, Tatyana, is Ukrainian and loved Putin. She felt especially proud of Russia on Victory Day, May 9.

The war caught them in the middle of the strawberry harvest and a redecoration project at their daughter Yulia's house. By the beginning of July, constant fighting pushed the family to move to the basement.

"We don't support anybody. All we want is to stay alive. Please make the world understand that," Igor said.

Back on the avenue

Shale gas stopped being the talk of Slovyansk, but the fear of war did not. Even after Ukrainian military forces pushed rebels and their commander, a former senior officer of the Russian Federal Security Service, Igor Strelkov, out of Slovyansk in July, many people continued to talk of Kiev officials' going after everybody involved with the separatists.

"They could easily deport the population of Slovyansk, poison the drinking water and our natural resorts on the lakes. We'll fight for as long as we live to free our Slovyansk of Ukrainian occupants," Denis Shpakovsky promised in an interview in Donetsk earlier this month.

After retreating from Slovyansk, Shpakovsky, 31, served in Strelkov's security force at a prison in Donetsk. On the day Ukrainian troops moved on Slovyansk, he had to evacuate eight members of his family, including his 10-year-old daughter, Dasha, to the Russian city of Rostov.

Even several days after losing Slovyansk to "enemies, Americans and Ukrainians" he had tears in his eyes as he described how his family lived in the basement of his garage, hiding from shelling.

Almost every resident of the Donbass now has a war story to tell. On Bulvarnaya Avenue, it was almost dark. The noise of a heavy military airplane made everybody in the yard pause and look up at the sky. A round-faced woman, Anna, said she was still afraid of the war. She wondered how soon Vladimir Putin and Barack Obama could agree to make peace. Neighbors questioned whether they should fix the broken glass in their windows or wait, in case more bombs and shells fall on their town.

[Aug 10, 2014] Ukraine may block all transit from Russia in sanctions row - Ukranian PM

RT Business
Ukraine ready to impose sanctions against any transit via its territory, including air flights and gas supplies to Europe, Prime Minister Arseniy Yatsenyuk said Friday.

Ukraine's parliament will vote on the final measure on Tuesday, and will take into consideration the country's Security Service, Valeria Hontareva, president of Ukraine's Central Bank, said.

Kiev has also prepared a list of 172 Russian citizens and 65 companies predominantly Russian to put under sanctions for "sponsoring terrorism, supporting the annexation of Crimea, and violating the territorial integrity of Ukraine," Yatsenyuk said at a briefing on Friday.

Proposed sanctions include asset freezes, bans on certain enterprises, bans on privatizing state property, refusing to issue licenses, and a complete or partial ban on transit- both aviation and gas.

"We simply have no other choice," the Prime Minister said, adding that Ukraine will use part of the planned $17 billion IMF aid to achieve energy independence, and may go to the World Bank for help. The country, which is on the brink of economic default, received the first $3.2 billion tranche in May.

Ukraine wants to "put a stop" to its gas dependence on Russia, its main source for energy to heat homes and buildings, but understands it will not be an "easy" process, Yatsenyuk told reporters.

The Prime Minister estimates Ukraine could stand to lose $7 billion as a result of imposing sectorial sanctions against Russia, its biggest trading partner after the European Union.

"There is no doubt that Russia will continue its course in Ukraine it began a decade ago- banning Ukrainian goods, decreasing cooperation, pressure, and blackmail," Yatsenyuk said.

On Monday the Ukrainian government said it plans to mirror Western sanctions and target Russia's financial, energy, and military sectors.

Ukraine imports nearly 50 percent of its natural gas from Russia, which in 2013 totaled 27.7 billion cubic meters of natural gas.

If approved, a halt to Russian gas transit would hit Europe as the continent gets 15 percent of the energy it needs from Russia. In June Gazprom, Russia's national gas company announced it was stopping deliveries to Ukraine, but would continue to ship 180 billion cubic meters of gas to Europe.

A new definition of chutzpah

Fern , August 1, 2014 at 6:47 pm
A new definition of chutzpah. Pork Chop has announced that he's hopeful of finding a compromise with Russia over economic difficulties. You know, if the will's there, little problems like the price of gas and Kiev's huge debts to Gazprom can just melt away. This is the same Pork Chop who was screaming all over the place in the immediate aftermath of the downing of MH17 that the 'international community' should treat the incident as another 9/11 and saddle up against the aggressor.

kirill , August 1, 2014 at 7:25 pm
This is why Russia has to draw the line. No more coddling. Let Porosyuk's handlers wipe his regime's bum. No negotiations over anything other than a peace deal with the rebels until the sanctions are removed.

I suspect that the NATO deciders behind this deadly game actually believe that Russia is soft and will go back to subsidizing Ukraine out of some delusion about Slavic brotherhood. It's time for everyone to realize that this has gone completely in the wrong direction. Instead of friendship, Russia got a collection of hostile, insecure welfare bums on its border. Let them go and blow their new NATO sugar daddy for a few crumbs.

My language is rough because I have direct family connections to western Ukraine. I can't believe that the Banderite religion is so strong. These people did not live through their much bewailed Holodomor "holocaust" but their hate is so high it is leaving orbit.

[Aug 02, 2014] An interesting article about Russian gas production and consumption

colliemum, August 2, 2014 at 6:59 am
This is an interesting article about Russian gas production and consume. While the title suggests it's due to dire things, like the sanctions maybe hitting Russia, the report as such points out the reasons for it (maintenance, summer warmth etc):

We've seen a similar 'omigawd' report here in the UK, about consumer confidence, where the 'decline' in energy consumption by 2.5%compared to a year ago was regarded as a bad thing. the bright sparks writing that report had overlooked the fact that it was a) spring and summer, with very nice weather this year while b) last year's spring and sumemr were pretty horrid and cold.

It seems that many young'uns, be they 'analysts' or sub-editors writing headlines, haven't got a memory going back further than last week, and never mind thinking about the actual weather.

[Aug 01, 2014] Europe became nervous by Olga Samofalova

"The EU will scream that the Russians are obliged to supply it with gas, but we will refer to Force majeure How we can supply gas through the country, which steals Russian gas where civil war is raging?"
August 1, 2014 |

The European Commission and Germany are trying to convince the population that the gas threats from the Russian side does not exist. Europe believes that Russia will not be able to attack its energy security. Eurocommission tries to convince population that Russia is not going to raise gas prices or restriction of deliveries of blue fuel to Europe in retaliation for sanctions, so there is not reasons to worry. Both European Commission and the German government name three reasons which allegedly confirm this thesis. So why Europe, which dependent on Russian gas for 30% of supplies is still nervous?

After the announced sectoral sanctions against Russia on July 30 on the official website of the Russian foreign Ministry has reported that sanctions are not only contradict the WTO norms, but "it is a reckless, irresponsible step. It will inevitably lead to growth of prices on the European energy market". Europe immediately sounded the alarm. German media the next day published screaming headlines that t that Russia might increase gas prices as a retaliation for sanctions. The German government was forced to act soothing statements.

"These statements are not currently a reason to be concerned", - stated in the Federal Ministry of economy, reports Deutsche Welle. There is no reason to expect that the supply of oil and gas from Russia to Germany and the EU will be limited, because the supply of gas in Germany is regulated long-term contracts, some of which are signed to last till 2035. In addition, "the price increase is possible only with the conclusion of a new contract", stated in the message of the German Department.

The EU Commissioner for energy Gunther Oettinger also sees no reason for concern and calls two reasons for this. First, the Russians themselves are interested in supplying gas to the European Union. "They need the proceeds for their state budget," he said. Secondly, Brussels has prepared a strategy, which in the short and medium term to European consumers will be "indifferent to actions of Russia in the energy sphere". According to the Oettinger, the EU has alternative sources of gas supplies, plus the European stores of blue fuel are well filled. "We can live many days without gas imports", - he stressed.

"Yes, we can't to increase unilaterally gas prices, because there is a system of contracts. We have always stood for their stability and longevity. Therefore we can agree that unilaterally to increase prices for energy resources to the EU will be difficult. It is the same on restriction of deliveries. Certain amounts under the contract we have to deliver. In this respect Europe is also protected", - agrees with one of the arguments of Europe Director of the national energy security Fund Konstantin Simonov.

However, there are nuances that the EU understands. As Konstantin Simonov. explained:

"if so why Europe is nervous, and the Oettinger have to make such statements. First, there are no real alternatives to Russian gas to Europe on the same price level. All alternatives are mythical or semi-mythical. And some real alternatives will be available not earlier than in 15 years. Until the end of this decade, some supplies of real gas the EU can only get from Azerbaijan in the amount of 10 billion cubic meters, and that's all. There are no other options"

Hopes for shale gas from the USA also illusory.

"It is doubtful alternative as for the price, the volume is unclear and time to market is slow. This is not a fast solution"

For a start, both in the US and Europe will need to spend tens of billions of dollars to build the infrastructure and fleet to export LNG to Europe, and Europe is to build the infrastructure for receiving LNG tankers and liquefied gas. And even if the US and the EU resolve those problems and seriously invest in the requires infrastructure, the price of U.S. gas will be at least comparable to the cost of Russian gas, and, most probably, will be higher.

Hope own shale gas from within Europe is also destroyed. Literally in early July, the Commissioner himself admitted that shale gas will not save Europe from its dependence on Russian fuel. Because shale gas will provide only 10% of needs of Europe, and the only thing it will bring, - compensate for the fall of own production on traditional fields, said Oettinger.

Norwegian gas is also out of question. Minister of petroleum and energy of Norway Tord Lien finally dispelled the hopes of the leaders of the European countries about possibility of for substantial expansion of gas deliveries to the European Union in case of reduction of purchases of gas in Russia. "In the short run we will be able to increase gas production, but not very much", he said yesterday in an interview with Handelsblatt. According to him, only by 2020, gas production in the country will increase, but only slightly: from 110 billion cubic meters in 2013 up to 130 billion cubic meters.

That means that Europe can not be indifferent to what Russia is doing in the field of energy, acknowledge European experts.

The European Union, despite the desire of the leaders of its member States, in the near future will not be able to substantially reduce its energy dependence on Russia, says the Director of the European center for energy and commodity security (EUCERS) Fridbert Pfluger in a published article in the German newspaper Handelsblatt.

According to him, during the discussion of this topic usually silent "about one significant point". "All the possibilities for diversification of gas supplies (in Europe) will be only towards the end of the current decade. In addition, due to diminishing stocks of blue fuel in Europe on energy carriers from Russia will be in great demand in 2030", writes Pfluger.

Liquefied natural gas supplies from the USA, obtained by the method of hydraulic fracturing (freking), have some problems. First, these exports will go first to the countries of Asia, where it is possible to sell them at higher pricest. Second, its value due to considerable cost of production and transportation the price probably will not be as low as Europeans would like. Brussels analytical center "Bruegel" recently decided that transoceanic deliveries of blue fuel will increase gas prices in the EU from one and a half to two times.

Analysts of the investment Bank Bank of America Merrill Lynch also warned that the EU in the short and medium term is unlikely to be able to abandon Russian gas. Europe in 2013 bought 165 billion cubic meters of gas from Gazprom, its share in the EU market - 30%.

Moreover, the EU has higher risk of losing the existing gas suppliers than opportunities to receive new ones. for example, the EU could lose the gas from Algeria. "This will happen if Libya will disintegrate and the Islamic revolution will spread throughout Algeria. What prevents revolution to capture the pipeline that carries gas from Algeria is in Spain, Italy and other European countries?" "says Simonov.

Moreover, Europe is silent about one detail - about the threat to its energy security that Ukraine civil war represents. "The winter will come, Ukraine will begin to steal gas from the transit pipes. And we will cut the supplies and transit of gas. The EU will scream that the Russians are obliged to supply it with gas, but we will refer to Force majeure How we can supply gas through the country, which steals Russian gas where civil war is raging? A country that steals our gas in which EU sponsored coup detat? So what claims they can put to us is they created this situation with the supply? None. " - says Simonov.

In the end, Russia could violation the existing contract, as Europe repeatedly did itself, when it was profitable. "Ettinger and EC say about the logic of the legal world, saying that Russia must fulfill contracts. However, they themselves do not live in this world. When the spot gas prices came down, Europe began to demand lower prices for Gazprom's gas, shout, let's rewrite contracts with Gazprom, which in their opinion does not worth the paper on which they are written. When the EU is unprofitable to live within the legal obligations it tool, she readily forget about it", says Simonov.

The same legal selectivity we can observer in the history of South stream". Russia has signed with the European countries the pipeline agreement. "And here suddenly Europe yells that the agreement violates the Third energy package of the EU, cancel these agreements. But in the European law existing agreement can't be cancelled due to new adopted law, retroactively", - tells the General Director of the national energy security Fund. Europe itself destroys the the rule of law when it is profitable, and she now tries to teach partners how to behave.

"So if it comes to economic war, then we will not have choice. If the EU will not stop this madness, I don't know what the consequences might be. We can't be very kind, when against us have more and more unreasonable sanctions. First, sanctions are imposed for the Crimea, but in relation to the companies, which have nothing to Crimea do not have. Then they applied the sanctions immediately after the crash, "Boeing", for the support of the rebels, even when there is no evidence that this insurgents shot down a plane. Is already finished examination of the black boxes, isn't presented any facts proving the guilt of the rebels? But sanctions are already in use", says Konstantin Simonov.

In his opinion, the situation is reminiscent of collective madness in the EU and the US. "100 years ago, Germany started a collective madness and got others in it by starting the First world war," says Simonov.

He does not exclude that Europe by their actions can now get us into this collective madness. And then Russia may respond by cutting gas supplies to the EU to the detriment of their budget revenues. "Of course we wouldn't want to do that. But to avoid this, Europe needs to think about what she does and possible consequences", - said the head of the national energy independence.

[Jul 31, 2014] Russia 'short-sighted' sanctions will backfire on US, EU

"This is a thoughtless, irresponsible step. It will inevitably lead to an increase in prices on the European energy market," the foreign ministry in Moscow said.
Jul 31, 2014 | DW.DE

Russia has criticized sanctions imposed by the EU and US this week, saying they will lead to higher energy prices in Europe. In eastern Ukraine, meanwhile, fresh peace talks appear possible - with an unusual host.

... ... ...

Pressure on Moscow has increased since the MH17 crash

The western sanctions restrict future arms deals with Moscow and trade in equipment for the oil industry, while also barring Russian state banks from raising money in Western capital markets.

"This is a thoughtless, irresponsible step. It will inevitably lead to an increase in prices on the European energy market," the foreign ministry in Moscow said.

Natural gas, arguably Russia's most important export to Europe, was a noteworthy industry not included in the sanctions.

The Russian foreign ministry also said that the measures would damage cooperation with the US on the international stage, and accused Washington of trying "to get even with us for our independent policy which is inconvenient for the United States."

[Jul 31, 2014] Europe bets on liquefied gas

Whether Moscow to raise prices for gas, how long the EU can sustain the suspension of gas supplies from Russia, and what are the prospects of the project "South stream", Deutsche Welle asked the head of the Department of energy, transport and environment, German Institute for economic research (DIW) Claudia kemfert.

DW: What will the reaction of Europe in case if Russia raises gas prices?

Claudia kemfert: Question one way or another, whether Russia to demand higher prices for gas. There are already signed contracts, which in this case is to remember. In addition, the danger for Russia lies in the fact that the EU because higher prices may start to buy oil and gas from other countries. And it may not be in the interests of Russia, as its economy sale of energy resources is very important.

- What is the current average price for Russian gas in Europe?

- If we compare, the price of Russian gas is about the same as the average price on the European market. It is comparable with the price of liquefied gas in Europe. In Asia rates almost twice as high as in the US - on the contrary below. Look, will in the EU to pay for gas at the new price. Or maybe Europe will use alternative sources or will try to save energy. It may also be a reaction to the price increase.

- In the debates between the European Union and Russia on sanctions the European Commissioner for energy Gunther Oettinger (Günther Oettinger) tends not to touch the energy sector. But sanctions are incresing. Could Europe endure possible suspension of gas supplies from Russia?

- All depends on how long it will last suspention. It's summer, the demand for gas is below normal, gas storage facilities filled almost to the maximum, because the winter was mild. In winter, the situation is different. Europe must prepare well for this winter. There are a lot of gas in international markets, which can be purchased in a short time. This gas is more expensive, but if Russia will demand higher pay, then we will see which price would be more attractive. But Europe is partially ready to such a transition.

I think, if Russia stop supplies of gas to European countries, that she hardly can long endure. This, first of all, the revenues of the budget will be affected, the second, it is about trust. Europeans would be very concerned if Russia would cease to be a reliable supplier of gas. This would cause signigicant consequences.

- What are against this background, the chances of "South stream" to receive the approval of the European Union?

- I think that the project "South stream" is already well advanced. Let's see what will be done to de-escalate the conflict, because currently both sides are very emotional. You must encourage the Europeans and Russians again found a common language. Serious money were already invested In South stream, and project participants do not want to lose them. So I would just wait and see what will happen.

This pipeline necessary to us, but in the future Europe will increasingly rely on liquefied gas. Let's say, such long-term projects would be considered outside the context of the current heated debate.

Currently Ukraine does not receive gas from Russia. What solution exists for Kiev, and how the European Union can participate in this decision?

Europe expects that Ukraine will receive from the West at least part of the necessary gas. The pipeline from the West to the East is already there, so from a technical point of view it is possible. You only need to spend some work to prepare for winter. Of course, there is also the possibility to bring to Europe more liquefied natural gas. If you can provide reverse gas supplies from Western Europe to Ukraine, most likely, the problem for Ukraine will be solved. We hope that this conflict will be settled

[Jul 27, 2014] Ukraine votes to keep Western companies out of gas industry

July 25, 2014 | RT Business

Tags: Gas, Oil, Russia and the global economy, Ukraine

Ukraine's parliament has rejected allowing EU and US companies to buy up to 49 percent of oil and gas company Naftogaz, and also said they were against liquidating the national energy monopoly.

Kiev rejected splitting the company in two, a measure encouraged by the West in order for Naftogaz to comply with Europe's third energy package, which doesn't allow one single company to both produce and transport oil and gas.

The bill proposed creating two new joint stock companies in order to conform to the package, "Ukraine's Main Gas Transmission" and "Ukraine's Underground Storages."

The proposal sought to meet the requirements of EU legislation and strengthen Ukraine's energy independence.

Earlier in July, the Ukrainian parliament passed a first reading of the bill that would have allowed Western companies up to a 49 percent of Ukraine's Gas Transportation System (GTS).

There had been rumors the state would sell off at least 15 percent of Naftogaz in a public offering, however, the conditions in Ukraine's capital and equity market aren't strong enough to get a high enough price.

The changes was rejected because of the large monopoly and influence Naftogaz has over the Ukrainian market, the country's political scientist Alexander Ohrimenko, told Russian business daily RBC.

Ukraine's Rada needed a minimum of 226 votes to support the reform, but only 94 deputies were "for" the change. In the first reading, it received 229 of the 226 votes required to restructure the company.

Voting bloc dynamics changed on Thursday after the ruling coalition dissolved itself triggering an early parliamentary election after the government resigned.

Following the rejection of privatizing Naftogaz, Prime Minister Yatsenyuk announced his resignation as head of the government.

The vote took place among other proposed budget reforms, defense spending, as well as a discussion on how to tackle Ukraine's gas debt.

Naftogaz's debt to Russia now exceeds $5 billion. Crippled finances prevent the company from paying for Russian gas supplies, much of which have already been delivered.

Gazprom halted supplies to Naftogaz in June following Kiev's unwillingness to start paying off the amassed debt.

Ukraine has recently increased its effort to find alternative sources of gas to substitute Russian supplies. One of its main goals is to soon start reverse gas flows from neighboring Slovakia, an undertaking that may not be legal.

Europe's economic recovery has stalled. The EMU policy elites took a fateful gamble that global growth alone would lift the eurozone off the reefs, without the need for serious monetary stimulus or a reflation package to ensure take-off velocity.

Their strategy has failed. The Bundesbank says German growth may have slumped to zero in the second quarter. French industrial output has fallen for three months in a row. French business surveys point to an outright contraction of GDP, with a high risk of a triple-dip recession.

Stagnation is automatically causing debt ratios to spiral upwards yet again across a large part of the currency bloc. The situation is doubly delicate since the European Central Bank is no longer able to serve as a lender-of last resort for Italy, Portugal and Spain.

Germany's top court has ruled that the ECB's back-stop plan (OMT) "manifestly violates" the EU treaties, and is probably Ultra Vires. The political reality is that the OMT cannot be deployed, whatever the European Court says when it issues its own judgment long hence.

Any external economic shock at this stage risks exposing the fundamental incoherence of the EMU system, and therefore shattering the fragile truce in the markets. It is this fear - even more than worries about gas supply - that is contaminating the crisis strategy towards Russia.

Europeans have created a currency structure that is not only prone to chronic depression and serial crises, but has also left them incapable of responding to a geopolitical threat of the first order, even when it is on their doorstep.

The eurozone relapse is slow torture for Italy, facing its 11th quarter of economic contraction, with youth unemployment at 43pc. The country's finance minister Pier Carlo Padoan called for the deployment of fiscal stabilisers, describing Germany's shock data as an "alarm bell" for the whole currency bloc.

He has reason to worry. Eurostat revealed this week that Italy's debt rose to 135.6pc of GDP in the first quarter. This is near the point of no return for a country that borrows in what amounts to a foreign currency.

What is remarkable is that the ratio has jumped 5.4 percentage points over the past year despite austerity and even though Italy is running a primary budget surplus.

This is the toxic effect of near deflationary conditions on debt dynamics. Unless action is taken to boost nominal GDP, Italy must mathematically sink deeper into a compound interest trap.

It is much the same story in Portugal, where the ratio rose 5.4 points to 132.9pc, and where the casualties of slow debt-deflation are coming to light as the Espirito Santo family empire unravels.

Fear that the EMU debt could erupt again at any moment is why Italy has been fighting a rear-guard action to head off serious sanctions against the Kremlin, though its efforts are already being overtaken by events. Washington crossed the Rubicon a week ago by cutting off long-term finance for much of Russia's energy sector. Every Italian bank will have to follow suit "nolens volens". You cannot function in Western finance if you defy US regulators.

It may soon escalate further. The Democrat chairmen of the US Senate's Foreign Relations, Armed Services and Intelligence committees have called on the White House to invoke the International Emergency Economic Powers Act and consider designating the Ukrainian rebels as "terrorists". Such a move would trigger specific clauses in US anti-terror legislation against anybody helping them. It would be tantamount to financial war against the Russian state.

The decision by French leader Francois Hollande to go ahead with the sale of two Mistral helicopter carrier to Russia - one for deployment in the annexed territory of Crimea - is evidence of how disorientated he has become as his presidency is defined by permanent recession and one austerity package after another - each chasing the failure of the last as the fiscal multiplier does its worst.

Mr Hollande's poll ratings have dropped to 16pc. The French employers group Medef went for the jugular this week. "The economic situation of the country is catastrophic. If France were a company, it would be going bankrupt," said its leader, Pierre Gattaz. Hyperbole perhaps, but such is the pre-insurrectional mood of the country.

The proper answer to this critique is for Mr Hollande is to take the lead in Europe, mobilise a Latin Front and issue an ultimatum to those who have run monetary union into the ground: either accept a policy of fiscal and monetary reflation immediately, or face the consequences. Mr Hollande instead clutches at straws by refusing to give up a €1.2bn weapons deal that is of no macro-economic importance, even though he supports the principle of sanctions. It not an edifying moment for the great French nation.

There are of course many reasons why one may think sanctions against the Kremlin to be unwise. The German Social Democrats (SPD) believe to this day that Willy Brandt's Ostpolitik - not the Reagan Doctrine, or Russia's bankruptcy - was what tamed the Soviet Union and ultimately brought down the Berlin Wall. That remains the SPD reflex, though it would be cleaner intellectually if their former Chancellor was not currently on the Gazprom payroll.

On the German Right, the AfD anti-euro party has its own variant of Ostpolitik. It has come close to suggesting that Russia has a legitimate claim on "Holy Kiev", and it evokes the Otto Bismarck's Reinsurance Treaty with Russia in 1887 as model for German policy today. This is of a different character, and needs watching. It taps into a historic current in German thinking that deems the Western democracies to be the real foe. Needless to say, US spies have not helped with their fatuous urge to tap Angela Merkel's mobile phone.

But mostly, Europe's aversion to doing anything about Vladimir Putin stems from economic fear. Their leaders have got into the latest mess because they thought - in defiance of Nobel laureates and the economics professoriate in Europe - that EMU could recover simply by feeding off Chinese, Anglo-Saxon and world demand, running an ever larger current account surplus.

The International Monetary Fund's latest "Article IV" report on the eurozone is a blistering indictment, saying the ECB may have to print money with "full conviction" to break out of the vicious circle.

It said that 70pc of youth unemployment is the result of the slump conditions, demolishing claims by the Brussels, Frankfurt and Berlin that the jobless crisis is due to rigid labour markets or lack of skills - and therefore the fault of the victim countries themselves, not EMU policy.

"Inflation has been too low for too long. A persistent failure to meet the inflation target could undermine central bank credibility," it said. Quite so. The ECB has failed in its common sense duty to offset the fiscal cuts with monetary stimulus as occurred in the US, UK and Japan, failed to meet its 2pc inflation mandate and failed to meet its Lisbon treaty obligation to support growth.

Private credit is shrinking at a rate of 2pc. The broad M3 money supply has contracted over the past year if you strip out Germany. The inflation rate has fallen to 0.5pc, automatically pushing up the debt trajectories of Portugal, Italy, Spain and Cyprus, among others. Yet the ECB still sits on its hands.

Paul Mortimer-Lee, from BNP Paribas, said the ECB seems to have no coherent strategy at this point and has failed to convince markets that it knows what it is doing. "Waiting to see imminent deflation before instituting QE is like putting on your lifejacket when you've already fallen into the sea. Inadequate policy is costing millions of jobs. The ECB needs to stop fighting ghosts and start fighting deflation," he said.

Mario Draghi's €1 trillion blast of cheap loans - later this year - is not the same as QE. It is a swap. Banks must hand over collateral, and many are still cutting their balance sheets to meet new rules. It does not in itself ignite the money supply.

The IMF's Reza Moghadam says QE would have "wider and larger effects" if done with gusto. It would not breach EU treaty law so long as the sovereign bonds were bought "across the board", rather than targeting the bonds of crisis states in a quasi-fiscal rescue.

This will not happen of course, or at least not soon enough or decisively enough to avert serious trouble. The eurozone stands defenceless with no safety buffer against deflation, and no shield against the near certain economic fall-out from a crisis in Russia that has only just begun. No wonder Europe's leaders behave like frightened sheep.

M of A - Ukraine Financial Rating Propaganda Likely To Fail

International credit rating agencies like S&P are nothing but political instruments. Consider this from July 11:

Ukraine had its credit-rating outlook raised to stable from negative by Standard & Poor's after the country obtained a $17 billion bailout loan from the International Monetary Fund.
"Full disbursement of the IMF program and related multilateral lending should enable Ukraine to meet its external financing needs over the next year," S&P analysts said in an e-mailed statement.

Now compare that with a real world report from July 17:

The IMF now expects Ukraine's economy to shrink by 6.5% this year, compared with 5% at the time the emergency loans were agreed. GDP stagnated last year.

Ukraine's government is spending more than expected on security as it battles the separatists. Having lost control of parts of the country, revenue collection is also falling behind schedule.

And state gas firm Naftogaz is struggling to force customers to pay their debts.
"The program hinges crucially on the assumption that the conflict will begin to subside in the coming months," the IMF said. "A significant prolongation of the crisis would seriously strain their ability to [reform the economy] without a substantial increase in external support on adequate terms."

The IMF more explicitly formulated: "Expect more of your money being wasted on the Nazis in Kiev."

Fortunately, after the rating disaster of mortgage bonds and derivatives that led to the financial crisis, smart real world investors have become mostly immune of the rating companies' nonsense, diminishing their influence further into the pure propaganda territory. From the last lines of first piece:

Global bond yields showed investors ignored 56 percent of Moody's and 50 percent of S&P's rating and outlook changes in 2012, more often disagreeing when the companies said governments were becoming safer or more risky, data compiled by Bloomberg show.

The S&P propaganda effort will therefore likely fail.


@with love from Poland #10:

I'm not sure what you mean by "standing still yet": a social implosion has not yet occurred?

From the very beginning with the breakup of the USSR, it was clear to anyone with any knowledge of the region that the project of a "Ukrainian nation" was dubious at best. It is an artifact of Soviet rule of Russia, with its borders arbitrarily drawn up by Stalin and Khrushchev, with no thought given to regional differences in terms of the ethnicity and culture of the inhabitants. Clearly, the only reason that "the territorial integrity of Ukraine must be preserved" has become a mantra of the West is that the Ukraine, with its current unabashedly fascist and racist regime, is a major problem for Russia, which is a main impediment to US full spectrum dominance.

I don't think that one should fear that the MH17 black flag op is going to be enough to make the Novorossiyan independence movement fail. Once Novorossiya, which will be more than just Donetsk and Lugansk, breaks away from Ukieland, Poland should certainly start talking about reclaiming the regions you mention. Alternatively, Poland and Russia agreeing to partition the former Ukraine between themselves would doubtless serve as an excellent basis for improving Polish-Russian relations, and would help Poland overcome its main current problem, which is being a pawn of the Empire.

To get back to MH17, it will be interesting to see how the "investigation" and its reception pan out. As the Saker wrote here, it is likely that the USG, Russia, and Germany already know who was responsible for the downing of MH17. His main worry is that the Russian military is extremely reluctant to disclose intelligence that it has obtained.

[Jul 13, 2014] Ukraine's shelling could have irreversible consequences, says Russia by Shaun Walker

An interesting programme for Ukraine's gas transit lines. Modernisation costs of over $3billion - proposed improvement costs of $5.5billion.
The Guardian

retsdon, 13 July 2014 3:05pm

Fighting at Tripoli airport; a great swathe of the Middle East from Syria to Iraq at war; civil war in Ukraine; and women and children being bombed in their homes in Gaza. There are millions of people whose lives are, right at this moment, in turmoil.

