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Russia takes a hit in EU energy crisis: analysts

MOSCOW – Russia’s standing has taken a battering in the crisis over European gas supplies, undermining its position as chief energy supplier to the EU and spelling some loss of diplomatic muscle, observers say.

As Russia and Ukraine groped towards a deal to restore supplies to Europe and Prime Minister Vladimir Putin warned Kiev against "stealing" Russian gas, analysts and newspapers here were underwhelmed by the Moscow’s performance.

"Strategically I think Russia lost," said foreign policy expert Fyodor Lukyanov, editor of the journal Russia in Global Affairs.

"Regardless of who is to blame, the general impression in Europe is that the eastern dimension of gas supply is not secure."

"The crisis united Europe," ran a headline in the Russian newspaper Kommersant on Sunday. "The EU will undoubtedly try to find ways of reducing dependence on Russian gas supplies and avoiding such crises in future."

Some experts believe the latest New Year gas dispute to hit Moscow’s supplies to the EU should spur investment in new routes from Russia that skirt around troublesome ex-Soviet neighbours, notably a plan for a "Nord Stream" pipeline under the Baltic Sea that has the backing of EU heavyweight Germany.

"Germany will from now on be able to convince other Europeans of the importance of this project," said Nikolai Petrov, an analyst at the Carnegie Moscow Centre.

But while Russia, the source of a quarter of EU gas supplies, is likely to remain the bloc’s dominant supplier, others say the crisis puts a question mark over Russian supplies and will spur the EU to pursue alternatives such as gas from North Africa and Central Asia and increased use of nuclear power.

Those who believe Russia has lost the initiative in its efforts to dominate European gas supply point out that energy giant Gazprom has had to scale back its ambitions as its financial position has deteriorated with falling world energy prices and a worsening credit market.

"Gazprom and all Russian companies are suffering from the (financial) crisis. It’s not the same Gazprom it was a year ago. It’s had to cut down many of its ambitious projects," said analyst Yevgeny Volk, of the Washington-based Heritage Foundation.

He added that Gazprom would in fact be more reluctant than it is admitting to open up the corruption-ridden gas trade with Ukraine to outside inspection, as foreseen under an EU-brokered resolution.

"Just as in Georgia, it certainly means Russia has to make concessions, to agree with a certain international machinery and agenda…. Russia will have to open up many things that Gazprom and the Russian energy industry are not eager to open," said Volk.

For his part Lukyanov believes the crisis has shown up the inability of Russian gas giant Gazprom to deal with Ukraine alone and could herald an advance by more capable European energy companies into Russia’s energy market.

"Both sides understood that the illusion Gazprom can do everything itself is impossible – Ukraine showed it’s a monopoly too, a transit monopoly, and Gazprom can’t do anything against it," said Lukyanov.

On the diplomatic front, the use of EU monitors to solve another crisis on Russia’s borders – the same solution that ended last year’s war in Georgia – confirms that Moscow has conceded the lead role in adjudicating disputes in its neighbourhood, he added.

While Ukraine is even further from its goal of EU membership due to the current dispute, the EU is increasingly playing the role of "patron" in solving the problems of eastern neighbours, ranging from the current gas dispute to efforts to police the crime-ridden Ukrainian border with Moldova.

"The European role is growing. Any claim by Russia that we will solve our problems ourselves and don’t interfere has been greatly undermined," said Lukyanov.

[AFP / Expatica]