Gazprom Pipeline Runs Dry

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Michael Ransom, Contributing EditorLast Modified: 08:05 p.m. DST, 21 June 2014

"CIMG0406"  Photo by: JanChr KIEV, Ukraine -- The violent conflict between Russian separatists and Ukrainian militias is slowing down, if only momentarily, due to a ceasefire declared by Ukrainian president Petro Poroshenko on Wednesday, 18 June. While bloodshed may be decreasing, Russia has initiated a new economic offensive, shutting off the primary gas pipeline running between the two nations.

According to Russian officials, Ukraine has run up an oil bill totaling more than $4 billion, although Poroshenko's administration denies this figure. The issue at hand is not whether Ukraine owes its northeastern neighbor for unpaid gas, but rather the size of the debt. Ukrainians have been vocal about Russian price-gouging, claiming that exports to Ukraine are sent at a steep premium when compared to other countries. Also, according to Poroshenko the value of Russian oil fluctuates at president Vladimir Putin's convenience.

While Russia closed the tab on 16 June, the move will not immediately impact the Ukrainian markets. Like much of Russian diplomacy, shutting off the pipeline is more a show of power than anything else. For now, the gas reservoirs throughout Ukraine are full and will provide energy for months. Even so, winter months are brutal in Ukraine, and officials will need to act fast to secure reliable gasoline preserves for wintertime.

The feud impacts communities outside of Russia and Ukraine. Gazprom, the corporation responsible for the supply termination, is the largest gas company in Russia and one of the largest international suppliers. European Union nations rely largely on the circulation of Gazprom oil through Ukraine, which is then sold and traded further west into EU countries. The uncertain relationship between Russia and Ukraine, especially in light of the ongoing Ukrainian civil war, leaves EU member nations at the mercy of regional stability.

Sensing the gravity of the situation, EU representatives have tried to middleman a compromise between Ukrainian and Russian executives, to no avail. Gazprom will require Ukraine to pay at least half of the debt before any more oil crosses the border. Ukraine has dismissed the offer, citing the longstanding price inflation and demanding that the costs be set at a rate consistent with the international market.

At the end of the day, both Ukraine and Russia have much to gain by cooperation, and more to lose if the regional friction continues to silence synergy. A good portion of Gazprom revenue comes from Ukrainian consumers and the network of markets throughout the EU. And similarly, Ukrainian winters could prove dangerous without the necessary raw materials.

The stalemate is expected to drag on, as both parties are sure of their facts and figures regarding oil transactions. Russia and Ukraine will both plead their case to international mediators in the coming months, but considering the average length of arbitration and settlement agreement, it will likely come down to the combined efforts of Kiev and Moscow to resolve the dispute and steady the market.

Follow Michael on Twitter Twitter: @nahmias_report Contributing Editor: @MAndrewRansom

South Sudan's Treacherous Growing Pains Continue

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Jessamy Nichols, Africa CorrespondentLast Modified: 22:00 p.m. DST, 18 February 2014

South Sudanese Man Celebrates Independence, Photo by United Nations PeacekeepingAs the world’s youngest country, South Sudan is a country to watch in terms of stability, growth and development. The country has been entwined in conflict and hardship, especially with Sudan, for decades, and current events are proving to show little progress.

Unfortunately, there has been a reprisal of violence and political tension since mid-December, and the deep, complicated history of the country is making it increasingly difficult to resolve. In a pattern all too familiar to African countries, South Sudan’s president, Salva Kiir, has been battling insurgencies and destabilizing movements, led by his former deputy, Riek Machar. In the past, the two were comrades bonded in the fight for secession from Sudan. Now, the two have become enemies, each battling to hold ultimate power over South Sudan.

Since the renewal of violence between the leaders, thousands have been killed and nearly a million have been displaced from their homes and are now seeking refuge. This situation is never acceptable, but it is especially disheartening considering South Sudan’s development potential. The young country is extremely resource-rich, with several oil fields and a seemingly-endless supply of minerals. Most of these reserves are still untapped, and are thus harboring immense economic and growth potential.  However, if the conflict continues, South Sudan’s oil minister has said that oil production and its export to international markets may be hindered or even halted. Such a consequence would cause further setbacks for the country.

Currently, Kiir has been working to spread the word at events and meetings that revenge and renewed violence will not be tolerated and that citizens, especially the youth, should put national interests above personal vendettas. Kiir’s party, the SPLM, has even moved to promoting a new theme, “one nation, one people,” in order to emphasize the importance of national goals over ethnic divisions.

If the situation is going to improve and remain stable, there must be immense change in sentiment and action for all of the country’s citizens. Continued political strife and armed conflict will only bring the country further away from growth and success, and unfortunately, South Sudan is running out of time.

Follow Jessamy on Twitter Twitter: @nahmias_report Africa Correspondent: @JessamyNichols