Putin Strikes Back: Russia Cuts Off European Gas Supplies, Starts Selling Dollars: “The Decision Has Been Made”

[jerry]

Mac Slavo
January 15th, 2015


http://www.shtfplan.com/headline-new...-made_01152015



Vladimir Putin has been silent lately. But if anyone thought he had been shamed into defeat or marginalized, then think again.

In the last few hours Russia has announced two key strategic decisions that show they are not going to stand idly by while their economy and way of life are destroyed by Western forces.

First, presumably in response to stiff sanctions leveled by the United States and the European Union after the annexation of Crimea last year, Russia has cut off 60% of Europe’s gas supplies right in the middle of winter. This has caused an almost immediate crisis in six European nations that have seen a complete cut-off to their supplies – Bulgaria, Greece, Macedonia, Romania, Croatia and Turkey – with more to follow. According to reports via Zero Hedge, the effect has been almost instantaneous.

Without Russia residents across Europe have no way of staying warm.


Vladimir Putin ordered the Russian state energy giant Gazprom to cut supplies to and through Ukraine amid accusations, according to The Daily Mail, that its neighbor has been siphoning off and stealing Russian gas. Due to these “transit risks for European consumers in the territory of Ukraine,” Gazprom cut gas exports to Europe by 60%, plunging the continent into an energy crisis “within hours.” Perhaps explaining the explosion higher in NatGas prices (and oil) today, gas companies in Ukraine confirmed that Russia had cut off supply; and six countries reported a complete shut-off of Russian gas. The EU raged that the sudden cut-off to some of its member countries was “completely unacceptable,” but Gazprom CEO Alexey Miller later added that Russia plans to shift all its natural gas flows crossing Ukraine to a route via Turkey; and Russian Energy Minister Alexander Novak stated unequivocally, “the decision has been made.”

Russia has taken similar steps in the past because of non-payment but turned the gas supplies back on once deals were reached.

This time, however, there won’t be a deal.

Russia says it will deliver the gas through Turkey, and then it’s up to the European Union to build the infrastructure that will transport it to the rest of the continent, as noted by Bloomberg.


“Transit risks for European consumers on the territory of Ukraine remain,” Miller said in an e-mailed statement. “There are no other options” except for the planned Turkish Stream link, he said.

“We have informed our European partners, and now it is up to them to put in place the necessary infrastructure starting from the Turkish-Greek border,” Miller said.

…

“The decision has been made,” Novak said. “We are diversifying and eliminating the risks of unreliable countries that caused problems in past years, including for European consumers.”

Europe, of course, does not have the necessary infrastructure in place for this, and Vladimir Putin most certainly knew this before he shut off the spigots.

Second, and perhaps even more significant than the overt move to show Europe who’s boss, Putin took a direct shot at the United States.

Also from Zero Hedge:


As Bloomberg reports Russia “may unseal its $88 billion Reserve Fund and convert some of its foreign-currency holdings into rubles, the latest government effort to prop up an economy veering into its worst slump since 2009.”

These are dollars which Russia would have otherwise recycled into US denominated assets. Instead, Russia will purchase even more Rubles and use the proceeds for FX and economic stabilization purposes.

“Together with the central bank, we are selling a part of our foreign-currency reserves,” Finance Minister Anton Siluanov said in Moscow today. “We’ll get rubles and place them in deposits for banks, giving liquidity to the economy.”

Call it less than amicable divorce, call it what you will: what it is, is Russia violently leaving the ranks of countries that exchange crude for US paper.

What we are seeing are the strategic moves that will eventually catalyze the next great war. And make no mistake, this is exactly what’s in store for the world should these escalations continue.

[A Voice from the Mountains]

Well no one can say he didn't warn them. Central Europe will start feeling the pressure next.

The EU promised to provide oil for these nations if Russia stopped supplying, so let's see how that works.

