Russian gas giant Gazprom has signed a deal with Belarus to sell gas for $100 per 1000 cubic meters (up from $45). The deal was signed right before 2007 hit and also sees Gazprom get a 50% stake in Belarus’ gas pipeline Beltransgaz.

Already one of the largest producers of gas in the world, Gazprom is seeking more command by securing control of the Belarussian pipeline, which is strategically important in delivering gas to Europe.

While there is widespread criticism of Russia for using gas prices to dictate foreign policy, there is also a counter-critique. State owned or not (Russia has a controlling package in the company), Gazprom is in the business of making money. The high profile cases of price hikes come from the Soviet past, with Ukraine, Georgia and others benefiting from friendly prices.

Did Belarus truly deserve to pay $45 when Europe pays over $200? Shouldn’t the market decide the price?

That’s precisely the lesson Georgia learned when it had to cave in to a new price of $235.

Friendly prices are usually artificial. And require friendship, not constant finger-pointing.


To watch in 2007

January 1, 2007

Afghanistan. Often forgotten because of the headlines from Iraq, Afghanistan is not a solved affair. Only Kabul is somewhat stable, with Kandahar and other cities remaining unsafe.

Global Warming. Scientists have been talking about it for years, and Al Gore has now popularized it with a documentary film . Yet there is still no clear policies on tackling this global issue. The US has not returned to the Kyoto framework (and hasn’t offered a good alternative) and Canada’s new government has been defiant in backing out of the Kyoto protocol. Meanwhile, the arctic is shrinking.

Iran. Will the Republic bow to pressure and halt uranium enrichment? And if not, what will Ahmadinejad do next? Iran has potential to play a vital regional role in stabilizing Iraq. It also may face opposition from the US.

Iraq. Will British and US occupying forces leave Iraq and leave it to Iraqi forces to provide security?

Lebanon. The standoff in Beirut continues, with protesters vowing to stay on. Will Prime Minister Siniora give in? Will protesters patience run out?

Mexico. Mexico will spend 2007 with new president Felipe Calderon. Will he be able to solve the mess of Oaxaca? Will state violence be halted or will the President disregard Mexican citizens in favor of Governor Ruiz?

North Korea. The DPRK has vowed to continue to provide a strong defense of the country and called on the 1.1. million army to be prepared to “mercilessly defeat any invasion of the US imperialists.” If nuclear talks don’t go well, will the Koreans test another bomb?

Palestine. Fatah and Hamas are at a stand-off, with Israel allowing arms deliveries to Fatah. Will elections take place? Will Abbas reach a deal with Olmert? What if Hamas prevails in the elections?

Russia. A presidential election is set for March 2008, yet some cynics have contended that Putin will attempt to stay in power, despite constitutional law which allows for only two terms. Putin the dictator?

Somalia. The country has lived through a lot in the last six months, with power shifting from one leadership to another, violence starting and ending. Will it stabilize in 2007?

United Nations. Ban Ki-moon enters his official duties as Secretary General of the UN. Will the troubled international body gain influence with its new face and voice? The test will be how Ban Ki-moon — a South Korean — handles the nuclear crisis in North Korea.

United States. The presidential elections are set for 2008, but candidates are already stepping up to the race. Will Senator Clinton run? Will McCain enter the race?

And everything else.

Please post omissions, like some of the obvious ones (China, Darfur, Haiti).

Living in Moscow

December 28, 2006

Russia has been in the news quite a bit lately. A common trend is to draw the parallel between Russia of today and the Soviet Union. For example is this weekend’s article in the Washington Post on the 15-year anniversary of the collapse of the Soviet Union.

On today’s Off the hour I spoke with Alexander Popov, who is a producer working in Moscow about his experience of politics while living in Russia’s capital and what he thought of the parallel. Listen below:


Negotiations and Resolutions

December 20, 2006

While it appears that there is still no consensus on an Iranian resolution, the US wants the UN Security Council to vote on one this week. State Department spokesperson Sean McCormack said the US wants the vote before the weekend.

It’s not clear yet what the resolution would be and what kind of sanctions could be imposed. Obviously, the question right now is of accommodating Russia who has vested economic interests in Iran. However, the resolution vote would be coming at a time when the US is trying to send pressure signals to Iran, even considering a bigger military presence in the region.

It also comes at a time of ongoing negotiations in Beijing: six-party talks are under way, attempting to settle the nuclear issue in North Korea. Like in the case of Iran, accommodating Russia will be an issue, with the addition of China. With permanent seats on the UN Security Council, the two states may be courted to make certain votes in exchange for support in other areas. If a successful resolution is passed in the Security Council this week, it will become clear what trade-offs China, Russia and the US have gone for, if any.

