Gazprom delivers more gas to the EU, economic growth in Russia collapses, US policy comes under even greater scrutiny
Hamishly, though very cautiously, the state news agency Ria Novosti reports that Gazprom has increased its gas exports despite the tense situation, the unseasonably mild winter and its announcement that it wants to become more independent of Russia.
In the first quarter, Gazprom said gas exports rose 2.6 percent, while imports from Algeria, Qatar or Libya fell or stayed the same. "Gazprom is de facto expanding its market share in Europe – and this despite the proclaimed policy (by the EU) of reducing dependence", said Sergei Komlev, head of the Gazprom Export department. However, it is clear that nothing will change so quickly, especially since the conflict with Russia only began after the fall of Yanukovych and the dissolution of Crimea. It is quite possible that the EU will first fill up its storage facilities and then return the gas to Ukraine, as planned, if Ukraine and Russia cannot reach an agreement on further gas supplies.
It is still unclear how the construction of the South Stream pipeline from Russia to Bulgaria, bypassing Ukraine, will proceed. There is also disagreement in the EU on this ie. Recently, however, EU Energy Commissioner Gunther Oettinger made it clear that he was not fundamentally opposed to the pipeline, which is scheduled to begin operations in 2017. Oettinger also opposes the Energy Union proposed by Poland, wants an expansion of pipelines and calls on Ukraine to pay gas bills to Russia. Gazprom has been supplying Lithuania with cheaper gas since July, and this has also been allowed to ease the prere from the Baltic states, which in turn the U.S.A. has been pouncing on.
Russian media, however, are now also reporting that Russia is not getting away unscathed in the conflict with the West. Not only has the ruble fallen and much capital moved abroad, but the Russian Ministry of Economy has now declared that economic growth will buckle and there may be a recession in the first half of the year. Government revenues will fall, but the losses will be partially offset by the devaluation of the ruble. Inflation is now at 7.5 percent, and is expected to fall to 6 or 6.5 percent in June. In April, the economy was expected to grow by 2.4 percent, but now it is expected to fall by 0.2 or 0.3 percent. If the West does impose economic sanctions, worse is to come.
Russia may be able to compensate for losses in the short and medium term, but in the long term things will look bleak if investments fail to materialize and necessary technology imports are cut back. For too long, Russia has relied only on the export of raw materials and neglected research and science as well as the modernization of industry. In particular, Russia is in danger of losing ground in the field of ruthlessness, which is why Putin once again emphasized yesterday that Russia’s ruthlessness must become independent of imports. The government has recognized this for some time and has initiated programs, but this will not change quickly, especially since corruption, the rule of oligarchs and a policy that increasingly restricts freedoms are preventing necessary changes.
It has now become known that the son of Vice-President Biden, the representative of a strong anti-Russian and pro-Ukrainian policy in the White House, is a member of the board of directors of Burisma Holding, of all people. Burisma is the largest private gas producer in Ukraine and has rights to several large gas fields. Hunter Biden is a lobbyist for international relations in the legal department. Also, as recently as April, Devron Archer, a close friend of U.S. Secretary of State Kerry, was added to the board, and no secret of this is made. There is no Ukrainian on the four-headed board, in 2013 the American investment banker Alan Apter was included and in 2014 the former Polish President Aleksander Kwasniewski was quickly added.
It also looks as if they quickly wanted to get their fingers in the pie in the course of the expected upheaval supported by the U.S. government, especially by Kerry and Biden. It is not unreasonable to ame that the privatization of the state-owned company Naftogaz is being pursued. Finally, along with the support of the Maidan movement came the promise to help the bankrupt Ukraine with loans, which will be done mainly by the IMF, which is following the usual neoliberal strategy, giving good deals to foreign investors, while saving money at home.
Behind the support of the Maidan movement and then the transitional government in Kiev on the part of the U.S. government there may also be private interests, but the White House has also already made it clear that with the anti-Russia policy the dominance of the U.S. in the EU and in NATO is to be strengthened, which is also to have an impact on the planned free trade agreement, in addition, one wants to swallow Europe with American shale gas, presumably, however, Ukraine, which could be "Russian granary" interesting for investors in agriculture and American seed companies such as Monsanto to be. The U.S. Department of Agriculture, in any case, according to its spokesman, sees no problems with the involvement of the Bides’ son. This is a private matter.
Energy could also have played a direct role, since Ukraine is largely dependent on gas imports from Russia, despite its own production, but there are huge untapped oil and gas fields in the Black Sea off the Crimea. A consortium under the leadership of the U.S. company ExxonMobil had already been awarded the contract for the development of a field under Yanukovych (And the Crimea is also about oil). Unfortunately, nothing came of it, because Russia took over the peninsula together with the resources in front of the coast after the fall of Yanukovych. Presumably Gazprom will now be able to exploit the fields instead of Exxon, should Crimea remain with Russia.
Expectedly, the first meeting of the round table brought only one result, that they want to continue talking. The separatists were left out, and the transitional government in Kiev wants to keep it that way, even though it claims to want to talk to everyone.