[jerry]

this coupled with the Swiss removing their price cap and Greece about to exit .... its show time

[Omni]

I can't help but get mad a little when I see sanctions placed on countries by the USA. Didn't Japan attack the USA because of sanctions? It's a shady way to create war and blame it on the opposing side for starting it, it seems to me. If everyone on earth was content and had their general desires accounted for, there would be very little crime, and suffering would be low too. When people are starving, desperate, and have no rights or freedoms that is when SHTF and/or they take arms against their oppressors. It's no wonder crime is much higher in areas that have poverty. It seems to me sanctions do not punish the leaders of the country, they punish the average citizen. I'm not sure they have ever been too effective, or applied with integrity.

I have way more respect for Putin than any US president(my country) in my lifetime. The "Government(s)" of the world are too corrupt for me to be comfortable thinking about such. How can we change these actions? It seems like there is no way to change what the cabal's agenda is sometimes... Am I wrong? Theoretically there may be all sorts of ways... But they seem to always get their way on a global scale. Does anyone have a solution to this that is attainable and realistic? I don't think meditating peace is helping personally....

[fractal being]

I don't know about the other countries, but I can assure you that not such thing has happened in Greece. In fact right now my home is being heated from Russian gas. Furthermore I would find it rather absurd given the huge losses Russia has from falling oil prices. I can also assure you that there are close to 0 chances that Greece will leave the Eurozone after the coming election. So I would double-check the original source.

[Tesla_WTC_Solution]

Thanks for this thread! Holy crap

I'd kind of gone cold lately on the Russia issue, but am not surprised that the Bear Bites Back!

There is a thread somewhere here on PA called "The Bitter Smell of War for Natural Gas" or something like that.

here:

https://projectavalon.net/forum4/show...or-Natural-Gas



Has a bit of background on this weird issue!

See, BP holds about 20 percent of Gazprom and I think Russia wants to shed some political dead weight.
So they are ok with the prices being up/down/whatever as long as they get out of the messed up bed they were in with BP.


I could be wrong but I think to make up for the unforseen cost of war with Ukraine, Russia wants BP to again shoulder the lion's share of its own costs,
rather than leeching.

just FYI and any economist shoulda seen it happening



for the doubters here is some more official looking news:

http://itar-tass.com/en/economy/771204

Gazprom to use Turkish route to substitute Europe-bound supply of 63 bcm via Ukraine

Economy January 14, 19:25 UTC+3
The Gazprom head Alexey Miller made this statement in response to a question about the fate of Russia’s South Stream gas pipeline project

http://news.yahoo.com/gazprom-warns-...212440234.html


Gazprom warns EU to link to Turkey pipeline or lose Russian gas
AFP
January 14, 2015 4:24 PM















its easier to look it up than discredit the OP

[fractal being]

Posted by Tesla_WTC_Solution (here)


for the doubters here is some more official looking news:

http://itar-tass.com/en/economy/771204

Gazprom to use Turkish route to substitute Europe-bound supply of 63 bcm via Ukraine

Economy January 14, 19:25 UTC+3
The Gazprom head Alexey Miller made this statement in response to a question about the fate of Russia’s South Stream gas pipeline project

http://news.yahoo.com/gazprom-warns-...212440234.html


Gazprom warns EU to link to Turkey pipeline or lose Russian gas
AFP
January 14, 2015 4:24 PM


its easier to look it up than discredit the OP

I get the feeling this is directed to me.

Sorry but the first thing to trust before anything propagated on the internet is my own personal experience, especially when it is in regards to my world. The OP is in present tense and I can definitely say it is not happening based on my own testimony.

The articles you presented are in future tense and there's a reason for it. Why? Because the South-stream is not operational yet and it will probably take a couple of years before it is. The southstream was supposed to continue further from Turkey, going through Greece-Bulgaria-Albania and up to Central Europe. However Bulgaria under EU pressure decided to drop from it a year ago (and has now regretted it) and around December 2014 Russia made the decision to stop the pipeline in Turkey.

