Gas is our everything

On the eve of the G8 summit, at a meeting of the heads of the G8's leading news agencies, German Malte von Trotha asked the president a question about Russian gas strategy.

Until recently, many believed that after 2008 Putin would become the head of Gazprom; moreover, it looked like it would be a different Gazprom. “SuperGazprom”, which - with the help of friends Silvio, Gerhard and Jacques - will include European gas networks, Gazprom, from the height of which YUKOS will seem like a small insect. A super company holding Europe at the umbilical cord of the pipeline.

Now this future is in doubt. After the January crisis caused by the feud with Ukraine, Europe has doubts about Gazprom's reliability. And the reprimand given by Alexey Miller to all European ambassadors for the reluctance of one particular England to sell the gas distribution company Centrika to Gazprom surprised the Europeans so much that everyone rushed to find out the real owners of Rosukrenergo.

Gazprom's strategy can be formulated as follows. First: we give you a share in the fields, you give us shares in the networks. Second: there is no gas market with a spot price, we need long-term contracts. This strategy is now under threat.

President Putin outlined the Russian position on gas to the heads of world news agencies. The beginning of his answer to von Troth was: “I believe that our business partners, especially European ones, have never doubted and today do not doubt the reliability of cooperation with their Russian colleagues.”

This is weird. Does the panic that gripped Europe after the Ukrainian story, the European Commission's search for cartels in the EU market and Gazprom's refusal to participate in the British and Italian gas distribution networks reflect a state of mind that can be described as “no doubt”?

But the president gave an exhaustive answer: his partners in Gazprom have no doubts. However, he continued: “And questions of this kind and their very formulation are assessed by us as a way to encourage us to make unilateral decisions that would satisfy our partners, but would not fully take into account the interests of the Russian economy...”.

This is a strange sequel. From the first half of the president’s answer it followed that there were no problems at all, and from the second - that there were not even problems, but whole intrigues: for the purpose of “making unilateral decisions.”

Then President Putin spoke about Ukraine: “Our Western friends very actively supported the “orange events” in Ukraine... But if you want to continue to support everything that happens there, you will pay for it. Why should we pay for this?...Russia has subsidized the Ukrainian economy annually in the amount of 3-5 billion dollars over the past 15 years...And every year we raised the question that we need to adopt the European method of pricing. Why should consumers in Germany pay 250 dollars per thousand cubic meters, and in Ukraine – 50? If you really want to make such a gift to Ukraine, pay for it. Why do you want us to give these gifts?”

But this is completely strange. First, President Putin said that Western partners do not doubt Russia; then he said that they were encouraging Russia to make unilateral decisions, and then he actually accused “our Western friends” of sabotage on the territory of a neighboring state (and we thought that it was the Russian president who personally flew to support Yanukovych).

From the president’s words, it can be understood that the West is demanding subsidies to Ukraine from Russia. But the West does not demand anything like that. The Germans don't care how much Ukrainians will pay for gas. The Germans are interested in how much the Germans themselves will pay. Never before or after the gas conflict with Ukraine has not a single Western politician demanded that Russia subsidize Ukrainian industry. Russia, alas, has been letting Ukraine down for many years. The framework agreement between Gazprom and Naftogaz, signed five years ago, provided for the linking of gas prices to oil prices, and even under this agreement in 2005 Russia was already supposed to receive $130 per thousand cubic meters. The Kremlin left prices at the same level, making a pre-election gift to Yanukovych - and the gift went to Yushchenko. Of course it's a shame. It’s just as offensive as giving an apartment to a bride who married someone else. But it is hardly worth blaming the Europeans for wanting Russia to subsidize Ukraine.

The Russian proposal to Europe “we are fields for you, you are networks for us” is far from indisputable. Demanding concessions from Europeans in exchange for giving them the right to invest their money in Russia is the same as a supermarket charging customers an additional fee for the opportunity to leave money in this particular supermarket. With such a strategy, it won’t take long to go broke. It is very difficult to convince the West that it must please the Kremlin twice: by selling networks and by providing investment.

But the main question that arises when you read the transcript of President Putin’s speech is whose words, actually, are these? If these words are spoken by a businessman who - quite reasonably - wants Ukraine to pay his company normal money and for his company to receive everything: money for fields and shares in networks - then what does politics have to do with it, accusing partners of conspiracy and attributing their own commercial miscalculations to their political intrigues?

If these words are uttered by the head of state, is it not too much for the head of state to make his relations with the world dependent on commercial concessions made to one particular company?

The project to create SuperGazprom was a truly grandiose project, which would not only allow the current Kremlin elite to convert power into property, but would also be a salvation for the flimsy Russian freedom. Perhaps this project did not entirely meet the classical decencies of democracy - but there is not a single project that could contribute more strongly to the political stability of Russia and which would deserve greater approval from the business elite.

Alas. This project is threatened not by enemies, not by terrorists, not by “Western friends” who do not care at all how the society that supplies them with gas is structured from the inside. It was endangered by the Kremlin's own illusions. Sincere confidence that gas supplies are almost the same as a tank invasion; and that the country, which is a raw materials appendage of Europe, is turning into an energy superpower only because it is led by wise people who understand the strengthening of the vertical of power as an increase in the amount of money received by this very power.