- The Washington Times - Tuesday, January 3, 2006

A bitter pricing dispute with Ukraine that briefly disrupted Russia’s natural-gas supplies to Europe has fueled fears over Moscow’s growing clout as an energy supplier to the Continent.

Gas shipments through Ukraine to Europe returned to normal yesterday — a day after they were severely restricted in the pricing fight — but doubts about Russia’s reliability and intentions as an energy supplier dominated the European press.

“Welcome to the new Cold War,” wrote the London Times, describing Moscow’s leading role as energy supplier “Russia’s most powerful weapon in its post-Soviet arsenal.”

The dispute put in sharp relief two contrasting priorities of Russian President Vladimir Putin’s foreign policy: his desire to use Russia’s energy reserves to cement ties to Europe and his willingness to use those same resources to bring Ukraine’s pro-Western government to heel.

Vladimir Socor, an analyst with the Jamestown Foundation, said Mr. Putin’s goals in the dispute are “twofold.”

He wants to “defeat Ukraine’s [pro-Western] Orange political camp in the upcoming political elections and compel Ukraine to turn its transit-pipeline system into a Russian-Ukrainian consortium,” Mr. Socor wrote in an analysis of the crisis.

Analysts said yesterday Moscow may have underestimated how badly the shutdown will damage its reputation in Europe, which now gets a quarter of its natural gas from Russia. The dispute also comes just as Russia assumes for the first time the chairmanship of the Group of Eight industrial powers.

London’s Daily Mail called Russia’s G-8 presidency “a travesty the West will come to regret,” while in Paris, the conservative Le Figaro’s headline proclaimed: “Putin plunges Europe into difficulty.”

European Union officials said yesterday there was no immediate supply crisis, but EU Energy Commissioner Andris Piebalgs told reporters that “the situation has shown how vulnerable the Union is to shortages of gas supply.”

Representatives of the 25 EU member states and the gas industry meet today in Brussels on ways to deal with future threats to Europe’s gas supply.

Russian and Ukrainian energy officials began separate talks yesterday in Moscow to discuss the dispute.

The showdown pushed up world oil prices in New York and London markets.

Russian officials deny a political motive in the showdown, saying they switched off Ukraine’s gas because Kiev rejected an abrupt, fourfold increase in gas prices to market levels. Russia also accuses Kiev of siphoning off pipeline shipments meant for European customers.

The Bush administration, which has strongly backed new Ukrainian President Viktor Yushchenko, said Gazprom’s sharp price increase “raises questions about the use of energy to exert political pressure,” according to State Department spokesman Sean McCormack.

“Such a change should be introduced over time, rather than suddenly and unilaterally,” Mr. McCormack said.

c Andrew Borowiec reported from London.

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