And why? Because America and its sidekicks chose to 'help' them.
You would think that the pattern should be obvious, even to the meanest intelligence.

But no, Putin is a threat to peace. Well, if you're credulous to the point of imbecility he might be....

MichaelRivero, 13 July 2014 3:14pm

Poroshenko WANTS a reaction from Russia, to allow the US to directly militarily intervene in Ukraine. That is why Poroshenko has been carrying out deliberate provocations such as driving an APC into Russian territory and abandoning it there, overflights, and the shelling of border crossings. Poroshenko will go on provoking Russia until Russia responds. Then the western media will declare Russia as the aggressor and try to make everyone forget Ukraine struck first, just as they are even now trying to obscure the fact that Israel started the current conflict in Gaza and claim HAMAS is the aggressor.

And let us not forget that the crisis in Ukraine actually started back in January when Ukraine's elected government was forced from power by a foreign-backed coup for rejecting an "offer" to merge with the European Union.

Manolo Torres rodney9, 13 July 2014 4:42pm

European Policies are very flexible. One year no one should relate to members of Svoboda because of their neo-nazi ideology, the next year they congratulate an illegal government with many Svoboda members on it

jonsid, 13 July 2014 10:33pm

An interesting programme for Ukraine's gas transit lines. Modernisation costs of over $3billion - proposed improvement costs of $5.5billion.

These costings were proposed by the Brussels based Energy Charter Trust.

There's big money at stake here.

Baba Baba, 14 July 2014 2:51am

Just some aditional information of very low importance.
The airport of Lugansk was retaken yesterday by the militias,by causing significant loses to the pro ukrainian militias and the unfortunate soldiers ,forced to join the ukrainian army.
Since Friday two SU 25 jets,one Mi 24 helicopter and one transport airplane have been shot down and destroyed .
So far the Ukrainian army has lost over 50% of its aviation..the tanks are so outdated,that are worse than coffins and are of no strategic significance.


The president of Russia ,with a big delegation ,mostly including officials put on the USA and EU black list was on an official visit to Cuba, where many contracts were sighed.Russia writes off 30 billion USA dollars Cuban debt and starts the construction of the greatest of the Caribean commercial port in CUBA.

The next day Putin was on an official vist to...Nicaragua,where the preparations for a second cannal .connecting the oceans are in a final stage.

The next day Putin was on a state visit in Argentina, where Russia by mutual consent bought ..ALL WESTERN INVESTMENTS OR PROPERTIES in the energy sector, where Russia is starting to built a nuclear power station and where Russia is financially supporting Argentina with 30 BILLION dollars.

Then Putin went on a state visit to Brazil,where very significant commercial and militery treaties were signed,whre he had constructive talks with Merkel,who is now supporting the Russian peace plan about Ukraine.

Tommorrow The leaders of BRICS are meeting in Fortaleza, to sigh the final documents about the BRICS international bank, based in Shanghai, to coordinate their commercial which the USA $ is not accepted as a valid payment paper.

Of course ,the Guardian is also not commenting anything about the sad fact, that from now on, not only the commercial ships ,under UK flag, or UK property are not allowed to stop in ANY South American port, but that also the passengers ships are under the same restrictutions.

It is expected, that ..if USA does not pay to the bonds owners, who are trying to get payments from Argentina...there could be decision of the MERCOSUR to expropriate ,confiscate or expell any USA related business...on the whole continent...
But ...of course ...all this is just...a KGB..TROLLING

Countries' defiance of EU ban on gas pipeline highlights Russia's energy clout in Europe Star Tribune

VIENNA - A clutch of countries is breaking ranks with the EU's efforts to put economic and diplomatic pressure on Russia over Ukraine and building a pipeline meant to carry huge amounts of Russian gas to their doorstep.

Their defiance of a European Union stop work order is more significant than just another missed chance for Europe to call out the Kremlin. Russian natural gas already accounts for around a third of the EU's needs. The South Stream pipeline could increase Russian supplies to Europe by another 25 percent, potentially boosting Moscow's leverage long after the Ukraine crisis fades.

Adding to the skein of Russian pipelines already ending in Europe, South Stream would go through Bulgaria, Serbia, Hungary, Slovenia, Austria and Italy in one leg and Croatia, Macedonia, Greece and Turkey in a second. The European Commission, the EU executive, has ordered a construction moratorium over concerns with Russia's dual role as pipeline owner and gas supplier. It has also delayed some political talks on the pipeline amid the crisis in Ukraine.

"Developments in Ukraine and Russia have demonstrated that the EU's priority is to diversify its energy sources," says spokeswoman Sabine Berger of the EU Energy Commissioner's office.

But Austria, Hungary, and Serbia - the first two EU members, the third a candidate to join - have said they will build their sections of the project and others may follow, to the displeasure of the EU and United States. In the wake of Austria's decision last month, Washington urged it to "consider carefully" whether that contributed to "discouraging further Russian aggression."

Moscow says such arguments by the U.S. are driven by business concerns. In Vienna recently to lobby for Austrian support for South Stream, Russian President Vladimir Putin said "our American friends ... want to supply Europe with gas themselves."

In Slovenia Tuesday for discussions that included South Stream, Russian Foreign Minister Sergey Lavrov challenged the EU Commission's moratorium as "not in accordance with norms of international law."

Slovene Foreign Minister Karl Erjavec cited North Stream, another Russian pipeline to Europe partially owned and supplied by Russia, as a precedent for South Stream.

A leaked document shows just how much the EU wants a piece of America's fracking boom By Lydia DePillis

July 8The Washington Post

... The EU has made its desire for the right to import U.S. oil known since the U.S. started producing large amounts of it in the mid-2000s. It signaled again at the outset of trade negotiations, and its intentions have become even more clear since.

This time, though, the EU is adding another argument: Instability on its Eastern flank threatens to cut off the supply of oil and natural gas from Russia. "The current crisis in Ukraine confirms the delicate situation faced by the EU with regard to energy dependence," reads the document, which is dated May 27.

The leak comes in advance of another round of discussions on the Transatlantic Trade and Investment Partnership, which kicked off last fall and is expected to encompass $4.7 trillion in trade between the U.S. and the European Union when it's finished (here's an explainer on the deal). That won't happen for several years - if ever - but knowledge of the E.U.'s position has inflamed the already-hot debate over whether to allow the U.S.' newfound bounty of crude oil to be exported overseas.

... ... ...

Now, Europe feels that it's in a similar situation. Although fossil fuel use has been declining, it's still not ready to transition to renewable energy sources, and remains heavily dependent on imported oil - 39 percent of which comes from the tumultuous Middle East and Africa, and 42 percent from the former Soviet Union. The U.S. is a huge potential source of supply, having recently overtaken Saudi Arabia as the world's largest producer of oil and gas. Also, while U.S. refiners had retrofitted their operations to process heavier oil imported from the Canadian tar sands before the fracking boom delivered a flood of new supply, Europe's refineries are well-equipped to handle it.

But who, exactly, is pushing for more U.S. crude behind the EU's unified veneer? The Council of the European Union did not respond to a request for comment. Industry watchers, though, point out that Germany still depends on oil as its primary source of energy - as opposed to, say, France, which gets 75 percent of its electricity from nuclear plants (though oil still supplies about a third of its energy needs*). Half of Germany's oil comes from former Soviet Union nations, and some of it used to come from Libya before rebels shut down export terminals there (the supply only just started flowing again). Germany is very influential within the EU, and may have pushed the trading bloc to raise its voice on measures that would help it diversify its supply over the long term; the letter itself admits that there's no way to stabilize Ukraine with U.S. oil imports soon enough to make a difference.

... ... ...

The second message, though, is internal: Securing additional energy supplies may help the EU negotiators to sell the agreement to their member states, especially when they might also have to give up some of their protectionist sacred cows, like the agricultural subsidies that have propped up European farmers for decades.

"The Europeans really want to set a precedent, to make a point, that they want free trade and a more liquid market," says Iana Dreyer, who edits the EU trade analysis service Borderlex, where she wrote about a previous leak on the treaty's energy chapter. "After the oil shock in the 1970s, energy has been so securitized, that the mindset has really changed - now we need a big flexible global market so that nobody can control it."

... ... ...

It's unclear how that would happen. Senator Ed Markey (D.-Mass) - who thinks Ukraine should kick its Russian fossil fuel habit through better energy efficiency - has outlined the legal reasons why the White House couldn't just lift the ban outright through executive action.

Meanwhile, however, the ban itself may be illegal under international trade law. Although no one has ever challenged the U.S. at the World Trade Organization, the American Petroleum Institute - composed of oil majors like Exxon, ConocoPhillips, and BP - intimated late last year that it might do so if the restriction isn't lifted through other means. And while the U.S. and European governments may not be on the same page on this issue, very large corporate interests on both sides of the pond see it as a top priority.

"Because U.S. and European companies, including energy companies, have invested heavily on both sides of the Atlantic, U.S. and EU negotiators are essentially representing the same company interests," the U.S. Chamber of Commerce's vice president for Europe Peter Chase told Bloomberg. That legal challenge has a non-zero chance of success, says Jim Bacchus, a former chair of the WTO's appellate body who argued for the National Association of Manufacturers that natural gas export restrictions would run afoul of international trade rules as well.

"Generally speaking, WTO rules prohibit restrictions on exports of any kind, unless they take the form of taxes," Bacchus says. "There has always been this notion that somehow energy products are not products that follow the scope of the WTO treaty. There's no legal basis for that view."

[Jul 11, 2014] Ukraine needs to buy an additional 6-7 billion cubic meters of gas from Russia

kirill, July 10, 2014 at 2:11 pm–Ukrainian.html

""At present, we need to buy an additional 6-7 billion cubic meters of gas, because we need gas to go through this [cold] season smoothly," Ukrainian Deputy Prime Minister Volodymyr Hroisman told reporters.

"We expect the Russian Federation will sell us this gas," Hroisman added."

No, Mr. Hroisman, we expect you to pay your debt of over $5 billion first. The chutzpah from this clown.

I thought his new bestest friends in the west would supply him with some reverse flow.

marknesop, July 10, 2014 at 3:12 pm
I imagine the Ukrainian position has not changed at all – we will pay the debt as long as you accept a price of $267.00 or whatever the ridiculous low price was that Ukraine insisted on – which would reduce their actual debt by about half – and then sell us future supplies as we decide we need them at the same low price negotiated by Yanukovych.

And it's true Russia was going to sell them gas at that price; however (a) that was for Ukraine the partner and fellow member of the Eurasian union, not Ukraine the court jester and new big mouth of the EU, and (b) the principal who signed that deal was violently deposed in a coup and chased out of the country. No such deal was ever signed with the current leadership.

I would not sell them a whiff of gas. But I am sure if that is what happens the intertubes will be flooded with pictures of freezing, starving Ukrainian children and pensioners all winter, with accompanying narratives that Russia cut off the gas to the helpless in order to destroy Ukraine's economy, and the heroes in the Rada are doing their best to be fair to everyone but their hands are tied by Russian cruelty. This stuff almost writes itself.

Ukraine, the Crimea, and Russia

The present crisis in Ukraine began in November 2013 when President Viktor Yanukovych repudiated an agreement for closer economic and political ties with the European Union (EU), opting instead for closer ties with Russia. That act touched off fierce anti-government protests in Kiev and eventually led to Yanukovych's flight from the capital. With Moscow's principal ally pushed from the scene and pro-EU forces in control of the capital, Russian President Vladimir Putin moved to seize control of the Crimea and foment a separatist drive in eastern Ukraine. For both sides, the resulting struggle has been about political legitimacy and national identity -- but as in other recent conflicts, it has also been about energy.

Ukraine is not itself a significant energy producer. It is, however, a major transit route for the delivery of Russian natural gas to Europe. According to the U.S. Energy Information Administration (EIA), Europe obtained 30% of its gas from Russia in 2013 -- most of it from the state-controlled gas giant Gazprom -- and approximately half of this was transported by pipelines crossing Ukraine. As a result, that country plays a critical role in the complex energy relationship between Europe and Russia, one that has proved incredibly lucrative for the shadowy elites and oligarchswho control the flow of gas, whille at the same time provoking intense controversy. Disputes over the price Ukraine pays for its own imports of Russian gas twice provoked a cutoff in deliveries by Gazprom, leading to diminished supplies in Europe as well.

Given this background, it is not surprising that a key objective of the "association agreement" between the EU and Ukraine that was repudiated by Yanukovych (and has now been signed by the new Ukrainian government) calls for the extension of EU energy rules to Ukraine's energy system -- essentially eliminating the cozy deals between Ukrainian elites and Gazprom. By entering into the agreement, EU officials claim, Ukraine will begin "a process of approximating its energy legislation to the EU norms and standards, thus facilitating internal market reforms."

Russian leaders have many reasons to despise the association agreement. For one thing, it will move Ukraine, a country on its border, into a closer political and economic embrace with the West. Of special concern, however, are the provisions about energy, given Russia's economic reliance on gas sales to Europe -- not to mention the threat they pose to the personal fortunes of well-connected Russian elites. In late2013 Yanukovych came under immense pressure from Vladimir Putin to turn his back on the EU and agree instead to an economic union with Russia and Belarus, an arrangement that would have protected the privileged status of elites in both countries. However, by moving in this direction, Yanukovych put a bright spotlight on the crony politics that had long plaguedUkraine's energy system, thereby triggering protests in Kiev's Independence Square (the Maidan) -- that led to his downfall.

Once the protests began, a cascade of events led to the current standoff, with the Crimea in Russian hands, large parts of the east under the control of pro-Russian separatists, and the rump western areas moving ever closer to the EU. In this ongoing struggle, identity politics has come to play a prominent role, with leaders on all sides appealing to national and ethnic loyalties. Energy, nevertheless, remains a major factor in the equation. Gazprom has repeatedly raised the price it charges Ukraine for its imports of natural gas, and on June 16th cut off its supply entirely, claiming non-payment for past deliveries. A day later, an explosion damaged one of the main pipelines carrying Russian gas to Ukraine -- an event still being investigated. Negotiations over the gas price remain a major issue in the ongoing negotiations between Ukraine's newly elected president, Petro Poroshenko, and Vladimir Putin.

Energy also played a key role in Russia's determination to take the Crimea by military means. By annexing that region, Russia virtually doubled the offshore territory it controls in the Black Sea, which is thought to house billions of barrels of oil and vast reserves of natural gas. Prior to the crisis, several Western oil firms, including ExxonMobil, were negotiating with Ukraine for access to those reserves. Now, they will be negotiating with Moscow. "It's a big deal," said Carol Saivetz, a Eurasian expert at MIT. "It deprives Ukraine of the possibility of developing these resources and gives them to Russia."

[Jul 09, 2014] Europe's Looming Gas Crisis The Winners and Losers by Jason Ditz

July 8, 2014 |
On June 16, without a lot of fanfare, Russian natural gas giant OAO Gazprom (NASDAQOTH: OGZPY ) cut off supplies to Ukraine's state energy company Naftogaz. The move was in response to failed talks on Naftogaz paying a fairly substantial debt for previous shipments, and refusing Gazprom's plan to move to a prepayment system.

The fears about siphoning leading to a cut in Gazprom exports to Europe have so far been unfounded, with flows remaining normal and Ukraine using a substantial underground reserve of previous shipments. The EU gas crisis did not come to pass, at least not yet.

Why the EU isn't out of the woods yet

Though Ukraine's stored reserves amount to some 14.2 billion cubic meters, the country's massive dependency on foreign (i.e., Russian) supplied gas means they'll burn through that, at present usage, sometime in late autumn. Naftogaz officials are pushing for a state of emergency and forced 20% consumption cuts, which they say could allow them to get through the winter, albeit just barely, and only if it's not a particularly cold winter.

Whether it comes late this year or in early spring of 2015, one thing is clear: Unless Naftogaz resolves the standoff with Gazprom, something they insist they won't do, Ukraine will run out of gas in a matter of months. When that happens, siphoning is inevitable, and supplies to the rest of Europe will be in jeopardy.

Supply cuts from Russia will mean big price increases in Europe, as the few alternative sources of natural gas become all the more sought after. Major EU energy importers, like Germany's E.ON (NASDAQOTH: EONGY ) , are going to be paying out the nose for gas, if they can get it at all. Existing deals between E.ON and Gazprom are likely to be impossible to continue until the Ukraine situation is resolved.

Where will that gas come from?

The loss of Russian gas will be a much bigger problem for European customers than it will for Gazprom, which has been picking up its exports to China and India. It's far from ideal for Gazprom to have a cutoff to a whole continent, but they should easily weather that storm.

Europe, by contrast, is going to have to take a long, hard look at importing more liquified natural gas, which could be good news for companies like BG Group plc (NASDAQOTH: BRGYY ) , whose liquifaction plant in Egypt could benefit.

The other big natural gas producer in Europe is Norway's Statoil (NYSE: STO ) , which could greatly benefit from a dramatic increase in prices across the region. The company's profits are already flourishing on tight supply in Brent crude, and the natural gas crisis could add even more to their already healthy bottom line.

[Jul 09, 2014] This is only a start of desperate times for the residents of Ukraine

On macroeconomic level, it is clear that Ukraine can avoid. the default. This year it will have to pay foreign debts and loans of more than $69 billion. Of them 14.5 billion are loads to the banks, 46.6 billion - loans to the industrial enterprises, 1 billion load to the national Bank of Ukraine, and 4.1 billion must pay the state itself in its external debts. The total volume of payments for servicing the external debt exceeds 40% of GDP.

In early April gold and foreign currency reserves of the country barely reach $15 billion. The Ukrainian government keeps repeating that for the salvation of the state's economy they urgently, within two to three months, need credits for 30 billion dollars. But nobody will give them to Ukraine. The first tranche of the IMF loan in the amount of about 3 billion were targeted for repayment of the debt to "Gazprom", but for the intended purpose was used only partially. Another 1 billion has provided US as a guarantee for government bonds. However, on June 24, the Ukrainian government had to pay it to Russian Vneshtorgbank after demand to repayment. Today Russia is going to demand its gas debt through international arbitration. the same path have chosen China, to which Ukraine has not deliver wheat worth billions of euros.

... ... ...

In fact, Ukraine is the country-bankrupt. It follows from the analysis of Reuters. According to the Agency, the Ukrainian authorities are negotiating with its creditors, the holders of state bonds of Ukraine, on debt restructuring, as she is not able to repay them.

In order to repay the numerous loans and find the money for expensive military operations to destroy the civilian population of Donbass, the Ukrainian authorities are tightening the screws to the common people. And not only by raising taxes, announced Arseniy Yatsenyuk. Already officially announced the freezing of the minimum wage and pensions, elimination of allowances to workers of budgetary sphere and civil servants. Already discontinued the payment of bonuses to the staff of government institutions, which were reaching 40% of the salary. But first of all liquidated local co-pay to the lowest paid workers in the regions put them low poverty level. Planned monthly salary of librarians, for example, will be a little over 1000 UAH. (83 dollars a month), doctors - 1200 UAH. (100$ a month), state municipal employees 1500 UAH. (125 USD a month). Even according to state statistics, the average monthly salary in the near future will fall from 3575 to 3379 UAH. The level of unemployment, according to the Minister, will rise from 7.1% to 8.2%.

Although the world Bank forecast inflation in Ukraine in 2014 at the level of 15%, and in 2015 - at the level of 10.5%, the reality is much more severe. Due to the depreciation of the hryvnia and the crisis in agriculture prices for some products from February has risen by more than two times, medicines - by 60-70%, which was officially recognized by the Minister of Finance Alexander Shlapak. In fact, the number of import of medicinal products of the first necessity has risen in price in 2-3 times. Remind: this happened in conditions when wages and pensions are frozen. That is why for people of Ukraine, priority is not buying of new cars, not relaxing in resorts, where the owners of hotels and lodges now are able to earn enough to sustain this institutions, to say nothing about profit due to the catastrophic drop in the number of tourists.

But the hardest times for the residents of Ukraine only begin. From July 1, the price on the natural gas for the population was raised 55-70%, hot water and heating by 40%, prices for electricity - by 10-40% depending on consumption volumes, prices for centralized water supply and drainage - 78-96%. The average cost of communal services will reach 1100 UAH per month -- above salary of several categories of workers.

Largest rises hit Kiev, for which the hot water will rise in price almost on 70%, and district heating - almost 60%. And this is only the first stage of the growth of prices for utility services, which will continue to gradually rise until 2017. Today part of the population of the Ukrainian capital is not able to pay the bills. From 23 June Kievenergo started to switch off 754 houses from the hot water due to the debt of communal enterprises which serve them which from the beginning of the year exceeded 838 million. Previously we reported about disabling street lighting in five districts of Kiev.

[Jul 06, 2014] Ukraine: Retreat From Slaviansk Far From End Game

"At its simplest, US involvement in Ukraine has more to do with Russian pipelines than anyone or anything in Ukraine. The US is trying to put a cork into Russia's delivery system to Europe." | Comments (182)

The Saker is somewhat depressed that the insurgents in east Ukraine retreated from Slaviansk. But that retreat was in good order and with few losses despite being surrounded by enemy forces. As their commander Strelkov explains there was no way Slaviansk could be defended against superior artillery and air superiority with little means to counter those.

Strelkov is now setting up defenses in Donetsk which is a much bigger city with more resources and likely easier to defend. As the Ukrainian army and the National Guard stormtroopers from the Right Sektor now move forward they may soon find that they have some "left behind" enemies in their back who can seriously influence their operations.

Supporters of the insurgents seem to blame Russia's President Putin for lack of (visible) support. But that is, in my view, thinking too small. It is far too early to have any idea of who has won or lost in Ukraine. What Putin is currently trying to do, with growing success, is to separate the Europeans from the ever meddling United States. Last Thursday a new agreement on a ceasefire was negotiated and agreed upon with Russia, France, Germany and Ukraine at the table. When the German chancellor Merkel informed U.S. President Obama about it it was the U.S. which again threatened Russia and urged the Ukrainian President Poroshenko to continue his "Anti-Terrorist Operation". The Germans and French will have taken note of this and will again move a bit more further towards the Russian side.

In judging the current situation I agree with Anatol Karlin who finds that Putin is playing a clever but cynical game:

[T]he lack of *direct* [Russian] intervention is more likely just the product of a series of cold calculations that show it more likely to be effective in a few months than today, when:

a) The Ukrainian Army has become weaker and more demoralized;

b) Photos of bisected, bloodied, and burnt corpses have been filling the Russian and international airwaves for a few months;

c) The resolve of the West and its unity are weaker;

d) The Russian economy is more prepared for any sanctions that are forthcoming; and

e) Austerity is biting Ukraine hard, and (gas-less) winter is coming.

Too bad that it is the residents of Donetsk who will be playing the blood price for this.

The Twisted Genius (TTG), who is former Green Beret trained in creating and directing local insurgencies, has a somewhat similar take on the situation:

[Putin] he is another hard hearted empath. He knows that Novorossiya must be forged from fire if it is to survive. They must want it and be willing to fight for it themselves.
Additionally, Putin disdains the West's penchant for R2P and aggressive interference in the affairs of others. He will move if he thinks it is necessary and when he thinks it is necessary. For now, I believe he is content to provide covert support as necessary, push for a real ceasefire and political solution, and bide his time as a new nation that intends to span from Kharkov to Oddessa and Transnistria births itself.
Posted by b at


"Too bad that it is the residents of Donetsk who will be playing the blood price for this."

The whole of Ukraine is a sacrificial pawn - the real target of the US machinations is and always has been Russia. The US seeks to destroy Russia's independence and reduce it to a vassal state so the US control its energy. That is why the US wants to prevent South Stream starting. Startup of South Stream would totally bypass Ukraine, removing the US control of gas flow and the potential to control the Russian and EU economies it allows. Remember Putin is the President of Russia so his responsibility lies there.

The trolls may well start up their 'Putin betrayal', 'Putin needs to grow a pair' etc, but the people who need to 'grow a pair' are the EU politicians. They need to recognize that a rabid Nazi regime in Ukraine is a threat to them as well as Russia. My understanding is that Putin is working on this. France has seen treatment the of BNP and the demands to sacrifice its economy by cancelling Mistral. Germany has found the alleged spy, and DB is facing similar threats of fines from the US. My impression is that Putin wants certainly France and Germany to agree to some kind of peace force to protect the citizens in the south east of Ukraine.

If that fails and direct intervention becomes necessary, it will be at a time of his choosing, when he has full support of the Russian people (as with Chechnya 2) and when his military are happy the they have clear military targets (where, how many, what form etc) and a clear political political end game (what's the exit plan?).

The Ukranian Right Sektor have ambitions to gain nuclear weapons (remember the control defense and energy (incl. nuclear) ministries. They have openly stated they would use such weapons pre-emptively. Thanks to the US, there are a number of loosely regulated bio-weapons plants in Ukraine (near Kharkiv, Odessa for certain). The Ukraine situation is a real tinderbox and the massacre of the poor citizens in the east is just the start.

Armchair generals, please feel free to provide us with any evidence that answers these questions, particularly how to deal effectively with the RS Nazi problem. Otherwise feel free to leave town on the rocking horse you rode in on.

Bob In Portland

At its simplest, US involvement in Ukraine has more to do with Russian pipelines than anyone or anything in Ukraine. The US is trying to put a cork into Russia's delivery system to Europe. The tell has been the US meddling in the South Stream pipeline. It's quite simply a business maneuver to put western-controlled petroleum in prominence in Europe and to break the Russian connections with the west. All the neo-Nazi street fighters who are puffing their chests and thinking great thoughts about destiny and the will of the pure Ukrainian race are all going to be disappointed. Actually, if they look around they should be figuring it out already, but most will soon enough.

Let us say for a moment that the US is meddling in Ukraine for purely "honorable" reasons. Allowing the South Stream to go ahead would relieve Moscow of its biggest worries (at least economic) with Ukraine. Ukraine could go forward with its austerity program and the EU/IMF/US could have the remains. But it's all about the control of energy. That's what Afghanistan was about, a means to project itself into Central Asia and that big pool of petroleum there. Crimea would have been a wonderful jumping off point to dismantle Russian control of all that.

It's very possible that once Crimea was taken by Russia this grand strategy was shattered and everything else now is just spite. It won't end well for the Ukrainians, east and west.

Also, Germany seems to be making a lot of noises about the US and its NSA spying. Since the BND and CIA (and their antecedents) have been working together since WWII, the fact that the US spies on Germany is absolutely no surprise to them. I'm sure they do the same. For as much indignity as Merkel has shown I wouldn't doubt that she has access to the menu from the White House kitchen every night and whether Obama sleeps on his back or side.

[Jul 03, 2014] Ukraine and the Battle for South Stream by Tony Cartalucci

Jun 27, 2014 | New Eastern Outlook

The ongoing conflict in Ukraine, admittedly an attempt to expand both NATO and the European Union (EU), has escalated in terms of dominating Europe's energy markets. Attempts to halt the ongoing construction of Russia's South Stream natural gas pipeline appears to be a direct attempt to further penalize Russia for its role in defending Ukrainians currently under siege by aircraft, artillery, heavy armor and irregular troops.

Toward a Europe "Whole and Free," and its Energy Market Too

"Toward a Europe Whole and Free" was literally the title of NATO's Atlantic Council's May 2014 event celebrating NATO's continuous expansion since the fall of the Soviet Union and its aspirations to integrate all along Russia's borders and even Russia itself into its geopolitical socioeconomic order. The Atlantic Council's official program webpage for the event stated:

This two-day conference will honor the historic milestones that have forged a strong and prosperous Atlantic community and explore the most pressing challenges to the completion of a Europe whole and free. This vision, successfully implemented for two decades with a bipartisan and transatlantic strategy, has been called into question both within current NATO and EU members and by Russia's aggressive actions. Leaders and experts will gather at the Council's headquarters to debate the opportunities and challenges in Europe's east and south with the aim of exploring a renewed common transatlantic approach.

What is essentially a celebration of expansionism, military aggression, and extraterritorial political subversion, the event featured many of the chief protagonists in Ukraine's current crisis. These included US Secretary of State John Kerry and US Vice President Joseph Biden, along with NATO commanders and US corporate-financier funded policymakers who have authored America's decades of "exceptionalism." It also included US Senator John McCain who literally flew to Kiev during the height of the "Euromaidan" protests and took the stage with ultra-right Neo-Nazi Svoboda Party leaders.

In their own words, those attending the Atlantic Council gathering describe the battle for Ukraine being fought to "complete" their socioeconomic consolidation in Europe – this includes "integrating Russia." Secretary John Kerry at the gathering would literally state:

Our European Allies have spent more than 20 years with us working to integrate Russia into the Euro-Atlantic community.

By "integrating" Russia, of course, Kerry means overthrowing any independent national political order that exists in Moscow and replacing it with one that answers to Wall Street, London, and now Brussels. This can be seen clearly in attempts by the West to replicate its model of "color revolution" within Russian territory itself.

But Kerry and the rest of EU-NATO, recognizing that efforts to subvert and overthrow an independent political order in Russia have failed, have resorted to a policy of encirclement, containment, and confrontation, with Ukraine being only one of many battlefields the West is fighting upon. Kerry would declare Europe's energy market as another.

He stated (emphasis added):

"…if we want a Europe that is both whole and free, then we have to do more together immediately, with a sense of urgency, to ensure that European nations are not dependent on Russia for the majority of their energy. In this age of new energy markets, in this age of concern about global climate change and carbon overload, we ought to be able to rush to the ability to be able to make Europe less dependent. And if we do that, that will be one of the greatest single strategic differences that could be made here. We can deliver greater energy independence and help to diversify energy sources that are available to the European markets, and we can expand the energy infrastructure across Europe, and we can build up energy storage capacity throughout the continent."

And immediately they did. After resisting pressure from the EU regarding Russia's South Stream pipeline, Bulgaria has been forced to suspend ongoing construction, jeopardizing interests and opportunities not only for Russia, but for the nations the pipeline is to pass through.

