Some Additional Comments on Russia’s Ukraine Surprise

Some Additional Comments on Russia’s Ukraine Surprise 1

The Russian gambit of recognizing the separatist regions of Donbass and Luhansk blindsided the West, to the extent that some pundits are still braying that Russia will invade Ukraine, as if it wants Ukraine, as opposed to making it untenable for the US/NATO to continue to use it as a staging ground to threaten Russia.

I thought it would be useful to clear up some points where the press reporting has been less than stellar. Most of the information is also found in our posts in Links today, but we thought we’d highlight some issues:

1. The Germans have not cancelled Nord Stream 2 but have instead put it on hold. We pointed that out in comments yesterday and some outlets, from the Wall Street Journal to Al Jazeera, made that explicit.

2. The EU will have difficulty replacing Russian fuel, even with LNG. From Reuters:

“Russia (provides) I think 30-40% of the supply to Europe. There is no single country that can replace that kind of volume, there isn’t the capacity to do that from LNG,” [Qatar energy minsiter Saad al-]Kaabi told reporters at a gas conference in Doha.

“Most of the LNG are tied to long-term contracts and destinations that are very clear. So, to replace that sum of volume that quickly is almost impossible,” he said.

As I read it, the EU, particularly Germany, has a short-term problem of filling a supply shortage if there’s a cold snap before winter is over, since inventories are already low. And even if the EU can arrange to get more fuel before next winter, it certainly won’t be at the old Russian price. While the US financial press is keen about the opportunities for frackers, US courts have increasingly been sympathetic to environmental objections to pipelines. The Supreme Court just refused to hear an appeal by the operator of the Dakota Access Pipeline to sidestep certain environmental provisions, for instance. So protracted and occasionally successful fights over pipelines could throw a spanner in shale gas expansion hopes.

3. The Russian recognition is not without precedent. NATO describes how its role as a “peace keeper” preceded the establishment of Kosovo. The State Department write-up is oddly silent on details; readers said, and I am not able to confirm in reasonable time thanks to the terrible state of search engines, that the domestic mechanism was a vote of the Kosovo parliament. I am also told that Russia had at the time depicted this approach as inadequate, and so wanted a referendum in Crimea on the specific question of joining Russia.

Note that there had been some acknowledgement of the separatists. The Donbass and Luhansk “republics” had been observers at the Minsk negotiations and even signed the agreement despite having no official role. Keep in mind there were also other means to address the concerns of the separatists, as the example of Quebec shows: more autonomy and specific protections for the aggrieved population.

4. Even Bloomberg is pointing out that the new US sanctions are wet noodle-level:

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