So what I see here is an attempt [presumably from Russia] to push for a new start on that pipeline. So I can't argue that the intention of Russia is such as mentioned in the articles or the OP, however it's not something that is happening right now. It will take at least a couple of years before it materializes. I hope that clears it up.

[jerry]

Posted by fractal being (here)
I don't know about the other countries, but I can assure you that not such thing has happened in Greece. In fact right now my home is being heated from Russian gas. Furthermore I would find it rather absurd given the huge losses Russia has from falling oil prices. I can also assure you that there are close to 0 chances that Greece will leave the Eurozone after the coming election. So I would double-check the original source.

heres a few off the top that indicate an exit may very well be in the cards , and being a gambler the zero odds you place on it not leaving is whistling past the graveyard http://www.washingtonpost.com/blogs/...r-been-higher/
http://rt.com/news/219639-greece-eurozone-exit-germany/
http://www.businessinsider.com/uk-el...ne-exit-2015-1
http://www.reuters.com/article/2015/...0UU5AF20150115

[fractal being]

Posted by jerry (here)

Posted by fractal being (here)
I don't know about the other countries, but I can assure you that not such thing has happened in Greece. In fact right now my home is being heated from Russian gas. Furthermore I would find it rather absurd given the huge losses Russia has from falling oil prices. I can also assure you that there are close to 0 chances that Greece will leave the Eurozone after the coming election. So I would double-check the original source.

heres a few off the top that indicate an exit may very well be in the cards , and being a gambler the zero odds you place on it not leaving is whistling past the graveyard http://www.washingtonpost.com/blogs/...r-been-higher/
http://rt.com/news/219639-greece-eurozone-exit-germany/
http://www.businessinsider.com/uk-el...ne-exit-2015-1
http://www.reuters.com/article/2015/...0UU5AF20150115

Oh boy, I can't blame anybody for this because I've been meaning to write an OP about all the lies that are being propagated from western MSM regarding the upcoming election in Greece, but I got lazy or to put it more precisely I got taken down from an illness recently. All these articles are part of a fear campaign that is orchestrated from the ruling conservative party in Greece in concert with their corrupt collaborators in Europe in order to stop the Greek people from electing for the first time a government from the people for the people and finally say NO to the endless austerity that has lead 30% of the population in extreme poverty and 6000 souls to suicide.

To make a long story short these coming elections (January 25th) the Greek people are projected to turn their back to the mainstream parties (PASOK -Social democrats, ND- Conservatives populists) which in previous elections would get an 80-85% of the votes combined and now they'll get max 30-35% combined, in favor of a center-left party (SYRIZA) that until 2010 would get barely 4%. A center point of the fear campaign is that if the Greek people dare to turn their back on the mainstream banker puppet parties and favor SYRIZA, then Greece would exit the Eurozone, Supermarkets will be empty, Greece will get flooded with illegal emigrants, Banks will shut down, meteors will devastate the land, typhoons the sea, plagues will kill everybody and all that crap. The Greeks are not giving into fear, I would advise you to do the same.

The SYRIZA party itself has made it clear that it has no interest in taking Greece out of the Eurozone in every chance they get and the Greek people themselves are majorly in favor of the EURO currency.

For the time being I would kindly ask you to trust my word until I am able to prepare a proper OP with English aritcles since right now all my collection consists only from articles in Greek. Indeed there is a big change coming in Greece, but not the one that the corrupt MSM are selling you.

