The Russian-Ukrainian Gas War: Lessons for Europe and the United States February 23, 2009

Hosted by: The Heritage Foundation

Russian and Ukrainian gas disputes have flared up at least twice before, most notably when Russia turned off gas supplies to Ukraine in 2006 for three days. This recent gas war, however, lasted over two weeks and caused disruptions in 20 countries, forcing factories to shut down, and leaving households shivering and even persons freezing to death. The crisis demonstrates Europe’s strategic dependence on Russian gas and highlights the necessity to change this situation quickly. Despite Moscow’s lobbying efforts, this crisis represents a wakeup call to many Europeans who have begun calling for greater diversification of the energy sources, transit routes and increased coordination among capitals. For Ukraine, the crisis clearly illustrates the need to modernize its energy sector, fight corruption and opacity, and deepen reform. Not surprisingly, according to the International Energy Agency, this crisis has damaged Russia’s reputation as a reliable energy supplier. It also hurt Ukraine’s position as the principal gas transit state. What does this gas war tell us about Russia’s role as an energy supplier and Europe’s dependency as its largest customer? Will Europe return to business as usual with Russia? What are the major lessons learned for Europe? What does this crisis tell us about Ukraine as a transit country? Will shady middlemen companies remain in the Russian-Ukrainian gas trade in Russia and Ukraine’s new gas deal? What is going to happen to the Nabucco project, a principal alternative to the Russian gas supplies? Finally, what, if any, lessons are there for the United States and what are the implications to U.S. policy?

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