Ukraine/Russia:

Behind the gas conflict

THE CUTTING of gas supplies to Ukraine by Russia's state-owned energy company, Gazprom, is intensifying the political antagonisms between Washington/EU capitals and Moscow.

Dave Carr

Russia's Putin government says the decision to cut gas supplies - after Kiev refused to pay a four-fold price increase - is 'purely a commercial decision'. However, Ukraine's government and the US/EU say Russia is punishing Ukraine following last year's 'orange revolution' (see the socialist, issue 420) that installed the pro-Western Yushchenko regime.

After independence, following the Soviet Union's collapse in 1991, Ukraine's pro-Russian governments continued to benefit from subsidised gas imports. But, Yushchenko's aim for Ukraine to join the EU and NATO has alarmed Moscow.

Russia still maintains a naval base at Ukraine's Black Sea port of Sebastopol. Ukraine's government threatens to retaliate against Russia in the gas dispute by demanding increased payments for use of its port facilities. Meanwhile, gas deliveries to a number of European countries - supplied through a pipeline that crosses the Ukraine - have experienced a drop in gas pressure.

Russia says it will restore supplies and accuses Ukraine of stealing gas. Kiev denies this but also says it is entitled to draw on gas from the western pipeline if temperatures fall below freezing.

The EU has suggested talks to resolve the dispute but, notwithstanding how the stalemate between Russia and Ukraine is resolved, securing energy supplies is increasingly occupying Western governments' minds.

Of course, securing energy supplies has always been a strategic objective of imperialism. In recent times this has meant the US-led invasion of Iraq and the US state department backing an attempted right-wing coup against Hugo Chavez, the populist president of oil-rich Venezuela in April 2002.

This geo-political strategy has assumed a greater importance because of the world economy's increasing demand for energy - partly due to the rapid growth in the economies of China and India.

By 2020 two-thirds of the EU's energy requirements will be imported, including 75% of its natural gas needs. With most of the world's oil supplies contained in the volatile Middle East and central Asian states, as well as in a resurgent Russian state, political and military conflicts will become more likely.

As the Blair government 'debates' Britain's future energy needs, advocates of nuclear power are seizing on this insecurity in energy supplies. Powerful companies in the nuclear lobby claim nuclear energy is a viable alternative to insecure and expensive gas and oil imports. Of course, this conveniently ignores the dangers of the technology, especially waste disposal, and the massive costs involved in nuclear energy.

But what the gas supply conflict between the Ukraine and Russia shows is the need for a socialist system of international planning of sustainable energy supplies between countries - something which the world capitalist system, with its inherent conflicts between nation states and its insatiable and destructive drive for profits, is incapable of achieving.

Centrica's gas price hike

THERE HAVE been worries that Russia's decision to cut gas supplies could affect Britain's increasingly fragile energy system where mismanagement and profit-seeking by privateers have already brought higher prices and more dangers of cut-offs.

Centrica, who own British Gas, have already told their customers that they'd pay more for their gas in 2006 as the wholesale cost of fuel keeps soaring. Many British Gas workers could lose their jobs on top of the 2,000 redundancies announced during 2005.

This would be the fourth big price rise in two years and follows rises of 14.2%, 12.4% and 5.9%.

Pensioners, the low-paid and people with young families could be hardest hit. Consumer watchdog energywatch says every 1% increase in fuel prices pushes another 40,000 households into fuel poverty - ie those spending over 10% of their income on fuel bills.

Centrica blamed the rises on British Gas' losses in the last half-year but Centrica's shares prices were still increasing and its profits went up from £1.23 billion last year to an expected £1.53 billion for all 2005.