Foreign Policy

Russia Stops Natural Gas Flow To Ukraine

January 2, 2006 ⋅  E-Mail Article ⋅  Print Article ⋅ Post a comment

Why is the trade deficit so scary, why do many Americans fear our current reliance on cheap imports? Because at anytime your supply can be pulled away, and when the man can’t fish for himself anymore who will feed his family? Imagine you go to fill your car with gas and you find out that’s the last gas you will get, none will be available next week. Don’t think it can happen? Ask individuals in the Ukraine. Don’t believe me, read the associated article at the end of this piece.

Russia is stopping its supply of natural gas to the Ukraine by slowly removing them from the pipeline. Russia has already started reducing the amount of pressure in its natural-gas pipelines that connect to the Ukraine. The move began Sunday after Kiev rejected Moscow’s last-minute offer to temporarily holdup of a sharp increase in supply prices. This move toward a cutoff has raised fears that European gas supplies will also be interrupted soon.

What can be done, what if this happened to the United States? What if other countries raised their prices on outsourced jobs, imported goods, or off-shored manufacturing, where would America be at this point? Many thought globalization would be like the tide that raised all boats. However, we are now seeing the devastating effects it has on consumer prices and working wages. Now we are seeing how our reliance on foreign companies and governments is a dangerous thing. We are also seeing how rogue governments, and anti-freedom governments, are asserting their influences further into world politics.

The demands for a rate hike by Russia are commonly seen as a punishment for the “Orange Revolution” that occurred in the Ukraine. The Orange Revolution was a peaceful uprising that many say is responsible for the removal of the Ukraine’s pro-Russian government a year ago. The Orange Revolution supporters are also supporters of President Viktor Yushchenko, a politician seen as an individual who has many Western tendencies in his character. Socialist Party parliament deputy Mikola Rudkovsky stated, “Russia’s firm position that Ukraine should buy gas at European prices is certainly a reaction to the new political course Ukraine is pursuing now.”

Hungary, Poland, and the Ukraine, are the first countries feeling the effects of this decision by Russia. However, many feel a trickle down effect will send shockwaves through the EU economy. Moscow cut its natural gas exports to Kiev because an agreement could not be reached regarding gas transits and prices. The Ukraine officials rejected an offer Saturday from Russian President Vladimir Putin, the offer was supposed to hold off on a price increase for heating fuel until April if the Ukraine government agreed to pay market prices for the supplies after the April strike date.

Gazprom is now run under intense pressure from the Russian government. Gazprom stated that on Sunday they would begin a partial shutdown in the gas lines on the Russia-Ukraine border, this line supplies almost 40% of the Ukraine’s gas and accounts for almost 30% of Europe’s total supply. Russian President Vladimir Putin instructed Gazprom to supply gas to Ukraine through the first three months of the new year at current prices, with the stipulation that the Ukraine would sign the new contract offer immediately. However, Ukrainian officials refused to sign the agreement.

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