We will see an increasing incidence of this sort of of economic warfare as the global economy slows and basket case states enmeshed in the global economy use what ever resources they can to blackmail money and other concessions from their neighbors. Russia’s move though has more than economic consequences, it can literally cost people their lives:
Fears of a deep chill spread across Europe yesterday after a row between Russia and Ukraine over gas prices cut supplies to the rest of the continent on a day of plummeting temperatures and heavy snowfalls.
The European Union said the situation was “completely unacceptable” as thousands of businesses were urged to switch fuels, and households struggled to keep warm in sub-zero temperatures. But there was no sign of an end to the standoff between Russia’s energy monopoly Gazprom and Ukraine, locked in battle since New Year’s Day.
Gazprom stopped pumping gas to Ukraine for domestic consumption on 1 January after the two countries failed to agree on a fixed price for 2009. The pipelines that cross Ukraine also carry gas to Europe but that continued to flow, until Moscow accused Ukraine of siphoning off Europe’s fuel and Prime Minister Vladimir Putin retaliated by ordering Gazprom to cut EU-bound exports by the amount being stolen.
Yesterday Russia stopped gas supplies through Ukraine to Bulgaria, Hungary, Greece, Turkey, Romania, Serbia, Bosnia and Macedonia. The government of Slovakia declared a national emergency; Austria and Italy reported falls of 90 per cent; France said Russian supplies had tailed off 70 per cent, and Germany also reported a decline although did not quantify it.
The Czech Republic, which took over the EU presidency this month, had sharp words for Moscow. “Drastically curbing deliveries this way is no solution to business disputes,” said Alexandr Vondra, the Czech Deputy Prime Minister. “It is impossible to hold other countries hostage.” He demanded the warring sides reach an agreement by the end of the week.
In Bulgaria, the government has declared a “crisis situation”. The country not only has the lowest GDP per capita in the EU, but relies on Russia for all of its gas.
“Everyone was sent home from school after the gas suddenly went off,” said Patrizia, an 18-year-old student in the provincial town of Pazardzhik, where the daytime temperature was minus 8C. “It’s the first time I remember this happening, there was no warning, and people are worried because they have no idea how long it will last.”
Douglas Erskine, a British expat, said many of Bulgaria’s seven million residents would struggle. “Houses are poorly insulated, the electricity supply is unpredictable, and the elderly will struggle to get coal and wood. In many towns and villages, people gather in cafÃ©s to keep warm because they can’t pay for heating at home. What will become of them if the heating goes off?”
Bakers say the price of bread could rise by 5 per cent because of gas shortages. The disruption has already forced two big fertiliser producers and a major brewery to stop production, and metals and pharmaceutical firms warned they may have to follow suit.
An EU delegation headed to Kiev for talks yesterday. Separate discussions are planned with Gazprom representatives today in Berlin.
There are talks and demands now, but how long before the E.U. will respond militarily to the Russians provocation? After a hard winter where hundreds of people freeze to death? There is already talk of “stronger intervention” from the E.U. which will not go over well with Putin’s Russia.
The Georgian invasion has emboldened Russia to the point where they may force Europe’s hand. Then I guess we’ll see if the Europeans are still against American foreign intervention.