Opinion

The Great Debate

from Breakingviews:

Russia puts gas-hungry China in a bear hug

By Ethan Bilby
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Russia has signed a long-awaited gas pipeline deal with China, and it leaves the People’s Republic in a bear hug. Russia gets a new market outside the increasingly frosty European Union. Oil major PetroChina gets to balance out some losses from low regulated prices at home. But the optics of the deal shred Beijing’s pretensions to political neutrality.

Russia could use a friend. EU countries have been planning to diversify supply away from dependence on Russia, which provides a third of their energy needs – especially after a dispute in 2009 saw gas cut off. Annexing Ukraine’s southern Crimea region has raised the temperature further. New pipelines from places like Azerbaijan are designed to limit Moscow’s leverage.

China presents Russia with a more willing customer. Its ravenous energy needs provide stable demand, which previously looked like it would have to be met by more inconvenient sources, like Australian and U.S. liquefied natural gas. Under the new deal, Russian state energy group Gazprom will supply Chinese counterpart PetroChina with up to 38 billion cubic metres a year, around 12 percent of China’s target demand in 2018 according to Alliance Bernstein.

The timing looks good for PetroChina, which handles all pipeline imports of natural gas into China. Below-market tariffs set by Chinese regulators leave it in the red. PetroChina’s average selling price of gas is $6.30 per thousand cubic feet according to CLSA analysts. Yet imported Central Asian supplies cost around $10 per thousand cubic feet, with LNG around $15. That drove PetroChina to make a loss of around 42 billion yuan ($6.7 billion) importing gas last year. Every bit of costly LNG this deal replaces will help.

The best role for Kiev provisional government? Exiting.

kiev rally

Successful provisional governments are quickly forgotten. Failed provisional governments, like the one during the 1917 Russian revolution, can be remembered forever.

Ukraine’s current provisional government already has, in many ways, outstayed its welcome. If the May 25 presidential election produces a definitive result, however, it still has a chance of quietly leaving the stage.

Provisional governments have one essential task: restore legitimate rule. In virtually all cases, it is a race against time. Indeed, the designation “provisional” carries a lame-duck status, since it conveys a sense of temporariness that undermines the stability of a regime.

from Breakingviews:

Rob Cox: Solving America’s homegrown Putin dilemma

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

As the eagle flies, it's a long way from Bunkerville, Nevada to Slovyansk, Ukraine. Right now, though, the two places have something insidious in common: armed vigilantism. That parallel sadly seems to escape the many American policymakers who have accused President Barack Obama of adopting the logic of appeasement in his dealings with Russian President Vladimir Putin. They're missing a big point. If the United States can't uphold the rule of law at home, it can have no credibility abroad.

Over the weekend, South Carolina Senator Lindsey Graham joined the chorus of Republicans branding Obama the new Neville Chamberlain. He told CBS's "Face the Nation" that the president is "delusional" and his latest economic sanctions "should have been called the Russian economic recovery act" for helping bolster the Russian stock market and rouble last week.

from Anatole Kaletsky:

Why the Russian sanctions don’t work

putin!!

Why did the U.S. and European sanctions against Russia earlier this week trigger a rebound in the ruble and the Moscow stock market?

To understand this paradox it is worth recalling Yes Minister, the British TV comedy about a blundering politician who stumbles from crisis to crisis with the same justification for every panic response: “Something must be done. This is something --– therefore it must be done.”

The problem with this syllogism is that doing something may be worse than doing nothing -- and the Western decision to rely on economic sanctions in the Ukraine crisis is a case in point.

Don’t cry for the Nabucco pipeline

The site of a newly opened distribution hub of the gas pipeline Gazelle is pictured in Primda

It is too late for regrets. With Europe worried that Moscow could cut off gas deliveries to Ukraine, which would trigger price volatility and supply risks throughout the continent, the failure of the Nabucco pipeline project stands out.

Created to carry Caspian gas into Europe by bypassing Ukraine, Nabucco would have given Europeans and Americans a much-needed sense of supply security — though the pipeline would have carried its capacity of 31 billion cubic meters of gas annually only near the end of this decade. Instead, Europeans are left scratching their heads and searching for alternative energy supplies.

