March 26, 2009 By Robert Amsterdam

Russia Feeling Left Out in EU-Ukraine Energy Talks

On the face of it, Russia should be happy with the news that the EU and Ukraine have agreed a deal to modernize Ukraine’s aging gas pipeline infrastructure. The Russians themselves have complained for years that Ukraine has allowed the system to degrade due to lack of investment.

But Vladimir Putin’s response laid bare Russia’s interest not in securing the pipeline to carry 80% of Russia’s gas exports to Europe, but in controlling it. Putin was harshly critical of the EU for failing to involve Russia. This move by the EU shows a significant degree of strategic resolve that many would say was lacking before the second cutoff of Russian gas supplies to Europe in January this year. In any case, the Ukraine-Russia gas conflict is far from over since Naftogaz is struggling to meet its monthly payments to Gazprom.

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