The Battle for South Stream

The halting of construction followed a visit by US Senators John McCain, Christopher Murphy, and Ron Johnson – with McCain in particular directly supporting the armed overthrow of the Ukrainian government earlier this year. In a Washington Post article titled, "Bulgaria halts work on South Stream gas pipeline," it states:

Bulgaria's prime minister has ordered on Sunday a halt to construction work on the Gazprom-led South Stream pipeline project planned to bypass Ukraine as a transit country and consolidating Russia's energy grip in Europe.

Plamen Oresharski said after meeting U.S. Sens. John McCain, Christopher Murphy and Ron Johnson that he has ordered all work on the disputed project to continue only after consultations with Brussels.

Moscow responded by pointing out the obvious nature of what are in all intents and purposes sanctions against Russia. The Moscow Times reported in an article titled, "Russia Sees Underhanded Sanctions in Bulgaria's Suspension of South Stream," that:

Bulgaria's decision to suspend construction of the Russia-led South Stream pipeline project on its territory, undermining Russia's efforts to diversify its gas transportation infrastructure to Europe away from Ukraine, is an underhanded economic sanction thrust on Russia by the West, a top Russian diplomat and Russian industry analysts said Monday.

The article would also point out that once the South Stream pipeline is completed it will diminish Ukraine's importance as a transit point for Russian natural gas into Western Europe. It appears that the moves against South Stream are designed to at the very least, delay this inevitable outcome for as long as possible, to maintain leverage as the West struggles to consolidate power on behalf of their teetering proxy regime in Kiev.

For Bulgaria's part, not only have they disregarded US sanctions on Russia, choosing a Russian firm to build the pipeline, they appear eager to resolve the legal obstacles conveniently laid down amid the ongoing Ukrainian crisis, and complete the pipeline as soon as possible.

Exploiting South Stream's Delay

The West's plans to use South Stream's delay to extort concessions from Russia and those working with it on the project. Additionally the delay will help preserve the benefits of Ukraine's current monopoly on transporting Russian natural gas to Western Europe. To ensure maximum leverage, the West is placing key personnel within Ukraine's energy sector, in addition to propping up the regime in Kiev. Perhaps the most indicative of the overall illegitimacy and criminal nature of the current EU-NATO posture was the appointment of Hunter Biden, son of US Vice President Joseph Biden, as a member of Ukraine energy giant Barisma's board of directors.

Biden Jr.'s nepotist appointment is not where the conflict of interest begins or ends. Biden Jr. was also a director of the US State Department's National Endowment for Democracy (NED) subsidiary National Democratic Institute (NDI). The NED/NDI played an admitted role in building up opposition parties in Ukraine prior to the so-called "Euromaidan" protests and admittedly engineered the so-called "Orange Revolution" in Ukraine in 2004. More recently, they served as "election monitors" lending their stamp of approval of polling in Ukraine where entire provinces failed to vote in the east, opposition parties were unable to campaign in the west, and the aerial bombardment of cities across the country was underway.

In effect, Biden Jr.s NDI overthrew a government ahead of himself being appointed as a director in the targeted nation's largest energy company – a dizzying conflict of interest. Coupled with the stated US agenda of reducing Russia's influence in Europe's energy market, this conflict of interest becomes a self-evident impropriety and an obvious component of the West's agenda of encircling and containing Russia.

It remains to be seen how long the South Stream delay lasts and what other moves the EU, NATO, and Ukraine's openly foreign-influenced regime and industries take in implementing Secretary Kerry's stated goal of confronting Russia. For nations like Bulgaria, the cost to their sovereignty upon entering the European Union can now be acutely felt. Bulgaria is now unable to pursue their own interests because of dictates from Brussels made on behalf of special interests operating well beyond their borders and in absolute disregard to the peace and prosperity of the Bulgarian people. It is a cautionary tale for other nations around the world seeking to enter into similar supranational "communities," most notably Southeast Asia's ASEAN/AEC.

NATO and the EU's open intent to "integrate" all of Europe including Russia into their geopolitical order, clearly by force if necessary, their abuse of the EU's legal framework to impose thinly veiled sanctions on Russia, overt nepotism, as well as obstructing the completion of projects that are demonstrably beneficial to their own member states reveals an emerging political order of immense criminality unbound by the rule of law and a clear and present danger to global stability. For those in eastern Ukraine weathering air raids, artillery barrages, and mechanized "national guard" composed of ultra-right Neo-Nazi militants, that instability is already a deadly, daily reality.

Tony Cartalucci, Bangkok-based geopolitical researcher and writer, especially for the online magazine "New Eastern Outlook".

[Jul 03, 2014] Russia and the Ukraine – The Worrisome Connection to World Oil and Gas Problems by Gail Tverberg

The idea that the United States can start exporting huge amounts of natural gas to Europe in the near future borders on the bizarre.
May 7, 2014 |

What is behind the Russia/Ukraine problem? It seems to me that what we are seeing is Russia's attempt to fix a two-part problem:

  1. Some oil and gas exporters, including Russia, are not receiving enough oil and gas revenue to meet their needs. They are not able to collect enough taxes to provide the services they have promised to their citizens, plus allow the amount of reinvestment that is needed to maintain production. Russia is starting to experience economic contraction because of the low revenue situation. This situation very closely related similar problems I have written about previously. In one post I talked about major independent oil companies not producing enough profit to provide the revenue needed for reinvestment, and because of this, cutting back on new investment. In another, I talked about the problem of too low US natural gas sales prices, relative to the cost of extraction.
  2. Some oil and gas importers, including Ukraine, are not using their imported oil and gas in productive enough ways that they are able to afford to pay the market price for oil and gas. Russia gave Ukraine a lower natural gas price because some of Russia's pipelines cross Ukraine, and Ukraine must maintain the pipeline. But even with this lower natural gas price, Ukraine is behind on its payments to Russia.

If a person thinks about the situation, it looks a lot like a situation where the world is reaching limits on oil and gas production. The marginal producers (including Russia) are being pushed out, at the same time that the marginal consumers (including Ukraine) are being pushed out.

Russia is trying to fix this situation, as best it can. One part of its approach is to make certain that Ukraine will in fact pay at least the European market price for natural gas. To do this, Russia will make Ukraine prepay for its natural gas; otherwise it will cut off its gas supply. Russia is also looking for new customers who can afford to pay higher prices for natural gas. In particular, Russia is working on a contract to sell LNG to China, quite possibly reducing the amount of natural gas it has available to sell to Europe. Russia is also signing a $10 billion contract with Iran in which it promises to construct new hydroelectric and thermal energy plants in Iran, in return for oil exports from Iran. This contract will increase the amount of oil Russia has to sell, and will increase the oil available on the world market. Russia's plan will do an end run around US and European sanctions.

Gradually, or perhaps not so gradually, Russia's exports are being redirected to those who can afford to pay higher prices. European Union purchases of natural gas imports have declined since 2008, presumably because they are having difficulty affording the current price of gas, so they are being relied on less for future sales.

The Russian approach seems to include building a new axis of power, including Russia, China, Iran and perhaps other countries. This new axis of power may threaten the US dollar's reserve currency status. With the dollar as reserve currency, the US has been able to buy far more goods from other countries than it sells to others. Putting an end to the US dollar as reserve currency would leave more oil and gas for other countries. The danger is that prices will drop too low because of the drop in US demand, leading to lower production. It this should happen, everyone might lose out.

I am doubtful that Russia's approach to fixing its problems will work. But if Russia is "between a rock and a hard place," I can understand its willingness to try something very different. It now has more power than it has had in the past because of its oil and gas exports, and is willing to use that power.

The US/European approach to this problem is to loan Ukraine $17 billion to pay for past natural gas bills. The hope is that with this loan, Ukraine will be able to make changes that will allow it to afford future natural gas bills. There is also the hope that the United States can step in with large natural gas exports to Europe and Ukraine. In addition, the US and Europe are trying to impose sanctions on Russia.

I find it very difficult to believe that the US/European approach will work. The idea that the United States can start exporting huge amounts of natural gas to Europe in the near future borders on the bizarre. There are many hurdles that would need to be overcome for this to happen. Installing LNG export facilities is among the least of these hurdles.

In fact, the West badly needs both the oil and gas that Russia is producing, so it really is in a very precarious position. If Russia cuts off exports, or if Russia is forced to cut off exports because of financial difficulties, both the US and Europe will suffer. It is clear that Europe will suffer because of its dependence on pipeline exports of oil and gas from Russia. But the US will suffer as well, because the US is tied closely to Europe by financial ties, and by import and export arrangements with Europe.

Furthermore, the US/European approach involves a great deal of new debt, in an attempt to fix an inherent inability of the Ukrainian economy to afford high energy prices. Without a huge transformation, Ukraine will be in even more financial difficulty when it comes time to pay back the new debt–it will need make debt payments at the same time that it needs to pay for more expensive future natural gas. More debt doesn't necessarily fix the situation; it may make it worse.

The US powers that be do not understand what Russia (and the world) is up against, so the policies they propose are likely to make the situation worse, rather than better.

Continue reading →

[Jun 30, 2014] South Stream Pipeline Project in Bulgaria Is Delayed by STANLEY REED JUNE

US is playing a dangerous game, but it playing it at the expense of EU economic interests, not their own.
Jun 30, 2014 |

...In early June, European officials demanded that the Bulgarian government halt work on the pipeline, saying it breached the region's rules.

Soon after, a delegation of senators, including Ron Johnson, Republican of Wisconsin; John McCain, Republican of Arizona; and Chris Murphy, Democrat of Connecticut, met with Bulgaria's prime minister to raise concerns about the project and the influence it gives Russia. They also criticized a pipeline contract awarded to a Russian company sanctioned by the United States. At a joint news conference later, Prime Minister Plamen Oresharski announced that Bulgaria would block the pipeline, called South Stream.

"What gives Vladimir Putin his power and control is his oil and gas reserves and West and Eastern Europe's dependence on them," Senator Johnson said in an interview. "We need to break up his stranglehold on energy supplies. We need to bust up that monopoly."

The energy industry, with its interconnected web of corporate, government and economic interests, is proving a crucial pressure point in the Ukraine crisis. While sanctions by the United States and Europe have hit a few top figures in Russia's oil and gas business - and have complicated matters for multinational energy giants - Europe's dependence on Russia for gas is widely viewed as limiting the scope of the West's response.

The South Stream pipeline is the biggest energy project caught in the political crossfire.

Dreamed up by Gazprom and the Italian oil giant Eni in 2007, the proposed pipeline would snake about 2,400 kilometers, or roughly 1,500 miles, from southern Russia via the Black Sea to Bulgaria, Serbia, Hungary and ultimately Austria. When completed, the pipeline could handle about 60 billion cubic meters of natural gas a year, enough to allow Russian exports to Europe to largely bypass Ukraine.

[Jun 30, 2014] It is time to act, while power is still dry by Vasily Zelenchuk

An interesting example of Ukraine "Right Sector" mentality... Slightly edited Google translation...

Let's blow up the gas pipeline. We have war, an on the war such things happens. Europe will get gas withdrawal symptoms and instantly will be highly motivated to solve all the problems in Ukraine. You would day that's mean. But I will say that in the war all means are good. The interests of the country is the main priority. And tools, sorry, we have what we have.

... ... ...

And here's a simple recipe, how to dry wet powder and return to him the "explosive condition".

1. The introduction of martial law in "difficult" regions. Before we have no martial law, for the world public opinion we've have some kind of a local war, which can disperse water cannons. Untie the hands of the military, make it clear to the world that we have a problem.

2. The change of the military leadership. There is "No fuel, no resources, no strategy, no motivation" is heard from the armchair generals. If so, then you are fired. There are plenty of people who have balls and are ready to do his duty, please give the a chance. It is better to 5 years of errors than 5 years of sabotage.

3. Get off the gas needle. Whatever fuel we can get via the reverse, with wood, oil, straw and wood furniture of Yanukovich Mezhigorye palace - use it and provide Ukraine's with necessary energy resources until we finish the terminal to receive liquefied gas!

It's time once and for all to cut short all the energy manipulation of our "Slavic brothers". In Qatar gas is much cheaper, and they put no additional conditions. It's "only business". We can sell it to Europe, if we properly do everything to accomplish this. This would be also bring us neat profit.

[Jun 30, 2014] Attempt to blackmail Russia's South Stream project failed... by Alexey Hazbiev

Jun 30, 2014 |

If all goes well, the first gas via South stream" will start flowing to Europe as early as 2017.

Threats and intimidation of the countries - participants of the project "South stream has not reached its goal. New gas pipeline to Europe will still be built, even if they have to change his route. But most likely this will not come as a serious alternative to Russian gas in EU no Stories "South stream": Opposition South stream can destroy the EU pipe of import replacing Tags "South stream" Economy Sanctions against Russia Chairman of Board "Gazprom" Alexey Miller and the General Director of the Austrian OMV Gerhard Roiss signed in Vienna legally binding agreement on the construction of the pipeline "South stream" through Austria. This project will deal with company South Stream Austria, which the parties are owned on a parity basis. The Austrian section of pipe is relatively small, only 50 km. "But no less important, as this is the final, final, plot the route", - said Miller.

In Austria, the pipe will go from the border with Hungary to the underground storage in Baumgarten, where is the Central European gas hub, linking it with the Stavropol gas transmission hub. According to the head of "Gazprom", this node will allow to fully satisfy the needs of European customers, and to decrease transit risks. It is in the Stavropol territory is planned to connect the Russian gas transmission system "southern corridor" current capacity of 63 billion cubic meters with the existing system of Gazprom transgaz Stavropol, at which gas is delivered in 12 regions of Russia and for export to Armenia and Turkey.

After commissioning of the "southern corridor" to transport gas through the Stavropol system will increase to 135 billion cubic meters per year, of which 32 billion cubic meters is expected to be sent to South stream.

If all goes well, the first gas will flow in Baumgarten already in the beginning of 2017 and 2018 "South stream" should reach its full capacity. Now OMV and Gazprom are negotiating a contract for the supply of up to 6 billion cubic meters of gas per year. This Austrian company invited our group to buy stake in Austrian gas exchange. "We always said that if someone is supplying gas to Austria, then it should have the opportunity to participate in this exchange. And that's why we suggested such participation by Gazprom, but it is not part of the signed agreement," said Reiss. The present contract is very important for Russia, as it demonstrates the authorities of the EU political support of the "South stream" from Austria. "Austria is very interested in this project was implemented, - says the head of the foreign Ministry of this country Sebastian Kurz. - We need not only more suppliers, but also more routes by which gas is delivered to Europe. And so the "South stream" is supported by Austria and many other countries of the EU". Approximately in the same spirit in the talks with Vladimir Putin spoke and the President of Austria Heinz Fischer, who called this project "reasonable and appropriate". "Why Bulgaria and Hungary - NATO countries - can contribute to the process, and we are not? The more that our portion of the pipes do not five hundred kilometers, and fifty" - wondered the Austrian President.

These words, no doubt, were addressed to the European Commission, which launched against the "South stream" bitter struggle, accompanied by a significant threats, and sometimes outright blackmail. Landing miss it all Started with the fact that in December of last year, the EU energy Commissioner Guenther Oettinger has sent a letter to the Minister of energy of Russia Alexander Novak a requirement to review all intergovernmental agreements concluded with the countries through which it will pass the "South stream" and their branches. This is Bulgaria, Hungary, Slovenia, Croatia and is not included in the EU Serbia, and now Austria. The European Commissioner believes that these agreements do not correspond to European legislation, namely, contrary to the Third energy package of the EU.

This set of rules, in particular, provides for the following three key conditions.

First, non-discriminatory access to the pipe, i.e. the ability to pump gas should be everyone.

Secondly, the functions of the fuel supplier and operator of the gas pipeline should be separated. And it may not be the company that is somehow affiliated with each other.

Moreover, if a foreign company, it should prove the absence of threats to energy security of the EU.

Finally, thirdly, the transportation tariffs for independent gas operator should establish the level of economic efficiency and only in agreement with the regulator.

In other words, everything is arranged so that EU authorities at any moment could intervene in the process of pricing and regulation method to reduce the price to the appropriate level.

Alexei Miller is confident that South stream will be built and will start to work, despite the opposition of the EU P

In the case of "South stream" these requirements are really not respected, because initially they did not exist. The sea section of the pipeline will be owned and operated company South Stream, in which 50% of shares belong to Gazprom, with 20% Eni and a further 15% - Wintershall and EDF. As for the onshore sections of pipe, they will be monitored all the same Gazprom and the relevant national companies of the countries - participants of the project on a parity basis. In Serbia, Gazprom will even get 51% in the joint company, and Srbijagas - 49%. But all this is easily explainable: "Gazprom" invests in the construction of the South stream enormous funds in total more than 22.5 billion dollars, and must be confident that the investment will pay off. And this concern should fully control the entire chain costs, including transportation tariffs, and not to depend on the whim of the regulators, which in any case try to defend the national interests of their countries. However himself "South stream" the EU is very necessary. That is why all the same Guenther Oettinger has repeatedly urged the Russian authorities to recognise the rules of the Third energy package and ask the European Commission to do for this pipe exception of existing standards. Did, in particular, Azerbaijan, and its export the TAP pipeline was immediately removed from under the rules of the Third energy package. The problem, however, is that if a similar application was filed by Russia, the EU authorities would have exposed a number of counter-conditions, which in our case is unacceptable. Roughly speaking, the ownership of the pipe Russia would deprive did not, but that's to sell gas on our terms, we would no longer could. What happened with our other gas pipeline "Northern stream" and its branch OPAL.

Alexander Novak addressed the European Commission with the request to withdraw OPAL from Third energy package, but was refused. So now this pipeline, and the Nord stream loaded at half capacity. And the remaining half of the EU reserved for alternative suppliers of gas, which actually does not exist.

As a result, Vladimir Putin has openly called the gas exporting "not to make concessions to Europe and to confront together the challenges of the Third energy package". This call is literally riled the leadership of the European Commission. And the conflict with Ukraine only strengthened the negative attitude of the EU towards South stream. "Despite the crisis in Ukraine we take a more defensive stance to Russian pipelines than a year ago. Now any exceptions for Gazprom is not our priority," he said at the end of may Ettinger.

Already in the beginning of June, European Commission President Jose Barroso has openly threatened sanctions all EU countries participating in the South stream project, and first of all Bulgaria. This was done under the pretext that Sofia allegedly violates European rules for conducting tenders on the construction of infrastructure facilities and provides a privileged opportunity for Russian and Bulgarian companies". We are talking about the company "Stroytransgaz" Gennady Timchenko, who was commissioned to build the Bulgarian section of South stream. Moreover, at a closed meeting with Bulgarian manual Barroso explained clearly that if Bulgaria is not freeze the construction of South stream, she can't any longer count on financing from the EU. Which, by the way, isabout 1 billion euros a year.

Looks like threats Barroso were not sufficient, as in Sofia urgently headed a group of American senators led by John McCain who convinced the Prime Minister of Bulgaria Plamen Oresharski "one more time to weigh" this desition.

"We would like to issues related to South stream, there was less Russian participation. We hope that this issue will be resolved in coordination with the Europeans and that companies that work with Russian companies, placed under sanctions, will not participate in the implementation of the project", - said at a joint briefing McCain. In the end, the Prime Minister Oresharski ordered to suspend work on the project "South stream" for consultations with the European Commission. "After negotiations with Brussels we will determine the course of the further work," he said.

However, niether the Russian government not Gazprom received any messages from Bulgaria concerning this intergovernmental agreement. "All made so far decisions remain in force. No change of plans did not happen. I don't have any doubt that if the suspension of works on the project happen - it will be temporary," said foreign Minister Sergey Lavrov. Approximately in the same spirit spoke and Alexander Novak. "Problems with Bulgaria are of working nature, thse quations are discussed and probably will be solved between companies. I think that the work proceed normally and the project will be implemented on schedule," he said.

And Executive Director of Wintershall Rainer Seele claimed that the consortium on construction of South stream will start laying the offshore section of the pipeline, even in the case of a negative decision of the European Commission project on the territory of Bulgaria. "This project is in the interests of the EU. If we manage to convince the European Commission, the policy regarding South stream will change. Now we are talking about the offshore section of the pipe, and it is an internal affair of Bulgaria. If it is a negative decision, we will still continue to adhere to the plan and will begin construction at the end of the year," said Seele. This can be considered a clear signal Bulgaria that if one goes on about the European Commission and the US, then it will be replaced with Turkey. And Bulgaria, which imports from Russia 100% of the consumed gas, will not only losel millions of fees for the transit of gat via its terriroty, but will continue to depend on the whims of Ukraine to buy gas without any preferences.

But why the European Commission needs all this problems. On what effects Brussel counts by t, trying to block "South stream"?

The court is coming

They count mainly to the fact that "Gazprom" in the end will be forced to play back and accept the rules of the Third energy package. That Russia will withdraw its claim to the world trade organization, which challenges the norms of this package as contradicting the EU commitment to the WTO.

But unilaterally our gas giant will never do it, taking into account that in this question its negotiating position is strong. It is no secret that at the moment of signing of intergovernmental agreements they fully comply with all EU standards. And the law, as you know, is not retroactive.

Moreover, the basic principle of international law States that the introduction of the new legislative acts deterioration of the initial conditions already existing agreements is unacceptable. Finally, u intergovernmental agreements signed by Russia with the countries of the "South stream", have at least the same legal effect as the EU legislation, and in some cases have priority over it. Not accidentally, the European Commission puts pressure on companies involved in the project, and to the governments of those countries through which the pipeline will pass.

And this was done very crudely, far beyond usual diplomatic etiquette. The same Barroso, while in Sofia, directly stated that "Bulgaria should be very careful", as "there are Russian agents in Bulgaria ".

But once it became known that Russia intends to sue the WTO, bureaucrats from Brussels changed their rhetoric. "The problems arising from the "South stream", can be solved, - said Gunter Ettinger. Is a project, which we, of course, accept. Negotiations will resume at the earliest opportunity. But first, the European Commission plans to probe the ground about the intentions of Russia in respect of a claim to the WTO".

The Commissioner said that Russia, accusing the EU in violation of WTO rules, wants to achieve for themselves exceptions to the European regulations. "That is the Russian energy policy is consistent with WTO rules and EU legislation does not", " ironized Ettinger. the Brussels bureaucrats are for some reason not allow the very idea that this is the fact.

As for Russia's intentions to bring the proceedings to the end, they are very serious. Our country has already sent a note to the EU delegation at the WTO and informed the Secretariat of this organization. According to the WTO, at the first stage, the parties will attempt to resolve contradictions through bilateral negotiations. The maximum period for such consultations to 60 days, after which Moscow will require to create a panel of arbitrators of the WTO, which will consider the claim on the merits. Of course, the proceedings in the WTO last for years, and the final verdict, as a rule, replete with compromise wording. Take for example mutual claims of the EU and the USA regarding illegal subsidizing of aircraft construction. The dispute lasted for about six years and ended because both sides were found guilty and had to change the mechanisms of financing of their aircraft corporations.

About the same solution can be expected in respect of the claim of Russia to the EU. The only difference is that if Gazprom is now ready to compromise, the European Commission is not. In particular, the Russian gas concern repeatedly offered the EU to discuss option which, in the absence of alternative supplier of the gas pipeline will be used by Russia at 100% capacity, but some part of gas will be sold on the open market through the auctions. However, no decision on this issue, the European Commission has been taken. And this is the best demonstrates the weakness of European diplomacy. In the current conditions the European Commission simply does not wants to try to find an acceptable way out of this situation. First, because this autumn its members will be completely changed and all current agreements can be revised. Do not forget that the current EU officials after the resignation hope to find work in other interstate structures such as NATO, which with more or less acceptable for Russia decision about South stream will be problematic. And secondly, because in no way they have any solution. European diplomacy in general is famous for the fact that she does not like to work out ways of retreating from the originally stated positions and as the result is very often pushes himself in a deadlock.

But if the project "South stream" gets stuck in the bureaucratic approvals, then who will supply gas to Europe?

Azerbaijan will not save Europe

Almost all hopes of an alternative supply current EU authorities connected with Azerbaijan. A month and a half ago at a meeting of the energy Council of the USA and the EU in Brussels, the USA Secretary of state John Kerry called Azerbaijan energy future of Europe". Azerbaijan has already started to develop the Shakh-Deniz with reserves of 1.2 trillion cubic meters of gas. It is expected that by 2030 gas production in this country will increase twice and will exceed 50 billion cubic meters per year. While most of the gas will be supplied to Europe as soon as two gas pipelines are ready. The first of them, TANAP, will be held in the so-called Northern route to Austria via Turkey, Bulgaria, Romania and Hungary. The second pipeline, TAP, is to be built in Italy through Turkey, Greece and Albania. The corresponding intergovernmental agreement Azerbaijani President Ilham Aliyev and Turkish Prime Minister Recep Erdogan signed two years ago. In the spring of this year, the parties agreed on a work plan for this project, and even installed the first section of pipe. It is already known that the construction of the gas pipeline will be performed by a consortium led by BP, and all the land on which it is planned to build, will be nationalized in Turkey until the end of the current year. This circumstance could not but affect the costs of the pipeline. If two years ago, it was estimated at $5 billion, a year ago at 7 billion, then now at $10 billion. Despite this and Turkey, and in particular, Azerbaijan is committed to complete construction as soon as possible. "My brother Erdogan expected opening of the pipeline by 2018," said Ilham Aliyev. At first on TANAP it is planned to pump in Europe of about 10 billion cubic meters of gas per year. After you've entered in build the TAP pipeline, the volume of annual gas exports will rise to 20 billion, and in the long term and up to 30 billion cubic meters a year. Given that Europe currently consumes about 460 billion cubic meters of gas per year, fuel from Azerbaijan in the medium-term, it may take about 6% of the European market. In order to "squeeze out" of Russian gas, or at least significantly reduce its share on the European market, this is clearly not enough. Therefore, EU authorities openly state that in order to diversify sources and consider other suppliers, such as Israel, Cyprus, Turkmenistan and, in certain circumstances, even Iran. However, this is done only in order to exert pressure on Russia in gas prices. In reality, none of these countries to compete with our gas on the European market cannot. Israel, which started work in the Maritime field Leviathan 135 km from Haifa, really has no the chances to become a significant exporter of gas to the European market. American company Noble Energy has estimated the total resources structures Leviathan just 453 billion cubic meters at 50 percent of confidence. This means that reserves might be even less. But in any case, even if the assessment Noble Energy is true, to lay pipes from Israel to Europe is too expensive it's much more efficient to organize deliveries of liquefied natural gas (LNG). This will cost around 5-6 billion. However, the problem is that this gas is also needed to Israel. Now it gets him out of Egypt through the pipeline that Islamic extremists blow up about twice a year. It is obvious that Israel will first replace the Egyptian gas and only then will start to export it to Europe. But the volume of these deliveries is unlikely to exceed 3-4 billion cubic meters per year.

Bet on Cyprus might also be lost. This country has 170 billion cubic meters of proven gas reserves, which after further exploration in the Eastern part of the shelf can increase by another 141,5 billion cubic meters. That is a total of about 312 billion cubic meters. At first glance, this is very good, especially as a serious industry in Cyprus is not and almost all this amount can be exported. But you have to understand that on deposits, which wants to develop Cyprus, claims and also Turkey. Even if this problem will be solved, Europe, as in the case of Israel, can count again for not more than 3 billion cubic meters of gas per year.

Thus, there are only Turkmenistan and Iran. Both countries have a truly fantastic gas reserves. In Turkmenistan they exceed 25 trillion cubic meters, in Iran -- 33.5 trillion cubic meters. But Turkmenistan is completely focused on China and rely on funds of companies from China which already laid already several branches of the gas pipeline, which will ship about 65 billion cubic meters of gas per year. And Beijing is not interested in Turkmen fuel also going in Europe. Given that Turkmenistan can not boast of strong geopolitical positions for a breakthrough on the European market Ashgabat needs not only to find funds for the construction of the gas pipeline, but also a support of more powerful ally than China. And the most important - to agree on a lining of pipes with its direct competitor - Azerbaijan.

the last preconditions also fully applies to Iran. If in the case of Turkmenistan the Azeris and Turks were ready to discuss this issue in a purely theoretical manner, with Iran that is impossible in principle. First, the export of hydrocarbons from that country to Europe is officially prohibited. Secondly, Ankara and Baku consider the Shiite regime in Tehran as openly hostile. Thus, it appears that, except Azerbaijan itself and partly Israel, other real option for the diversification of gas supplies to the EU does not have. They will not come even "in the long run".

Of course, the EU can count on LNG from Qatar and the USA. But this gas is more expensive than pipeline by least 25%. Also there is a huge demand for LNG in Asia, where market prices are higher, so to expect falling of the prices is meaningless. And no one in Europe will buy more expensive fuel just due to geopolitical considerations. As for Azerbaijan to Israel and Cyprus, their total supplies in the most optimistic scenario will cover around 7-8% of the needs of natural gas of Europe, needs which increase each year. In addition, the energy dependence of the EU on Azerbaijan and Turkey are not much better than dependence on Russia.

So it looks like EU authorities has no realistic path then to settle their issues with Russia. Taking into account that Russia might also find new market in Asia. The problem is that serious agreement with the new members of the European Commission can be achieved not earlier than autumn. And it is not very probably that Ukraine will be able to provide uninterrupted transit of Russian gas that long. Most likely, Ukraine will begin its unauthorized tapping into gas flows in August. Which may halt the transit. That probably can be considered as another argument in favor of the "South stream"

[Jun 29, 2014] Kharkiv, in eastern Ukraine, looks west as war next door imperils its Russian market

As Ukraine last gas supplies from Russia the future for its industry looks bleak. In a published Tuesday, June 10, report, the world Bank's states that in 2013, the Ukrainian economy has shown a "zero growth", and in 2014 can contract more then 5%. Some owners already think about moving production to other countries.
The Washington Post

After 20 years of running a large commercial tube-manufacturing plant out of eastern Ukraine's biggest city, Leonid Filshtinskiy is moving some of his operations westward - to Spain.

"I decided to do it because I fear losing Russia as a market," Filshtinskiy said, explaining how his business, which mostly depends on buyers in the former Soviet Union, struggled as political upheaval gripped Ukraine. "This political situation, this bad experience, has pushed us toward these kinds of changes."