China is probably North Korea’s closest ally, but has been forced to partake in the financial sanctions against the regime. Notably, the North Koreans have made it clear at the ongoing talks that the lifting of financial sanctions will be necessary for talks to progress. While China is participating in these sanctions, it is also losing out economically by doing so. Because North Korea is as isolated as it is — with China and Russia its closest partners — it gives the Chinese a near-monopoly on North Korea’s financial markets.

Russia is involved in Iran’s civilian nuclear project and wants any resolutions to not jeopardize those projects, as it looks to gain more lucrative contracts with the country. It is also looking for a bigger role in Asia as a counter-balance to the challenges it’s receiving in Europe.

Both China and Russia have no interest in North Korea’s nuclear program developing, as that lowers their influence — the two being nuclear powers.

Siniora in Russia

Moscow, Russia — Lebanon’s Prime Minister Fouad Siniora is in Moscow to meet with Russian President Vladimir Putin and other top officials. The visit comes ahead of Basher Assad’s visit to the Russian capital, and is likely intended to garner Russian influence over Syria.

While Syria was not directly mentioned, President Putin said that Russia would help Lebanon ease the political tension.

Role for Syria?

It is no secret that Russia is in good relations with Syria, both politically and economically, so Putin’s support will be useful to the Siniora government. However, more is needed to solve the political standoff.

The idea that Damascus can stabilize the situation lies on the fact that Hezbollah has been linked to Syria. However, the current protests in Beirut are not a Hezbollah-only project. In fact, several political factions have mobilized to demand a unitary government. According to Ziad Najjar, of the Council of Lebanese Canadian Organizations, Hezbollah represents about a third of protesters.

The Lebanese crisis is not about outside actors, but is about the domestic situation. Domestically, Lebanon’s government has limited support; according to a poll conducted by Al-Akhbar, 7 out of 10 Lebanese favor the formation of a unitary government in Lebanon, something Prime Minister Siniora has been refusing.

Syria can certainly help with the situation, but the solution to the crisis is inside Lebanon.

European states have reportedly drawn up a new text for the Iran Nuclear resolution. The previous draft had been rejected by China and Russia.

Unidentified officials have told The New York Times that the new text allows for Iran’s civilian nuclear program to go on, as the prohibitions have to do with activities linked with making a nuclear weapon. It also removes restrictions on the nuclear reactor being built by Russia in Bushehr. The revision is undeniably meant to get China and Russia on board and it’s likely that the Europeans will get the support of the two veto-yielding powers.

The key issue for Russia is the idea of nuclear energy and what Russia stands to gain economically if Iran is to develop its nuclear program. With Bushehr off the new proposal, the Russians will be able to complete the power plant without obstruction. If the project is successful, they stand to gain more similar contracts, as Iran is looking to expand in the nuclear field. The new text also urges Iran to go ahead with the proposals put forth to it in June, which include stopping uranium enrichment. Because it will need to enriched uranium for its nuclear energy, Iran may chose to have it enriched in Russia, as was proposed a few weeks ago. This would benefit Russia economically as well.

China has economic ties with Iran as well and may want to participate in helping Iran shape its nuclear energy program as well, reaping the economic benefits received by Russia thusfar (the Bushehr plant is worth 800 M$).

The revised resolution which is to be formally presented on Monday is more reflective of the changing reality of countries like Iran, which are undergoing new stages of development that include nuclear energy production. In the same trend is India, which is currently in the process of finalizing a deal on cooperating with the US on its own nuclear energy program.

For more, see Nuclear Energy on Rise, Iran on Board.

Russia is refusing to comment this weekend’s reports from Japan, which suggested that North Korea would offer Russia exclusive rights to its uranium in exchange for open support at the forthcoming nuclear negotiations. A representative of Rosatom, Russia’s Nuclear Agency, said that the agency does not comment on rumors, while Russia’s foreign ministry called the reports “provocative.”

It is important to note that while Russian officials have not commented on the reports, they did not deny them either. There is no reason to assume that such talks are impossible; after all, apart from China, Russia is North Korea’s closest ally. With pressure from the US to deal with North Korea accordingly, Russia needs incentives to work with the North Korean government. It is also in search of new areas of influence, as it is constantly being undermined in its traditional area (former Soviet Union), notably by Georgian President Sakaashvili.

North Korea also has a lot to gain from the deal. For one, it will provide them with a stable stream of income. This is significant for North Korea’s economy, which has been isolated for years and has also suffered serious economic sanctions since it walked our of the nuclear negotiations last year. It would also maintain part of the infrastructure required to build nuclear weapons. While North Korea would not be enriching uranium, it would be producing it, making it possible to secretly continue enrichment in the same plants that produce the uranium.

It is interesting to note that Russia today said that the nuclear negotiations would not begin before 2007, citing the forthcoming Christmas holidays. This may be the case, but it is also possible to speculate that Russia is still in talks with North Korea over the alleged deal. Furthermore, the deal does not seem completely lack credibility, as the Russians have already offered to enrich uranium for Iran’s nuclear power plants.