How Europe Enables Putin
Look at what is done, rather than what is said, in the standoff over Ukraine, and what emerges is an unsettling picture of dissemblance on both sides.
Russia says it wants to see Ukraine's future resolved through dialogue, that it didn't want Sunday's independence referendum in the self-proclaimed Donetsk People's Republic, and that it is withdrawing troops from Ukraine's border. Europe and the U.S., meanwhile, say they are preparing serious economic sanctions to impose if Russia continues to destabilize Ukraine.
But look at what Europe is doing. On Monday, the European Union added 13 people to its list of sanctioned individuals, plus -- for the first time -- companies. However, these two Crimean energy companies were expropriated from Ukraine by Russia, and at least one had signed exploration deals with Italy's Eni SpA and Electricite de France. That's hardly proof that the EU is ready to endure the self-inflicted pain that effective economic sanctions against Russia would involve.
It gets far worse. On Monday, French President Francois Hollande confirmed that France will go forward with its 1.2 billion euro ($1.64 billion) sale to Russia of two sophisticated Mistral class helicopter carriers. You would think this sale would have been canceled long ago. After all, the vessels would enable Russia to quickly deliver air power and tanks to potential battle zones in the Black Sea area: Odessa, Moldova and Georgia. Instead, Russian sailors are on schedule to start training onboard the first of the ships next month, with delivery set for October.
On April 30, as the EU solemnly warned Russian President Vladimir Putin that it will reorient its natural gas purchases away from Russia, Austria's OMV AG agreed with the Russian gas monopoly OAO Gazprom to build its section of the planned South Stream pipeline. South Stream is designed to provide a new transit route to Europe that bypasses Ukraine. This would remove Ukraine's ability to counter Russian gas-price pressure with threats to siphon off Gazprom's sales to the EU. Once completed in 2017, the pipeline would also wipe about $20 billion worth of assets off the balance sheet of Ukraine's state-owned gas company.
Both these European projects undermine the goal of the West's inadequate sanctions and give Putin the leeway to likewise act without regard to his own rhetoric.
What has he done? For one thing, after separatists in the self-proclaimed Donetsk People's Republic held their quickly organized referendum Sunday -- in apparent defiance of Putin's direct advice -- he turned around and endorsed the results. Russian troops have not moved from their positions on the border, as promised. And Tuesday, just days after Ukraine received the first $3.2 billion tranche from an International Monetary Fund aid package, Gazprom sent Ukraine a $1.6 billion bill for pre-payment of June's gas deliveries, at the punitive price of $486.50 per thousand cubic meters (the highest in Europe, and up from $268.50 before Ukrainian President Viktor Yanukovych was deposed). Failure to pay, Gazprom said, will mean that supplies will be cut off starting June 3.
In an interview with Bloomberg TV today, Russian Foreign Minister Sergei Lavrov defended Russia's position, and at least one thing he said was true: Ukraine "is as close to civil war as you can get." For this crisis not to end in war, both sides need to heed their own pronouncements. The first move will have to come from the West; France and the European participants in South Stream need to cancel their business plans. Because if Europe will not take its role in ensuring the security and stability of its immediate neighborhood seriously, why would Russia?
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