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Ed Hancox: The Politics of Pipelines

It’s winter in Europe: time for snow, St. Nicholas, and the annual Russia-Ukraine dispute over natural gas supplies. On Wednesday, Russian President Dmitry Medvedev warned his counterparts in Ukraine not to try to modify a 10-year gas supply contract between the two countries. It’s a warning not to take lightly—last January, Russia turned off the taps to the Ukrainian pipeline network over what they said was a billion dollar debt owed to them by Kiev and claimed the Ukrainians were siphoning off gas bound for countries further west in Europe. (For their part, Kiev blamed the missing gas on their leaky, outdated pipeline network rather than theft). Last January’s shutdown had drastic effects. Europe receives about 20 percent of their natural gas supplies from the Russian pipeline network. Countries in the former Soviet-controlled East though get half, or in some cases almost all, of their supplies via Russia. The Russia-Ukraine gas feud shut factories, chilled cities, and provoked a crisis across much of Europe. Russia has the second-largest known reserves of natural gas in the world; Turkmenistan is thought to have the third-largest reserves, and other Central Asian states have significant stocks of their own. Europe would like to tap into these gas fields with pipelines that avoid Russian territory. Moscow, meanwhile, is eager to lock these Central Asian supplies into new pipeline networks that they would build and operate, knowing that control over a big chunk of Europe’s energy supplies provides a huge amount of political leverage. Pipelines have thus become a big political issue for Europe. And in the race to build new pipelines, lately Russia seems to be edging into the lead.



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