Stratfor --

01/08/2009 | observr
Russia raised the stakes in the natural gas crisis with Ukraine even higher on Wednesday by shutting off the last of the supplies piping into the country. The standoff has now lasted seven days, with a dozen states in central, southern and eastern Europe seeing their imports shut down 100 percent, and a handful of other countries like Germany and Italy seeing the bulk of their supplies disappear.

Russia has changed the game from a simple threat to a possible real crisis. In Russias 2006 cutoff of natural gas to Ukraine (and subsequently to Europe), Moscow never cut supplies fully, and it only reduced the flow for two days, so the move had no real impact. It was meant to get Europes attention, not to concretely harm the Continent. Russia was letting the West know that it was time for Moscow to get Ukraine back under its umbrella, something that has been shaking out over the past few years.

The current crisis looked as if it were following the same path until Wednesday, when Russia did not just prolong the cutoff, but expanded it into a full shutdown of supplies through Ukraine. Some European states Serbia, Bulgaria, Macedonia and Bosnia are shutting down industrial complexes and decreasing access to centralized heating, all while an arctic front moves across the Continent.

So far, the cutoffs real effects are being felt only in the less-influential European states. Russias next step would be to prolong the cutoff, causing industries to close and heating supplies to dwindle in the more influential countries, like Germany. Russia might be just testing out its energy lever on the smaller states to see how long it takes to break them, before threatening (or actually inflicting) the same treatment on the more critical states.

The Russians have the Europeans at break point. Europe cant bear a Russian natural gas cutoff for much longer. Even with all its energy diversification plans on the table, the fact is that Europe is still heavily dependent on Russian supplies for the next few years. The Europeans have issued ultimatums, held meetings and sent warnings to the Russians, but there is nothing concrete that they can do right now.

Europes next practical step would be accommodation. And the main target the Russians want the West to back off on is still Ukraine. A deal on scaling down Western influence in Ukraine wont be struck within a day, but a more solid and prolonged reversal within Ukraine will be seen most likely with the end result of a pro-Russian government being installed.

It seems that discussions on this topic already are under way; Stratfor has heard rumors that German Chancellor Angela Merkel, Ukrainian Prime Minister Yulia Timoshenko and Russian Prime Minister Vladimir Putin held a phone conference during the night. Merkel is struggling to make sure that the trap Russia has laid by freezing the Europeans isnt sprung on Germany, and at the moment, the price for such assurance is Ukraine.

But this doesnt mean Russia wont ask for more than just Ukraine in the near future. Russia has a long laundry list of things it wants to accomplish before it is countered by a freed-up United States, including locking Germany into a neutral stance, restoring its hegemony in the Caucasus, starting up a crisis in the Baltic states and intimidating Poland. But for now (and only now), Russia will settle for Ukraine.

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