Not Everything It Seems To Be?

It was the late AJP Taylor who suggested that the efficient (or proximate) cause of the first world war was to be found in the the way the national railway timetables had been drawn up. Without wishing to take issue with Taylor (either for or against), it does occur to me that a certain amount of light may be thrown on the otherwise puzzling decision of Gazprom to throw the tap by taking a quick look through looking the election timetables of all the key players (in both Eastern and Western Europe). I was put in mind of this point by the following opening gambit in what is in fact a very interesting and to the point article in today’s FT:

Russia’s row with Ukraine has triggered fresh concern over the security of Europe’s energy supplies and some see nuclear power as the biggest beneficiary.”

Nuclear power, hmmmm. I hadn’t thought enough about this point when I knee-jerked my response yesterday.

A study commissioned by the EU last year warned that, with the arrival of the new eastern European members, EU reliance on Russian gas would increase further. “The vulnerability of the EU to a disruption of gas supplies is growing, partly because of the increased gas imports in general and partly because of the high dependence on a single source, Russia, of the new member states,” the study found.

“The ability to diversify…is limited due to the fixed infrastructure and the organisation structure of the gas industry in Russia.” Russia has become increasingly explicit about its intention to use its energy reserves as a foreign policy tool. The question now is whether Europe should work harder to reduce its reliance on imported energy.

One of the few options available to European countries would be to build more nuclear power stations. After the oil shocks of the 1970s, France embarked on a massive nuclear programme, and today, more than three-quarters of its electricity comes from nuclear power…..

Germany, the largest consumer of Russian gas, has promised to close all its nuclear power stations by 2020. But many analysts believe the new government will agree to extend the lives of many reactors when the political climate is right.

I imagine now you can see where I am leading. In Germany, politically, the time may well be right, or as near as damn it. And the ground has been nicely prepared by the aforementioned EU report. Angela Merkel is now in coalition with the SPD, and in theory there is almost the full term to run. The Greens are well out in the cold, and there’s no chance of them coming in from it anytime soon. In addition, any re-assesment of the use of nuclear energy across Europe would surely see the French industry being the principal beneficiary, and this would go down none too badly in a Presidential election year. So I can see who might be happy the Russians did what they just did: I think here there is a before and an after. What I can’t see, in the same way as I have trouble with Taylor’s railway timetable view, is just how this splendid congruence of interests could have extended all the way down the line to that nice gentleman I saw turning the wheel back and then forth.

While I am here I would recomment Jerome’s post over at European Tribune. As he points out, as far as gas supplies go, Gazprom needs us more than we may need Gazprom. But here you need to distinguish between the long and the short run. The dependency fear is one which revolves around being vulnerable to ‘spur of the moment’ blackmail. Just for a moment imagine (as a kind of thought experiment) that we get a Russian government dependent on support from neo-Nazi nationalists (not an impossible, or even improbable eventuality). Then imagine that to keep these partners happy, the Russina government decides to squeeze Latvia, or Lithuania or Estonia (this is the area where I feel we are most vulnerable to Russian pressure). Imagine that this happens in deep-midwinter, and when we say ‘Hoi, hands off’, all the gas heating in Bavaria goes off. I don’t think the present Russia is a partner you can count on, and I don’t think we should be doing so.

So, in a way, I welcome having a debate about nuclear energy. I’m sure a lot of the arguments have changed since last time we held one, and I’m one hell of a lot sure that I would prefer this to a debate about whether or not a certain action by Russia counts as being militarily aggressive. Its just that I would like to know, when my knee jerks, exactly who it is who is doing the jerking.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

10 thoughts on “Not Everything It Seems To Be?

  1. He now has made sure that the baltic pipeline will be built. Possibly quicker than planned.

    Secondly, what does this do to prices? Has he created a fear surcharge which he will pocket?