In larger Kharkiv, a Russian-speaking region known for its universities, factories and farms, evidence of an adverse political situation is scant: There have been no big protests for months, the war with separatists in neighboring Donetsk and Luhansk has not spilled over the region's borders, and life in the regional capital has been almost boringly calm - apart from a late-April assassination attempt on the mayor, Gennady Kernes.

But even relatively quiet parts of Ukraine have not escaped the economic backlash of the country's political problems. In Kharkiv, the setbacks come with a special challenge: how to revive a flagging economy largely dependent on trade with Russia and Ukraine's other neighbors to the east when Ukraine as a whole is making a concerted turn to the West.

"Before, when 100 percent of contracts went to Russia, why did you have to think? You didn't," said Eduard Rubin, deputy chairman of the Kharkiv chapter of the European Business Association, a large international nonprofit group in Ukraine. "But the situation in Ukraine, it changed."

Waging war against Russia, one pipeline at a time

Quote: "the US and its allies have attempted to undermine Russia's economic and strategic position vis-à-vis gas delivery infrastructure, while simultaneously strengthening their own. "
RT Op-Edge

While the human politics of the crisis in Ukraine garner all the headlines, it is the gas politics that in many ways lies at the heart of the conflict.

Indeed, the energy issue has not only framed much of the economic dimensions of the crisis, it has revealed the deep divides that exist among the political and business elite of Europe who, despite their bluff and bluster about Russia's actions in Ukraine and the expansion of sanctions, understand quite clearly that Russia is an integral part of Europe's economic future.

However, that hasn't stopped the West and its proxies and clients in Eastern Europe from attempting to undermine Russia's strategic economic position through a variety of means. From derailing negotiations over pipeline construction to using puppet governments as a wedge between Moscow and Europe, the US and its allies have attempted to undermine Russia's economic and strategic position vis-à-vis gas delivery infrastructure, while simultaneously strengthening their own.

Ukraine and the threat to Russia and Europe

Lost amid the horror stories of Kiev's military assault on the people of Donbas, the vicious attacks by Right Sector Nazis, and the general state of chaos in Ukraine's political institutions, is the fact that one of the central aspects of the Ukraine-Russia conflict is gas. Specifically, it centers on the Russian energy delivery infrastructure (pipelines, refineries, etc.) in Ukraine and its vital importance to Russia's continued energy exports to Europe.

Also, Kiev and the Russian energy giant Gazprom have been busy trying to negotiate terms of payment for the massive bill (at least $4 billion, though likely more) Ukraine owes, which undoubtedly raises the stakes for both sides as billions of dollars are on the line. Were the conflict only financial, then undoubtedly a resolution could be reached. However, in recent weeks there have been dangerous developments and accusations, which have cast the issue in a new light; it is no longer merely about profits, it's about security.

In mid-June, a major gas pipeline carrying Russian gas through Ukraine was blown up in the Poltava region of the country. Though Ukrainian authorities have claimed that the gas supply to Europe was not interrupted, the incident signals a dangerous development in the ongoing crisis, specifically the targeting of key pipelines by terrorists bent on attacking Russian economic interests. Many experts, including the eminent historian and scholar Dr. Stephen Cohen, have accused right wing ultranationalist extremist groups of carrying out this terrorist action, as well as others including the shameful and violent "protest" outside the Russian embassy in Kiev.

In fact, this week saw yet another attack by Right Sector terrorists on critical gas infrastructure. A large contingent of militants from the fascist group seized the Dolynsky Oil refinery in Kirovograd in Central Ukraine. The attack on the facility, owned by a friend and business associate of the deposed former President Yanukovich, is yet another assault on key elements in the Russian energy supply network. While the Right Sector militants justify their actions as being part of a campaign against "terrorists in Donetsk," it is hard to view these developments as anything other than a direct attack upon Russian economic interests.

Naturally, Kiev has not been exactly diligent in its attempts to investigate these and other incidents implicating Right Sector and other fascist groups, which have been legally sanctioned, including with the moniker "National Guard," by authorities in Kiev. Lack of a thorough investigation notwithstanding, the attack on the pipeline represents a significant escalation of the conflict, as it now threatens not only Russian revenues, but the European energy supply.

As many commentators have noted, Russia provides upwards of one third of Europe's gas imports, with 60-80 percent of that supply traveling through pipelines on the territory of Ukraine. An escalation of attacks on this critical infrastructure threatens the stability of the European economy, and has led many business leaders in Europe and the US to question not just Washington's and Brussels' policies toward the Ukraine issue, but the general hostility toward Russia that has come to dominate ruling class circles in the West. It would seem then that the political will to further exacerbate the conflict is at odds with good business sense – precisely what many in Russia and around the world have been saying since the chaos in Ukraine began.

Pipelines and economic proxy war

Beyond Ukraine, there have been a number of attempts by the US and its partners to derail Russian pipeline development, and, as a corollary, to continue to promote projects that undermine Russia's position in the energy market of Europe.

One of the more well-known projects that Moscow has embarked on in recent years is the highly ambitious South Stream pipeline, a project that would bring Russian gas under the Black Sea and into Central Europe via Bulgaria and Serbia. Seen by most experts as Russia's attempt to diversify its delivery infrastructure away from Ukraine, the project has been a major sore point with the US, which has attempted to decrease European reliance on Russian energy. And so, negotiations among the relevant transit countries have taken on added significance with the advent of the crisis in Ukraine. It is against this backdrop that the latest news from Bulgaria is worrying for the Kremlin.

Earlier this month, the government of Bulgaria yielded to pressure from the EU and halted construction of the South Stream. A number of analysts both in Bulgaria and around the world have noted that this development is a direct consequence of threats and arm-twisting from the West which is desperately trying to prevent Russia from further solidifying its position in the European energy market.

As one prominent Bulgarian political analyst, who asked not to be named, told the German news agency Deutsche Welle, "The EU has no money to support Ukraine in the gas dispute with Russia... So in order to blackmail Moscow and compel it to continue transporting gas via Ukraine, Brussels wants to put a halt to the South Stream project. Bulgarians are the ultimate victims. And the project might still be completed, potentially via Turkey, which does not bow to the [sic] pressure from the EU."

Indeed, it seems that Europe, and by extension the US, is attempting to leverage their political clout in Eastern Europe to block Russian development and, simultaneously, keep those countries subservient to the West. As many have noted, the pipeline will bring tremendous benefits to Bulgaria, and all countries through which it transits, as those countries will then be recipients of generous gas discounts, not to mention jobs and other major benefits for the economically struggling countries of the former Soviet space.

And this is precisely the issue, namely the question of whether countries like Bulgaria are allowed to pursue their own, independent economic development, or whether they must be subjected to European and American bullying. As renowned Bulgarian political and energy analyst, and professor of International Relations, Dr. Nina Dyulgerova explained in a recent interview:

"Judging by the fact that we [Bulgaria] are the first country in the EU route of South Stream, we can conclude that has to do with politics. Europe is subjected to a growing Russian-American confrontation in the field of energy. The Ukraine crisis, for instance, was a geostrategical object of impact from the US side which an increased US participation in the most important element of Washington's interest in the field of energy, namely - the gas transportation system of Ukraine. Coincidentally [Hunter Biden], the son of US Vice President Joe Biden, is a member of the board of directors at the Ukrainian gas company [Burisma]. The fact that a process of buying up parts of Ukraine's energy system by American firms, and European ones close to them, also increases the pressure on the construction of South Stream, because it would mitigate or put an end to this complicated game."

As Dr. Dyulgerova correctly notes, part of the US strategy in Ukraine is to strip the assets of the Ukrainian state, mostly but not exclusively in the energy sector, and sell them off to Western interests. Naturally, Russia's counter-measure is to accelerate the development of South Stream, to which the West has responded with the most recent round of intimidation and meddling. In fact, this goes far beyond simply making crony capitalist deals with Western companies.

Just before Bulgarian Prime Minister Plamen Oresharski made the announcement that his country would be freezing construction of South Stream, he had extensive consultations with prominent US Senators, including John McCain (R-AZ) and Ron Johnson (R-WI), both of whom have extensive ties to the oil and gas industry. Immediately following these meetings, the announcement was made, with the connection of course not being mere coincidence. Obviously, the political establishment, in the service of its corporate patrons, has committed its energies and resources into being the tip of the spear against Russian economic development and its attempts to solidify its relations with European countries.

While countries like Bulgaria have been cowed by US and European pressure, others have not. In the wake of the announcement by Bulgaria's Prime Minister, Serbian Prime Minister Aleksandar Vucic reiterated his country's desire to participate in the project and maintain its traditionally close ties to Russia. Additionally, leaders in Slovenia and Austria, have continued to express their support for South Stream, rejecting calls from Washington and Brussels to turn away from the project. In fact, Russian President Putin and Austrian President Fischer came together this week to mark the signing of the cooperation deal between Austria's OMV and Russia's Gazprom. In a characteristically undiplomatic and unfriendly subtle threat directed at Austria, the US embassy released a statement saying that Austrians "should consider carefully whether today's events contribute to the effort [to maintain trans-Atlantic unity and discourage further Russian aggression]."

Essentially then, South Stream has become one of the primary battlegrounds in the economic war that the West is waging against Russia. The sanctions are merely the window-dressing to the much more sinister attempt to stifle the independent economic development of all countries seeking to do business with Russia and increase their own prosperity.

Moreover, the attacks on South Stream signal a US-EU policy in Ukraine, and in the region, which is in many ways at odds with powerful business interests. In this way, some of the divides within the establishment have become clearer. In addition, with the recent signing of the Sino-Russian gas deal, which itself will lead to the completion of two more critical pipelines, Moscow seems to have developed a comprehensive counter-strategy. While the US and its partners have attempted to restart projects like the Trans-Caspian Pipeline – a Western-sponsored alternative to the South Stream, which is still in the early stages and has encountered a number of major hurdles in recent years – Russia continues to steadily build up and refurbish its pipeline infrastructure.

The 19th Century saw the advent of the "Great Game" – competition between the Russian and British empires for control over the remnants of the Ottoman Empire in the Black Sea, Central Asia, and elsewhere – which persisted throughout that century, leading to at least two major Russian wars. The 20th Century was characterized by world wars and the Cold War which saw the Anglo-American empire, even when allied with the Soviet Union during the wars, in constant competition with Russia. In the 21st Century, an era when such animosities were supposed to have been buried with previous generations, we are seeing a renewal of the Great Game and Cold War, with the US and Europe playing foil to Russia's rising economic power.

The new Great Game is one for energy, pipelines, and access to markets. But, ultimately, it is about power, and the US has yet to recognize that the power it once wielded, the power to influence outcomes to its own benefit whenever it suits, has rapidly declined. Washington has yet to recognize that the entire world is no longer its imperial backyard. Hopefully, for the sake of peace and progress, they will recognize this reality, sooner rather than later.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.

moribundus 28.06.2014 03:22

I think that neocons are real relics of cold who forgot themselfs quarter century back. Times of beacon of democracy and the city upon a hill are over. Dogmas are fine, just need to heat up house and prepare food; for the best price. People are becoming more&more pragmatic and Machiavellian- so now its not just privilege of god's choosen.

Looks like people are also less and less scary of Power of Nightmares

Enrique Ferro, 28.06.2014 01:41

" the US embassy released a statement saying that Austrians "should consider carefully whether today's events contribute to the effort [to maintain trans-Atlantic unity and discourage further Russian aggression]."" ;

Shameful! This is the way the empire treats the sovereignty of its "allies". Washington can only think of them as servants and puppets, who have to follow its orders, and keep quiet. Otherwise they will be destabilized and harrassed.

Even Western European states aren't safe. Remember France when she refused to follow the Iraqi insanity? The US hatred escalated only to end up getting a Sarkozy!

Emmett, 28.06.2014 01:06

US is a dangerous global crime syndicate because its puppet masters are insane psychopaths who have killed millions (leaders of nations, activists, citizens, children, elderly, . . .) to get and keep their wealth and power.

US along with EU/NATO are always thinking how they can rule the world which means supplying the world with energy. US is not located in a good geographical area to supply Eurasia but until they can loot, kill and steal to do so they will do everything they can to keep Russia from doing so. This is all about oil, gas, and greed on US's part.

Abhishek Warner, 27.06.2014 19:22

This is an old western propaganda.
If you cant beat them, cheat them ....
Don't worry Russians, the west is loosing its influence

[Jun 27, 2014] The EU gives Moscow an ultimatum until Monday June 30th to deal with the situation in the Ukraine.

colliemum , June 27, 2014 at 6:06 am
Hot off the press, i.e. the German online paper "Frankfurter Allgemeine":
So – the Association Treaty has been signed, and the still acting EU president van Rompuy says that there's nothing in this treaty which would damage Russia in any way … but they are prepared to explain any 'misunderstandings' Russia might have.

Very reassuring, innit.

But wait – there's more!

The EU gives Moscow an ultimatum until Monday June 30th to deal with the situation in the Ukraine. Otherwise: more sanctions! Because 'the EU can meet again to impose those sanctions' – not many people knew that the EU can actually meet again and again, LOL!

Regarding what Russia 'must' do (as if they were the defeated side …): work together with Porochocco on his peace treaty, make the separatists to 'give' the border control posts they hold back to Kiev, work out a control mechanism in regards to that armistice with the OSCE, and the OSCE 'hostages'.

Al , June 27, 2014 at 7:43 am
Or what? The EU will fully absorb all the costs of the Ukraine? They'll cancel South Stream? If the latter case occurs I would expect Russia to say they are having doubts about the EU's reliability as an energy and trading partner and will start looking at reviewing current contracts. That should send a few ripples through the European economies and stock markets.

This whole western schtik of we will threaten you economically if you do not subsidized Ukraine's western path is wearing very thin indeed.

So far Putin has been keeping his powder dry and hasn't had to push back because the sanctions so far a laughable and he is de facto in a position of strength, despite what the vast mass of western reporting tells us every day.

I'd like to see him at least suspend deals with American energy companies and General Electric if any further sanctions are forthcoming. Certainly wildcat strikes at Russia's American owned car plants should be on the cards. It would show Europe's neighbors what they will be in for if they keep on letting themselves be mounted by the American pitbull. Even better, they could announce a very large contract to supply China with modern jet engines (or license production) which is something that would really stick in the US' craw. It doesn't have to be the latest stuff either/

Still, very much all mouth and no trousers so far so hopefully it will stay that way.

Isn't Putin off to meet Shinzo Abe soon and talk 'opportunities' soon? If a big deal was in the offing, I couldn't imagine Japan dropping it at the behest of the US…

Al , June 23, 2014 at 5:43 am
Reuters: UPDATE 1-Austria defends Russia's South Stream gas pipeline

"LUXEMBOURG/VIENNA, June 23 (Reuters) – Austria remains committed to Russia's controversial South Stream gas pipeline project despite a deepening crisis in Ukraine, its foreign minister and the head of its top energy company said on the eve of a visit by Russian President Vladimir Putin.

"We need not only more suppliers, but also more variety in the routes that energy can flow to us," Foreign Minister Sebastian Kurz told reporters in Luxembourg on Monday, noting five European Union countries firmly backed the project….

…The head of Austrian energy group OMV called for accelerated negotiations to approve the South Stream pipeline, telling a newspaper it was unrealistic to think Europe could entirely wean itself off of Russian energy supplies….

…"One should not make this economic integration into a political football, because our economy and prosperity are based on it," he said in remarks published on Monday…"

Meanwhile the Kiev Komedy Klowns say there is no need!

euractiv & Reuters: Ukraine says it will 'remove need' for South Stream pipeline

"Ukraine's parliament agreed yesterday (19 June) to discuss a bill to allow gas transit facilities to be leased on a joint venture basis with participation from firms in the European Union or United States.

Ukraine would hold 51% and foreign partners would be offered 49% in the venture, which would manage both transit pipelines and underground gas storage facilities….

…"If Europeans join this company, Russia will not build South Stream," Prime Minister Arseny Yatseniuk told parliament. No date was set for discussion of the bill…

…On Thursday, Naftogaz said Gazprom had informed the company of its intention to terminate a contract under which Ukraine provides additional gas to Europe when European consumption rises, and is then compensated by Russia.

Naftogaz said it had been told the contract would be terminated on 23 June, and that it believed the move was intended to discredit Ukraine as a reliable supplier…"

Al , June 23, 2014 at 10:54 am
Correction! Russia Today is the THIRD most watch news channel in the UK: Broadcasters' Audience Research Board:

It's is still quite a way behind BBC News and Sky News, but is ahead of the others.

RT also was the first news channel to make 1 billion hits on youtube (overtaken by Al Jezeera), speaking of which:

IBT: YouTube Blocks Kremlin-Funded Russia Today Channel

"The YouTube channel of state-funded Russia Today news outlet has been suspended due to "multiple or severe violations" of the site's policy one day after the outcome of the Crimea independence referendum….

…In 2012, the channel was kept offline for about eight hours. YouTube said it was a mistake and apologised for the incident…

…In its coverage of the Crimea invasion, RT repeated the official Kremlin line about troops being local self-defence forces….

…UPDATE 14:07 A YouTube spokesperson told IBTimes UK: "This problem was a result of a technical glitch. We fixed the problem and apologize for the inconvenience."

UPDATE: RT's YouTube Channel is back online with no explanation given for its suspension."

[Jun 24, 2014] Press statements and answers to journalists' questions following Russian-Austrian talks

Jun 24, 2014 |

A question about South Stream. The President of Austria just spoke extensively about how this project is very important and necessary for Austria, but we nevertheless all hear the statements made by the American side and the statements coming from certain European officials. In this regard, how viable are the Russian-Austrian agreements on South Stream, in your view?

VLADIMIR PUTIN: You know, we are holding talks with our contracted partners, not with other nations. Our American friends are unhappy with South Stream; they were unhappy in 1962 as well, when we began the gas-for-pipes project with Germany. And now they are unhappy with this as well.

Nothing has changed; the only thing that changed is that they themselves want to supply gas to the European market. But I assure you, it will not be cheaper than Russian gas. Pipeline gas is always cheaper than liquefied gas. Shale gas needs to be extracted, it needs to be turned into liquid, transported across the ocean and then regasified. This involves a lot of money. It is certainly more expensive than our pipeline gas.

But the Americans are competitors nevertheless. This is a normal situation. And they are doing everything possible to break up this contract, same as many decades ago. There is nothing unusual here. This is typical competition.

Political means are used in this competition as well. They talk about Europe's overdependence on Russian gas. We believe that any of our partners have the right to, they can and they should, perhaps, create the most favourable conditions possible for themselves, maintaining contacts and contracts with many partners.

We do the same. Just recently, we signed a contract with the People's Republic of China. We will continue to promote our product in developing markets in Southeast Asia and Asia overall. But this is our natural movement to expand our transport infrastructure.

Incidentally, answering your Austrian colleague's question, I can say that this is not about a desire to bypass Ukraine. These projects were initiated long ago. And what about Nord Stream – was that an attempt to bypass Ukraine? No. And what about our Blue Stream to Turkey under the Black Sea? This project exists and is working. Is that a desire to put someone in a difficult position? No, these are simply our direct contacts with Turkey.

There is another gas pipeline through Belarus and Poland. Is that an attempt to bypass Ukraine? No, we are simply developing our transport infrastructure. You cannot always insist that we are doing something against someone. We are doing this in our own interests – ours and those of our partners.

[Jun 24, 2014] Russian Riddle: EU Can't Agree on a Natural Gas Strategy By Frank Dohmen and Christoph Pauly

June 24, 2014 |

The flame last Tuesday was immense, rising some 200 meters (650 feet) into the air out of the natural gas pipeline named Brotherhood in eastern Ukraine. What caused the explosion remains a mystery. But it showed with shocking immediacy just how vulnerable Europe's energy supply has become as a result of the unrest in Ukraine.

A day before the explosion, Russian energy giant Gazprom had announced that it would only continue supplying Ukraine if the country paid for deliveries in advance. Because about half of Russian gas headed for Western Europe flows through Ukraine, European leaders now have a crucial topic to discuss at their summit this week in Brussels: Will deliveries to EU member states be affected?

At the same time, EU leaders are also wrangling over how to secure Europe's long-term natural gas supply. Polish Prime Minister Donald Tusk is determined to demand more solidarity from his European partners. Others too have taken up his proposal to create a so-called energy union to reduce Europe's dependence on Gazprom.

But as so often happens in the EU, when it comes time to discuss the details, national interests diverge and friendships dissolve, particularly when money enters the picture.

Tusk envisions the creation of a kind of purchasing syndicate that would negotiate with Russia. Poland is furious that it has to pay considerably more for natural gas than major German buyers.

But German Minister of the Economy Sigmar Gabriel is skeptical. "There are good reasons why those are decisions made by the private economy," he said earlier this month at a meeting of EU energy ministers. Thus far, German suppliers like E.on or Wintershall have gotten along well with the Russians. They have long-term gas-supply contracts of up to 20 years with Russia, guaranteeing them lower prices.

Unlawful Contracts?

According to industry insiders, these old contracts are getting in the way of EU solidarity. A high-ranking E.on manager says that many such deals explicitly prohibit customers from re-selling the natural gas abroad. That means that the European Commission's plan calling for Western European countries to deliver gas to Eastern European countries in case of emergency is not currently workable.

The EU executive is convinced that such clauses are against EU law. European Commissioner Joaquin Almunia has launched an investigation into Gazprom, partially as a result of the deals, and European Energy Commissioner Günther Oettinger is likewise skeptical. It would, he says, "be unlawful if the contracts stated that the gas can only be used in Germany."

The financing of the planned energy union has also been a source of conflict. According to Commission calculations, about €200 billion would need to be invested by 2020 in order to upgrade pipelines and power lines so that a European single energy market could be created. The EU has only made €5.8 billion available thus far.

EU member-states haven't even been able to agree on what measures must be taken before next winter. In the current version of the final summit communiqué, which is already being negotiated, there is only talk of strengthening "existing emergency and solidarity mechanisms," like natural gas storage. The Poles, on the other hand, are asking for concrete details, like who must deliver gas at what price and at which volume.

The tone is getting sharper. "It's impossible," a Polish diplomat complains, "that we can't agree on something substantial in a crisis like this one."

Translated from the German by Thomas Rogers

[Jun 21, 2014] Gentle embrace of Gazprom

Continuation of
June 21, 2014 |

In continuation of the theme: Sanctions against the monopolist is as a member of a meter - wildly cool and absolutely useless.

One can only sympathize with the European Commissioner Guenter the Oettinger, who was officially ordered to send the USA to hell on the gas issue: "Russian gas we buy in the European Union, not the United States. We can consult with US, to listen to their recommendations, but to take decisions ourselves," said European energy Commissioner Guenther Oettinger in Brussels. It's a shame, Yes. The Americans tried so hard to put under control of the Ukrainian pipe and control (i.e. cutting) energy flows from Russia to the EU.

These statements were made before Gazprom started to increase pressure. Today, Gazprom took another two movements. Only two but the "box of troubles" it keeps is still pretty full.

The first movement: "Gazprom" will stop the "Nord stream" on the maintenance, in spite of aggravation with Ukraine.

The essence of action: In conditions when Europe wants to use every opportunity to pump more gas into its reservoirs to have more time to defuse crisis with Ukrainian transit and inability of Ukrainians to pay, Miller defiantly blocks North Stream, depriving Europe of this opportunity. As you can guess, inspection may reveal the need for new maintenance procedures and still more maintenances works, etc. This way Russia reminds of to enable Nord Stream to the fullest to compensate the loss of Ukrainian transit is not a "concession on the part of Brussels" (which supposedly moral suffers from the need to temporarily break European rules of the 3rd Energy Package). It is the good will of the leaders of the Russian Federation.

The second action of Gazprom: Gazprom broke a contract with the operator of the Ukrainian gas transportation system "Ukrtransgaz". The agreement provides compensation Ukrainian party daily fluctuations in gas consumption in Europe.

The essencial steps:

- close a loophole that could be used for re-sale of gas to the EU to prevent the Europeans to build up reserves of gas for the winter to prevent Naftogaz to fill in your store

This is a very specific technical action, such purely "expert hole", which is known only to specialists. Closing it means that on top of the order has come in the form: "gather tadpoles, they will close all that you can and then make ukram most painful, and Europeans - the most inconvenient". Moreover, this order has not been sabotaged in the best traditions of top-management of Russian state companies, and this is a great sign. This can be explained in two ways: at the top promised to "kill" if they find out about sabotage or top management was imbued with national interest. Both of them are good.

There have been dramatic scrapping the strategy of work with the EU. Until recently Russia has shown the maximum good will, and now creates the most inconvenient conditions for the EU, literally pushing Europeans in the corner. In this cold corner they will have to make quick decisions about how to calm Kiev.

The same Ettinger, after visiting Kiev, clearly outlined to the European public that salvation Ukraine will cost European taxpayers more than bailing out Greece. Ukroptika rejoiced, thinking that this money to them (>60 billion euros) at once will give. Vain!

Ettinger has provided Russia a huge service by translating intra-European discourse about Ukraine from the sphere of ideology to the sphere of money, which

a) EU does not have

b) will not be given to Kiev,

c) even if money are available

Those who think that the EU will tie around her neck mill yellow and blue millstone - strongly underestimate the greed and self-preservation instinct of Europeans. They in the Ukrainian gamble got involved in order to plunder, and not to to be robbed.

In a recent article, Advisor GDP Sergey Glaziev came to the following conclusion:

"Along with measures to undermine U.S. capability to Finance the growth of military expenditures necessary political efforts on the formation of a broad anti-war coalition to condemn the American aggression and exposing its organizers in Washington and Brussels. Of particular importance is the political activation of the European business, to which provoke another war in Europe does not promise anything good."

If things will go on, it will come true (albeit not in such a brutal form) forecast unknown poet:

Along the GTS snow stranded,

In tents sang in chorus,

German Infantry patrols,

And panzergrenadiere...

P.S. Brave Balts immediately realized that the smell of fried, and hastened to put a bribe to Russians, well, just in case...

What breaking economic ties with Russia promises Ukraine

Recent events show that Ukraine and Russia, most likely, will now live each with their lives. Accordingly, the economies of our countries are already other. The days of the relationship, namely, the dependence of the economy of Ukraine from Russia go back to history. And now, Ukraine will need to create a new model of economy, already without Russia. It is not so simple and not so quickly, as they say in policy. Everything requires time and money.

This is a misconception that if Ukraine would break up business relations with Russia, its economy will turn into a kind of economy of Poland or the Czech Republic.

The main export of the Ukrainian metal. But few know that the Ukrainian metal is only half-Ukrainian. Iron ore really Ukrainian origin, but the coke and gas is imported, first of all imports from Russia. When in the times of Kuchma Ukraine could use cheap gas from Russia, it was possible to easily carry the metal at the enterprises more than a hundred years, and successfully sell it on the world market. But now, when Ukraine will pay for coke and gas at world prices and to buy raw materials will need to be in the EU, it is pointless to produce metal on our outdated plants. It is simply impossible to sell on the world market. Therefore, you will need to leave only a few of metallurgical enterprises, where more or less new equipment, investing in their modernization and other metallurgical plants just to close and not to spoil the environment. In his time as did Turkey. Now it produces metal quality and cost is not worse than in the EU, and sold for export.

As for the chemical industry, for Ukraine it is enough one refinery to process all the oil that is extracted in the country. Other refineries just better to let the scrap metal. It is more profitable than to reconstruct, as oil can only come from Russia. And now Russia is not our partner. The same applies to other chemical plants, they have inherited from the Soviet Union and focused on raw materials from Russia. In the new conditions it is easier to close, and buying ready chemical products in the EU.

With machine building even more difficult. It just so happened that the Ukrainian machine-building products suitable only for the CIS. All the matter in the standards and specifications. Ukraine can produce great locomotive, but to sell it only in the CIS, the EU, no one will buy. To enter new markets, but it is difficult, and most likely just replace the CIS to other regions will not work. In Latin America dominant position among the products of mechanical engineering is the USA. In Asia - China and EU. In Africa, in addition to the EU and China - and Russia. All these countries have actively adopted and mastered these regions. And competitors do not need them. And Ukraine, with its financial capacity is unlikely to be able to compete in these regions. China provides African countries with an extremely favourable loans with the condition of their purchase of machine building products. What Ukraine can offer? Therefore, most likely, will need to just close the Ukrainian machine-building enterprises starting with Khartsyzsk pipe and ending with "Motor-SICU". They are not able to work without Russia. As Ukrainian domestic market is too small for them.

[Jun 21, 2014] Privatization of gas transport system withour participation of Russia with cost dearly to Ukriane

Unedited Yandex translation
European and American companies for economic reasons not to accept the proposal of Ukraine to enter into the composition of shareholders of the gas transportation system (GTS) of the country. According to the adviser of the head of "Gazprom export" Andrei Konoplyanik, because of the extremely low credit rating of Ukraine and the "Naftogaz of Ukraine" borrowing costs for future joint-stock companies will be very high, which decreases commercial attractiveness of the project because of the uncertainty of the timing of its payback. And in the absence of safeguards download this pipe Gazprom, according to Deputy Director of the Fund of national security of the Russian Federation Alexei Grivach, and even makes it meaningless. In the result of Ukraine's plans to privatize part of its gas transportation system without Russian interests can contribute to acceleration of construction and run the "South stream", as well as a strong reduction of transit flows of gas of "Gazprom" through Ukraine.

The Verkhovna Rada of Ukraine sent for revision government bill on the reformation of Naftogaz of Ukraine", according to which the possibility of creation of joint venture for management of the unified gas transportation system of the country, as well as the management of underground gas storages of Ukraine. The project provides that in such enterprises the share of the Ukrainian state shall not be less than 51%, while the founders of companies can compete and legal entities that are owned or controlled by residents of EU countries, the USA or the European energy community".