Russia, meanwhile, is likely to remain Europe’s chief natural gas supplier through at least 2020, despite the anticipated growth of diversified gas shipments to Europe, including liquefied natural gas (LNG) from the vast U.S. shale-gas resources.

U.S. v Russia: Searching for Kennan

No matter how counterintuitive it may seem, Washington needs to stop lecturing Russian President Vladimir Putin if it wants to resolve problems with him.

In George Kennan’s celebrated 1946 “long telegram,” the diplomat and scholar explained why Russia’s conduct was so often duplicitous. Kennan might well have been writing about Putin when he laid out the West’s problems with the Kremlin leaders’ behavior. Being annoyed with them wouldn’t help, Kennan advised, since their conduct was based on a fierce Russian nationalism complicated by a serious streak of insecurity about Moscow’s position in the world, evident whenever Joseph Stalin felt the Soviet Union was not receiving the respect he believed it was due.

We see this pattern in Putin’s conduct today. He insists that the United States “treats Russia like the uninvited guest at a party,” freely interfering in his country’s affairs, which he won’t tolerate — no matter the cost. Confronted with his outright hostility, the West seems at a loss as to how to deal with the bellicose Kremlin.

No drama in Obama’s Ukraine policy

Many are asking: How can we stop Russian President Vladimir Putin from moving into Ukraine and seizing a large chunk of its territory in the east? The actions of forces that resemble the Russian special operations troops who created the conditions for annexation of Crimea suggest that other parts of Ukraine may also be in the Russian strongman’s sights.

The fact is, however, we cannot stop Putin. Or, to be more precise, we should not try to stop him physically. Doing so would require military threats or troop deployments to Ukraine. The stakes do not warrant such a step. It is not worth risking World War Three over this.

Ukraine is not a member of the North Atlantic Treaty Organization. It does not have a formal security treaty with the United States, and its strategic importance is not great enough to warrant such escalation. Though we can feel for Ukrainians — and reject what Putin is doing — this is a classic case of where the old axiom “We can’t be the world’s policeman” does apply.

Odessa: Ukrainian port that inspired big dreams

Tensions have been rising in many corners of Ukraine as the threat of a Russian intervention looms. Ukraine’s Black Sea port of Odessa is one such corner of dispute between Moscow and Kiev, where macro-battles have been transformed into a seemingly endless chain of micro-conflicts.

Supporters of both countries have taken to marching through the streets, ominously threatening each other. The Ukrainian government is trying to wrest control of the local oil refinery — one of the country’s most important — away from a Russian bank. Tension is visible in the smallest aspects of life.

Odessa’s role as a site of unbridled Ukrainian-Russian competition is not surprising. Though within Ukraine, the city is overwhelmingly Russian-speaking. Prominent Russian political figures regularly proclaim their right to take back what was theirs — from Alaska to Finland.

Obama: Ineffectually Challenged

President Barack Obama is in a funk. Americans are coming to see the president as ineffectual. That is a dangerous perception.

Obama’s job approval rating is at risk of dropping below 40 percent. Democrats may lose their majority in the Senate this fall. It may be difficult for the president to accomplish anything during his last two years.

In the March NBC News-Wall Street Journal poll, 42 of registered voters say they would be less likely to vote for a candidate endorsed by Obama. Only 22 percent say they would be more likely to vote for Obama’s candidate.

from Nicholas Wapshott:

Crimea: Too small to matter

Crimea is permanently lost to Russia.

That is implicit in President Barack Obama’s remarks about where the Ukraine crisis heads next; the terms of the Paris talks between Secretary of State John Kerry and the Russian Foreign Minister Sergey Lavrov, and the West’s rejection of military action to hurl back the occupying Russian forces.

That Crimea is gone forever is also the view of former Defense Secretary Robert Gates, who declared, “I do not believe that Crimea will slip out of Russia’s hand.”

It is now generally accepted in Washington that short of sparking a shooting war, Crimea is lost and will now always be Russian. President Vladimir Putin, presiding over an economy of $2 trillion, barely equal to California, has roundly defeated the United States and the European Union, with a combined worth of more than $34 trillion.

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