Page last updated at 13:41 GMT, Wednesday, 14 January 2009

Strategy behind Europe's gas game

By James Rodgers
BBC News, Moscow

Engineers of Hungary's gas transporting company

It looks like a poker game, where the two players bluff and bet against each other.

In fact, it is closer to chess - a game played by grandmasters - where the amateurish onlooker can only guess at the real strategy.

Russia and Ukraine seem no closer to resolving the row which has led to the suspension of Russian gas supplies to Europe via Ukraine.

Europe is caught in the middle.

Naturally, the EU wants to remain on good terms with both Russia and Ukraine - but its frustration is beginning to show.

A weekend of painstaking diplomacy in effect led to nothing. Now it may be harder to reach a deal where one has already failed.

"The current situation is in short most unacceptable and incredible," said the President of the European Commission, Jose Manuel Barroso, expressing the EU's frustration.

High stakes

Russia's strategy appears to rely on the fact that Europe needs Russian gas, and so, eventually, will be sympathetic.

Russian Pime Minister Vladimir Putin
There is bad blood between Mr Putin and the Ukrainian president

Ukraine presumably hopes its EU ambitions will bring supporters to its side.

Each failed agreement, though, raises the prospect that both may actually lose.

European consumers may take the view that whoever is to blame, Russian gas cannot be counted on if it has to cross Ukraine.

"If the agreement is not honoured, it means that Russia and Ukraine can no longer be regarded as reliable," warns Mr Barroso.

The problem here is a distinct lack of political will. It increasingly seems that neither Russia nor Ukraine will be satisfied with a solution that doesn't involve the other admitting that it is to blame.

That hardening of attitudes makes the diplomatic task all the more difficult.

Poisoned atmosphere

In the poker game, Russia appears to believe the fact that Ukraine will have to fold. Its allies in the EU will persuade it to step down - perhaps, this school of thought goes, in return for financial assistance.

In the chess game, there's more at stake.

As Russian President, Vladimir Putin all but endorsed the candidate who ran against the current Ukrainian President, Viktor Yushchenko.

Since Mr Yushchenko's victory - after a fraudulent first ballot - relations between Moscow and Kiev have varied between sour and hostile.

Viktor Yushchenko at a news conference in Kiev, 13 January 2009
Mr Yushchenko has called on Russia to "stop the blackmail"

Before this crisis, Ukrainian support for Georgia during Georgia's war with Russia over South Ossetia was the latest, major irritation to the Kremlin.

Ukraine's plans for eventual Nato membership sum up everything about the country that annoys the current Russian administration.

Those global political tensions rose to the surface when Gazprom's Deputy CEO, Alexander Medvedev, suggested that Washington was directing Ukraine's actions.

He accused them of "dancing to the music which is being orchestrated not in Kiev but outside the country."

It was an echo of Russian suggestions that the United States had encouraged Georgia to launch its military action to retake control of South Ossetia.

So the political atmosphere is poisonous.

'Face-saving draw'

It may not be the Russian government's main aim in this dispute, but they would shed few tears if the row were to damage Mr Yushchenko politically.

Ukraine is due to hold presidential elections in October. Mr Yushchenko's ongoing rivalry with Ukrainian Prime Minister Yulia Tymoshenko - a former ally - is another factor.

"What is most important in these talks now is to bring a halt to the political emotions," Mr Yushchenko said in the aftermath of the collapse of the deal that was supposed to get the taps turned back on. "Stop the blackmail and let experts start working out answers on the basis of clear and comprehensible principles."

On the surface, like the poker game, this row is about money - a dispute over prices and contracts, and accusations of politicians seeking personal gain, corruption, and blackmail.

Beneath that, the chess game goes on. Presidents, prime ministers, and business leaders have taken the places of kings, bishops, and knights. The confrontation is just as complex.

Both sides are seeking outright victory. A face-saving draw would probably be the EU's favoured outcome.

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