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PAX, LUX ET VERITAS SINCE 1965
Post Gazprom; Russia, Ukraine and Natural Gas
Created by John Eipper on 02/05/13 6:51 AM

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Gazprom; Russia, Ukraine and Natural Gas (Cameron Sawyer, Russia, 02/05/13 6:51 am)

A small correction to Robert Gibbs's post of 5 February: Gazprom is not "wholly owned by the Russian government." Gazprom is a public company listed in Moscow and London; it's the largest Russian corporation and was at one time the world's third largest public company. Gazprom's market capitalization is now about 70 billion pounds (about $115 billion), considerably down from its peak of more than $300 billion before the 2008 crisis. Slightly more than 50% of Gazprom's shares are owned by the Russian government through the former Rosimushestvo fund, Rosneftegaz, and other state-owned companies. 2.5% is owned by the German EON-Ruhrgas company, and the rest is owned by private investors both in Russian and abroad.

Gazprom produces 17% of the world's entire output of natural gas and owns the world's largest gas distribution network.

Gazprom has been used as an instrument of state control over the television media--for example, Gazprom acquired the NTV independent television network in the early Putin years.

Concerning Ukraine and Gazprom:  it should be mentioned that Gazprom sells gas to Ukraine at below-market prices as a tool of Russian foreign policy (roughly like the billion-odd of foreign aid we give Egypt and Israel, perhaps, but on a bigger scale). The situation with Russian gas in Ukraine is much misunderstood. Ukraine's biggest industry is steel production, using obsolete Soviet plants whose particular weakness is inefficiency in the use of the enormous quantities of energy involved. Ukraine can sell its steel only if it has access to subsidized natural gas; without access to this the Ukrainian economy might collapse. So Russia has supplied this subsidized gas to Ukraine in order to maintain relations and, to some extent, control over the former Soviet republic, which Russia needs for economic reasons as much as anything else (the two economies are quite interdependent due to industries left over from Soviet times). So the amount of this subsidy was, until 2010, a constant bone of contention between Russia and Ukraine--Russia was paying billions and so expected something in return (hence the "ungrateful Little Russians" in Robert's post). What it got varied, however, according to the vagaries of Ukrainian politics, and from time to time the Ukrainians were simply stealing what they needed from gas in transit to Western Europe through Ukrainian pipelines (the Ukrainians admitted this). When Russia complained about this, the Ukrainians would launch another info-war attack, claiming that Russia is bullying them with gas. Gullible Western journalists often swallowed this whole, without the slightest understanding of the real dynamics of the situation. This is why Russia has spent billions developing pipeline routes which bypass Ukraine--not just in order to not be at the mercy of Ukrainian pricing for transit, but so that the Ukrainians won't steal it. And this is why the Germans have been so supportive of Russia in all of this, unlike most of the rest of the Western world--it's to a great extent their gas which has been stolen or blocked by the Ukrainians. The result is the Nordstream pipeline under the Baltic, the longest sub-sea gas pipeline in the world, which cost about 14 billion euros and which was recently opened. The political context of this is complicated, but can be sketched with just a couple of facts--Radislav Sikorski, the Foreign Minister of Poland's Russophobic and Germanophobic former prime minister Kaczyinski, compared the Nord Stream project to the Molotov-Ribbentrop Pact(!); former German Chancellor Gerhard Schroeder served as the first Chairman of Nordstream after he left office.

The aftermath of all of this is much happier; Poland has a new government which has cultivated extremely friendly ties with both Germany and Russia, which has led to a trade and investment boom, and even a tourism boom, between Russia and Poland; Ukraine has a new government with which Russia has been able to settle apparently all differences--in 2010, Russia and Ukraine signed an agreement guaranteeing natural gas subsidies (according to Wikipedia, see: http://en.wikipedia.org/wiki/Russia%E2%80%93Ukraine_gas_disputes --the price as of June, 2010 was $234 per thousand cubic meters), and Ukraine extended the lease on Russia's main naval base at Sevastopol for 25 years. This agreement has worked well and there have been no further gas disputes with Ukraine.

JE comments: As a small postscript, I did see a lot of Russian tourists when we visited Poland last summer. Many of them drove, as Russian license plates were a common sight. For that matter, I also saw many Russian tourists in Cancún last month.  I presume they flew.  (Cancún's street vendors are now learning Russian--one of them showed me a book he'd just bought, "Aprenda ruso.")



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  • Russian Tourists (Cameron Sawyer, Russia 02/05/13 3:29 PM)
    JE wrote on 5 February:

    "I did see a lot of Russian tourists when we visited Poland last summer. Many of them drove, as Russian license plates were a common sight. For that matter, I also saw many Russian tourists in Cancún last month. I presume they flew. (Cancún's street vendors are now learning Russian--one of them showed me a book he'd just bought, ‘Aprenda ruso.')"


    Russians are prodigious travelers, like Americans in the 1960s and Germans in the 1970s and ‘80s. They are free spenders, and not just wealthy Russians--it's part of Russian culture to spend and be generous and for God's sake never appear to be cheap or stingy (to call someone "zhadny" in Russian is one of the worst possible things you can say). Thus they are much beloved by shopkeepers, restaurateurs, and vendors in various tourist destinations around the world, although they are also notorious for alcohol-fueled "high spiritedness" in certain circumstances.