  2. “[T]he otherwise puzzling decision of Gazprom to throw the tap” is explained by a desire to benefit the lame-duck incumbent in a French election a year and four months away?
    Hmm. So how is Opus Dei involved?
    I honestly can’t see what you’re driving at with your “splendid congruence of interests”, at the elite level, the wheel-turning level or any other level. Why does the Russian government, via its Gazprom glovepuppet, want to advance the case for nuclear power? Or do you mean rather that Putin is attempting to reassert Russian power over his immediate satellites while avoiding wider trouble by treating Western Europe with exquisite electoral tact? Or something else?
    Ordinarily I wouldn’t bother responding to a blogpost I found unintelligible, but you’re normally such a worthwhile read.

    Many thanks for the link to Jerome’s stuff on this, however. I’m sure I’d have missed it otherwise.

  3. “I honestly can’t see what you’re driving at with your “splendid congruence of interests””

    Let me try to spell it out then. This is definitely not in Russia or Gazprom’s interest, short or long term. Short term it isn’t because they have to back-off immediately (and hence lose face and credibility, just as Putin is about to try and ‘up’ his profile), and long term for the reasons Jerome spells out. From the Russian point of view this has been a big mistake.

    The decision was, however, in the best interests of the French nuclear industry and of all those in the EU who want to advance the nuclear cause. For them now is definitely the time to move.

    If I had a mechanism which could explain how the best interests of the French nuclear industry could make their presence felt in Gazprom I’d be home and dry, but of course I don’t.

    The interesting question is who was egging Putin on. There are those inside Russia who have been pushing for some time now for retaliation against Ukraine, but why would the supposedly level-headed executives of Gazprom pay them such heed, or why would Putin, about to take over G8 presidency, allow them to follow such an ill-advised path.

    Now I am not the only one to advance an ‘electoral timetable’ view. Radio Free Europe has this:

    Russia’s dispute with Ukraine and subsequent gas cutoff has been seen by many analysts as Moscow’s attempt to pressure Ukraine in the runup to its 26 March parliamentary elections.

    This undoubtedly was motivating some people, but not necessarily the ones who actually took the decision. Also Ukraine’s response was pretty predicatble:

    “Some Ukrainian officials are occasionally hinting that they might again resort to siphoning Russian gas from the transit pipelines, if Gazprom imposes unfair prices on Ukraine. That practice can inflict losses on Gazprom in the short term……Moscow is complaining preemptively in Brussels and elsewhere in Western Europe against Ukraine’s alleged siphoning intentions. Gazeport (Gazprom’s export arm) General-Director Alexander Medvedev warned, “The international community will not permit Ukraine to revert to siphoning gas illicitly.Ukraine notoriously used that practice during the mid- and late 1990s, initially at Gazprom’s expense;”

    Ironiically it was the arrival of Viktor Yushchenko and Yulia Tymoshenko in the prime ministers office in 2001 which put a stop to this.

    Putin is also facing elections in 2007, and he has personally taken an active part in animating the Gazprom decision:

    “Authorized by President Vladimir Putin, Gazprom halted deliveries of Russian gas to Ukraine as of 10 am Moscow time on January 1. To maximize the political impact in Ukraine, Russia’s state-controlled television channels showed Putin, his close aide and Gazprom chairman Dmitry Medvedev, and other top officials authorizing the halt in supplies to Ukraine. The channels also showed overdramatized scenes from Russian compressor stations near the Ukrainian border shutting off the supply valves to that country.”

    “Putin personally gave Ukraine a 24-hour ultimatum on December 30, demanding that Kyiv sign by the next evening a supply contract for Russian gas in 2006 on terms demanded by Russia, or else have the supplies halted on January 1.

    Putin is under pressure form the extreme-nationalist right and of course ‘gestures’ like the Ukraine move can be read in many ways.

    At the end of the day I am not suggesting that we should put all this down to the ‘hidden hand of opus dei’, I am simply saying that when you dig a bit deeper there is more going on here than meets the eye. Collisions of opposing forces normally produce unforseeable outcomes, and I hate conspiracy theories, but still, I also think that when something strange happens it is often interesting to also look at who the principal beneficiary of that strange thing is, and work back from there.

    If I was an investigative journalist, I would say there was plenty of material to dig-around in here, but I am, as you indicate, a mere humble blogger :).