Proposal on the participation of Russia in such a consortium of the Russian Ministry of energy of the country had not been officially informed "Izvestiya" in the Department. The Ministry of energy representative added that talks on a possible joint participation in the consortium for the operation of the Ukrainian GTS lasted several years, but were interrupted: the energy Ministry has sent a draft intergovernmental agreement on this issue in Ukraine even in 2011, but the answer has not been received. The representative of "Gazprom" Sergei Kupriyanov for calls not answered.

According to the official representative of Russian foreign Ministry Alexander Lukashevich, the fate of the Ukrainian gas transportation system cannot be solved without Russia's participation, as the share of Russian gas in transit supplies to Europe very solid
- In principle, without the Russian factor in Ukrainian gas transportation system, especially its kind in which we are seeing now, hardly anyone will be needed, he added.

Pavel Zavalny, President of Russian gas society and Vice Chairman of energy Committee of state Duma of the Russian Federation explained to Izvestia that affect the privatization process of system of gas pipelines of Ukraine, Russia can not and will not.
Is the sovereign right of Ukraine on its territory in respect of its gas transport system. They are not invited to this project Russia, although we are still several years ago proposed to create a trilateral consortium in this area. But today Russia's participation in this project would be contrary to the action of the Third energy package, which is now intends to comply with the Ukraine by the signing of the Energy Charter with the EU. By its terms, mining raw materials companies do not have the right to enter into the composition of shareholders of a system of transportation even in minority shares.

For Russia the prospect of incorporation of the GTS of businesses in the EU and the US threatens to replace this system of volumes of the Russian gas intended for export to Europe, a private Ukrainian gas to be extracted later on PSA terms with foreign partners. We are talking including shale gas. This will reduce energy dependence of the EU on Russian gas, but will increase its dependence on the US (because in such projects involved an American company). But this is a medium-term perspective, which may shatter on the environmental risks of shale gas. South stream will interfere with these plans, and America will continue pressure on Europe to freeze the construction of South stream and its commissioning, the Deputy said.

Andrey Konoplyanik, adviser to the head of "Gazprom export" noticed that the future shareholders of Ukrainian GTS will incur huge financial cost as at modernization and improvement of work of a single operator of gas transportation through its territory in the framework of the Third energy package.

This can lead to that they will try to shift part of the burden on Gazprom as a direct participant of pumping gas according to the system through the growth of transport tariffs, - considers Andrey Konoplyanik. - This step may discourage Gazprom from the continuation of gas supplies through Ukraine in the current volume and to stimulate unlocking alternative routes: pipelines Opal and "Yamal-Europe", and accelerated construction of South stream and the intensification of talks on its smooth introduction into service.

While European and American companies may not be willing to enter Ukrainian consortium because the payback period of the project is open to question, and it will not be short. Now the very high threat of termination of the transit of gas through Ukraine. This is just one of the factors that contributes to the cost of credit for the future of the consortium.

Among other factors, growth in the cost of borrowings low credit rating of Ukraine and the "Naftogaz". In addition, according to the rules of the Third energy package, Naftogaz will have to share in the extractive and transportation companies, overwriting between the new structures debt load current company. This makes the project of the single operator of the gas transportation system uncertain and risky, which is also not conducive to providing him with cheap credit. All this only plays into the hands of an alternative to Russian pipelines pumping gas to Europe bypassing Ukraine - "South stream", the attractiveness of which is growing with each additional risk related to transit gas through Ukraine, " explained Konoplyannik Izvestia.

Deputy General Director of the national energy security Fund Oleksiy Grivach believes that the corporatization of the GTS does not promise risks "South stream", because in order to GTS came shareholders, need assurance download this pipe. And such guarantees can only give "Gazprom"and he is doing is not going to.

- Attempts to block "South stream" continue throughout the project. But they will not lead to the fact that the transit traffic through the Ukrainian gas transportation system has been preserved in the same volume. Ignoring the interests of Russia to Ukraine may eventually lead only to the fact that the transit gas flow to Europe will be broken, which is not in the interests of neither Europe, nor Ukraine itself, " he said.

Meanwhile, Ukraine represented by its energy Minister Yuriy Prodan assured the European Commission that will do everything to ensure the uninterrupted transit of Russian gas to Europe, despite the introduction of a system of pre-payment.

[Jun 21, 2014] EU specified the pre-condition of resuming construction of the "South Stream"

June 20, 2014 |

The European Union is not against the pipeline "South Stream", its construction stopped temporarily, said European Commissioner for Energy Gunther Oettinger, reports "Interfax". In order to defrost its construction, Russia must recognize the norm of the Third Energy, which owned pipelines in the EU can not be gas companies.

Ettinger has complained about the Russian claim to the WTO, which reflects disagreement with European rules. "We have started negotiations, created a working group and continued discussion. But a few days ago, Russia decided to appeal to the court of the WTO to achieve through this organization for themselves exceptions to European regulations. Moreover accused us of violating WTO rules. That claim means that Russian energy policy is consistent with WTO rules and EU legislation does, "- he said.

According to European Commissioner, Russia must first recognize the EU regulations and bring the project "South Stream" in accordance with it, but only after being asked to make an exception for themselves. At the same time, according to Ettinger, these exceptions are possible.

"For us, this is an unacceptable violation of the rules of the internal market. Exceptions are possible, but first we must recognize our rules, and then ask for exceptions to them. This story was a" Nord Stream ". We are flexible, we can make exceptions. But project partners and investors must recognize the rules "- said the commissioner.

The European Commission asked June 3 Bulgaria, through which "South Stream" pipes are planned, suspend its construction. Five days later, the government agreed to stop work. The next day, Serbia followed the example of Bulgaria

We are talking about the dispute between Moscow and Brussels over the so-called Third Energy restricting the rights of the operator of the pipeline. In accordance with the owners of pipelines on the territory of the Union may not be a company engaged in the production of gas. They either have to sell their assets in the EU, or transfer the right to control pipelines independent companies from the EU. If operating companies controlled by foreign entities, they must pass the certification under which they are subject to additional requirements. For example, they have to prove the absence of threats to the energy security of the EU. If the line is under the control of the EU, this is not required.

"South Stream" - a global infrastructure project "Gazprom" gas pipeline capacity of 63 billion cubic meters through the Black Sea to the countries of Southern and Central Europe in order to diversify export routes for natural gas and cut transit risks. Offshore section of the pipeline will consist of four threads with the total length of more than 930 kilometers.

[Jun 19, 2014] US Foreign Policy = Follow the Money.

The U.S. has long show great interest in the Ukrainian natural resources

Ukraine is ready to give half of his gaz transpotation system under the control of the United States! In the Parliament received a government bill that allows you to part with 49% of shares of the operator of the gas transportation system of the country.

The parliamentarians also asked to reform the company "Naftogaz of Ukraine", and to create a joint venture for management of the unified gas transportation system and underground gas storages.

As ITAR-TASS reported the explanatory note to the law states that this draft law "is directed on the increase of economic efficiency of oil and gas industry"

Note, the Americans have long been showing great interest in the Ukrainian natural resources. For example, relatives and friends of major American politicians are included in the Board of Directors of the Ukrainian gas company Burisma with interests in the affected by armed conflicts Donbass. U.S. authorities pretend that this is absolutely normal.

The company has licenses for development of five deposits in Kharkiv, Lviv, Ivano-Frankivsk and Chernivtsi regions. And in the first quarter of this year it has increased gas production, oil and gas condensate production almost twice in comparison with last year. Most likely, under the guidance of the Director Biden this holding was calculated and participate in dividing the pie on the rich shale gas fields in the East and West of Ukraine.

yalensis, June 18, 2014 at 5:02 pm

Draft bill in Ukrainian Parliament to sell 49% of shares in Ukrainian gas pipeline system to United States of America.
Pipes are currently owned by Uke national company Naftogaz.

cartman, June 18, 2014 at 6:30 pm

I guess that makes sense, since they already gave away all of the country's gold, agreed to turn the country into a nuclear waste dump, and bought more Westinghouse nuclear fuel rods with cracked assemblies. I hope their are enough Right Sector goons to throw themselves on the melting-down NPPs.

[Jun 18, 2014] Russia tables new UN resolution for ceasefire and talks in Ukraine

17 June 2014 | The Guardian
edwardrice -> panpipes , 17 June 2014 6:09am

Ukraine owes $4.5bn of back-payments. Gazprom is demanding a pre-payment system. Ukraine refuses to pay what it owes or pre-pay.
Therefore gas is cut off. Can you explain why Ukrainians should have free energy supplies while the rest of us have to work to pay the bills? Do you think European tax-payers should help out?

4planetearth -> panpipes, 17 June 2014 6:11am

You must be so dumb to even say something like that. Ukrainian gov. should be thankful to Russia for not shutting gas off back in February or March, but waited till it at least got warmer. You can't pump gas and not pay for it, try doing that in your home town, I would like to see how far you get.

SimplyR2014 -> panpipes, 17 June 2014 6:48am

Russia supplied natural gas to Ukrain for $5bn free of charge! That is the input to support the Ukrain, isn't it?

MishkaYaponchik -> panpipes, 17 June 2014 7:53am

Russia will provide aid if others are on board and Russia will provide gas if it is either paid for or we are convinced to supply it anyway by other means.

mauman -> panpipes, 17 June 2014 8:10am

Ukraine boasted it had reserved to last well into Autumn

Zoltán Koskovics -> panpipes , 17 June 2014 8:22am

Russia cuts supplies to the maidan govt with neo nazis in it. Calls for humanitarian aid for the thousands of displaced, suffering Ukrainians. What is it that you fail to grasp?

Jiri -> edwardrice, 17 June 2014 9:08am

Can you explain why Ukrainians should have free energy supplies...?

Why shouldn't they? It's a free market.

Adzm00 -> 4planetearth, 17 June 2014 10:38am

Yep Ukrainians should be so grateful for Russia infringing its territory, going back on security agreements and fostering a civil war within their country.

I mean really, how dare they complain about anything Russia does.

Skywithclouds -> Adzm00 , 17 June 2014 11:40am

Criminals who burn people alive and says it's ok don't have the right to complain of anything.

Reynardus . -> panpipes , 17 June 2014 12:37pm

Russia did not cut gas to Ukraine. After six month it stopped giving it away to Ukraine without payment.

seamuspadraig -> mauman, 17 June 2014 1:49pm

Too bad the reserves won't last through the winter.

MintyScience -> edwardrice, 17 June 2014 2:39pm

My domestic gas supplier hasn't occupied and annexed one of the rooms of my house.

riggbeck -> edwardrice, 17 June 2014 2:48pm

Can you explain why Ukrainians should have free energy supplies while the rest of us have to work to pay the bills?

Can you explain why Russia deserves any payment at all after invading Crimea and fomenting terrorism in Eastern Ukraine?

vivaItaly -> panpipes, 17 June 2014 3:19pm

When Ukraine pays for gas, this country will get it again. No problems!

But Ukraine(it's government)doesn't want to pay. What kind country will pay for Ukraine?May be yours?)))

fonseca1 -> panpipes -> 17 June 2014 5:12pm

So, in your opinion, the cutting of gaz supplies provoked the humanitarian crisis? Or you are to thick to use brains to think?

How long Russia should supply gaz for free to the hostile regime that has already a debt of more than 6 bln. of USD? To the regime whose so called Foriner Minister uses publicly dirtiest expressions (more suted to the drunkard in a pub) speaking about of its President?

To the regime that kills peaceful population using heavy artillery, military aviation and white phosphor bombs? Bombing schools and hospitals? Killing and torturing jornalists? Trespassing its borders?

Skywithclouds -> Polvilho, 17 June 2014 9:21pm

It's a task of Ukrainian authorities to indetificate and punish the killers, there are a lot of video evidence.

Since they didn't do it - the authorities support that kind of killing and it suit official policy. Not to mention words of support the killing from various ministers.

So that mean that burning people alive are pretty much ok official policy of country named Ukraine.

Robert Sandlin , 17 June 2014 6:09am

It is senseless to try and go the legal route through the UN.

Russia needs to understand the the Western States are waging a Jihad against Russia. And literally couldn't care less how many women and children are killed in East Ukraine. They are a disgrace to humanity, but for at least a while the world is stuck with this UN.

Russia will have to handle the peacemaking themselves.They should order a no-military fly zone over East Ukraine.And set a time limit for Ukraine to order a ceasefire and pull their forces back from the East.Tell the Ukrainians if they don't conduct negotiations within a scheduled period that they will extend recognition to Novorossiya as an independent republic. To save the Unity of Ukraine that would force the Kiev regime to see reason and begin negotiations with the Federalists.

This crisis disturbing the security of the World needs to be brought to a close. Only a firm stand by Russia can bring it to a close.

Ishowerdaily -> 17 June 2014 6:42am

People evacuate the village of Metallist in eastern Ukraine following a shell attack by the government forces on Monday.

How the fuck is shelling a civilian population in any way justifiable? Any attempt to justify it is bollocks and if you try you should be ashamed.

edwardrice -> omasta , 17 June 2014 7:05am

Russia is meddling in the Ukraine's issues by proxies

The EU and US backed the coup in Kiev, not Russia. People in the east took up arms after the coup.

Crimea the way Sudetenland was in 1938.

I don't think there are any comparisons, for a start there wasn't a US/EU backed coup in Czechoslovak in 1938.

Rolex44 -> omasta, 17 June 2014 7:32am

Russia was financially supporting the baby Ukraine who needed cheap gas and money for years. despite still being an infant it suddenly wants new toys.

Goes running to the US who quickly decide that Syria is a lost cause and they now want a piece of the action in Ukraine.

So they decided to muscle out Russia and did this by organising a coup. Russia wants it's money back and the gifts it gave Ukraine.

Newmacfan, 17 June 2014 7:15am

If this request for talks by Russia is not embraced and savoured it will merely reinforce the overwhelming feeling that there is a massive attempt to entice Russia into perceived confrontation.

Apart from that being completely pointless it would only serve to muddy the waters between Asia and Europe, the only people to gain from that are over four thousand miles away.

All the countries in the immediate vicinity can win here by sitting down around a table, preferably without the United States who would merely muddy the waters. These proposed talks could put the foundations for a road of peace, cooperation and mutual economic growth. Wonderful.....let's do it but let's keep the spoilers away!

MishkaYaponchik -> Newmacfan, 17 June 2014 8:30am

That's the USA taught tactic. If the proposition is great and can not be argued against, you just add your own condition which you know the other side will not agree to and then blame the other side for not wanting to go ahead with the original proposition.

HansVonDerHeyde -> PyotrGrozny , 17 June 2014 5:01pm


I'm disgusted by this , yesterday some videos were uploaded , and it seems it took place in Mariupol were some Pro-Russians were captured. It shows Clearly evidence of U.S Forces in E.Ukraine fighting for the Kiev Junta:

  2. Here is a pic of the video , again look at the Insignia
  3. Now Read This

Shocking isn't? That's not ALL , LISTEN VERY CAREFULLY at the next video:]].com/watch?v=yRxq_xdvejs (Same Video better audio)

Listen at 0:26 someone says in a Thick Accent "Window" at then immediately someone responds in perfect America/English " I understand" 0:28.

The U.S Government should be condemned for this -- ! Where are the sanctions against U.S ? Can the Western Media/White House be more Hypocrite?

MishkaYaponchik , 17 June 2014 7:31am

"We cannot equate the legitimate government with illegitimate illegal insurgents who are better armed than the Ukrainian army and are carrying out attacks on the territory and against the state of Ukraine."

Where does USA find these puppet clowns? The separatists don't have planes and helicopters, how are they better equipped? They are not carrying out attacks on civilians unlike the Nazi Guard, they have time and time again asked for the military to withdraw and the Kiev government to sit down and talk with them.

Kiev government is incompetent, they cannot guarantee safety of other countries' embassies, their foreign ministers are filmed swearing at leaders of foreign countries, they can not even control their own military.

umweltAT2100, 17 June 2014 7:55am

Months-long negotiations over Ukraine's unpaid Russian gas bill of US$ 1,951 billion and the price that Gasprom is prepared to sell Ukraine for US$ 385 per 1000 cubic meter, but that Ukraine only wants to pay US$ 268, were broken off on evening of 15 June by Ukraine shortly before the ultimate deadline on morning of 16 June (this had previously been set as 1 June). Russian gas will now only be delivered to Ukraine on payment in advance or deliveries will stop.

As Ukraine is also a transit country for gas it could endanger supplies to the EU. The EU has been there before in 2009 when the gas bill wasn't paid, and Russia threatened to cut off Ukrainian gas, Ukraine threatened to stop deliveries reaching the rest of Europe.

EU Energy Commissioner Oettinger, who has been acting as mediator in this gas conflict, said (in Bratislava on 16 June) that Ukraine would need billions of Euro more in aid than Greece had done to get its economy on its feet. That would require contributions from taxpayers, voters, the European Commission, the USA, Canada, and the IMF.

The difference is, of course, that Greece is a member of the EU, Ukraine is not, and especially the EU Mediterranean members, in addition to struggling with their own financial difficulties that some have been facing, are also facing an enormous financial and humanitarian burden with refugees from conflicts in the Middle East and North Africa, arriving in their thousands. In Italy alone this amounted to 54,000 since January this year and these countries have repeated appealed for help from their EU partners.

So who should pay Ukraine's gas bill?

UK Treasury opposes EU call for 'yet more money'

The UK Treasury has said the European Commission should not be asking for "yet more money" from EU member states.

The commission has published proposals to increase the 2014 contributions from members by 2.16 billion euros (£1.76bn) to cover increased costs for growth and jobs schemes, and help for Ukraine.

The Treasury said: "At a time when countries across Europe continue to take difficult decisions to deal with deficits, the European Commission should not be asking Europe's taxpayers for yet more money. (29 May 2014)

EnviroCapitalist -> umweltAT2100, 17 June 2014 8:33am

So who should pay Ukraine's gas bill?

Tricky one. Ukraine needs to use its gas more efficiently - if it did, it would be self sufficient. But that will take time and the issue is now.

I think the best solution regarding the debt would be for Russia to agree to write off the gas-debt in return for Crimea. Moving forward, Ukraine will have to get used to higher gas prices

BryanHemming -> umweltAT2100 , 17 June 2014 9:12am

It would be interesting to find out if the average Ukraine citizen using gas gets cut off for not paying bills. Somehow, I rather suspect they do, as I don't remember any energy company supplying customers for free.

Then we might be forgiven for asking, who exactly isn´t paying the Ukrainian gas bill? Seems to me the most likely suspects are the very people who were siphoning off gas intended for Europe not so long ago. Yes, the very same oligarchs already responsible for strangling the nation's economy and creating all the political instabiltiy in Ukraine in the first place.

As I doubt whether it's free chocolate in Ukraine today, I don't suppose it was ever free gas, except from Russia to the Ukrianian oligarchs. Why don't journalists ask the most simple questions anymore? They'd be surprised how simple the answers are.

Skywithclouds -> EnviroCapitalist , 17 June 2014 9:28am

As someone said oligarchs who now ruling the Ukraine have plenty of money to pay that bill. But they just want more money.

So why Russia has to forgive country who call Russia a scum and Russians sub-humans who it is free to kill?

Robert Sandlin -> EnviroCapitalist , 17 June 2014 9:42am

That is an solution Russia might consider if a cease fire and general peace conference was called, I do believe.

But I doubt Ukraine's nationalist government and its neo-nazi supporters are smart enough to see reason.

edwardrice -> EnviroCapitalist, 17 June 2014 10:01am

I think the best solution regarding the debt would be for Russia to agree to write off the gas-debt in return for Crimea.

The Kiev regime has said Crimea is Ukrainian. It's not for sale. They aren't going to back off on that and sell Crimea to the Russians to pay a debt.

AMHants -> BryanHemming, 17 June 2014 1:33pm

Didn't Tymoshenko get her name 'Gas Princess' and her billions that way?

Oilyheart -> umweltAT2100 , 18 June 2014 2:28am

It appears that the EUSA expects Russia to supply Ukraine with free gas ad infinitum in a tug-of-war that could lead to open armed conflict.

............shouldn't anybody in their right mind be worried?

etatsunique , 17 June 2014 8:01am


There's another story in the Guardian now.

The UN is appealing for more than $1bn in emergency humanitarian funding for South Sudan, warning that six months of fighting have left the country facing famine and the "loss of a generation of children and youth".

Oh, look how concerned the phonies at the UN are about the effect the civil war in South Sudan is having on the population there.

But where's the concern for the destruction being wrought in East Ukraine?

Point to one oil field in East Ukraine. You can't, can you? But if I asked you to point to oil fields in South Sudan you'd find a bazillion.

The hypocrites at the UN don't care about the death and destruction in East Ukraine because no oil is being kept off the market there. But in South Sudan the production is stopped and apparently it is missed.

Robert Sandlin -> etatsunique, 17 June 2014 9:37am

As I recall they are also responsible for the crisis there as well.

Sorry4Soul -> Robert Sandlin, 17 June 2014 10:14am

Yeah South Sudan is in the first place because of UN.

TedMorgan38, 17 June 2014 8:22am

It would save much time and suffering if Russia unilaterally invaded East Ukraine and repelled the mercenaries and irregulars who are slughtering the citizens in Lugansk and Donetsk who, justly, reject the coup in Kiev.

Unfortunately, that would contravene "international law", that slippery beast routinely trotted out by the West when it suits, but ignored when it doesn't.

Events in Crimea demonstrate how, given the swift enactment of the populace's wishes, even in the teeth of the "International Community's" opposition, peaceful resolution of territorial disputes can be achieved. Crimea has little violence because Russia ensured Kiev could not ruthlessly assault the local inhabitants. The consequence of the lack of such assurance in Donbass in plain to see.

Once more, the West has blood on its hands, opportunistically fomenting revolution in Kiev, even to the degree of ensuring the rise to power of fascists, purely for geopolitical advantage. It is simply grotesque.

Zoltán Koskovics -> TedMorgan38, 17 June 2014 8:29am

The only real solution is the federalization of the Ukraine. A russian invasion now would help the suffering of the people in the east in the short term, but would not create a potential for federalization. In fact it would do just the opposite.

A federal Ukraine open to both Russia and the EU, but closed to the US and NATO is the only concievable way out of this crisis.

TedMorgan38 -> Zoltán Koskovics, 17 June 2014 8:43am

Ukraine is past the sticking plaster of federalisation. Kiev's vicious assaults on the East and South have put pay to that.

SHappens -> Zoltán Koskovics , 17 June 2014 8:45am

I wouldnt rule out this could still happen. It might take some time and some more death but it seems to be the only way out.

EU is very divided now as what to do next about this conflict. Also this is starting to cost them huge money, at one point it might not be "interesting", if it ever was, for the EU no more. And that's when they will turn their back to the US/NATO.

Russia could also close the North Stream. We might come to a point when Russia will be pushed to react, probably not with arms, but I am sure they are ready with some unexpected retaliations to the unfair treatment they are under as to sanctions and moreover for all their attempts to solve the crisis being rejected with profound distaste.

Kal El , 17 June 2014 8:23am

As for the Lithuanian Ambassadors assertion that Crimea is Ukrainian.

I'll present a few facts.

In 1994, a referendum with 3 questions was held in Crimea, against Kiev's wishes.

The questions asked if Crimeans wanted even greater autonomy from Kiev (they were already an autonomous republic by then btw following the 1991 referendum), if they should have dual Rus/Ukr citizenship, and if the Crimean President's Decrees should be made law.

The yes results respectively were, 78.4, 82.8, 77.9 %

In 1994, the President of Crimea tried to issue the Russian currency, adopt the same time-zone as Moscow and issue Russian passports to the population with a view to being annexed by Russia.

In 1995, Kiev scrapped the Crimean constitution and abolished the post of Crimean President, on the grounds that the Crimean constitution (which as an autonomous republic it was well within its rights to have) and the Crimean President (which it Crimea was also within its rights to have) endangered the sovereignty of Ukraine.


Therefore, how people can say that the 2014 vote was a sham, the results contorted and the annexation illegal, when Crimeans had effectively voted to be a part of Russia 20 years previously in 1994, is completely beyond me.

Lithuanian ambassador must have gone to the same school of lies as Psaki. Maybe they were even roomies.

Ragneur , 17 June 2014 8:25am

Whenever your hear anything about Putin from the evil empire we should try to keep this in mind. Russia has an estimated 75 trillion resources.]

Yeltsin alowed the evil empire to loot them to their hearts content as we all know the cost paid by the poor populace = good Russian leader.

Under Putin all those resources will benefit Russia which put him on the to coup list instantly = bad Russian leader. How dare you be independent?

We should try to disassociate our thought progress of the evil propoganda that passes itself off as western media. To keep their evil population scared into accepting spending well over half the tax money on enriching the military corporations at their expense they need to come up with as many bad guys as they can, Putin is one.

If you still believe the official line about 9/11 - that every single one of the multitude of the most advanced air defence in the world all failed at exactly the same time then there is no hope for you. 9/11 was about adding a whole ethnicity to the bad guy list. 6% of terrorist attack are from Muslims. In racist America it isn't very hard to turn them against the likes of Muslims.

When Putin liberated Crimea, his already sky high approval rating went up to 80% Without the evil empire none government agencies funded by the likes of George Soros spreading their dark intentions it would be far higher. As they have fought off endless invaders over the centuries in Sevastopol it has a genuine affinity to all Russians. They refer to it as the hero city and were devastated about losing it.

American love dictators, They do all of the oppression for them. The only time they will ever overthrow a dictator is when they are independent. The reason they demonize whichever leader they are about to invades it to convince the populace that blatant imperialism is humanitarian intervention.

By comparison Dave's approval rating is 28%. Chinese is 90% 78% of the world want Putin to be their countries leader. Sound like the narrative we get?

Luschnig -> Ragneur , 17 June 2014 8:38am

Precisely. Putin isn't so bad. He reestablished and increased pensions which under Yeltsin had gone unpaid. Real incomes in the RF have increased 300% since Putin was first elected. How well you wages fared in the West since 2000? And concerning the Ukraine: Russian salaries average three times as much, government salaries are up to ten times as high as in the Ukraine. And most telling of all, between a quarter and one third of the Ukrainian workforce is working in Russia and the money they send home accounts for a sizable percentage of the Ukraine's total GNP. Russians might not make as much as some in the West but they are headed in the right direction.

Ragneur -> Ragneur , 17 June 2014 9:02am

This is the seminal occurrence of actual events in Ukraine:

I knew 9/11 was a false flag but as every YouTube poster thinks they are a Hollywood director I'd given up finding a video there until I came across the one on their site. It's an exhausting 5 hour documentary literally going through every claim and counter claim to find the truth(). It was a masterpiece. They use the style with the Ukraine one.

Ragneur -> Ragneur , 17 June 2014 9:25am

I'll keep posting here to try and help you understand the man this newspaper should be doing. This is the first hand account of someone who had decades of interactions with Putin and is trying to open peoples eyes regarding the most misunderstood person in the west too:

Who is Vladimir Putin? Why Does the US Government Hate Him?

As the Ukraine situation has worsened, unconscionable misinformation and hype is being poured on Russia and Vladimir Putin.

Journalists and pundits must scour the Internet and thesauruses to come up with fiendish new epithets to describe both.

Wherever I make presentations across America, the first question ominously asked during Q&A is always, "What about Putin?"

It's time to share my thoughts which follow:

Putin obviously has his faults and makes mistakes. Based on my earlier experience with him, and the experiences of trusted people, including U.S. officials who have worked closely with him over a period of years, Putin most likely is a straight, reliable and exceptionally inventive man.

He is obviously a long-term thinker and planner and has proven to be an excellent analyst and strategist. He is a leader who can quietly work toward his goals under mounds of accusations and myths that have been steadily leveled at him since he became Russia's second president.

I've stood by silently watching the demonization of Putin grow since it began in the early 2000s –– I pondered on computer my thoughts and concerns, hoping eventually to include them in a book (which was published in 2011). The book explains my observations more thoroughly than this article. Like others who have had direct experience with this little known man, I've tried to no avail to avoid being labeled a "Putin apologist". If one is even neutral about him, they are considered "soft on Putin" by pundits, news hounds and average citizens who get their news from CNN, Fox and MSNBC.

I don't pretend to be an expert, just a program developer in the USSR and Russia for the past 30 years. But during this time, I've have had far more direct, on-ground contact with Russians of all stripes across 11 time zones than any of the Western reporters or for that matter any of Washington's officials.

I've been in country long enough to ponder on Russian history and culture deeply, to study their psychology and conditioning, and to understand the marked differences between American and Russian mentalities which so complicate our political relations with their leaders. As with personalities in a family or a civic club or in a city hall, it takes understanding and compromise to be able to create workable relationships when basic conditionings are different. Washington has been notoriously disinterested in understanding these differences and attempting to meet Russia halfway.

In addition to my personal experience with Putin, I've had discussions with numerous American officials and U.S. businessmen who have had years of experience working with him––I believe it is safe to say that none would describe him as "brutal" or "thuggish", or the other slanderous adjectives and nouns that are repeatedly used in western media.

I met Putin years before he ever dreamed of being president of Russia, as did many of us working in St.Petersburg during the 1990s. Since all of the slander started, I've become nearly obsessed with understanding his character. I think I've read every major speech he has given (including the full texts of his annual hours-long telephone "talk-ins" with Russian citizens). I've been trying to ascertain whether he has changed for the worse since being elevated to the presidency, or whether he is a straight character cast into a role he never anticipated––and is using sheer wits to try to do the best he can to deal with Washington under extremely difficult circumstances. If the latter is the case, and I think it is, he should get high marks for his performance over the past 14 years. It's not by accident that Forbes declared him the most Powerful Leader of 2013, replacing Obama who was given the title for 2012. The following is my one personal experience with Putin.

The year was 1992: It was two years after the implosion of communism; the place was St.Petersburg. For years I had been creating programs to open up relations between the two countries and hopefully to help Soviet people to get beyond their entrenched top-down mentalities. A new program possibility emerged in my head. Since I expected it might require a signature from the Marienskii City Hall, an appointment was made. My friend Volodya Shestakov and I showed up at a side door entrance to the Marienskii building. We found ourselves in a small, dull brown office, facing a rather trim nondescript man in a brown suit. He inquired about my reason for coming in. After scanning the proposal I provided he began asking intelligent questions. After each of my answers, he asked the next relevant question.

