Russia. That cold eastern giant, looming like a grey cloud above Europe, covered in ice and drifting snow and men wearing really furry hats. What I'd like to know is, what's their problem? In my opinion, it is lame of them to pick on little Ukraine.
From what I can tell through my vast research, Russia is ginormous. As a matter of fact, Russia is 16,995,800 square kilometers in size, with a population of almost 150 million people. In comparison, the Ukraine is about 600,000 square kilometers, with a population of barely 46 million people. (Please ignore the metric measurements, I don't know how to convert. Focus on the numbers, Russia is way bigger.)
Over the past ten years, Russia has charged Ukraine and some other small eastern European countries a subsidized amount for the gas that fuels and heats their societies, of which Russia has vast reservoirs. In the last couple of years, Russia has begun demanding that the small countries pay a market price instead of a subsidized price for the fuel. Now, I am all about market economics, but Ukraine paid $179.50 per thousand cubic meters of fuel last year, and now Russia demands $450 per tcm for 2009. If my calculations are correct (I admit, you may want to check them yourself),that's an increase of more than 150 % in one year. Call me crazy, but that's just crazy.
Ukraine is currently in the worst recession they've seen in a decade, which probably isn't saying a lot considering they're a former Soviet-bloc country. However, the LGR (looming global recession) has severely reduced demand for their two major exports, steel and chemicals. Clearly, this hasn't helped their economic situation. Huge sectors of the population are unemployed, and the Ukranian currency lost half its value in December (read: that is bad.) They took out a $4.5 billion loan from the International Monetary Fund in November to combat that particular problem. The trick with IMF loans is that they come with a lot of conditions, not the least of which are a requirement for a deficit free budget(read: no debts.)
All this to say that it appears that they simply can't afford to pay $270 more per tcm for fuel. To do this, they would either have to create a budget deficit (which they aren't supposed to do) or cut a lot of social programs, which the unemployed and struggling population would really not appreciate. So they said "we just can't afford it." Russia's reaction to this situation? Turn off the gas. In eastern Europe, in the winter. Real classy guys.
But now it appears that they are stepping the bullying up to a new level. Gas has stopped flowing all across Europe, even in France, Germany, and Italy. The larger countries have reserves of fuel, but smaller countries like poor little Bulgaria are declaring a state of emergency, shutting down factories, with whole neighborhoods going unheated. It's freakin' cold in Bulgaria! Not cool, Russia! AND to top it off, they're blaming Ukraine! They're telling the world that the Ukrainians are siphoning off gas for their own use and keeping it from Europe. The Ukranians are trying to pass on some of their reserves to the rest of Europe to help, but let's remember their tiny size and dwindling economy.
I guess it's possible that the Ukranians are lying, that they just don't want to pay for gas, and that they really are stealing fuel from the rest of Europe for their own benefit. But really, who's believing Russia? They've been bullying people around (remember good old Joe Stalin?) for hundreds of years. I don't trust 'em any further than I could throw them, and considering I haven't started pilates yet, that's not far.