Europe makes new threat to Russia and Ukraine on gas supplies

By Stephen Castle

Friday, January 16, 2009
BRUSSELS: After days of fruitless diplomacy, the European Commission threatened to review its entire relationship with Russia and Ukraine unless there is a breakthrough this weekend that leads to the restoration of gas supplies to Europe.

Johannes Laitenberger, the European Commission spokesman, said that failing a resolution of the crisis that has left Europe without most of its Russian gas supplies since Jan. 6 the whole range of ties would be reviewed. "We will have to look," he said, "point by point, at our relationship with Russia and Ukraine and whether we can continue to do business as usual in these circumstances."

Absent a resolution, the areas likely to be reviewed are talks on a new partnership agreement with Russia as well as support for Moscow's accession to the World Trade Organization. For Ukraine, the areas to be revisited would include the negotiation of a new association agreement with the European Union, and energy cooperation.

The European Union put its credibility on the line by intervening in the dispute between Russia and Ukraine, which centers on the price Ukraine will pay for its own supplies of Russian gas.

But the diplomatic gamble has failed to get the Russian gas flowing across large parts of Europe. It has also damaged the diplomatic prestige of the 27-nation bloc.

Exasperated European officials are now pinning their hopes for a breakthrough on a meeting Friday in Berlin between Angela Merkel, the German chancellor, and the Russian prime minister, Vladimir Putin. It is Putin's first visit to Berlin since he stepped down as president last March.

Russian officials, who said the country's gas monopoly, Gazprom, had lost significant revenues as a result of the dispute, have sought to place the blame on Ukraine.

But political experts say that neither side is motivated to compromise, because the dispute has never been about the stated issues - natural gas prices and transit fees. Instead, it has been a proxy for more fundamental and insoluble matters, particularly Ukraine's 2004 turn to the West in the "Orange Revolution," which deeply disturbed Russia's nationalists.