Russia Cuts Gas And Europe Shivers
Gazprom, the Russian gas monopoly, halted nearly all its natural gas exports to Europe on Tuesday, sharply escalating its pricing dispute with neighboring Ukraine. The cutoff led to immediate shortages from France to Turkey and underscored Moscow’s increasingly confrontational posture toward the West.
Across Europe, countries reported precipitous drops in gas pressure in their pipelines at the peak of the winter heating season in a bitterly cold January.
In one sign of the extent of the shutoff, Ukraine’s president, Viktor A. Yushchenko, said Gazprom intended to halt all shipments passing through his country, which account for about 80 percent of Russian gas exports to Europe. Europe, in turn, depends on Russia for 40 percent of its imported fuel.
While each side blamed the other for the scope of the latest drop in gas shipments, Russia’s prime minister, Vladimir V. Putin, had personally announced on Monday evening on state television that he was ordering a sharp reduction in gas flows, saying Ukraine was siphoning gas from the pipelines without paying.
For Putin, the escalation comes at a perilous time, as slumping energy prices threaten the fiscal health and political stability that have underpinned his popularity at home.
Some analysts of Russian politics had expected Putin to become more conciliatory as energy prices fell. Instead, he has taken a hard line in seeking to raise gas prices in Ukraine and perhaps create panic-buying on the international market, where prices of natural gas and oil, Russia’s leading exports, have fallen sharply in recent months.
“They’re still playing hardball, when they have to realize the rules have changed,” Marshall I. Goldman, a senior scholar in Russian studies at Harvard and the author of the recent book “Petrostate: Putin, Power and the New Russia,” said in a telephone interview. “It happened so quickly that I don’t think they’ve had time to realize the implications.”
With temperatures plunging, European leaders expressed mounting concern. Some countries announced rationing for industrial customers to reserve enough heating for residential buildings.
A spokesman for the European Commission said that the cut had come “without prior warning and in clear contradiction of the reassurances given by the highest Russian and Ukrainian authorities,” adding, “This situation is completely unacceptable.”
By Tuesday evening, even as more than a dozen European countries faced the risk of shortages of heating fuel, Gazprom threatened additional cuts.
The cutoff appears to have multiple aims.
Ukraine has angered Russia by seeking membership in the North Atlantic Treaty Organization, as has Georgia, a country Russia fought a brief war against last summer.
Putin is also under heavy pressure domestically. Oil and gas exports provide about 60 percent of the Russian budget; oil prices, meanwhile, have fallen by about two-thirds since their peak last summer.
The effects are rippling through the economy. The ruble is being devalued, Russian companies are facing bankruptcy and the government’s huge budget surplus will turn into a deficit next year if prices do not rebound, analysts say.