Foreign Policy Blogs

The gas conflicts of Ukraine, Belarus and Russia: Fears of a long cold winter in Europe

stock_naturalgaspipelineThe European Union plans to announce today that it sees possible disruptions for its gas supplies from Russia via Ukraine, a liklihood we identified earlier this year. What’s worse, Gazprom is now demanding $230 in debt payments from Belarus, another key gas transit route to western Europe.

The payments from Belarus may stem from a political dispute over disagreements including Minsk’s failure to follow Russia’s lead in recognizing the independence of Georgia’s break-way republics and Moscow’s freezing of a $500 million loan for Belarus. However, due to the opacity of the gas trade in eastern Europe, Gazprom’s debt may be legitimate.

The saga of the dispute in eastern Europe is likely to play out in political circles over the summer until the weather gets cold. But for those in Europe looking for a warm apartment in the winter, they should follow Ukraine’s purchases from Russia over the summer. Ukraine’s national gas company, Naftogaz, will unlikely have the cash to pay to fill its storage capacity for the winter heating season. The Ukrainian newspaper Sehodnia reports that the company may not have the funds by as early as July. Unless Ukraine buys its required amount, a new flare-up is in the offing, which portends a few weeks of cold in western Europe.

 

Author

David Abraham

David S Abraham has expertise in the analysis of geopolitical and economic risk as well in energy issues. At the White House Office of Management and Budget, his work included overseeing natural resource and foreign assistance programs, and serving on the interagency trade policy committee. In his previous role as a sovereign risk analyst with Lehman Brothers, subsequently, Barclays Capital, he advised the firm on geopolitical and economic risks in developing countries. He has also consulted for a variety of organizations including the United Nations Support Facility for Indonesian Recovery, RBS Sempra Commodities, ClearWater Initiative and a small German consultancy. David earned degrees from Boston College and The Fletcher School at Tufts University and proudly served as a Peace Corps Volunteer. His written work has appeared in a variety of publications, most recently in The New York Times, The Providence Journal, and CFR.org. He speaks Lithuanian and is a Term Member at the Council on Foreign Relations.

Area of Focus
Geopolitics; Economic Risk; Energy Issues

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