[jerry]

Posted by fractal being (here)

Posted by jerry (here)

Posted by fractal being (here)
I don't know about the other countries, but I can assure you that not such thing has happened in Greece. In fact right now my home is being heated from Russian gas. Furthermore I would find it rather absurd given the huge losses Russia has from falling oil prices. I can also assure you that there are close to 0 chances that Greece will leave the Eurozone after the coming election. So I would double-check the original source.

heres a few off the top that indicate an exit may very well be in the cards , and being a gambler the zero odds you place on it not leaving is whistling past the graveyard http://www.washingtonpost.com/blogs/...r-been-higher/
http://rt.com/news/219639-greece-eurozone-exit-germany/
http://www.businessinsider.com/uk-el...ne-exit-2015-1
http://www.reuters.com/article/2015/...0UU5AF20150115

Oh boy, I can't blame anybody for this because I've been meaning to write an OP about all the lies that are being propagated from western MSM regarding the upcoming election in Greece, but I got lazy or to put it more precisely I got taken down from an illness recently. All these articles are part of a fear campaign that is orchestrated from the ruling conservative party in Greece in concert with their corrupt collaborators in Europe in order to stop the Greek people from electing for the first time a government from the people for the people and finally say NO to the endless austerity that has lead 30% of the population in extreme poverty and 6000 souls to suicide.

To make a long story short these coming elections (January 25th) the Greek people are projected to turn their back to the mainstream parties (PASOK -Social democrats, ND- Conservatives populists) which in previous elections would get an 80-85% of the votes combined and now they'll get max 30-35% combined, in favor of a center-left party (SYRIZA) that until 2010 would get barely 4%. A center point of the fear campaign is that if the Greek people dare to turn their back on the mainstream banker puppet parties and favor SYRIZA, then Greece would exit the Eurozone, Supermarkets will be empty, Greece will get flooded with illegal emigrants, Banks will shut down, meteors will devastate the land, typhoons the sea, plagues will kill everybody and all that crap. The Greeks are not giving into fear, I would advise you to do the same.

The SYRIZA party itself has made it clear that it has no interest in taking Greece out of the Eurozone in every chance they get and the Greek people themselves are majorly in favor of the EURO currency.

For the time being I would kindly ask you to trust my word until I am able to prepare a proper OP with English aritcles since right now all my collection consists only from articles in Greek. Indeed there is a big change coming in Greece, but not the one that the corrupt MSM are selling you.

Thanks fractal your comments well taken .....its why we post, as we all know about MSM

[Karma Ninja]

Interesting to get the local perspective and thanks for sharing Fractal! It's equally interesting to hear how much support Syriza is receiving, I had heard they were still an outside chance to win the election.

[ThePythonicCow]

Posted by fractal being (here)
Indeed there is a big change coming in Greece, but not the one that the corrupt MSM are selling you.

That is an intriguing teaser for your intended post ... I am looking forward to it .

[M0JFK]

Don't forget Putin is part and parcel of the New World Order. The bad guy part he is playing or good guy pending on your view is by design.

[Latti]

I read post from some who claim that Mr. Putin is "Mr. Clean" fighting the corrupt western bankers. Those posters haven't studied Mr. Putin's history.

He uses the same tactics. False flags and all. There may be some behind the scenes power struggles between Mr. Putin and others in the west, but they are all playing the same game.

They are all promoting fear to control the masses and keep our attention away from their true intentions.

[Tesla_WTC_Solution]

Has anyone considered the following:

BP owns too much of the USA and Russian economy.
By cutting off foreign economies temporarily, these two counties may hope to "reset"; i.e. FLUSH BP out of their economies during the slump.

It would take something huge to get rid of BP, like an economy crash or the total devaluation of a resource they are hoarding.


"keep your friends close but your enemies closer"

etc.

Russia is trying to distance itself from Europe.
Would rather sell gas thru Turkey lol.
XD



Russia is also seemingly trying to keep us entrapped in the Middle East problem created by Britain/BP, by forcing us to deal with the Middle east at all!

I think Putin wants the West to stew in its own crap heap for a while.

has nothing to do with false flags etc. all to do with money and bogging down.

[Rocky_Shorz]

this is all about forced global gas prices, instead of consumer related demand pricing.

in one move, Putin is saying you will pay what we are asking or we won't sell...

kind of a smack in the face of the Saudi's for hammering down the prices...

big oil controls this world, and I'm sure they made the decision to cut exports from Russia

if I was an airline or major user of Gas Oil I'd buy a billion barrels at current price and take all they would deliver...

