Ukrainian Gas

Gazprom, the Russian energy firm, has said that Ukraine owes them 2 billion USD for gas and is threatening to cut off supplies unless they are paid. This has happened before and the last time Russia cut off the gas to the Ukraine the government tapped into the gas line and "stole" supplies destined for Europe. This caused a  minor crisis. Lots of people have got very short memories.

The EU, US and the IMF are arranging 15 billion USD in loans for the Ukraine. Some of this money will no doubt be used to pay for Russian gas. So much for the financial sanctions aimed at Russia.

Russia can easily turn off  all the gas and make Europe and the Ukraine suffer. Russia can do without BMWs and Consumer goods but Europe cannot do without gas. Trade sanctions will hurt everyone but they will hurt Europe much more. They can break us without having to use military force.

This is why Russia will get away with its technically illegal "annexation" of the Crimea. There is simply nothing that the US or Europe can do about this situation. The Ukraine will not get the Crimea back unless unpalatable concessions are made to Russia. De facto,  the Crimea is lost;  it seems that only Germany understands the true meaning of Realpolitik.

The West has no choice but to accept a diplomatic solution. The Ukraine may be forced to elect politicians which are more acceptable to the Russians and this will mean that the far right, which the Russians fear so much, will have to be excluded. Someone's calculations have gone badly wrong. It is time for the West to rethink its "carrot and stick" strategy - more of the carrot and less of the stick. The stick is very thin.

The West no longer has the stomach to face down the Russians as John Kennedy did. The West's weakness has been cruelly exposed and it might have been better to have done nothing in the case of Ukraine and leave the showdown for another day. Then, just hope that another crisis about the borders of NATO does not arise again.

Is it not time for Russia to show some true statesmanship and some generosity and make some concessions? A little bit of altruism helps when you hold all of the levers of power. A trade agreement between Europe, Ukraine and Russia might be to everyone's mutual benefit and this could easily be based on the EEA model. It is not too late. Free trade and the free movement of people across Europe and the Asian part of Russia could be the key to a peaceful and prosperous future for us all.