The Gas Attack: Counting the Losses

In EDM, Vladimir Socor has an analysis of the controversial aspects of the Russia-Ukraine gas agreement - details which have been officially disclosed in Kyiv:

First, this is not just a bilateral interstate agreement, but has a third, co-equal signatory: RosUkrEnergo, an ostensibly private though shadowy offshoot of Gazprom. Second, Ukraine forfeits any possibility to import gas from Turkmenistan -- an option that Kyiv had pursued up to the last day in 2005. And, third, Naftohaz Ukrainy -- hitherto solely responsible for marketing all imported gas in Ukraine -- yields one half of that business to RosUkrEnergo.

And, in the same issue, Igor Torbakov looks at the unwieldy combination of strategic objectives and private interests which comprise the Kremlin's energy policy. In addition, Torbakov notes that the "gas attack" on Ukraine has not exactly been an unqualified success for the Kremlin:

Russia did not succeed in splitting the Ukrainian population ahead of the country's parliamentary elections in March. It equally failed to force Kyiv to cede control over the national gas transportation system to Gazprom

The achieved result -- the relatively moderate revision of prices for the gas Russia supplies to Ukraine -- is too modest an outcome after the weeks of vitriolic anti-Ukrainian propaganda campaign waged by Moscow, personal involvement by Russian President Vladimir Putin, and, ultimately, the brief disruption of gas supplies to Russia's European customers.

Russia's national interests likely suffered a blow in this affair, a number of independent analysts suggest. But not the interests of several very influential Russian individuals associated with Gazprom. At the heart of the Russian-Ukrainian deal is the role of the shady intermediary, RosUkrEnergo, whose significance has been tremendously enhanced: under the terms of the agreement, the Swiss-based Gazprom joint venture will become the "exclusive distributor" for all gas imports to Ukraine. This company, like a number of its predecessors, has been created with the sole purpose of skimming off profits from Gazprom. As one knowledgeable Moscow source notes, it is a "more or less private business" operating in the interests of the Gazprom senior management and in those of the Kremlin leadership.

If anything, the latest episode of the Russian-Ukrainian gas war lays bare the thorough blurring of the line dividing private and public interests at the top of Russian power structures as well as the completely opaque nature of "strategic" decision-making.