[MorningSong]

Just for any/everyone's info....

I have looked into this and can find NOTHING in the Italian news about this.... except things that source to the US or UK.. like this which is a translation of the WSJ original:

http://www.wallstreetitalia.com/arti...sei-paesi.aspx

Here's an interesting article from "BusinessInsider" that explains some problems Russia is having (and has had in the past) with their gas business... but it doesn't mention suspension of supply NOW... boh!

http://uk.businessinsider.com/russia...as-2015-1?r=US

[Hervé]

A re-post from here:

Posted by Hervé (here)
Ouch! Aye-yayaye-yayaye...

... which gives a better idea why Russia ended ditching both Ukraine and South Stream:



The Importance Of The Cancellation Of South Stream

Wednesday, December 3, 2014
by Alexander Mercouris

The reaction to the cancellation of the Sound Stream project has been a wonder to behold and needs to be explained very carefully.

In order to understand what has happened it is first necessary to go back to the way Russian-European relations were developing in the 1990s.

Briefly, at that period, the assumption was that Russia would become the great supplier of energy and raw materials to Europe. This was the period of Europe's great “rush for gas” as the Europeans looked forward to unlimited and unending Russian supplies. It was the increase in the role of Russian gas in the European energy mix which made it possible for Europe to run down its coal industry and cut its carbon emissions and bully and lecture everyone else to do the same.

However the Europeans did not envisage that Russia would just supply them with energy. Rather they always supposed this energy would be extracted for them in Russia by Western energy companies. This after all is the pattern in most of the developing world. The EU calls this “energy security” - a euphemism for the extraction of energy in other countries by its own companies under its own control.

It never happened that way. Though the Russian oil industry was privatised it mostly remained in Russian hands. After Putin came to power in 2000 the trend towards privatisation in the oil industry was reversed. One of the major reasons for western anger at the arrest of Khodorkovsky and the closure of Yukos and the transfer of its assets to the state oil company Rosneft was precisely because is reversed this trend of privatisation in the oil industry.

In the gas industry the process of privatisation never really got started. Gas export continued to be controlled by Gazprom, maintaining its position as a state owned monopoly gas exporter. Since Putin came to power Gazprom’s position as a state owned Russian monopoly has been made fully secure.

Much of the anger that exists in the west towards Putin can be explained by European and western resentment at his refusal and that of the Russian government to the break up of Russia's energy monopolies and to the “opening up” (as it is euphemistically called) of the Russian energy industry to the advantage of western companies. Many of the allegations of corruption that are routinely made against Putin personally are intended to insinuate that he opposes the “opening up” of the Russian energy industry and the break up and privatisation of Gazprom and Rosneft because he has a personal stake in them (in the case of Gazprom, that he is actually its owner). If one examines in detail the specific allegations of corruption made against Putin (as I have done) this quickly becomes obvious.

His agenda of forcing Russia to privatise and break up its energy monopolies has never gone away. This is why Gazprom, despite the vital and reliable service it provides to its European customers, comes in for so much criticism. When Europeans complain about Europe's energy dependence upon Russia, they express their resentment at having to buy gas from a single Russian state owned company (Gazprom) as opposed to their own western companies operating in Russia.

This resentment exists simultaneously with a belief, very entrenched in Europe, that Russia is somehow dependent upon Europe as a customer for its gas and as a supplier of finance and technology.

This combination of resentment and overconfidence is what lies behind the repeated European attempts to legislate in Europe on energy questions in a way that is intended to force Russia to “open up” its the energy industry there.

The first attempt was the so-called Energy Charter, which Russia signed but ultimately refused to ratify. The latest attempt is the EU's so-called Third Energy Package.