I became aware that this interviewer was different from other Soviet bureaucrats who always seemed to fall into chummy conversations with foreigners with hopes of obtaining bribes in exchange for the Americans' requests. CCI stood on the principle that we would never, never give bribes. This bureaucrat was open, inquiring, and impersonal in demeanor. After more than an hour of careful questions and answers, he quietly explained that he had tried hard to determine if the proposal was legal, then said that unfortunately at the time it was not. A few good words about the proposal were uttered. That was all. He simply and kindly showed us to the door. Out on the sidewalk, I said to my colleague, "Volodya, this is the first time we have ever dealt with a Soviet bureaucrat who didn't ask us for a trip to the US or something valuable!" I remember looking at his business card in the sunlight––it read Vladimir Vladimirovich Putin.

1994: U.S. Consul General Jack Gosnell put in an SOS call to me in St.Petersburg. He had 14 Congress members and the new American Ambassador to Russia, Thomas Pickering, coming to St.Petersburg in the next three days. He needed immediate help. I scurried over to the Consulate and learned that Jack intended me to brief this auspicious delegation and the incoming ambassador. I was stunned but he insisted. They were coming from Moscow and were furious about how U.S. funding was being wasted there. Jack wanted them to hear the"good news" about CCI's programs that were showing fine results. In the next 24 hours Jack and I also set up "home" meetings in a dozen Russian entrepreneurs' small apartments for the arriving dignitaries (St.Petersburg State Department people were aghast, since it had never been done before––but Jack overruled). Only later in 2000, did I learn of Jack's former three-year experience with Vladimir Putin in the 1990s while the latter was running the city for Mayor Sobchak. More on this further down.

December 31, 1999: With no warning, at the turn of the year, President Boris Yeltsin made the announcement to the world that from the next day forward he was vacating his office and leaving Russia in the hands of an unknown Vladimir Putin. On hearing the news, I thought surely not the Putin I remembered––he could never lead Russia. The next day a NYT article included a photo. Yes, it was the same Putin I'd met years ago! I was shocked and dismayed, telling friends, "This is a disaster for Russia, I've spent time with this guy, he is too introverted and too intelligent––he will never be able to relate to Russia's masses." Further, I lamented: "For Russia to get up off of its knees, two things must happen: 1) The arrogant young oligarchs have to be removed by force from the Kremlin, and 2) A way must be found to remove the regional bosses (governors) from their fiefdoms across Russia's 89 regions". It was clear to me that the man in the brown suit would never have the instincts or guts to tackle Russia's overriding twin challenges.

February 2000: Almost immediately Putin began putting Russia's oligarchs on edge. In February a question about the oligarchs came up; he clarified with a question and his answer: "What should be the relationship with the so-called oligarchs? The same as anyone else. The same as the owner of a small bakery or a shoe repair shop." This was the first signal that the tycoons would no longer be able to flaunt government regulations or count on special access in the Kremlin. It also made the West's capitalists nervous. After all, these oligarchs were wealthy untouchable businessmen––good capitalists, never mind that they got their enterprises illegally and were putting their profits in offshore banks.

Four months later Putin called a meeting with the oligarchs and gave them his deal: They could keep their illegally-gained wealth-producing Soviet enterprises and they would not be nationalized …. IF taxes were paid on their revenues and if they personally stayed out of politics. This was the first of Putin's "elegant solutions" to the near impossible challenges facing the new Russia. But the deal also put Putin in crosshairs with US media and officials who then began to champion the oligarchs, particularly Mikhail Khodorkovsky. The latter became highly political, didn't pay taxes, and prior to being apprehended and jailed was in the process of selling a major portion of Russia's largest private oil company, Yukos Oil, to Exxon Mobil. Unfortunately, to U.S. media and governing structures, Khodorkovsky became a martyr (and remains so up to today).

March 2000: I arrived in St.Petersburg. A Russian friend (a psychologist) since 1983 came for our usual visit. My first question was, "Lena what do you think about your new president?" She laughed and retorted, "Volodya! I went to school with him!" She began to describe Putin as a quiet youngster, poor, fond of martial arts, who stood up for kids being bullied on the playgrounds. She remembered him as a patriotic youth who applied for the KGB prematurely after graduating secondary school (they sent him away and told him to get an education).

He went to law school, later reapplied and was accepted. I must have grimaced at this, because Lena said, "Sharon in those days we all admired the KGB and believed that those who worked there were patriots and were keeping the country safe. We thought it was natural for Volodya to choose this career. My next question was, "What do you think he will do with Yeltsin's criminals in the Kremlin?" Putting on her psychologist hat, she pondered and replied, "If left to his normal behaviors, he will watch them for a while to be sure what is going on, then he will throw up some flares to let them know that he is watching. If they don't respond, he will address them personally, then if the behaviors don't change–– some will be in prison in a couple of years." I congratulated her via email when her predictions began to show up in real time.

Throughout the 2000′s: St.Petersburg's many CCI alumni were being interviewed to determine how the PEP business training program was working and how we could make the U.S. experience more valuable for their new small businesses. Most believed that the program had been enormously important, even life changing. Last, each was asked, "So what do you think of your new president?" None responded negatively, even though at that time entrepreneurs hated Russia's bureaucrats. Most answered similarly, "Putin registered my business a few years ago". Next question, "So, how much did it cost you?" To a person they replied, "Putin didn't charge anything". One said, "We went to Putin's desk because the others providing registrations at the Marienskii were getting 'rich on their seats.'"

Late 2000: Into Putin's first year as Russia's president, US officials seemed to me to be suspect that he would be antithetical to America's interests––his every move was called into question in American media. I couldn't understand why and was chronicling these happenings in my computer and newsletters.

Year 2001: Jack Gosnell (former USCG mentioned earlier) explained his relationship with Putin when the latter was deputy mayor of St.Petersburg. The two of them worked closely to create joint ventures and other ways to promote relations between the two countries. Jack related that Putin was always straight up, courteous and helpful. When Putin's wife, Ludmila, was in a severe auto accident, Jack took the liberty (before informing Putin) to arrange hospitalization and airline travel for her to get medical care in Finland. When Jack told Putin, he reported that the latter was overcome by the generous offer, but ended saying that he couldn't accept this favor, that Ludmila would have to recover in a Russian hospital. She did––although medical care in Russia was abominably bad in the 1990s.

A senior CSIS officer I was friends with in the 2000s worked closely with Putin on a number of joint ventures during the 1990s. He reported that he had no dealings with Putin that were questionable, that he respected him and believed he was getting an undeserved dour reputation from U.S. media. Matter of fact, he closed the door at CSIS when we started talking about Putin. I guessed his comments wouldn't be acceptable if others were listening.

Another former U.S. official who will go unidentified, also reported working closely with Putin, saying there was never any hint of bribery, pressuring, nothing but respectable behaviors and helpfulness.

I had two encounters in 2013 with State Department officials regarding Putin:

At the first one, I felt free to ask the question I had previously yearned to get answered:

"When did Putin become unacceptable to Washington officials and why? Without hesitating the answer came back: "

'The knives were drawn' when it was announced that Putin would be the next president."

I questioned WHY? The answer: "I could never find out why––maybe because he was KGB." I offered that Bush #I, was head of the CIA. The reply was, "That would have made no difference, he was our guy."

The second was a former State Department official with whom I recently shared a radio interview on Russia. Afterward when we were chatting, I remarked, "You might be interested to know that I've collected experiences of Putin from numerous people, some over a period of years, and they all say they had no negative experiences with Putin and there was no evidence of taking bribes". He firmly replied, "No one has ever been able to come up with a bribery charge against Putin."

From 2001 up to today, I've watched the negative U.S. media mounting against Putin …. even accusations of assassinations, poisonings, and comparing him to Hitler.

No one yet has come up with any concrete evidence for these allegations. During this time, I've traveled throughout Russia several times every year, and have watched the country slowly change under Putin's watch. Taxes were lowered, inflation lessened, and laws slowly put in place. Schools and hospitals began improving. Small businesses were growing, agriculture was showing improvement, and stores were becoming stocked with food.

Alcohol challenges were less obvious, smoking was banned from buildings, and life expectancy began increasing. Highways were being laid across the country, new rails and modern trains appeared even in far out places, and the banking industry was becoming dependable. Russia was beginning to look like a decent country –– certainly not where Russians hoped it to be long term, but improving incrementally for the first time in their memories.

My 2013/14 Trips to Russia: In addition to St.Petersburg and Moscow, in September I traveled out to the Ural Mountains, spent time in Ekaterinburg, Chelyabinsk and Perm. We traveled between cities via autos and rail––the fields and forests look healthy, small towns sport new paint and construction. Today's Russians look like Americans (we get the same clothing from China). Old concrete Khrushchev block houses are giving way to new multi-story private residential complexes which are lovely. High-rise business centers, fine hotels and great restaurants are now common place––and ordinary Russians frequent these places. Two and three story private homes rim these Russian cities far from Moscow.

We visited new museums, municipal buildings and huge super markets. Streets are in good repair, highways are new and well marked now, service stations looks like those dotting American highways. In January I went to Novosibirsk out in Siberia where similar new architecture was noted. Streets were kept navigable with constant snowplowing, modern lighting kept the city bright all night, lots of new traffic lights (with seconds counting down to light change) have appeared. It is astounding to me how much progress Russia has made in the past 14 years since an unknown man with no experience walked into Russia's presidency and took over a country that was flat on its belly.

So why do our leaders and media demean and demonize Putin and Russia???

Like Lady MacBeth, do they protest too much?

Psychologists tell us that people (and countries?) project off on others what they don't want to face in themselves. Others carry our "shadow"when we refuse to own it. We confer on others the very traits that we are horrified to acknowledge in ourselves.

Some of you were around Putin in the earlier years. Please share your opinions, pro and con …. confidentiality will be assured. It's important to develop a composite picture of this demonized leader and get the record straight. I'm quite sure that 99% of those who excoriate him in mainstream media have had no personal contact with him at all. They write articles on hearsay, rumors and fabrication, or they read scripts others have written on their tele-prompters. This is how our nation gets its "news", such as it is.

There is a well known code of ethics among us: Is it the Truth, Is it Fair, Does it build Friendship and Goodwill, and Will it be Beneficial for All Concerned?

It seems to me that if our nation's leaders would commit to using these four principles in international relations, the world would operate in a completely different manner, and human beings across this planet would live in better conditions than they do today.

As always your comments will be appreciated. Please resend this report to as many friends and colleagues as possible.

Sharon Tennison

Sharon Tennison is President and Founder of the Center for Citizen Initiatives,, Author of The Power of Impossible Ideas (under revision)

This is a two part documentory about the rise of Putin and the fall of the oligarchs. It is an evil empire documentary so there's an entirely unnecessary racist title:

part 1 -

part 2 -

Kal El , 17 June 2014 9:09am

I see Petro The Pimp is now saying he hopes to finalize a peace plan before the end of the week.

Is this in addition to a promise 2 weeks ago to end the fighting "in hours", and in addition to "cease fighting" by the end end of the week, last week ?

It is obvious to even a casual observer that "The Pimp" is neither capable of keeping his word, delivering on anything he says, or resolving the "crisis" in Ukraine whatsoever.

Oskar Jaeger -> Kal El , 17 June 2014 9:18am

The Pimp? Why are you "pro-Russians" always so uncultured impolite?

Kal El -> Oskar Jaeger, 17 June 2014 9:22am

Petro has links to prostitution, money laundering, narcotics, and probably many other things in-between in his quite shady past.

"Petro The Pimp" is quite justified.

Mistaron -> Oskar Jaeger , 17 June 2014 11:56am

Seems to me that it's been Russia who has been the prime mover into trying to get the diplomatic resolutions. It has been the West that has inflamed the war with its ridiculous support for the increasingly elusive, 'moderate' fighters.

Russia, Syria and Iran cannot be swayed by US hegemonic machinations and stand in defiance of the Brzezinski NWO agenda, (The Grand Chessboard, American Primacy & Its Geostrategic Imperatives (1997)).

Answer; demonization, destabilization and Balkanization.

If the West genuinely wanted de-escalation, they would be supporting, without preconditions, any initiatives that may lead to dialogue and peaceful resolution.

The aggressor today is not Russia, Syria or Iran. Most of today's global instability can be broadly laid at imperialist America's doorstep. It doesn't take much research to bear this out.

Our governments no longer represent the people, they serve shadowier entities.

Belatedly though it may be, informed people the world over, are beginning to see how duplicitous their political elites have become.

We are sick of the lies, the theft and the wars.

A return to sovereignty may be the only answer.

Kal El , 17 June 2014 9:19am

I swear from looking at this pic that Turchynov and Yatsenyuk are completely bereft of soul. Rarely (if ever) have I seen such utterly cold and downright evil stares.

Hanwell123 -> Kal El , 17 June 2014 9:44am

They are a particularly nasty lot for sure; shameful we support and encourage them

  • umweltAT2100 , 17 June 2014 9:20am

    What has happened to the announcements on 9 and 10 June by Poroschenko – why were they not implemented immediately, i.e. on 10 June? That week (9-14 June) has come and gone and Ukraine is still carrying out military strikes.

    Ceasefire in East Ukraine?

    Only one day after his inauguration (i.e., on 9 June 2014) the Ukrainian president Petro Poroschenko announced a ceasefire for the east of the country. 'We should stop the military strikes this week. Every day in which people die, every day on which Ukraine pays such a high price in unacceptable' the agency Interfax quoted Poroschenko as saying at a meeting of a contact group for implementing his announced peace plan.

    Shortly before this announcement Russia had demanded that the Ukrainian military holds a ceasefire so that the dialogue could begin. (Rough, abridged translation from German)

    Poroschenko für schnelle Waffenruhe in der Ostukraine | (09.06.2014)

    BBC News - Ukraine to create humanitarian corridors in east

    The government has also been ordered to provide transport, food and medical supplies for local officials to be able to handle the expected inflow of displaced people into other areas of Ukraine.

    The move to create these corridors may allay concerns from human rights groups about Kiev's use of tanks and air power to suppress the pro-Russian militia.

    Ukraine's new President Petro Poroshenko has ordered the creation of humanitarian corridors so civilians can flee areas of the east hit by conflict.

    Scores have died in recent fighting in the eastern Ukraine between government troops and pro-Russia militants who want to break away from Kiev.
    Thousands of people are thought to have been displaced by the fighting.
    Russian Foreign Minister Sergei Lavrov welcomed Mr Poroshenko's move, but said what was needed most was a ceasefire. (10 June 2014)

    Poroshenko also said that he would follow a pro-western course to join the EU and in the same breath said that Crimea belonged to Ukraine – but the first goal does not mean that the EU will want to get involved in a war with Russia, economical or otherwise, to achieve his second goal.

    Quaestio , 17 June 2014 9:22am

    Daily news create atmosphere of hostility and increase chances of war. I recall in 1990 the atmosphere of hostility created by incident reporting in the Yugoslav media. I've never forgotten the story told by friends as we sat at table on the most beautiful island in Dalmatia, shaking our heads in disbelief over the development.

    A Croat married to a Serb, the couple were one out of many such couples. The island was a favourite destination for the Belgrade crowd, and tensions did not exist until about 1989. Then the media started reporting nationalist incidents, and within a year fear developed and pervaded public spaces. The couple told me that their best friends, a Serb couple who visited every year since the wedding, suddenly decided to return home to Belgrade after only a few days holiday on the Croatian island. Why, the couple asked of their best man and maiden of honour, long loyal friends, why would you leave? What on Earth has happened? Have we been inhospitable? No. Has something happened outside in town? No. Then why, why would you leave?

    "The newspapers reported attacks on Serbian civilians in Croatia."

    Right. But here nothing happened. This place is safe. Why would you leave?

    "Our parents phoned and they meant we would be more safe home in Belgrade."

    Incredible! Do you realise that we have not done anything to deserve you leaving us abruptly? Haven't we been good friends for so many years? Silence. Do you realise that by leaving you are offending our sense of hospitability and offending us as friends? Silence. Do you realise that if you leave now, we may never see each other again? Silence. Is what the papers and your parents say more powerful than the truth - that you have not been under any danger, let alone attack here? They left.

    Numerous incidents, likely staged, were reported in the Krajina area. Btw, we never referred to that area as Krajina in Yugoslavia. That period belonged to the past. Yet the past resurfaced in the newspapers somehow, and daily reporting became reality. The next year the Yugoslav army under pretext of endangered Krajina Serbs carpet-bombed its own civilians who, of course, were as multinational as ever.

    Staged events, reporting of incidents, one side presented as the villain. We've seen it all before. Let's hope it will not lead to bloodbath this time. By focusing on the war, Western politicians avoid scrutiny and divert focus from the internal affairs. Let them not get away with it. Let the states deal with their border issues on their own.

    Oscar_Lynch -> Quaestio , 17 June 2014 9:39am

    And I suppose that the 200 000 Serbs who were ethnically cleansed from Croatia (those that weren't too old or weak to run for theur lives) are also just a figment of our imagination? A creation of pro Moscow - pro Serb - pro KGB - pro communist propaganda? Is that so?

    Luckily, there are photos and videos to prove atrocities committed against the Serbs (who were certainly not the only victims).

    In the late 1990s, there were well over 500 000 refugees living in Serbia... they came from Bosnia, Croatia, Kosovo. Serbia was BY FAR the country in the region hosting the LARGEST number of refugees. Strange for an "agressor" wouldn't you think?

    Antidyatel -> Quaestio , 17 June 2014 10:02am

    Any comments on the following:

    In the exclusive interview, Franjo Tuđman's Internal Affairs Minister Josip Boljkovac admitted Croat leadership carried out planned attacks on Croatia Serbs in 1991, in order to start a war. "Tuđman wanted the war at any cost, following the concept according to which Serbs must disappear from Croatia," Boljkovac said.

    ID1543590 -> 17 June 2014 9:36am

    " To an impartial observer, you might think the American Empire is purposely sowing seeds of discontent, war, and disorder around the globe. Never ending war benefits the military industrial complex, as tremendous profits are generated from the sale of arms to all parties involved. Iraq and Syria are good for the bottom line of the U.S. Defense Industry. War and global disorder also benefit the worldwide banking cabal, as the only way to fund these misadventures is through debt. As we all know, debt is what makes this world go round – until it doesn't.

    There has been a virtual mainstream media blackout regarding the Ukraine as government forces bomb and murder civilians. The billionaires running America need to support the billionaire president of the Ukraine because he is one of them. Truth has no place in modern governmental affairs"

    SHappens -> ID1543590 , 17 June 2014 9:48am

    Information concerning Russia is treated in a unacceptable way for a society that claims to be democratic. It seems that everyone has forgotten that democracy which we are talking incessantly about, implies the possibility not only to express different opinions, but also the obligation of the State to provide the means to form an opinion.

    This involves ensuring real freedom of the press. And beyond the opportunity to express themselves, it is necessary that the choice made by citizens have implications in the country's politic. But unfortunately, in Europe, we now cut opportunities to learn, so we limit and manipulate the choices made by the people. When this is not interesting, simply, we do not talk. And when you can not hide it is deformed.

    onestep -> ID1543590, 17 June 2014 9:51am

    the ever evil disunited Nazi-states of america is desperately scrambling trying to hold on before it bankrupts in a cloud of debt. that's why and the fact that american vulture industry craves opportunities no longer available back home and thus the aggressive messages all around to open up the various opportunities and the country that holds the most is actually Russia and the vulture industry is not allowed to participate other than minority partners.

    and the fear emitted from the Nazis in the white house is palpable!

    Sorry4Soul , 17 June 2014 9:37am

    "For us it does, and it cannot be any other way," she said. "We cannot equate the legitimate government with illegitimate illegal insurgents who are better armed than the Ukrainian army and are carrying out attacks on the territory and against the state of Ukraine."

    So Grad launchers, Mi gunships, Su jets are less powerful than AK and RPG ?
    Kal El , 17 June 2014 9:39am

    "Lithuanian" Ambassador, hmph, if it hadn't been for the sacrifices of the Red Army in WW2, people now may not have been able to call themslves "Lithuanian".

    Skywithclouds -> Kal El , 17 June 2014 9:45am

    Next time something bad happens they would be left to Germany or any other attacker mercy, no worry.

    Hellarious -> Kal El , 17 June 2014 10:43am

    Go deeper into the history of 20th century and you will understand , that Nazis and Soviets treated these people in the same sh...ty way

    Robert Sandlin -> Kal El, 17 June 2014 11:09am

    The few left, would be calling it Littland with German accents.

    Robert Sandlin -> Hellarious, 17 June 2014 11:11am

    Except for one difference. The Soviets wanted their loyalty. While the Nazis wanted their lives.

    Hanwell123 17 June 2014 9:50am

    The hypocrisy in turning a daily blind eye to the government approved Terror in East Ukraine makes anything said about Israel, the Jihadists or any other area of contention worthless. Innocents in Europe are being targeted by an army and there isn't a peep of protest from even the so called progressive media.

    jamesoverseas , 17 June 2014 10:41am

    Lithuania's UN ambassador Raimonda Murmokaite told the Associated Press that all countries supported a condemnation of the embassy attack, but some wanted a parallel or separate condemnation of the downing of a Ukrainian military transport plane by pro-Russia separatists early Saturday which killed all 49 crew and troops aboard.

    Why? The downed plane was bringing in fighters into an airport that had already been under siege for 3 days in the middle of a conflict zone. They weren't on their way to scatter rose petals. No civilians involved, all victims military personnel on duty in a conflict zone - legitimate military target, just as the checkpoints manned by rebels are.

    On the other hand the first and iron rule of international relations is that the host country has an absolute responsibility to protect diplomatic missions from all threats, especially those coming from its own citizens.

    PeterSchmidt , 17 June 2014 11:01am

    Unfortunately you cannot reason with the US and its puppet the UN. The only thing matters is money and control. Yats don't care one iota about ordinary Ukrainians, be they Svoboda members, western Ukrainians or Russia speaking Ukrainians.
    If he did, he wouldn't be the man the US wants there.

    Just like with the EU expansions. The EU only started expanding when it ran out of markets to sell its stuff. People are renewable stuff for these people.
    Kerry, McCain, Psaki and all the other sidekicks, like Yats and that Lithuanian PM have only one mission, that is to sell you to the big bankers. No love lost.

    siesta , 17 June 2014 11:21am

    I've have read a lot of blogs from Ukraine. I am chocked by the attitude against the Russian part of the population. They are either ignorant village idiots, that do not understand anything than the Putin propaganda they are fed, or they are simply evil.
    Reading those blogs, I understand Yatsenuyk's "subhumans". It's not a "slip of the pen", it is really what those nationalists believe and feel.

    To assert that the Russian part of the population has nothing to fear from nationalistic Ukrainians who yearn to rid the country of all of them, is the understatement of the century.

    Divide the country, it's the only answer

    SamDecker -> siesta, 17 June 2014 11:43am

    I don't understand. Are you saying that the pro-russian bloggers are evil or ignorant village idiots because they don't understand anything other than the Putin propaganda they are fed?

    Or that the nationalist Ukrainians are 'subhumans'?

    Either way, why is dividing the country and giving part of it to Russia - which is what the pro-Russian separatists want - the only answer?

    Oscar_Lynch -> SamDecker , 17 June 2014 11:45am

    Because, as it appears now, the alternative is full blown civil war with hundreds of thousands of dead.

    [Jun 18, 2014] Ukraine, Russia and the EU Gas Drama A Three-Way Game of Chicken

    The National Interest

    The first question is whether or not Ukraine will begin to siphon off gas currently transiting its territory for delivery to European customers of Gazprom. With the fate of the South Stream pipeline-a second transit network designed to directly connect Russian suppliers with European customers and bypassing Ukraine altogether-currently in limbo as the European Commission examines whether its construction violates EU regulations, Russia would be anxious to trumpet any Ukrainian "theft" of EU-bound gas to drive home the argument that Europe's energy security depends on eliminating untrustworthy middlemen. In turn, aware that European popular support for Ukraine may begin to diminish if European populations begin to suffer energy shortages or higher prices as a result of the disruption, the Ukrainian side may decide not to interfere with gas transit and rely on the country's own stockpiles of gas in order not to play into that Russian narrative.

    The second question is whether the EU (or the United States) is prepared to offer additional financial support for Ukraine. If Ukraine is unable to prepay for gas deliveries-the condition Gazprom now insists upon for resuming gas supplies-would EU countries be prepared to purchase additional supplies of gas from Russia and then resell that gas on credit to Ukraine to tide Kiev over (and perhaps use that as additional leverage to force painful reforms in the domestic Ukrainian energy markets)? Some additional purchases of gas seem likely in any event, because if the plans to reverse-supply Ukraine from Slovakia and Poland are fully implemented, the ultimate source of the gas remains Russia-unless EU countries are prepared to give up some of their existing supplies to ration them for Ukrainian use. If Western support for Ukraine in the next few days does not move beyond words, then newly elected President Petro Poroshenko will be able to accurately assess what cards he has to play against the Kremlin

    [Jun 17, 2014] Ukraine Three Card Monte with Russia and EU

    Ukrainian satire on "junta in chocolate" behavior in gas negotiations with Russia and EU... Sorry I lost the URL

    It turned out very well for new, post Maidan Ukraine: just a couple days after the pogrom of the Russian Embassy Ukraine was switched to a new form of paying for gas. Using term introduced into modern diplomacy by Foreign Minister Mr.Dreshchitsa if can be defined as: "either pay beforehand or go f*ck yourself".

    The Stockholm arbitration court, of course, will be a crowded place now. It got a unique case: "who really is a complete boneheaded loser". Gazprom tactfully hint that this role from now on belongs to the current regime in Ukraine and, especially, Arseniy Yatsenyuk. Kiev was instantly invoiced for four and a half billions, which, of course neither the American nor European sponsors of the regime are willing to part with.

    The head of "Naftogaz of Ukraine" with the characteristic last name Prodan which can be translated into English as "Sellout" believes that the other side is a complete loser despite a number of incriminating facts, including the fact the it was he, who signed the current contract with Russia. And, as we noticed his manner bargaining can lead to stroke even Arab merchants and probably arise strong desire from Russian partners to avoid dealing with such a wonderful Bazaar partner for as long as possible. But in now way Prodan is discouraged. He is more optimistic the most Ukrainians because he know exactly that to do next: expropriate Russian gas which is intended to European customers and rely on Washington for protection from beating with baseball bat for this accomplishment.

    We now turn to the analysis of the consequences of this decision. Officially announced that the Ukrainian pipe from 16 June will carry only a transit gas destined for Europeans. Yes those proud European sponsors of EuroMaidan, who now started to see the light in the tunnel in a form of consequences of EuroMaidan for Europe. And like Russians, they understand perfectly well that Kiev now will implement a new formula -- I will steal the gas from our European benefactors and claim it on Russia "undersupplies". This famous well-tested Ukraine formula "expropriated gas from the tube and keep quite about it". You do need any fortune teller to understand that this is what will happen next.

    As we all know during the Premiership of Yulia Tymoshenko, who with the help of the dress with a luxury zipper across the back literally snatched from starved for sex Putin's fair price for gas. Almost five hundred dollars per thousand cubic metres. And for this and some other achievements she was put into jail by corrupt and criminal regime of Yanukovich. And now the task of deciding what to do with this wonderful contract falls on Provisional Government who released her during the celebration of democracy by stoning of police (aka EuroMaidan) and now began to regret this taken in heat of the moment decision.

    The game of Three card Monte that Ukraine from now intends to play with Europe and Russian as marks will be performed in a typical for Ukraine economic policy polished and dignified manner. The guy with the name translated as "Sellout" will start to cry about evil Russians who does not deliver enough gas to Europe, and forces poor Ukraine to compensate European customers from this own gas storage in which unpaid to Russia gas landed. The unprecedented in generosity feat of Ukraine, which pumps gas from its underground storage facilities to ensure uninterrupted supply of fuel to European consumers. Then they will claim that they added into tube some gas produced by their own wells. And then like in three card Monte some gas disappeared without trace. Leaving Gasprom and European customers to wonder where is the gas that they supplied to their European customers.

    Apparently, Europeans, which were bent into this position but good uncle from Washington would suspect something feeling the shortages of fuel. The only thing that they can hope is that Ukraine regulate its relation with a Northern fur bearing animal before autumn. Until the autumn of Ukraine can survive on stored gas and transit gas stealing. But with the beginning of the heating season, this scheme will no longer work. So this line of thinking gives us pretty precise calculation of the time of the coming Gas Armageddon, when Moscow will cut gas completely. Patriots, of course, will be extremely happy, since this is a real fulfillment of their age-old dream: to spit the Muscovites and proudly say to them " You can now choke on you gas".

    With the aim of raising fighting spirit Ukrainians, the Ukrainian MSM now need to publish numerous stories about alternative fuels. And they should daily remind to everybody that Russians picked the Crimea, and, secondly, the Russians are fighting in Lugansk and Donetsk. No logic there, so all will believe that Russians are so evil and just don't want to give gas to Ukrainian patriots for free. Of course, rejection of the Russian gas supplies will strengthen the wave of patriotism in one Western politically correct area of the country. However, some vague suspicions concerning how bright is the nearest future for Ukraine will probably linger in heads of even the most devoted Maidan activists.

    [Jun 16, 2014] Gazprom Stops Supplying Natural Gas to Ukraine By NEIL MacFARQUHAR

    Jun 16, 2014 |

    "The European Commission has received timely notification of possible interruptions in gas transit, in the event that Naftogaz Ukrainy siphons off gas from transit flows," said a statement from Gazprom.

    The company, which is 50.01 percent owned by the Russian government, also said that it was filing a lawsuit in an arbitration court in Stockholm to force Ukraine to pay $4.5 billion for gas that had already been delivered.

    ... ... ...

    Gazprom had most recently ratcheted up the pressure on Ukraine by reducing gas supplies by about 50 percent in early March. The Russian tactics alarmed European officials because about a fifth of the European Union's supply of natural gas flows through Ukraine.

