Brief History of Soviet and Russian Gas Pipeline Policy

Democratic Russia brings the Cold War fears of Western Europe into reality.

• West European states were always afraid that increased gas imports from the USSR would make them dangerously open to Soviet political blackmail.

  • To reduce the risk, West European states introduced a 30% limit to the share of Soviet supplies in the total gas balance.

• These fears never came true. Even in the worst periods of Cold War, the USSR did not use the leverage of gas pipelines in its political interests.

  • When Poland was leaving the Warsaw Pact, the subsidized price of gas and the gas flow stayed intact.

  • When Lithuania tried to step out of the Soviet Union, the price of gas and the flow also stayed intact.

• There was a pipeline route conflict of a smaller scale when the first line from Urengoy to Germany was built in the early 1980s.

  • West Germany did not want the pipeline to run through East Germany.

  • To avoid East Germany controlling the tap, the pipeline had to take a much longer route via Ukraine and Czechoslovakia.

  • Without this concern, Belorussia and Poland would have been the major transit countries for Russian gas exports to Western Europe.

  • Interestingly, KGB agent Vladimir Putin was assigned to Stasi station Dresden in 1985, shortly after the Urengoy-Uzhgorod-Germany pipeline was commissioned.

• From the years of Cold War through the political and economic turmoil of the 1990s, the USSR Gas Ministry, now Gazprom, was a very reliable supplier of gas to Europe.

• Now democratic Russia is using Gazprom and gas pipelines to influence the coming election in Ukraine.

  • This move will increase the operating costs of Gazprom.

  • This move will also potentially destabilize the situation in Ukraine, which in turn can destabilize the gas flow to Europe.

  • A comparison of price offers - $220/mcm for Ukraine and $110-120 for Estonia, Latvia and Georgia - shows the political nature of Ukrainian transit problem.

• From now on Europe knows that any country is at risk to be punished.

  • Comparing the USSR of early 1980s, Russia of the 1990s and Russia today, it is unclear whether the Gas Pipeline Force is a substitute of weak Air Force and Strategic Nuclear Command, or not.