This is presented as a development of EU anti-competition and anti-monopoly law. In reality, as everyone knows, it is targeted at Gazprom, which is a monopoly, though obviously not a European one.

This is the background to the conflict over South Stream. The EU authorities have insisted that South Stream must comply with the Third Energy Package even though the Third Energy Package came into existence only after the outline agreements for South Stream had been already reached.

Compliance with the Third Energy Package would have meant that though Gazprom supplied the gas it could not own or control the pipeline through which gas was supplied.

Were Gazprom to agree to this, it would acknowledge the EU’s authority over its operations. It would in that case undoubtedly face down the line more demands for more changes to its operating methods. Ultimately this would lead to demands for changes in the structure of the energy industry in Russia itself.

What has just happened is that the Russians have said no. Rather than proceed with the project by submitting to European demands, which is what the Europeans expected, the Russians have to everyone’s astonishment instead pulled out of the whole project.

This decision was completely unexpected. As I write this, the air is of full of angry complaints from south-eastern Europe that they were not consulted or informed of this decision in advance. Several politicians in south-eastern Europe (Bulgaria especially) are desperately clinging to the idea that the Russian announcement is a bluff (it isn’t) and that the project can still be saved. Since the Europeans cling to the belief that the Russians have no alternative to them as a customer, they were unable to anticipate and cannot now explain this decision.

Here it is important to explain why South Stream is important to the countries of south-eastern Europe and to the European economy as a whole.

All the south eastern European economies are in bad shape. For these countries South Stream was a vital investment and infrastructure project, securing their energy future. Moreover the transit fees that it promised would have been a major foreign currency earner.

For the EU, the essential point is that it depends on Russian gas. There has been a vast amount of talk in Europe about seeking alternative supplies. Progress in that direction had been to put it mildly small. Quite simply alternative supplies do not exist in anything like the quantity needed to replace the gas Europe gets from Russia.

There has been some brave talk of supplies of US liquefied natural gas replacing gas supplied by pipeline from Russia. Not only is such US gas inherently more expensive than Russian pipeline gas, hitting European consumers hard and hurting European competitiveness. It is unlikely to be available in anything like the necessary quantity. Quite apart from the probable dampening effects of the recent oil price fall on the US shale industry, on past record the US as a voracious consumer of energy will consume most or all of the energy from shales it produces. It is unlikely to be in a position to export much to Europe. The facilities to do this anyway do not exist, and are unlikely to exist for some time if ever.

Other possible sources of gas are problematic to say the least. Production of North Sea gas is falling. Imports of gas from north Africa and the Arabian Gulf are unlikely to be available in anything like the necessary quantity. Gas from Iran is not available for political reasons. Whilst that might eventually change, the probability is when it does that the Iranians (like the Russians) will decide to direct their energy flow eastwards, towards India and China, rather than to Europe.

For obvious reasons of geography Russia is the logical and most economic source of Europe’s gas. All alternatives come with economic and political costs that make them in the end unattractive.

The EU's difficulties in finding alternative sources of gas were cruelly exposed by the debacle of the so-called another Nabucco pipeline project to bring Europe gas from the Caucasus and Central Asia. Though talked about for years in the end it never got off the ground because it never made economic sense.

Meanwhile, whilst Europe talks about diversifying its supplies, it is Russia which is actually cutting the deals.

Russia has sealed a key deal with Iran to swap Iranian oil for Russian industrial goods. Russia has also agreed to invest heavily in the Iranian nuclear industry. If and when sanctions on Iran are lifted the Europeans will find the Russians already there. Russia has just agreed a massive deal to supply gas to Turkey (about which more below). Overshadowing these deals are the two huge deals Russia has made this year to supply gas to China.

Russia's energy resources are enormous but they are not infinite. The second deal done with China and the deal just done with Turkey redirect to these two countries gas that had previously been earmarked for Europe. The gas volumes involved in the Turkish deal almost exactly match those previously intended for South Stream. The Turkish deal replaces South Stream.

