Publication: Eurasia Daily Monitor Volume: 2 Issue: 224

Russia appears increasingly ready to use its status as a leading energy producer as an instrument of its muscular policy in the post-Soviet lands. Neighboring countries that do not have “special relations” with Moscow and that demonstrate pro-Western leanings are facing a steep rise in gas prices as of January 2006.

Russia’s state-run energy giant Gazprom has long sought to boost profits by ending subsidies to former Soviet states. Next year prices for new European Union members Estonia, Latvia, and Lithuania will increase by half to between $120 and $125 per 1,000 cubic meters, Gazprom’s top executives recently announced. The price Ukraine will have to pay for the Russian gas supplies will more than triple — to at least $160 per 1,000 cubic meters. Georgia and Armenia will pay about $110 next year, and Moldova will pay between $150 and $160.

Gazprom explains the move by pointing to the rise of energy prices on global markets. (The average price for natural gas in Western Europe is currently about $200 per 1,000 cubic meters.) “This is not politics, Gazprom isn’t under pressure from the government,” Alexander Ryazanov, the company’s deputy chief executive, said in Moscow on November 29. “This is simple economics.”

But some key Russian policymakers have made it absolutely clear that the gas monopoly’s Kremlin supervisors are being guided by more than an economic rationale. They bluntly say that Moscow will continue to subsidize energy supplies to its “allies.” At the same time, it will promote “purely market mechanisms” in bilateral relations with those neighbors that are not sufficiently loyal and that display a “suspicious” geopolitical orientation. “We simply suggest applying market principles while doing business with those countries with which we don’t have an alliance-type relationship,” argues Konstantin Kosachev, chairman of the State Duma Foreign Affairs Committee.

It is undoubtedly very symptomatic that the influential lawmaker immediately referred to Georgia and Ukraine — two countries that openly announced their pro-Western foreign policy course following their “color revolutions” in 2003 and 2004 respectively — as the primary targets of Gazprom’s new aggressive strategy. Ukraine and Georgia clearly stated that they “did not want to forge an alliance with Russia,” Kosachev said, adding that Kyiv and Tbilisi appeared “to have made their [strategic] choice.” This choice, he continued, allows Russia to regard these two countries as ordinary business partners “among dozens of others” that are not entitled to any trade privileges. Kosachev and other Russian politicians contend that the Gazprom’s price hike is an “absolutely transparent offer that corresponds with universally recognized world standards.”

Indeed, instead of building a strategic partnership with Russia, Georgian and Ukrainian leaders have forcefully reiterated the desire to integrate their countries into European and trans-Atlantic structures. Remarkably, on December 1, the first forum of the Commonwealth of Democratic Choice convened in Kyiv. The leaders of Ukraine, Georgia, Moldova, Estonia, Latvia, Lithuania, Slovenia, Macedonia, and Romania, as well as representatives from Azerbaijan, Bulgaria, Poland, the OSCE, and the Council of Europe, have taken part in the gathering that discussed, among other things, the creation of the Baltic-Black Sea-Caspian Commonwealth of democracies. In the words of Georgy Arveladze, Georgian President Mikheil Saakashvili’s chief of staff, one of the main objectives of the forum’s participants is to “build an axis of democratic nations that do not want to remain within Russia’s zone of influence.”

The Kremlin-connected political thinkers were quick to dismiss the democratic forum in Kyiv. One commentary labels it a “stillborn child” resembling the “defunct GUAM” group that lacks any “constructive program.” The countries participating in the gathering, the commentary suggests, are united only by their “anti-Russian stance.” The other observers contend that the geopolitical exercise initiated by Russia’s neighbors would lead to nothing because the “democratic community of nations between the three seas” that excludes Russia — the only country that borders all those three seas — is an “outright laughable affair.” However, most Russian security experts tend to agree that the “community of democracies” will likely serve as a kind of “ante-chamber” meant to facilitate the road to NATO membership for such former Soviet countries like Ukraine and Georgia.

Tbilisi further annoyed the Kremlin when, at the end of November, Georgia’s Defense Ministry unveiled its new National Military Strategy drawn up as part of its partnership program with NATO. The blueprint, posted on the ministry’s official website, mentions the remaining Russian military bases, separatist activity within the country’s borders, and Russian peacekeeping troops that “have a history of provoking instability in separatist regions” as the major security threats. No wonder the Georgian defense doctrine raised eyebrows in Moscow. On November 30, Russian Foreign Ministry spokesman Mikhail Kamynin called the fact that Russia’s military bases and peacekeeping contingents in Georgia were listed in the document among major military threats to Georgian statehood “bewildering, to say the very least.”

In light of Georgia and Ukraine’s strained relations with Moscow, Gazprom’s increased pressure on both countries is understandable. Last week, Tbilisi was forced to accept the increased gas price, although Georgian Prime Minister Zurab Nogaideli termed Gazprom’s move not an economic but a purely political decision. Ukraine, however, put up a strong resistance to Gazprom’s demand, being fully aware of its importance as a transit country: 80% of the gas that Western Europe imports from Russia goes through a pipeline that crosses its territory. A bitter dispute ensued between Kyiv and Moscow that, in a worst-case scenario, could seriously endanger the energy supplies to European countries.

(Novye izvestiya, Kommersant, Nezavisimaya gazeta, December 1;, December 1, November 23; RIA-Novosti,, Times, Moscow Times, November 30)