    Part of the current Russian passion for travel goes back to Soviet times. As I've written before, surveys consistently show that Russians found the Soviet restrictions on travel abroad to be by far the most oppressive aspect of life under the Soviet regime.



    I took this photo in Helsinki last week: I wonder if WAISers find it as amusing as I do. It says, in Russian: "We have a menu in the Russian language," and below, in English: "Also Russian menu, welcome!" Why would they need to inform Russians in English that they have Russian menus? Funny. It must be an unconscious instinct to communicate with foreigners of any kind in English. On the same trip, I met a young construction engineer who mentioned he was taking Russian lessons. When I asked him why, he said: "In this country, if you want any chance for your career, you must know Russian."


    JE comments: Yes, Aprenda Ruso. In Havana 15 years ago I picked up a very tired copy of a Soviet-era classic, Hable ruso, from 1973. Nobody in Cuba wanted to learn Russian back then; I suspect the situation has now changed with the influx of free-spending Russians in Varadero and elsewhere.


    Almost forgot--here's Cameron's pic. I very much appreciate its strangeness:





    Welcome, Russian friends!  At a Helsinki Restaurant.  Photo Cameron Sawyer




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    • Russian Tourists in Spain (John Heelan, UK 02/06/13 6:21 AM)
      In my multiple stays in Andalucia for both research and vacation purposes, some ten years ago I began noticing the rapid growth of Russian being used for menus and in major store chains. Further, I obsesrved a swelling of Russian tourists and expats. Many of the expats had the distinctive ex-military look, and some of them might have belonged to Russian criminal gangs that were starting to challenge those of other nations that were flooding into the Costa del Crime. It was a novel experience to be served borscht and blini at al fresco meals under the Spanish sun! The good news was that the quality of vodka that became available is far better than the previous Spanish hooch.

      JE comments: Spanish hooch (the hard stuff) tends to be really bad, except for the grape-derived brandies. I recall once being served "tequila" in Spain and having no idea what it was. No problem, though: just stick to wine and its derivatives. I also hear the folks in Jerez do a good job with Sherry.


      Potables aside, why is it that some nations produce avid tourists and others not so much?  Present and former imperialists, such as the English, the Spanish, the Russians and the camping-obsessed Dutch, continue to out-travel other nations... but perhaps this is a silly thesis.  Americans, I would offer, do surprisingly little travel abroad.  Most of my countrymen don't even have a passport.


      It's been a few months since we heard from Sasha Pack, our in-house expert on tourism history.  Sasha, your thoughts?




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      • Russian Tourists (Sasha Pack, USA 02/06/13 4:00 PM)
        My personal experience with Russian tourists has been pretty limited, although it does not surprise me that surveys indicate that Russians found travel restrictions to be among the most oppressive aspects of the Soviet regime. (See Cameron Sawyer, 5 February.) Freedom to travel was one of the most cherished freedoms in the "Free World," the "Iron Curtain" a graphic metaphor of its limits. It was confused rumors about the loosening of travel restrictions that emboldened East Berliners to assail the Berlin Wall in 1989.

        The experience of Soviet tourists in the 1960s shows that even within the Eastern Bloc, where they were allowed to travel somewhat more freely, the USSR was a world apart. At Romanian resorts, they showed up at the beach in ill-fitting knitted underwear, while the Poles and Czechs at least had proper swimsuits. They annoyed department store clerks in Prague and East Berlin, asking the price of everything but buying nothing, and they were known among bartenders as bad tippers. They were bewildered by the number of choices on café menus in Talinn, now Soviet but historically in a German orbit. Many more similar vignettes, drawn from Soviet embassy reports as well as private memoirs and reports from Intourist chaperones, are given in a gratifying book by a Canadian historian named Anne Gorsuch entitled, All This is Your World: Soviet Tourism at Home and Abroad after Stalin. Gorsuch also makes the interesting observation that by the 1960s, Soviet films depicted Leningrad and Moscow less as buzzing meccas of industrial production, but rather as cities filled with fashionable urbanites and lively street cafés. Perhaps someone with more knowledge than I possess of late Soviet film can confirm this.


        All this forms another indication that the Worker's Paradise did try to adjust, however clumsily, to a modern world increasingly defined by consumerism. Tourist travel was of course micromanaged, so the party strictly controlled the issuance of passports and all travel abroad was chaperoned. The regime's fear was not only that Soviet tourists might defect, or at least become dissatisfied with scarcity back home, but also--and worse--that the vaunted New Soviet Man and Woman might be exposed as gruff and provincial wherever he or she roamed. (But, then, Turgenev might have expressed the same anxiety a century earlier.) Lucky for folk like me, the American government has never harbored any such concern about its citizens.


        JE comments: Many thanks to Sasha Pack for responding to my invitation to comment.  In his post of 5 February, Cameron Sawyer suggested that Russian tourists have acquired a reputation for generosity.  I've always thought that my US compatriots are the best tippers, as it's ingrained in our culture.  Tourist workers I've talked with in several Latin American countries usually rank US Americans at the tip-top, with Asians second and Western Europeans trailing behind.  French tourists are usually dead last.  The next time I have this kind of conversation I'll ask about Russians.


        Sasha raises a fascinating point:  the United States government has never cared a hoot about the image its citizen-tourists convey while abroad.




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