These deals show that Russia had made a strategic decision this year to redirect its energy flow away from Europe. Though it will take time for the full effect to become clear, the consequences of that for Europe are grim. Europe is looking at a serious energy shortfall, which it will only be able to make up by buying energy at a much higher price.

These Russian deals with China and Turkey have been criticised or even ridiculed for providing Russia with a lower price for its gas than that paid by Europe.

The actual difference in price is not as great as some allege. Such criticism anyway overlooks the fact that price is only one part in a business relationship.

By redirecting gas to China, Russia cements economic links with the country that it now considers its key strategic ally and which has (or which soon will have) the world’s biggest and fastest growing economy. By redirecting gas to Turkey, Russia consolidates a burgeoning relationship with Turkey of which it is now the biggest trading partner.

Turkey is a key potential ally for Russia, consolidating Russia's position in the Caucasus and the Black Sea. It is also a country of 76 million people with a $1.5 trillion rapidly growing economy, which over the last two decades has become increasingly alienated and distanced from the EU and the West.

By redirecting gas away from Europe, Russia by contrast leaves behind a market for its gas which is economically stagnant and which (as the events of this year have shown) is irremediably hostile. No one should be surprised that Russia has given up on a relationship from which it gets from its erstwhile partner an endless stream of threats and abuse, combined with moralising lectures, political meddling and now sanctions. No relationship, business or otherwise, can work that way and the one between Russia and Europe is no exception.

I have said nothing about the Ukraine since in my opinion this has little bearing on this issue.

South Stream was first conceived because of the Ukraine's continuous abuse of its position as a transit state - something which is likely to continue. It is important to say that this fact was acknowledged in Europe as much as in Russia. It was because the Ukraine perennially abuses its position as a transit state that the South Stream project had the grudging formal endorsement of the EU. Basically, the EU needs to circumvent the Ukraine to secure its energy supplies every bit as much as Russia wanted a route around the Ukraine to avoid it.

The Ukraine’s friends in Washington and Brussels have never been happy about this, and have constantly lobbied against South Stream.

The point is it was Russia which pulled the plug on South Stream when it had the option of going ahead with it by accepting the Europeans’ conditions. In other words the Russians consider the problems posed by the Ukraine as a transit state to be a lesser evil than the conditions the EU was attaching to South Stream .

South Stream would take years to build and its cancellation therefore has no bearing on the current Ukrainian crisis. The Russians decided they could afford to cancel it is because they have decided Russia’s future is in selling its energy to China and Turkey and other states in Asia (more gas deals are pending with Korea and Japan and possibly also with Pakistan and India) than to Europe. Given that this is so, for Russia South Stream has lost its point. That is why in their characteristically direct way, rather than accept the Europeans’ conditions, the Russians pulled the plug on it.

In doing so the Russians have called the Europeans’ bluff. So far from Russia being dependent on Europe as its energy customer, it is Europe which has antagonised, probably irreparably, its key economic partner and energy supplier.

Before finishing I would however first say something about those who have come out worst of all from this affair. These are the corrupt and incompetent political pygmies who pretend to be the government of Bulgaria. Had these people had a modicum of dignity and self respect they would have told the EU Commission when it brought up the Third Energy Package to take a running jump. If Bulgaria had made clear its intention to press ahead with the South Stream project, there is no doubt it would have been built. There would of course have been an almighty row within the EU as Bulgaria openly flouted the Third Energy Package, but Bulgaria would have been acting in its national interests and would have had within the EU no shortage of friends. In the end it would have won through.

Instead, under pressure from individuals like Senator John McCain, the Bulgarian leadership behaved like the provincial politicians they are, and tried to run at the same time with both the EU hare and the Russian hounds. The result of this imbecile policy is to offend Russia, Bulgaria's historic ally, whilst ensuring that the Russian gas which might have flown to Bulgaria and transformed the country, will instead flow to Turkey, Bulgaria's historic enemy.

