Moscow's attempts to present its decision to shut off supplies of natural gas to the Ukraine as a purely financial sanction are less than convincing. No one disputes that Kiev has been paying substantially less than the market rate for its gas supplies in recent years. But the same is true of a number of other former Soviet states. The question is why Ukraine has been singled out for a price hike.
The answer is obvious to many Kremlin-watchers. It is a political decision. Vladimir Putin intends to destabilise Russia's western neighbour in the hope of unseating its leader, Viktor Yushchenko. The Ukrainian president has been a thorn in the Kremlin's side since he was swept to power amid mass demonstrations against Russian influence. With elections looming in Ukraine, President Putin regards this as the right time to exert pressure.
If the origins of the crisis are discernible, its ultimate effects are still hazy. But this affair has already demonstrated the frightening dependence of the European continent on Russian gas. Some 90 per cent of Europe's gas imports from Russia pass through the Ukraine. The disruption to supplies since Sunday's switch-off has already begun to affect deliveries further west. Supplies in France, Austria, Italy and Germany fell yesterday.
Britain can consider itself fortunate that it does not import gas directly from Russia. But this state of affairs will not last forever. Our North Sea oil and gas supplies are on the verge of running out. Last year Britain became a net importer of gas for the first time. And while we import only 10 per cent of our gas supplies at present, this will rise to 80 per cent by 2020. Much of this will come from Russia. This is not a crisis that Britain can afford to watch disinterestedly from the sidelines.
The Government has already begun to hint that this affair strengthens the case for Britain building more nuclear power stations to boost our domestic supplies of energy. But this will produce nothing for decades. And, in the long term, its environmental effects will outweigh the benefits. The Government would be better advised to devote its attention to fostering greater European co-operation over energy supplies. European Union energy experts will convene tomorrow to discuss this. Their meeting clearly now has an added urgency.
When Tony Blair took up the EU presidency last year, he stressed the need to devise a common energy policy but, as so often, did little to follow through. The new EU president, Austria, which is heavily dependent on Russian gas, must be more assiduous in pursuing this end. At the moment the European energy markets are racked with national protectionism. It is vital that the European Commission ensures fair access to Russian gas supplies.
Energy crises are certain to grow more frequent in coming years as the booming Indian and Chinese economies continue to boost global demand for energy. And now it is clear that the increasingly authoritarian behaviour of Russia, which controls the world's largest gas supplies and the eighth biggest oil reserves, is another barrier to stability. Russia may no longer be a military giant, but it has become an energy superpower. Its leadership of the G8 this year begins with a serious question mark over whether President Putin can be considered a reliable partner. His vindictive actions towards Ukraine suggest not.
As this year begins, we are faced with soaring demand for energy, dwindling global supplies, turmoil in the Middle East and a capricious Kremlin. We are in the midst of a dangerous new world, where the need to secure energy supplies will be increasingly important. The crisis over Ukrainian gas is merely a taste of what is to come.Reuse content