Europe Calls Gazproms Bluff and Ponders its Threat

Russia's gas strategy in Europe is based on the fundamentally anti-market principles of fixed quotas and guaranteed long-term contracts that would eliminate any competition; it also implies a "divide-and-deliver" maneuvering between major European consumers.The last thing Putin wants to see at the G-8 summit in St. Petersburg this July is the EU's Green Paper forming the basis for a discussion of "energy security." He has very different ideas about securing Russia's status as an "energy superpower" but if these ideas are placed on the table, the summit would hardly make any sense at all, which might indeed signify the end of the G-8 as Andrei Illarionov, former presidential economic adviser, has suggested (Vedomosti, April 18). Seeking to break through this web of contradictions, Putin, apparently, has resorted to a rather unsophisticated bluff (Gazeta.ru, April 20). The gambit had slim chance of succeeding, since Gazprom is in fact more dependent upon Europe, which now imports about 45% of its gas consumption, than Europe is upon Gazprom, even if it covers 90% of consumption in Hungary and Poland and 100% in Finland (Newsru.com, April 21). Growing internal demand remains unprofitable for the gas monopolist, exports to other post-Soviet states remain politically problematic with a new conflict with Ukraine looming already this summer, export to Asian markets is a proposition for mid-term future, so the EU is its only immediate source of badly needed income.