The world's focus is on the Russian military's movements in occupying the Crimea. The political analysts are working overtime attempting to examine Vladimir Putin's ego as a means of predicting the next possible move. Lost in all of this international panic is the real Putin motivator - namely MONEY. The Putin of today is more of a crime boss than the cold war KGB agent that he was decades ago (think about Bob Kraft's NFL Super Bowl ring and just how brazenly Putin stole it). Whenever Putin spots something of wealth or prestige he goes for it gangster style. The disclaimer and discussion follow the orange squiggle below.
(Disclaimer Preface: the difference between whimsy and fact is proof.)
Putin has had a monopoly on supplying Russian gas to meet the needs of many European nations - the most prosperous of which is Germany. Several times in the past 2 years Putin not only threatened to shut off the flow of gas to these EU nations but had Gazprom engage in “pipeline reduction events” some as great as 50% down from full capacity. Russia's energy resources are the key to the nation's recent prosperity and Putin will do anything to eliminate any competition.
The following reference is from Wikipedia and is titled “Russia in the European energy sector”.
“In 2007, 38.7% of the European Union’s natural gas total imports and 24.3% of consumed natural gas originated from Russia. As of 2009, Russian natural gas was delivered to Europe through 12 pipelines, of which three were direct pipelines (to Finland, Estonia and Latvia), four through Belarus (to Lithuania and Poland) and five through Ukraine (to Slovakia, Romania, Hungary and Poland). In 2011, an additional pipeline, Nord Stream (directly to Germany through the Baltic Sea), opened.” The article notes on conclusion that the dependence of European nations on Russian energy exports has become the prominent issue in European politics toward Russia. It ends with this most telling sentence; “These ties have occasionally led to calls for greater European energy diversity, although such efforts are complicated by the fact that many European customers have long term legal contracts for gas deliveries despite the disputes, most of which stretch beyond 2025-2030.”
With such heavy ongoing energy dependence on Russian energy resources by Europe, just how much real support for the defense of Ukraine against further Russian aggression can the U.S. expect from NATO? (Paper Tiger alert!)
Enter Ukraine and its recent attempt to join the EU. The EU nations and the US obviously have discovered something that has put Putin and the Kremlin on edge; and that something is possible gas reserves in the Ukraine that could be extracted using the Fracking technology that has been so successful in extracting gas here in the U.S. Putin got wind of the possibilities of Ukraine joining the EU and thereby become a major competitive energy source for Europe, so he needed to stop it fast. He offered the Ukrainian government a $15 billion loan to help it meet its financial obligations, along with a discounted price on Russian gas. The Russian puppet Ukrainian Prime Minister Viktor Yanukovych dropped the application for EU membership and took the Russian deal. However, the Ukrainian people revolted and the Ukrainian Parliament voted him out of office.
Putin followed the script and immediately initiated an invasion of the Crimean section of the Ukraine with Russian troops. Since the Crimean section is largely populated with Russians, and a large Russian naval base is located there the "invasion" was welcomed by the Russian speaking population there. We are currently watching developments as the Commander of the Russian forces in the Crimea has given an ultimatum to all Ukrainian soldiers and naval personnel to leave their bases or face an all-out attack. The deadline for this ultimatum is 10:30 pm eastern U.S. time. This is where the situation currently stands.
From my perspective since this "dust up" is mainly about who will be the energy supplier for both the non-EU nations and the EU nations I predict that we will see a Putin engineered ENERGY squeeze put on the EU nations. Unless provoked by a highly improbable NATO military action Putin will be content to stand fast in his present Crimean occupation while he waits to see if the World Bank, the EU, and the U.S. can come up with an emergency bailout package for the Ukraine. Meanwhile Putin will start to jack up the energy prices for gas flowing into the EU nations. This price increase action by Putin/Gazprom will be designed to be a pressure signal to the EU warning them to back off their intent to make Ukraine a competitive gas supplier for Europe.
Here at home if Russia increases the price of gas for their EU customers then the Obama administration will be forced to approve the Keystone pipeline as a countermeasure. The White House will use the argument that the pipeline is necessary to counter the attempts by Putin to become the energy czar of the world.
Q.E.F.