The Bulgarians are not the only ones to have acted in this craven fashion. All the EU countries, even those with historic ties to Russia, have supported the EU's various sanctions packages against Russia notwithstanding the doubts they have expressed about the policy. Last year Greece, another country with strong ties to Russia, pulled out of a deal to sell its natural gas company to Gazprom because the EU disapproved of it, even though it was Gazprom that offered the best price.

This points to a larger moral. Whenever the Russians act in the way they have just done, the Europeans respond bafflement and anger, of which there is plenty around at the moment. The EU politicians who make the decisions that provoke these Russian actions seem to have this strange assumption that whilst it is fine for the EU to sanction Russia as much as it wishes, Russia will never do the same to the EU. When Russia does, there is astonishment, accompanied always by a flood of mendacious commentary about how Russia is behaving “aggressively” or “contrary to its interests” or has “suffered a defeat”. None of this is true as the rage and recriminations currently sweeping through the EU’s corridors (of which I am well informed) bear witness.

In July the EU sought to cripple Russia’s oil industry by sanctioning the export of oil drilling technology to Russia. That attempt will certainly fail as Russia and the countries it trades with (including China and South Korea) are certainly capable of producing this technology themselves.

By contrast through the deals it has made this year with China, Turkey and Iran, Russia has dealt a devastating blow to the energy future of the EU. A few years down the line Europeans will start to discover that moralising and bluff comes with a price. Regardless, by cancelling South Stream, Russia has imposed upon Europe the most effective of the sanctions we have seen this year.

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[Karma Ninja]

It's worth reminding people that the source for this post is talking about something that will affect the European gas supply in the future. Russia has not even completed building the gas line that would run it's product through Turkey.

Effectively, what Russia is saying is "We are running our gas through Turkey and not the Ukraine. We don't trust the Ukraine and, due to the political change and instability, we don't see the mistrust changing. Therefore we are going to move our supply route to the south and connect with Europe through Turkey. If you want access to Russian gas then build your own connecting pipes down to Turkey at your own cost."

This is a huge F-You to the EU and obviously to the Ukraine. It puts Europe in the position of having to pay to build their own pipes and to broker gas sales through a Muslim country. It puts the gas supply in jeopardy if EU countries are not able to build the pipes connecting to their land. For the Ukraine, it eliminates the stolen gas supply which the Russians were always aware of and allowed to happen. It also makes it easy for Russia to cut the Ukraine off if they are unable to pay back the billions already owed to the Russians. Previously, the Ukraine held a bit of an upper-hand simply by having the pipes running right through their country. (Easy to steal and Russia obviously wanted to keep the relationship somewhat amicable)

It will still take years for this change to be in effect and by then most countries affected will be able to find new suppliers and maintain a healthy reserve. It's nonetheless a huge pain in the ass to the EU. Russia is further protected by the new gas deal it recently agreed to with China.

Russian just moved an important piece out of check and tucked it in nicely behind some cover. Go ahead Ukraine, join the EU.

Posted by MorningSong (here)
Just for any/everyone's info....

I have looked into this and can find NOTHING in the Italian news about this.... except things that source to the US or UK.. like this which is a translation of the WSJ original:

http://www.wallstreetitalia.com/arti...sei-paesi.aspx

Here's an interesting article from "BusinessInsider" that explains some problems Russia is having (and has had in the past) with their gas business... but it doesn't mention suspension of supply NOW... boh!

http://uk.businessinsider.com/russia...as-2015-1?r=US

[A Voice from the Mountains]

If I could thank you multiple times for posting that article I would, Hervé.


If the EU gets cut off from Russian gas this is really bad news for Europe. It's not just about paying more for fuel. Everything you buy at the grocery store or other shops is shipped using gas and oil. The prices of these commodities goes up to pay for the rising cost of transportation. In effect the price of everything increases, the whole cost of living goes up, there is inflation... You get the idea.