    According to the United States Energy Information Agency, Ukraine imported from Russia 63 percent of the natural gas it consumed in 2012, producing the remaining 37 percent domestically. Earlier this year, Ukrainian officials said they had stockpiles to substitute for Russian imports for at least a month.

    [Jun 14, 2014] Gas talks stall because Kiev has little 'grasp of reality'

    Ukraine is smaller then Russia and has rights to defend its interests... Although junta's Yatsenyuk proved to amazingly incompetent.
    RT News

    The Russian gas supply to Ukraine may be cut off on Monday after Kiev rejected all concessions offered by Moscow to settle Kiev's gas debt. Chances are that the Ukrainian government is simply acting irrationally, some analysts say.

    Kiev has not been paying for gas it imports from Russia for months, resulting in a multibillion dollar debt mounting. Russia says that it would invoke the prepay option of the standing contract and would only deliver as much gas as Kiev pays for in advance starting Monday. With Ukraine not willing to pay, this would mean an effective cut-off.

    Russia offered a $100 discount to gas price roughly to the level that the Europeans pay. The offer includes recalculation of the current debt, which would revalue gas supplied since April with the discount applied, but Kiev rejected this plan, saying it's not good enough.

    "Ukraine has been offered a very generous discount and yet they still want more. It really is quite incredible – the nerve and the chutzpah of the Ukrainian government in all this. I don't think any amount of discount would really satisfy Ukraine. They are spoiling for a fight here," believes journalist Neil Clark.

    Instead of compromising and settling the debt, Kiev seems to be preparing to raise the stakes. Over the past few months it has been pumping as much unpaid Russian gas into its underground gas storages as it could and now says it has enough to last till autumn.

    Kiev's desire to dictate the terms to Russia may have an irrational basis underneath, international law expert Alexander Mercouris told RT.

    "It is difficult for the Ukrainians at this time to negotiate with Russians about anything. There are many people in Kiev who don't like that," he said.

    "One of the fundamental problems with the way in which the Ukrainian authorities have been dealing with their multiple crises since they took power in February is that they don't seem to show very much grasp of reality," he added.

    There are also concerns that Kiev would eventually simply siphon off gas it transits from Russia to European consumers, as was the case during previous rounds of gas stand-offs.

    A more distant problem will arise in winter. Normally Ukraine would accumulate gas intended for Europe in summertime and deliver it in winter, because that's how the Ukrainian gas pipeline system is designed. With gas from the storages use for Ukraine's own consumption, there would simply not be enough for Europe next winter.

    "The Ukrainian government has been intransigent and putting the people of Europe at risk. That's why the EU is actually cautiously supporting Russia's position at this time," political analyst Bill Dores told RT.

    Ukraine has for years enjoyed a politically motivated preferred treatment by Russia in terms of gas price discounts, he added. Now there is a government in Kiev hostile towards Russia, and Moscow has no reason to support it.

    An escalating conflict would hurt all the three parties involved. But the Ukrainian government may be tempted to raise the stakes now, said Mercouris.

    "There is an expectation that once things are deteriorating in Ukraine, it could be blamed on the Russians," he explained.

    With Ukrainian economy already in peril, painful austerity measures demanded by international creditors in exchange for loans and a political turmoil in the eastern provinces, Kiev has loads of blame to apportion in the future.

    [Jun 15, 2014] Ukraine minister's abusive remarks about Putin spark diplomatic row

    The Guardian

    As well as the ongoing unrest in east Ukraine, which Kiev says is indirectly supported by Moscow, the two countries are also attempting to negotiate a price for gas deliveries.

    Pushkov claimed that both Moscow and the EU are looking to solve the gas dispute between Russia and Ukraine, but are being stymied by Washington's nefarious plans. "Kiev is blocking any solution, so that the US has a reason for a cold war," he wrote.

    [Jun 15, 2014] Liar, Liar

    A good description of Russian position

    The leadership of Ukraine tries to bluff and call back -- white were it what can and where it cannot, just to delaying the moment of paying Russia gas debts...

    Remember this movie, the name of which is put into the title? The main hero is a lawyer. Played by comedian Jim Carrey at the end of the film he finally understands that lying is not good. What it might be punishable, sometimes. Probably, this film must be a daily training aid for present Kiev authorities. So that they, in particular, the acting Prime Minister Arseniy Yatsenyuk stop to lie. Heck, simply put, to lie shamelessly and without stopping.

    These days, the West is trying hard to turn internal civil conflict of different regions of our neighbor into the confrontation between Russia and Ukraine. Meanwhile, Russia does not want to be a party in this clueless and outbreak of civil war unleashed by Kiev junta. And if she tries to take part in the conflict, to play exclusively humanitarian role in the same status as the European Union.

    However, it would be foolish to deny the existence of actual conflict between our countries. But that conflict lies exclusively in the economics. And concerns purely inability of Ukraine to pay for n gas supplies and growing debt to Gazprom. Ukraine now owes billions and does not want to pay. And in this situation the current Ukrainian leadership had chosen to behave very arrogantly, pushing the ultimatums and refusing to stick to already signed agreements.

    As a result in the negotiations on the settlement about settlement of Ukraine gas debts and the price on new supplies, each party behaves differently.

    Russia, despite the fact that the debate is still ongoing, while never ceased to ship gas, and Kiev received from Moscow over 10 billion cubic meters, not paying him a penny. In addition to gas, Kiev received the advance payment for transit of Russian gas in full.

    Russia took the initiative to extend negotiation including into them the EU to find a fair solution. Russia (Putin) not once, not twice sent letters to the heads of European countries, warning of approaching the problem and the fact that Kiev does not want to negotiate. Let's remind, that Russia has offered Ukraine a discount of $100, as if forgetting that she has a right to exist only if timely payment with no delays. In the end, it is Russia endured growing gas debt and intend to switch Ukraine to prepayment mode for gas deliveries, at the same time responding to all proposals of pointless meetings. And all this in order to try to negotiate an exit from the stalemate.

    What is really surprising, but the Ukrainian side demonstrated more and more chutzpah as negotiations continued. And eventually it came to the point that Kiev being openly spits not only on the Russian proposal, but also on the recommendation of the emissaries of the European Union. Its peak this policy "F*ck you" reached when Arseniy Yatsenyuk at the talks in Brussels admitted that that he understood that the price 268,5 dollars per thousand cubic meters that Russia offered to Yanukovich was not market price, that it was a "bribe" the former authorities for their loyalty. But Kiev now decided to declare it a fair market price and pay for delivery at this price in case Ukraine will permit re-export, that is, to sell Russian gas on to Europe at higher prices.

    Europe understands that the policy of blackmail by Yatsenyuk will backfire. But can do nothing, because at present Kiev has very high patrons. And Washington is very interested in mutual weakening of Russia and the EU so that they would be more amendable to American diktat.

    In this situation, pathological lying Yatsenyuk and his government and especially their theft of Russian gas in transit still plays into the hands of Washington. Recently, MSM has got some of the hacked correspondence by Prime Minister of the Ukrainian government Arseniy Yatsenyuk and the first Vice-Premier of Kiev Vitaly Yarema. Some points of this correspondence is very interesting.

    So, Yarema, in particular, assures "consultant on economic issues," US Embassy in Kiev David Mila that "all the rumors about the misuse of funds supplied by the USA, have no grounds" and promises urgently "contact Yatsenyuk". And what does this means? Yes those allocated by Washington on military assistance to Ukraine. Mila has previously expressed concern that: "State Department received information that our previous allocation of funds was not used for the purposes it was designed. The House of Representatives Appropriations Committee requires that you provide accurate financial statements in the first part of the assistance and detailed plan for the second part. In addition, the US Congress is going to send a special Supervisory Commission to Ukraine with a special task - to watch how you use the money that we send you".

    "Achtung! Achtung! - probably cried Yarema and ran for help to "the prominent economist" Arseniy. After all, he must find a way! And Mila meanwhile wrote. "I hope we will solve this annoying misunderstanding."

    And prominent economist Yatsenyuk recommendations?

    It is necessary to replenish the misused funds. Transfer money from another account. Use money for out debt for gas. Miller can suffer I assume, ' recommended Arseniy.

    "I understand, but a balance on those accounts s close to zero. They are practically empty, " panicky responded Yarema.

    Sorry, but the rest of the correspondence I will omit because of the density of censored words in it.. But the meaning is simple: money are already gone to some friends. Now the question is how to cover my butt?

    " ... You can invent whatever you wish, but to the end of the week all the documents should be ready to send to the Committee of the US Congress, - sums up Yatsenyuk and ends the conversation. "I personally told you, that you should order Koval (Minister of defense of Ukraine - ed.), what before Yankee arrive he need to fake all the contracts that can be attached to the report about procurement of arms in the framework of the military reform.

    " We did not think that it will require detailed expense reports" started to cry Yarema, trying to prove to the "I am not guilty, this is all bad circumstances", thus inflicting on himself the explosion obscenities from the head of the Ukrainian Cabinet.

    Actually, who and how much steals the current Ukrainian government in Kiev, in not very interesting for Russia. But two things interesting. The first is "Miller can suffer". Miller is the head of "Gazprom". Which means that money for the settlement of the conflict that would guarantee continuation of gas supplies to Europe, the money that the international financial institutions, including the IMF allocated to Kiev to settle debts with Russia for gas, those thieves reallocated to other more urgent needs. Spitting on old lady Europe. Of course, a naive person might think that Americans do not like this kind of behaviour. But, I can assure you that this behaviour corresponds to the USA interests.

    Several billions Ukrainian rulers plundered is a very reasonable price to keep Yatsenyuk and those with him on the hook and dictate what and how they should behave. And promise to support as long as they "sing" according to the score provided. The letter Mila send to Yarema in this situation means: "We know all and you will go to jail, unless you behave. This latter is just a gentle reminder".

    And it is this support that allow this "rabbit" Yatsenyuk to play lion and demonstrate incredible arrogance, even attempting to twist arms of Russia. And while this looks ridiculous exactly up to the moment when we see that the Russian side does not resist, and under pressure of mounting unpaid debt move to more convenient to Ukraine position. It is clear that Yatsenyuk simply can't pay, and in this context our willingness endlessly try to find compromises with Kiev, when at the end Kiev has no money to pay the debt, looks humiliating.

    Moreover, the European Commission is also tired of endless shizpath form Ukraine. And the only thing they're interested in, by and large, it's timely delivery of gas to Europe.

    It not this a high time, dear Gazprom negotiators, stop this endless chutzpah? All the proposals were already made, and there is just idle chatter, sorry, negotiations.

    Russia, in this case, Gazprom effectively subsidizes the war Kiev wages with Donetsk and Lugansk, wittingly or unwittingly helping to kill civilians.

    Ukraine PM Warns "Prepare For Russian Gas Cutoff On Monday"

    Submitted by Tyler Durden on 06/13/2014 10:49 -0400

    Having set a deadline of June 16 (next Monday) for pre-payment of gas supplies from Russia to Ukraine, it appears Ukraine officials are willing to take the pain of no energy instead of paying what Gazprom is asking:

    The last negotiation had Ukraine willing to pay $326 and Russia asking $385, which Ukraine said "was not a market price." There are more problems for Europe though as Ukraine's PM has ordered the national regulator to revise 'transportation tariffs' for Russian gas via Ukraine (i.e. to Europe).

    No deal...


    And so...

    As Novinite reports, negotiations are not going well,

    Ukraine announced it would agree to pay USD 326 per 1000 cubic meters of gas following a three-way Brussels meeting over the dispute with Russia.

    State-owned energy utility Naftogaz's CEO Andrey Kobolev said the price, which was offered by the EU, a mediator in talks between Kiev and Moscow, was acceptable, according to RIA Novosti.

    This would however be a provisional step, with Kobolev describing it as a measure for "an interim 18-month period" during an arbitration procedure in Stockholm.

    A potential breakthrough is now in sight after Ukraine turned down a fresh Russian proposal earlier this week which included a USD 100 worth reduction of the price Kiev is to pay for 1000 cubic meters.

    This would have set the price at USD 385, which is still USD 100 up from what former Ukrainian President Viktor Yanukovych had managed to agree with Moscow. But a month after he left the country amid episodes of violence in the streets of Kiev, Gazprom introduced a 80% hike for Naftogaz and warned it would introduce prepayment for supplies (and thus virtually disrupt them) if the utility does not deliver on its debts to the Russian counterpart.

    The current price is set at USD 485, an amount that Ukraine categorically refuses to pay. Russia, on the other hand, has claimed the total debt accumulated (partially as a result of Kiev's rebuff) is over USD 4 B.

    Kiev's previous offer (rejected by Gazprom), on the other hand, was USD 268.5. In Kobolev's words, the price of USD 326 per 1000 cubic meters was just "the average" between Ukrainian demands and the status quo.

    Gazprom is yet to comment on whether it would also agree to slash its latest proposal.

    The Russian energy giant meanwhile announced it was still waiting for the transfer of a USD 1.9 B worth chunk of Ukraine's gas debt by June 16.

    And so Ukraine is preparing for the worst case...

    Ukrainian Prime Minister Arseniy Yatsenyuk instructs Naftogaz to file for international arbitration in Stockholm against Gazprom, according to statement on govt website.

    Ukraine needs economically justified rate for gas transit

    Yatsenyuk: "As the Russian Federation purposefully and unilaterally refuses to settle the conflict, energy security of Ukraine and the EU is undermined"

    06/13/2014 - 10:55 | 4852831 eaglerock

    Market price? If you were in a desert dying of thirst, what would the market price of a bottle of water be? Exactly what bargaining power does Ukraine have?

    06/13/2014 - 10:58 | 4852847 Time for Titus

    They can threaten to stand down their FSA.

    06/13/2014 - 11:11 | 4852919 knukles

    Man o Chevas, this is turning into one massive global clusterfuck thanks muchly Fearless Messiah
    Keep on Kumbayan'

    Fri, 06/13/2014 - 11:20 | 4852985 Impoverished Ps...

    Dig in Knucks... winter is coming.

    Fri, 06/13/2014 - 11:32 | 4853039 DaddyO

    The winter of discontent swiftly followed by the American spring...

    So what happens when the eyes of the world are diverted to the growing humanitarian crisis along the US border.

    What happens when these new Americans decide they want to ally with Mexico and decide to vote to that end.

    Is Nuland going to say F'em and spill 5 billion in CIA funds to quell the unrest?

    Methinks not...

    This Ukrainian outcome is her shining monument to the growing pile of evidence to US complicity in this debacle.


    06/13/2014 - 11:42 | 4853104 -> Latina Lover

    I guess this is what you call an Ukrainian threesome:

    Sucking USA dick real hard, as you get it up the rear, Russian Style.

    06/13/2014 - 11:46 | 4853139 Latina Lover

    The Nuland/Nudelmaners are pushing Ukraine to commit economic suicide to fuck with Russia. From the USSA perspective, this is a no lose proposition since either way they get to screw the Slavic sub human.

    06/13/2014 - 12:01 | 4853262 Impoverished Ps...

    We need some T-shirts printed up... "I was sacrificed in a US proxy war"


    06/13/2014 - 12:29 | 4853475 ilion

    I don't understand the childish whining of Ukrainians. Just pay the gas bill and let everyone go on with their lives.

    06/13/2014 - 13:12 | 4853837 Latina Lover

    It is easy to understand their mentality, the ukie leadership are like USSA ziocons, entitled, self centered, spoiled, criminal bitchez.

    06/13/2014 - 12:39 | 4853550 Pure Evil

    Did anyone notice that Nafto-gas is just one letter away from Nato-gas?

    На "газовом фронте" затишье Украина пытается выиграть время Новости Украины

    Брюссель, 11 июня.

    Газпром подтвердил информацию, что Украине дана еще одна отсрочка для погашения газовых задолженностей, и перевод Киева на предоплату за поставляемое голубое топливо откладывается до 16 июня. Очередной раунд переговоров в Брюсселе по газовым вопросам в формате Россия-Украина-ЕС продлился более двух часов. Переговоры будут продолжены в среду, 11 июня.

    Новою "диспозицию" на российско-украинском "газовом фронте" Федеральному агентству новостей (ФАН) прокомментировали профессор Высшей школы экономики Александр Семенов и писатель, общественный деятель Николай Стариков.

    "Будет довольно сложный процесс переговоров, поскольку мы видим наметившуюся тенденцию признания правительства Украины и в то же время попытки не признавать самостоятельность нового выбранного президента, – отметил профессор ВШЭ Александр Семенов. – Мне кажется, сейчас мы наблюдаем попытку российского руководства вернуть ситуацию к той точке до крымского фактора, когда Украина была в нашей сфере влияния".

    - Как вы оцениваете нынешнюю ситуацию, как положительную или отрицательную? – уточнил корреспондент.

    "Ээкономический фактор оказался настолько тесно связан с политическим, что их невозможно разделить. Политически мы находимся в плохой ситуации, поскольку Украина имеет политическую поддержку Европы и Америки, и в этой ситуации может не платить за газ. Экономически мы вынуждены каким-то образом урегулировать этот вопрос" – считает ученый.

    С профессором Семеновым согласен писатель и общественный деятель Николай Стариков.

    "Отдельно рассматривать газовые вопросы от общей ситуации на Украине – это ошибка, – уверен Стариков. – Ситуация с оплатой долга является прямым следствием общей ситуации, которая развивается с момента государственного переворота в Киеве. Запад сегодня оказывает колоссальное давление на Россию с целью заставить нас оплатить издержки переворота. Тут идет всё что угодно, вплоть до прямого шантажа и блокирования строительства газопровода "Южный поток". Конечной целью Соединенных Штатов Америки является провоцирование ссоры между Западной Европой и Россией (…): поскольку газ на Украину идет вместе с газом на Западную Европу, прекращение поставок на Украину, фактически, означает прекращение поставок в Западную Европу. Вот эту ситуацию американцы всячески провоцируют: либо продолжайте дешево и с перерывами в оплате снабжать газом антироссийскую Украину, либо России придется вступить в конфликт из-за этой ситуации с Европой (…). Потому что для Запада совершенно очевидно, что прекращение поставок газа на Украину в ее экономической ситуации может привести к смещению марионеточного режима, который сегодня установился в Киеве".

    Ранее сообщалось, что президент России Владимир Путин после телефонного разговора с канцлером ФРГ Ангелой Меркель уполномочил делегацию РФ продолжить переговоры с Украиной по газу "с прицелом на достижение взаимоприемлемой договоренности".

    Позже российская сторона подтвердила перенос введения системы предоплаты за газ для Украины до 10:00 мск 16 июня.

    Россия настаивает на экстренном погашением Украиной задолженность за газ за ноябрь-декабрь 2013 года в размере 1,451 млрд долларов и 500 млн долларов за апрель-май 2014 года.

    После вхождения Крыма в состав России цена 1 тыс. кубометров газа для Украины составила 485 долларов. Киев настаивает на возвращении старой цены за газ – 268,5 доллара за 1 тыс. кубометров.

    Еврокомиссия предлагает цену, которую считает более реальной, – 350-390 долларов за 1 тыс. кубометров и настаивает на четком графике погашения оставшейся задолженности.

    Good Judgment Comes From Experience. Experience Comes From Bad Judgment

    The Kremlin Stooge
    karl1haushofer, June 12, 2014 at 5:40 am
    Russia capitulated again.

    1. No pre-payment system for Ukraine for gas.
    2. Existing gas debts will be reviewed downwards.
    3. Not even a suggestion of payments being made in Russian-Ukrainian border.

    Russia really knows how to play hardball…And all this while the junta is killing Russian people just across Russian border.

    Al , June 12, 2014 at 5:53 am
    It's a poker game. You don't have to go all in if you are in a position of strength, but use your leverage to solve other outstanding issues.

    It depends if the EU and US gave Russia a cast iron guarantee that they won't block South Stream in future. I think of the Cuban Missile Crisis which was sold as a total Western success, but Kruschev deliverately placed those missiles in Cuba to use them as bargaining chips to get US Jupiter IRBMs out of Turkey, which the US promptly did after the crisis was over. For sure we don't have the full story and I would expect that Western guarantees are written and signed on paper.

    Either way, NATO and the EU's credibility is no way enhanced in the public eye. Both have used mafia like threats publicly that contradict what their PR has been telling the great unwashed for decades. It's all there in black, white and digital.

    moscowexile, June 12, 2014 at 5:55 am

    My, you must have been pleased to write that word.

    It's the kind of word that a Langley propagandist would use in order to sow seeds of dismay.

    Here are the conditions offered by Russia as per the RIA article:

    Russia will not introduce advance gas payments for Ukraine and review its gas debt downwards if Kiev pays off $2 billion of its gas debt by June 16 and clears arrears in full by June 26, Energy Minister Alexander Novak said Wednesday.

    Do you really think Kiev (read USA/EU) will cough up $2 billion in 4 day's time?

    The offer will be turned down again, as will the next … and the next…

    That's the whole idea.

    And then the gas will be turned off and nobody will be able to say that Russia had not bent over backwards in order to agree to amicable terms with the Banderites.

    And no one will be able to sell the line that Russia is blackmailing Kiev or using an energy supply as a weapon against the Ukraine – such as it is.

    By the way, that heap of shite Kerry not long ago said that the denial of an energy supply was an infringement of human rights.

    He said sweet fuck all about cutting off water supplies to civilian populations, which most definitely is a war crime.

    marknesop, June 12, 2014 at 2:38 pm
    That has actually always been Russia's position – that payment in advance was necessary because Ukraine could not be trusted to pay what it owes.

    Pay your back owesies in full, and no advance payments – see how it works?

    So nothing has really changed except that they have been given yet another extension to pay up. Since each of these extensions is only in days, it makes Ukraine look far worse for cheaping out over and over than it does Russia for giving them extensions.

    [Jun 12, 2014] Gasprom CEO Miller said that Monday, June 16 is the last date of switching Ukraine to pere-payment mode
    Switching Kiev to prepayment was again postponed at the request of the European Commission till 10.00 Monday, June 16. This is the last postponenet and we will not postpone it again", - said Miller, RIA "Novosti".
    "The position of the Ukrainian side is absurd, when the Ukrainian side goes against the sovereign rights of the Russian Federation to regulate the price of gas supplies through the mechanism of export customs duties. It is the sovereign right. The Law Of The Russian Federation. This position of the Ukrainian party otherwise than absurd, it's impossible to say. The Ukrainian side put an ultimatum to us," said Miller.

    "The statement of the Prime Minister of Ukraine Mr. Yatsenyuk was made during the tripartite consultations, the European Union, Russia and Ukraine. And actually this public statement of the Prime Minister of Ukraine tore tripartite consultations," said Miller.

    "When on Wednesday, October 11, Prime Minister of Ukraine Mr. Yatsenyuk says that there is no basis for reaching agreement, this reflects strange and absurd position of the Ukrainian side. There can be no agreement unless it reached only on Ukrainian conditions. While such statements, according to the European Commission, are absolutely inappropriate. We agree with that," said Miller.

    Miller believes that Ukraine's position a "blatant blackmail". Miller noted that the current situation in Ukraine is different from the position of 2009. In 2009 "Ukraine paid for gas, and now she does not pay, and is not going to do that", reports ITAR-TASS.

    "The Ukrainian side must fully pay the debts for November and December 2013 is 1,451 billion dollars, and show progress on payment of debt in April and May which are $ 500 million. Thus, Gazprom should see the money on Gasprom account until the morning of Monday, 16 June, in the amount of 1,951 billion. Otherwise, we enter the mode of advance payment", - said the head of Gazprom.

    He stressed that the mode of payment is not disabling of Ukraine on Russian gas supplies or any restrictions. "It's the supply of gas to Ukraine in volumes of gas that Ukraine paid. If no amounts of Ukraine will not be paid, then, respectively, the supply of gas to Ukraine will be zero," said Miller.

    Let's remind, Russia has proposed to set the final price for gas at $385 per thousand cubic meters, including the the debt for April-May, taking into account discounts and will not intorduce prepayment if Ukraine up to June 16 will repay $ 2 billion and then, up to 26 June, the remaining part of the debt.

    But Kiev did not agree and said he intends to appeal to the Stockholm court, although the parties have agreed not to do it. Until the court Kiev offers to set price within 268,5 dollars per thousand cubic meters.

    [Jun 12, 2014] Ukraine and Russia Still Far Apart on Gas Deal

    After a second day of talks brokered by the European Commission in Brussels, the two sides remained far apart on the issue of how much Ukraine should pay Gazprom for the gas imports it needs to keep its economy running and how much it owes Russia for past deliveries that went unpaid because of arguments over price.

    "Such negotiations are difficult enough, and there is a political situation that makes them even harder," Günther Oettinger, the European Union's energy commissioner, told a news conference after the negotiations broke down. "We are talking about billions of dollars, major economic interests and major business interests that are at odds with each other."

    Russia and Ukraine have been squabbling almost nonstop since the 1991 collapse of the Soviet Union over the price Kiev pays for Russian natural gas, but the dispute reached a new pitch following the ouster in February of Ukraine's pro-Russian president, Viktor F. Yanukovych. Russia responded to Mr. Yanukovych's fall at the hands of protesters it denounced as Western-backed fascists by raising its gas price by more than 80 percent.

    Russia's energy minister, Alexander Novak, said Wednesday that Moscow had offered a reduced price of $385 per 1,000 cubic meters, describing it as "very much a market price," and warned that Ukraine had until Monday to reach an agreement before it faced demands that it pay in advance or risk being cut off.

    President Vladimir V. Putin, at a meeting with senior members of the Russian government, described Russia's offer as fair and said it was below what Poland and some other neighboring countries paid for the gas. He urged Ukrainian authorities to take the deal while it remained on the table.

    "We believe that our proposal, even more than a partnership, is aimed at supporting the Ukrainian economy, at a complex enough time, to help," Mr. Putin said.

    "But if our proposals are rejected, then we move into a completely different stage. This is not our choice, we do not want it. But if so, we will live in another dimension," he added.

    Путин: При Януковиче Украине предлагались те же условия по газу


    Украину не устроила даже та цена, по которой покупал газ Янукович

    11 июня 2014, 16:06

    Россия предлагает Украине условия по газу такие же, как при президентстве Виктора Януковича, заявил президент России Владимир Путин на совещании с членами правительства.

    "Газпром предложил украинским партнерам точно такие же условия, которые имело правительство Виктора Федоровича Януковича: скидка с контрактной цены в 100 долларов, конечная цена 385 долларов на тысячу кубов", - заявил Путин.

    "Украинским партнерам вроде как мало этих скидок, они претендуют на большее, правда не очень понятно на каком основании"

    Путин отметил, что соседние с Украиной страны, в том числе Польша, получают газ по более высокой цене, "при таком же обеспечении этого ценового показателя, а именно - сокращения вывозной таможенной пошлины на газ", передает ИТАР-ТАСС.

    "Судя по всему, дело сознательно заводится в тупик", - заявил Путин.

    Путин отметил, что "украинским партнерам вроде как мало этих скидок, они претендуют на большее, правда не очень понятно на каком основании".

    Путин отметил, что "Россия ведет переговоры по газу абсолютно открыто, прозрачно. Считаем, что наши предложения более чем партнерские, направленные на то, чтобы поддержать украинскую экономику в достаточно сложное для нее время".

    "Но если наши предложения будут отвергнуты, значит мы перейдем в совершенно другую стадию", - предупредил Путин. - Это не наш выбор, мы этого не хотим".

    "Я просил бы правительство, председателя правительства подумать над вопросом о том, как можно было бы на уровне правительства Российской Федерации либо по договоренности с правительством Украины зафиксировать эти условия и сделать их абсолютно надежными и не меняющимися на протяжении определенного времени", - заявил Путин.

    Президент отметил, украинские партнеры озабочены тем, что предлагаемая им льгота в одностороннем порядке может быть легко отменена."Мы так никогда не делали. Мы всегда демонстрировали предельную надежность наших договоренностей", - подчеркнул глава государства.

    Премьер России Дмитрий Медведев заявил: "Мы подготовим для наших украинских партнеров предложения по линии правительства, которые будут означать долгосрочный характер предоставляемых скидок".

    Глава кабинета добавил, что это будет сделано, несмотря на сложное положение в котором находится российская экономика и это "для нас имеет определенный счет и достаточно болезненно".

    "Но ради того, чтобы поддержать наших украинских партнеров, экономика которых находится в очень непростом положении, мы готовы пойти на это", - подчеркнул премьер-министр.

    При этом "нашим украинским партнерам в правительстве надо не о ловушках рассуждать, которые Россия расставляет, а помнить о том, что есть непогашенная задолженность за газ, которая в любой момент может превратиться в предварительную форму оплаты", подчеркнул глава кабинета.

    С этим президент России согласился: "Договорились, вообще ситуация, конечно, странновата, потому что есть контракт, который действует и подписан давно, в том числе и людьми, которые и сегодня работают в правительстве, но они на каком-то этапе почему-то решили от него отказаться - странно это, но факт".

    "Будем работать и с целью поддержки экономики Украины и, чтобы клиента не потерять, поэтому мы готовы действовать открыто, честно, предельно прозрачно и, судя по всему, есть понимание в справедливости нашей позиции и у ряда европейских партнеров", - добавил глава государства.

    Также президент напомнил, что Россия не будет вводить предоплату за газ для Украины до 16 июня.

    В среду назначенный Верховной радой премьер-министром Украины Арсений Яценюк похвастался знакомством с "российскими ловушками" в газовых контрактах и заявил, что Украину не устраивает предложение, сделанное российской стороной по снижению цены на газ за счет экспортной пошлины, и Киев по-прежнему настаивает на пересмотре газового контракта.

    В ночь на среду глава Газпрома Алексей Миллер сообщил, что срок введения режима предоплаты за газ, поставляемый Украине, перенесен на понедельник, 16 июня. При этом, по словам главы Минэнерго России Александра Новака, по состоянию на 10 июня Газпром не получил от Украины новых платежей за поставленный газ.

    По словам Новака, Россия предложила Украине пересчитать долг за апрель-май, с учетом скидки он составит 2,353 млрд долларов вместо 3 млрд. Россия откажется от предоплаты за газ, если Украина до 16 июня погасит 2 млрд долларов долга и до 26 июня оставшуюся задолженность.