  4. It has the effect of pushing nuclear power. Indeed Mr. Stoiber has just made the move.

    But this may or may not be incidental to the decision. In any case, Russia, too, has a nuclear industry. When you say that not substituting gas for nuclear power in the EU would hurt Russia, you are making three assumptions. Russia could deliver that much gas, Russia believes that the EU would put itself in that much a dependency and that the EU would import the gas from Russia. I guess to Mr. Putin putting his own country into a position where it had no secure electricty supply is unthinkable, making him assume the same about the EU.

  5. “When you say that not substituting gas for nuclear power in the EU would hurt Russia”

    I’m not exactly saying this Oliver. I am saying that Russia has just lost a lot of credibility for its modus operandi. It is irrelevant who really is the more guilty party here, Ukraine or Russia. When you see two people brawling in the street, neither side comes off particularly well.

    This credibility is important to Russia, since energy is a very sensitive area, and it doesn’t matter whether the issue is gas or nuclear, no-one wants to rely on an unreliable partner.

    Interesting to note your Stoiber detail though.

    “Russia believes that the EU would put itself in that much a dependency”

    Well it’s hard to know what those who rule Russia believe these days, especially since most of the things they do seem truly ‘unbelieveable’.

    “In any case, Russia, too, has a nuclear industry.”

    Oh yes, and this is going to be very important, as we can see in the cases of Iran and Pakistan. This is another reason we may want to rethink our nuclear attitudes in the EU.

  6. @ Bert

    Incidentally I would point out that I am not suggesting corruption here, or anything like it. Just that in a game play, if one side can be expected to respond stupidly, and the referee doesn’t pull the yellow card at the first infringement, then the ‘hard nut’ team can be expected to continue playing hard-nut, until such time as the referee (in this case Solana), either out of frustration or as a result of a prior decision finally pulls the red one.

    Lobbying is, in a democracy, a perfectly legitimate activity, so if lobbyists from the French nuclear industry gave Putin’s advisers the idea that the red card wouldn’t be played (after all you only want market prices etc), and if the advisers were silly enough to swallow this, well then……

  7. I am saying that Russia has just lost a lot of credibility for its modus operandi. It is irrelevant who really is the more guilty party here, Ukraine or Russia. When you see two people brawling in the street, neither side comes off particularly well.

    Sorry for overreading.
    Are you sure that Mr. Putin has lost credibility in his own eyes? After all he has solved the crisis very quickly. That he created it in the first place is not necessarily a view held in Russia.

  8. ‘Cui bono’ is a good principle, absolutely.

    And I’m sure the Russian electoral timetable plays a big role. (I’d be less confident about the degree of calculation involved in any link between the Gazprom decision and the Ukrainian elections, if only because of the same logic you follow above: who is most likely to benefit?)

    Fundamentally I think we can agree that the ramifications for the nuclear debate in Western Europe are unintended consequences of the decision, rather than the visible fruit of a hidden pattern of interest and influence. The role of machiavellian French lobbyists can only be guessed at, but even they are several stages removed from the people turning the gas taps. We know that states and corporations play it shady and devious in the energy sector, but the dots don’t connect A to B in this case.

  9. Bert,

    I really don’t think we disagree.

    “Ordinarily I wouldn’t bother responding to a blogpost I found unintelligible”

    Well lucky you did this time, since if you hadn’t bothered we wouldn’t have had this exchange, which I think has clarified things.

    “The role of machiavellian French lobbyists can only be guessed at..”

    Yes, and moving from fact to fiction, wouldn’t this make a great novel. If only I had the time and the talent!

    I even have a title if anyone wants it:

    French Dis-connection II.

    In the end I am more than happy if the French get back technical leadership in the nuclear reactor business. I think this will be good for all of us in Europe. But first I think I would like to see a debate about nuclear power as an alternative, so we are all a bit better informed before taking any important decisions.

    At present I am getting interested in the European Pressurised Water Reactor (or EPR). There is an interesting link here:

    http://www.uic.com.au/nip16.htm

  10. It also opens up opportunities for the British nuclear waste reprocessing industry, currently overdependent on the Japanese. France is the only competitor in this market; it’s currently worth about €20 billion annually to the UK.

    It’s a complex and highly technical industry, involving a large funnel attached to a pipe pointed at the Irish coast. [link]

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