Tuesday, January 03, 2006

Stand up for your rights, Mr Putin

Here's my piece from today's First Post: on the Russian/Ukraine gas dispute.

Stand up for your rights, Mr Putin

Russia should be allowed to charge market rates like anyone else, says Neil Clark

The Evil Empire is back. Not content with taking over the year-long presidency of the G8, those dastardly Ruskies are now using their domination of the European gas market to exert political pressure on countries like the Ukraine which refuse to bow to Moscow's line. So the argument goes.
But in their hysterical over-reaction to the decision by Gazprom, the Russian state owned gas company, to charge Ukraine the market rate for its supplies, the Russophobes are in danger of turning themselves into a complete laughing stock. Many of their number profess to be passionate believers in free markets. Yet their advocacy of market economics is conveniently forgotten when Russia is concerned.
Why on earth should Ukraine, which has been paying a quarter of what Russia is asking for its gas, not pay the market rate?
Why on earth should Ukraine, which has been paying a quarter of what Russia is asking for its gas, not pay the market rate?
And why should Russia continue to subsidise a country which, in a highly-contested election, voted in a government openly hostile to it?
If the decision to increase the price of gas to Ukraine is political - as critics claim - then what's the big deal? Exerting economic pressure for political purposes didn't start with President Putin; it goes back centuries. The British used it against the settlers in America in the 1770s. The Arab states used it in the 1970s against the West for their support of Israel. The US and the EU used it against the rump Yugoslavia in the 1990s and the US and the EU are both using it against Russia's last European ally, Belarus, today.
The Russians have as much right to stand up for their economic and strategic interests as any other country. It's time for those who ludicrously seek to portray President Putin as "the new Stalin" to acknowledge this - and to stop denouncing what every other country in the world would do in Russia's position.

2006 N.Clark/The First Post


Gryphen said...

Congratulations Neil you are the most recent recepient of attention from the Tim Blair faction out of Australia.

I have already been visited by their rabid right wing attention during the holiday season.

Welcome to the fold.

Tim Worstall said...

Could be because us free market types believe that people shoudl perform what they promise in hte contracts they sign. As Illarionov pointed outa couple of days ago, the Ukraine has a contract at the lower price.

Breach of contract Mr. Clark. Slightly frowned upon.

E.T. said...

No one except Mr. Illarionov (even Ukrainians themselves) says about breach of contract. You are so naive. If it was indeed breach of contract, the Ukrainians go to court.

MPH said...

From Kira Zalan

Many are labeling Russia’s pressure on Ukraine to pay market prices for natural gas as “Cold War” tactics. Of course, the Ukrainian government is paying the full price for their anti-Russian rhetoric and pro-Western orientation. Russia is flexing the only muscles she has: natural resources. But, it’s not so much a message to the Ukraine as to the West. And it’s not so much “Cold War” as Realist geo-politics.

Putin quickly realized that Russia only has one card to play in today’s world of growing demand for natural resources. Domestically, this realization became clear with the takeover of the Yukos oil company. Disguised as retribution for legal transgressions, Putin removed the threat of a western-oriented Yukos
by imprisoning its managers, and paved the way for a predictable government takeover of Russia’s oil industry. Today, it is not so clear what the rules of oil investment are (i.e. no foreigner shall hold majority stock in a Russian oil company), but it is very clear who makes the rules.