    Киев заявил, что его не устраивает предлагаемая Россией скидка на газ.

    [Jun 11, 2014]Europe Halts Russia's South Stream Oil Pipeline

    Business Insider
    Russian Foreign Minister Sergei Lavrov lashed out at Brussels on Monday for pressuring Bulgaria on South Stream, claiming the pipeline was being used to seek revenge on Moscow for the Ukraine crisis.

    "Sometimes Brussels is guided by a desire to punish, a desire to take revenge," Lavrov said.

    The EU already urged in mid-April that South Stream be scrapped as a rebuke to Moscow for its actions in Ukraine.

    [Jun 09, 2014] Ukraine launches dual talks with Russia to end fighting in east and avert gas cut

    The Guardian
    MeldrewInTraining , 09 June 2014 1:22pm
    I fear that, sadly, a peaceful resolution will not be so easily forthcoming.
    Aleksandr Romanovich Podgaets -> MeldrewInTraining , 09 June 2014 2:24pm
    There is a problem in that nationality that was constructed in Galicina, Lviv, etc. some time ago. Basically, they build the notion "Ukrainian" on rejecting everything Russian. They don't talk to Russia. Just watch some tavern youtube movies from some years back - those patriotic songs "kill the Russians, crush Russia", etc. I don't recall even the most crazy of our nationalists saying that about a foreign country.

    That was fine while they were not in power. Somebody more moderate did the talking as a pres, and those folks from Lviv hopped on the train and happily came to Russia for work cause there they could earn money.

    Now they are afloat, and everybody can see what they say. No dialogue.

    They can't start a dialogue with their East because that would mean that their national idea is wrong. Who would say that about their own nation? Well, mature nations admit when they are wrong and have no trouble, they even find pride in a moral high ground, saying: I was wrong - but that's why they are called mature.

    If Western Ukraine starts talking to Eastern Ukraine - those they call "pro-Russian", that would mean for their citizens that they failed as a nation. And if they admit they failed as a nation, then everybody can declare a new national idea. And the country will break up into cities, not just two parts.

    So, I'm afraid, Western Ukraine is going to push it's war and hope for God's sake that they conquer the East. Otherwise - see above.

    The escape from this linear logic would be an appearance of a sane statesperson, somebody with brains and guts, who can look at the situation from above and talk to both gangs of extreme nationalists without submitting to either of them. That is the only possibility of this unholy war ending anytime soon.

    Some things Ukraine has to do itself. The world already tried to help - look at 16th of March for instance. Nobody can save Ukraine except Ukraine.

    cookiesforbreakfast -> Aleksandr Romanovich Podgaets , 09 June 2014 3:50pm
    "The escape from this linear logic would be an appearance of a sane statesperson, somebody with brains and guts, who can look at the situation from above and talk to both gangs of extreme nationalists without submitting to either of them. That is the only possibility of this unholy war ending anytime soon."

    Putin? :) Irony is as much as they hate him, somebody similar to him would be useful for them.

    RuStand , 09 June 2014 1:23pm

    >double its neighbour's rates
    Lie. Removing dual discount to the price agreed and signed and doubling the rate is not the same thing.

    Rinnero -> RuStand , 09 June 2014 1:48pm
    Germany pays 380, while Poland 480.

    Ukraine had two $100 discounts that reduced the price from 480 to 260.

    First discount was about Sevastopol lease since 2017 and Russia ALREADY PAYED FOR 4 YEARS FOR IT. It was an advance payment for 2017-2020 years of lease. So basically Russia started to pay its part of the deal 8 years before the Ukrainian part of the deal would have kicked in. Obviously now this discount is no longer due, and Russia may even ask for a reimbursement of this discount for these 4 years, amounting to $11bln dollars.

    The second discount could have still stayed working if Ukraine had payed in time. It was a very simple clause which stated that you get $100 discount if you pay in time. Again, its totally in the contract and totally according to contract. But what we see? Russia pays 8 years in advance meanwhile Ukraine does not pay a dollar even for 6 months ago gas priced with previous discounted price.

    Its ridiculous how especially Yatsenyuk can be so blatant. As if I come to shop and ask to buy on tick for discounted goods, then come again and after noticing that there is no more discount, I DEMAND it or else I wouldnt pay for my previous goods. Ridiculous.


    I can see it, Poroshenko wants to end the fighting by killing the rebels and not by engaging in negotiations with them. No matter what Poroshenko would like it to be, the rebels do not report to Putin and might not stop fighting even if Putin tells them to do so. All Putin can do is to unofficially supply (or not supply) the East with volunteers and guns. It is in the best Ukrainian tradition to solve the problem by creating a new one.

    As for the debt, Ukraine must pay for the gas at the market price unless the EU wants to subsidise them. This is what free market capitalism is all about.


    Ukraine had a huge discount on Russian gas. Did they expect to keep that discount with a nazi infested, US puppet, anti-Russian government?

    And our media insist on calling any human beings who are against the new government "pro-Russian" gunmen or militants. So the thugs and army killing civilians in the east should be referred to as pro-US militants.

    atavistic -> gbroment

    well said. let's not forget that the ones calling for a humanitarian corridor were the Russians! the Ukrainians and the EU refused!

    it was then the separatists that organised the mass evacuation of ALL women and children who wanted to go!


    This article is well-written and balanced. This is so unlike AFP, which usually serves NATO propaganda. The following statement in the article is incorrect:

    Ukraine has refused to pay the bills in protest against Russia's decision to almost double the amount it charges for its gas following the toppling of Kiev's Kremlin-backed president in February.

    In actuality, Russia lowered the price only after Yanukovych rejected the EU free trade pact at the end of 2013. This low price lasted for several months and went back up after the coup d'état.

    Obama's Climate Plan is Leaking Methane - 06/05/2014 - Yves Smith

    [Jun 08, 2014] The Russian Gas Carousel: Who Wants Off, and Who Wants On

    If this another financial speculative bubble ready to burst
    May 21, 2014 | The Kremlin Stooge
    Al, May 21, 2014 at 9:27 am
    Another fine post. I will quibble on your point that 'Europe' is trying to kill South Stream (if only they could steal Scarlett Johanssen from Sodastream to front it). Sure, the 'EU', namely bureaucrats in Brussels who want to be helpful to their masters have been making lurid threats, but that is all they are and they know it. These bureaucrats simply don't have the power to cancel South Stream.

    a) It is clear that it is an intra-european project, not simply and EU one which can be controlled from Brussels;

    b) Russia hasn't ratified the Energy Charter* with the EU but it has agreed a roadmap to 2050**;

    c) De-linking of oil-gas price unilaterally (which is the de facto standard of decades) by Brussels unilaterally is very dodgy – arguing that US gas is cheaper even though it is not even being exported;

    d) Brussels demanding a single EU price for gas regardless of reliability of payments, quantity discounts, investments etc. is also dodgy because this would be Brussels unilateral seizing control of energy negotiations for the EU without the agreement of EU member states – patently illegal, and behavior that would make any self-respecting mafiosi proud.

    BTW Russia is taking the EU to the WTO over the EU threats:


    Why are these bureaucrats making so much noise? Because they can do so little. They have to 'do something', regardless how ridiculous and hollow it may be. It's all part of the mass anti-Russian propaganda campaign being waged US and EU wide in their free and independent media.

    I had another point, but it escapes me for the moment.

    marknesop, May 21, 2014 at 10:05 am

    Yes, it's fair to say that it is Brussels which is trying to kill – or at least stall on – South Stream and not the EU, although what I meant to do there was differentiate between Political Europe and Business Europe. The latter could give the former badly-needed lessons in pragmatism, while the former employs a sliding scale of ethics and outrage which allows it to overlook various abuses in its colleagues while dropping the hammer on Russia every time. Your point on the WTO is well-taken and interesting, because I was not aware of it and it is exactly what Russia should do – it highlights Russia's reliance on international institutions.

    It is Political Europe which wants the gas to continue to go through Ukraine for as long as possible, so that the EU has a buffer state it can stir up from time to time to introduce chaos into the Russian economy. For a considerable time, also, Political Europe pinned its hopes on its own Nabucco pipeline as a rival to South Stream.

    'Behold, the whirlwind of the Lord goeth forth, it shall fall upon the head of the wicked..Bel is confounded, Merodach is broken pieces; her idols are confounded, her images are broken in pieces". Wicked Nabucco, in despair, sees the error of his ways, and begs forgiveness. It is not hard to see how the theme of rescue from oppression, not to mention the manner in which Verdi's opera was viewed as a call to arms by the Italians to throw off the yoke of Austria, titillated the too-clever-by-half Europeans to name their pipeline Nabucco – it was meant to free them from energy enslavement by Russia. But the project was marred from the start by typical internecine bickering and some states it would transit were less than enthusiastic, and it is unlikely it will ever be built. Even if it were, it would never have supplied Europe's needs on its own.

    marknesop, May 21, 2014 at 10:30 am
    Interestingly, another story co-listed with the first reference you cited adds substantiation to my point – the EU (or Brussels) is going after the smaller countries on the pipeline route, attempting to trip them up on the rules and starting from the incredible negotiating position that the entire deal will have to be renegotiated, after the pipeline's construction is already underway.

    This likely is the inspiration for Russia's making individual deals with states rather than going through Brussels, because Brussels appears committed to favouring Nabucco – which, to the best of my knowledge, has never been officially canceled although it appears to be headed for the junction of no and where. But Brussels is in no hurry at all, because having European gas continue to transit Ukraine suits its purposes.

    Al, May 21, 2014 at 10:52 am
    It is still as sign of lack of credible & legal tools and smacks of extreme weakness as they are picking on economically weak countries and not the stronger ones (Italy/Austria) who have already told Brussels to F O and makes Brussels look very, very bad to the countries involved. Is it really in Brussel's interests to keep some of its poorest members poor??? It's guaranteed blowback and won't be forgotten easily. Dumb f93ks.

    Renegotiation is Brussels strongest maximalist position. Russia has already said that it would look at individual contracts to iron out any oddities, but certainly no rolling over to have its belly tickled.

    ucgsblog , May 21, 2014 at 9:35 am

    Great article as usual Mark! I'd just like to make a quick addition: Russia and Norway generally cooperate with one another in the energy market and they border one another. If the Euros get too uppity about South Stream, another pipeline could be finished through Norway by the 2020s. The article conveys just how far apart the EU and Europe's rank and file are. The rank and file want stable energy supplies. The EU's elites wants to use energy as a weapon against Russia at the expense of their rank and file, in addition to austerity.

    Speaking of EU's approval, here's what it was in 2013:

    It's been on the decline ever since, to the point where the EU is scared to conduct their own polls on the proper subject: and

    In terms of shale gas, is any of it in California? Because the thing about Californians, is that California's crazy about property values and few things can destroy property values as fast as drilling. Speaking of that:

    If anyone knew anything about California's economy, they'd know that land value growth and servicing makes up 15 to 20 percent of California's $2 trillion GNP. That's a range of $300 to $400 billion. And Californians are supposed to be risking that over aiding Ukraine?

    Economy of California: education, housing, Silicon Valley, Hollywood. Who in their right mind would challenge any of those? And those who do, well, you guys are screwed.

    Oh, and Mark, this just came in:

    "After 10 years of negotiations, Russia's Gazprom and China's CNPC have finally signed a historic gas deal which will provide the world's fastest growing economy with the natural gas it needs to keep pace for the next 30 years. The total value of the contract is $400 billion, Gazprom CEO Aleksey Miller said. However, the price of gas stipulated in the document remains a "commercial secret." Assuming the overall price of the contract includes only the cost of supplies of Russian gas, then the $400 billion price tag means China will pay about $350 per 1,000 cubic meters. Delivery price for the contract will be tied to market oil prices, Putin said from Shanghai on Tuesday."

    My guess is that the Russians and Chinese already had the deal lined up, but told the Westerns that they didn't, just to see Western reaction. Then they laughed and signed the deal.

    Al, May 21, 2014 at 9:35 am
    I just remembered the other point which has come up before in the comments section.

    The EU simply cannot subsidize the Ukraine in place of Russia. They have sweet FA to offer but better prospects in future. Russian gas flowing through the Ukraine, even if it is not used or stolen by Ukranian oligarchs, still produces a transit revenue which is a subsidy that can be relied on as long as the gas is flowing. That's what the EU wants along with Russia giving up any control or ownership of the Ukranian pipeline network. They saw Lukashenko sign over Byelorussia's network to Russia to pay off debt and they simply will not accept this. Regardless of South Stream, the EU simply cannot tolerate Russia getting hold of the network if there is any hope of the Ukraine joining the EU and taking over the pipeline network. Once it is sold there is nothing Brussels can do.

    Al, May 21, 2014 at 9:43 am
    The Crime Scene Monitor knows better than either the Russians or the Chinese:

    Russia-China mega gas deal: Is it a pipeline too far for Moscow? (+video)

    Putin is in Shanghai to cut a long-gestating deal to provide China with gas. But experts warn that Russia may not be ready to fulfill the deal's terms for years to come.

    Meanwhile: Russia and China to Cooperate on New Airliner, Helicopter

    Unless it is a step-change design like the proposed 'Frigat Eko Jet'* a.k.a. 'Wide Boy' and not another simple tube with wings stuck on, then I would remain sceptical of it global potential.

    marknesop, May 21, 2014 at 7:14 pm
    If you can get past Fred Weir's relentless propagandizing and his reliance on "some folks say", it's actually a startlingly balanced article. Here's the money shot for me: "Kremlin-linked liberals, who have successfully argued in the past that Russia must not burn its bridges with the West because it needs "modernizing alliances" with the world's most advanced countries in order to complete its transition to a post-industrial power, are now completely on the defensive…If this contract on gas supply is indeed signed with China, it will be of great political importance as well as economically. We may take some losses in terms of price, but Russia needs this," says Vladimir Portyakov, deputy director of the official Institute of Far Eastern Studies in Moscow. "Those Russians who argue for maintaining a pro-Western balance have already lost much influence. With this deal, Russia will feel much freer in its relations with the West"

    This is significant, because the west has invested considerable capital in its agents of change, like Navalny. Sure, you remember – Alexey Navalny? The guy who ran for mayor of Moscow? People could be forgiven now for not knowing who Navalny is, because he is rarely mentioned and unless the west invests frustrated effort in building him up again he will be forgotten. Regulation of political NGO's and the discrediting of western-leaning liberals due to being associated with the west's flailing and incoherent policies have gone a long way toward reassuring Russians that they are on the right path, with the right leader. It is important, too, to note that Putin has personally been quite fair with the west, responding mildly to criticism and typically receiving discourtesy and threats with courtesy and suggestions. Owing to this restrained but determined behaviour, it is hard to see Russia as the radical and isolated pariah the west portrays it to be.

    Another casualty of the gas deal and resulting closer cooperation between Russia and China is going to be the USA's "Asian pivot". China seems motivated thus far to maintain cordial but cool relations with the west. To its credit, Russia has thus far resisted the probable temptation for childish mocking, such as the west happily descended into when things were going its way, such as the simpleminded bragging in "Ukraine to Russia: We've Got a New Friend – Get Used To It". See how pathetic that attitude looks now.

    As far as the "Russia may not be able to do it for years" goes, Russia is not going to have to do it for years – the deliveries do not start until 2018. Maybe he missed that part. If he is trying to imply that Russia might run out of gas by then, well, yes; it might. But if it does there will be a whole lot of other people concerned about it other than China.

    ucgsblog, May 21, 2014 at 10:27 am
    In my previous posts, I've implied that the West thinks that absolutely everything is about the West. In the context of the Russo-Chinese gas agreement, this sounds hilarious. If the gas agreement does not go through, then Russia is risking their survival, just to make a point to the West. If the gas agreement goes through, then Russia's doing it primarily because the sanctions are working. It's a great strategy, unless both events happen within a 24 hour time span, and then you sound rather silly. Introducing – Bloomberg!

    [i]The presidents of China and Russia failed to sign a $400 billion gas supply deal at a meeting yesterday in Shanghai, prolonging negotiations that started more than 10 years ago… "It shows that Russia is not willing to cut a low-price deal just to make a political point with the west," said Chris Weafer, founder at Macro Advisory in Moscow. "The danger is if a deal is not concluded this year China may switch its efforts to secure pipeline gas elsewhere."[/i]

    To summarize: Russia wanted the $400 billion gas price, and wouldn't go any lower for the purposes of making a political statement with the West. They might pay dearly for that! Watch out Russia- oh wait, Bloomberg's got something else to say:

    [i]Russia reached a $400 billion deal to supply natural gas to China through a new pipeline over 30 years, a milestone in relations between the world's largest energy producer and the biggest consumer. President Vladimir Putin is turning to China to bolster Russia's economy as relations sour with the U.S. and European Union because of the crisis in Ukraine."[/i]

    But, but, but, didn't you just say that the deal wasn't signed because Russia wanted to keep the price at $400 billion, in order to ignore the West? The price is still $400 billion! It hasn't changed! Maybe USA Today can explain it better:

    [i]China and Russia signed off on a huge gas deal worth as much as $400 billion Wednesday that heralds a pivot east for Russian business amid ongoing tensions with the West over Ukraine, though few details of the deal were made public. The 30-year gas-export contract, seen as a move by Russian President Vladimir Putin to aggressively shift the country's commercial interests east amid mounting sanctions from the United States and Europe, was signed as the Russian leader has enjoyed a warm welcome in China, where the two countries have inked a raft of agreements during his ongoing, two-day visit.[/i]

    Apparently the deal that's been in progress for a decade, has just been signed in response to recent sanctions by the EU and the US. Where did Putin get his time machine?

    May 21, 2014 at 7:44 pm
    "Apparently the deal that's been in progress for a decade, has just been signed in response to recent sanctions by the EU and the US. Where did Putin get his time machine?"

    Ha, ha!!! I'm about 4 pages behind in comments, getting steadily behind-er and so tired I am giddy, and that just made me laugh and laugh until I almost had to blow into a paper bag to make myself stop. You have, of course, spotted the essential absurdity of the west's position and exposed it with typical merciless clarity. How much better journalism would be if it was executed by the sarcastic cynics!!!!

    It's perfectly true that Putin wanted this deal in order to give him options in dealing with the west, so that when the EU said "See here, my good man, sirrah, if you do not straightaway and with all dispatch grovel before us for our amusement and pleasure, we shall not buy your gas and you shall become a pauper!!" Putin could respond with a Russian variation on "I like your approach: now, let's see your departure". However, as you say, the pivotal fact that all have forgotten is that the deal has been in the works for 10 years, and 10 years ago relations between Russia and the west were nothing like the deep-freeze they are now, wholly due to the west's clumsy and embarrassing floundering. And the argument that Putin had to sacrifice on price in order to urgently ram it through now because he felt the west breathing down his neck is likewise a non-starter, for obvious reasons. Thanks for a very therapeutic laugh.

    ucgsblog, May 21, 2014 at 9:06 pm
    I'm not a cynic. I'm an optimist. I just state the facts. The Western "we matter the most" historiography is propagandized to an absurd degree. UK's historiography talks about barbarian Scots vs Romanized Angles, instead of talking about how different people sharing the same island overcame the Roman Era and the Middle Ages. Essentially they're creating conflict where none exists, solely to proclaim: "West – FTW!!!"

    That's exactly how Russian History is studied in the West. Everything that came before Peter the Great is irrelevant. Russians must bow and worship the Great Peter, the truth, the light, the blah, blah, blah. When the Russians had a vote on Name of Russia and Alexander Nevsky beat the crap out of Peter the Great in a democratic election, what happened? Oh right, the Western Press talked about Stalinists rigging the vote. Did they? Probably, modern Stalinists aren't very popular in Russia. But that's irrelevant, Even with the rigged vote for Name of Russia, Stalin wasn't the one elected. Nevsky was.

    When Rome fell, what is that time period called? The Dark Ages. Oh noes, our empire fell! Never mind this flourishing Caliphate here, nope, we're calling this period the Dark Ages! Hey, Europe's coming back together, it's a Rebirth, let's call it the Renaissance! Don't get me wrong, I love the Renaissance, I think it was an amazing time for European History, but how about calling it what it is: the European Renaissance.

    And this brings me full circle to Russo-Chinese relations. Russians and Chinese have been friends for the most part. I go into this in detail on my blog. With two exceptions, Russian Imperialism between 1855 and 1917, and the Stalin-Mao stupidity with the subsequent cover up, Russo-Chinese relations have been very warm.

    The first part is when Russia was "enlightened" with Imperial stupidity as a result of the Napoleonic and Crimean Wars. I'm glad that's over, and I don't see that as an obstacle, because the Russians had a giant revolution, which demonstrated that the Late Romanov Imperialism was a really bad idea. The second part began with Stalin being a prick, Mao overreacting to that, and the Russian and Chinese leaders trying to cover it up. In the Internet Age, that's rather pointless.

    Since for the West, the early Russo-Chinese relationship = Imperialism and the latter Russo-Chinese relationship = Stalin and Mao, on the basis of this rather limited knowledge, it's correct to say that the Russo-Chinese relationship is troubled. Nevertheless, when reality looks at the bigger picture, a very realistic possibility, Russia and China will establish a new power center, along with India, Brazil and South Africa. And it won't take too long for the Realpolitiking Germans to realize that, and join their side. ASEAN will jump on board. As will Argentina and Venezuela. And then the rest of the World will follow.

    Moscow Exile, May 21, 2014 at 11:32 pm
    The Angles could hardly have been Romanized as they, together with their Germanic kindred folk, the Frisians, the Saxons and the Jutes, only arrived after the Romans had abandoned the Roman Imperial Province of Britannia at the end of the 4th century.

    These Germanic peoples soon began to call themselves collectively "Angelcyn" (/angelkin/) and the land that they occupied: "Angelland".

    The ethnic peoples whom the Old English tribes enslaved or slaughtered were, however, Romanized and Christian: they were the Brytonic Celts, forefathers of those whom the English call "Welsh", that word being derived, ironically, from the Old English for "foreigner".

    England was never part of the Roman Empire and the English tribes were pagans. Their chief god was Woden: known as Odin in the Norse lands and Wotan in the European Germanic territories.

    England and the English only became "civilized" and Christian after missionaries had arrived there from Rome in the 6th century.

    Legend has it that the pope ordered that the English be converted after having seen English children on sale in the Roman slave market. Having asked who these children were, the pope was told that they were "Angli" – the Latin for "Angles, whereupon the pope replied: "Non Angli sed angeli!" – "Not Angles but angels!"

    What the pope was doing browsing round the children's section of the slave market has never been explained to me.

    [Jun 05, 2014] Ukraine: The Real Energy Crisis Starts in June by Yves Smith

    May 28, 2014 | naked capitalism

    Yves here. Readers are likely to beg to differ with this post's assessment of the newly elected president of Ukraine. However, the key part of this analysis is the degree to which his support and authority comes under pressure when Gazprom insists it gets paid or else. I'm updating this post about a half hour after its release to include this comment from Ilari's post earlier today:

    Ukraine has a new president, or at least someone, Petro Poroshenko, who claims to be. One of the first things to come out of his mouth was that he doesn't recognize Crimea as being a part of Russia. Still, the good listener knows there were no Ukraine presidential elections in Crimea either on Sunday. So Crimea is supposedly still a part of Ukraine, despite a referendum in which 89% of Crimeans chose not to be, and they get no vote in who gets to be their president either? What does all that mean?

    Poroshenko also vowed to bring peace to east Ukraine, something he aims to achieve through violence, as yesterday's 100 deaths can bear silent witness to. Ukraine has a new president and the first thing he orders, even before being inaugurated, is the killing of more of his own citizens. Petro P. had lofty words about wanting a good working relationship with Russia, but those were only words; why, or even how, would Moscow want to talk to someone who has not even officially been elected yet but already wants to kill ethnic Russians who happen to live just across the border from Russia because of a map redrawn pretty much at random 60 years ago? What about that map permits Ukrainians in one part of the country to kill fellow Ukrainians who live in another part?

    If Russia would withdraw its troops, chances are there would be a massacre, if not a genocide. That it cannot do. It cannot allow it either. So what is Poroshenko's idea? That if he can kill enough eastern Ukrainians the rest will submit to anything he wants? And that Putin will let him? Neither seems even remotely likely, and the president-to-be knows it. What then is behind this? Is he even his own man?

    By Robert Bensh, an energy and energy security expert with over 13 years of experience leading oil and gas companies in Ukraine. He has been involved in various roles in finance, capital markets, mergers and acquisitions and government for the past 25 years and is currently the Managing Director and partner with Pelicourt LLC, a private equity firm focused on energy and natural resources in Ukraine. Cross posted from OilPrice

    Kiev is feeling emboldened by the successful election of a new Ukrainian president and a bloody surge against separatists in the east, but in just a few days, Russia says it will twist the gas spigot, and there's very little Kiev can do to stop that.

    On June 3, Russia plans to reduce the gas supply to Ukraine - and hence, to Europe - if Kiev has failed to pay in advance for next month's gas deliveries, the price for which has been doubled as a result of the political crisis.

    Interim Ukrainian Prime Minister Arseniy Yatsenyuk is trying to play hardball with Moscow, suggesting that gas talks cannot move forward until Russia addresses the issue of $1 billion in gas it stole when it annexed Crimea.

    Yatsenyuk may be riding high on the sense of stability the recent presidential election has brought, not to mention the unleashing of the Ukrainian military on pro-Russian separatists in Donetsk, but the "stolen gas" gambit is a losing one-a bunch of bluster that certainly won't make Moscow go away.

    Ukraine owes $500 million just for May gas deliveries, on top of a whopping $3.5 billion in outstanding gas debt (according to Moscow). If at least part of this debt is not paid, there won't be any negotiating over price. Gazprom says Ukraine had agreed to pay $2 billion of its debt this week, but Kiev is instead talking about stolen Crimea gas.

    What is promising in all of this is the election of Petro Poroshenko as Ukraine's new president, by a wide margin and with more than 60 percent voter turnout. Ukraine has new, legitimate leadership that Russia, the United States and the European Union have all agreed to recognize.

    The new president immediately pledged to deal with the separatists in Donetsk and Lugansk, establish a working relationship with Russia and hold early parliamentary elections, which undoubtedly is an attempt to capitalize on the current political good will and further weaken a parliament dominated by former Regions politicians, Fatherland and business interests.

    What the presidential elections give Kiev is a bit more strength and a more united force to deal with its energy crisis, as well as with Moscow.

    In the coming days, Russia will recognise Poroshenko's legitimacy and remind him that June 3 is right around the corner. By next week, we could see the disruption of gas supplies to Europe, Russia's largest and most profitable market.

    If this happens, an acute energy crisis in Ukraine is all but certain. Ukraine stockpiles its gas supply for the winter heating months during the summer. With current low supplies and higher prices expected for this summer, Russia will walk all over Kiev.

    Short of handing Gazprom a cashier's check, there is no way to avoid the present crisis.

    In the medium-to-long term, however, some hard decisions are going to have to be made-decisions that former Ukrainain vice prime minister and energy minister Yuri Boyko would have liked to make some time ago. These include selling off the state-run gas companies, Ukrnafta and Ukrgasproduction.

    So we find ourselves reliving 2006 and 2009, when Russia cut off gas supplies to Ukraine and Europe. And if Ukraine hopes to stop reliving these desperate years over and over again, it's going to have to start selling off assets and rolling out the transparency.

    The trick will be for Poroshenko and a newly appointed energy minister to work with both Russia and Europe to secure new pricing and to foster energy independence while at the same time being mindful of one very important fact: Ukraine's westward drift toward the EU is what led Russia to annex Crimea in the first place.

    Russia will continue to use Russian nationalist movements in eastern Ukraine to stir discontent and to sow chaos, striving to keep Kiev off balance as Moscow works to use gas as a weapon to ensure a compliant Europe. It's a hard balance to maintain, especially as some Central European countries are seeing the light at the end of the independence tunnel.

    Poroshenko is a highly pragmatic businessman, which is what Ukraine needs. But neither he nor those around him know energy, or Russia. From the energy crisis standpoint, it is the appointment of a new energy minister that will change the real balance of power.

    There are very few figures in Ukraine who know the West, Russia and enough about energy to do what needs to be done. Because of that, Poroshenko's pick for energy minister should be the smartest choice, not the most popular one.

    Третья газовая война ЕС и США должны оплатить свои успехи на Украине - Новости России


    Итак, Россия и Украина балансируют на грани очередной (третьей по счёту) газовой войны. На фоне "горячих" боевых действий и репрессий на Юго-Востоке, газовый конфликт отошёл на второй план, однако, возможно, он окажет на украинский политический ландшафт не меньшее и долгосрочное влияние. Начнём с ретроспективы - тем более, что газовые войны давно превратились в часть украинской политической мифологии, главным персонажем которой является зловещий тоталитарный сосед, душащий молодую демократию и не дающий ей добиться грандиозных успехов и истинно европейского процветания.

    Действительность выглядит несколько иначе. История российско-украинских газовых отношений - это история о том, что украинская сторона всегда получает то, что хочет, но итоговый результат ей почему-то очень не нравится. Итак, в 2005-м Украина купалась в дешёвом газе. Тогдашний контракт, который должен был действовать до 2013-го года, предусматривал фиксированную цену в $50 за тысячу кубометров, плюс оплату "натурой" за транзит, что давало Украине 19,7 млрд кубометров по фактически ещё более низким ценам.

    Вторым поставщиком, благополучно использовавшим российскую газотранспортную систему, была Туркмения, за неимением других покупателей, кроме России и Украины продававшая газ по $40-$42. Иными словами, утверждение, что Украина получала газ по $50, в действительности грешит натяжкой - в среднем он был существенно дешевле. При этом "Газпром" закрывал глаза на реэкспорт. Фактически это были субсидии, обеспечившие украинской экономике весьма быстрый рост, положительный торговый баланс и прочие позитивные тенденции в эпоху позднего Кучмы. В целом, это была более чем щедрая плата за внеблоковый статус Украины и относительную лояльность - ничего другого от Украины не требовалось.

    Однако в 2005-м случился первый Майдан. Администрация Ющенко сделала однозначно прозападный выбор, который должен был быть оплачен из карма