The Ukraine Economic War

The Ukraine Crisis

This is a big game of bluffing and politics. I don’t think there will be a war (unless some drunken Russian soldiers accidentally hit the trigger on the AK47). If there’s a war, it will be a civil war.

To date I have listen to Western media and Russian media and the difference in coverage between the two is the equivalent to the difference between black and white. The views are heavily slanted and biased based on the reporter’s motives and background. In the Western media, Russia is an aggressor is illegally occupying Crimea. In the Russian media, Crimea is protected by Russian Peacekeepers because it’s Russia’s moral duty.

It’s hard to have the “full picture” coverage of the event. So far the media seems to be covering the day to day events without filling the big picture. They don’t really dig beyond the surface to understand the sources and motives behind the conflicts. I think the real war is economically. Russia could use Gazprom has a weapon. The Russian state owns a controlling 50% stake in Gazprom, the largest natural gas company in the world. Gazprom is an important source of revenue for the Russian government. Ukraine and parts of Europe relies on Gazprom for most of its energy. Without Gazprom Ukraine would not be able to heat their homes and fuel their industries. The Ukraine-Russia dispute could affect gas supplies to Europe as it did in 2006. It might also be in Putin’s interest to control a very strategic warm-water port. And finally, Ukraine would not be eligible to join NATO because the charter prohibits new members from having territorial conflicts. Russia certainly doesn’t want a NATO country in their backyard.

Crimea is very important to Ukraine and Russia. It’s located on the warm Black Seas and is an important source of tourist income for the Ukraine government. Crimea is also a hot source of future energy. The conflict is threatening Exxon Mobil and other companies’ prospects for oil and gas drilling in the Black Sea. It also derails Ukraine’s wish to detach themselves from Russian gas imports.

The media has labeled the conflict to simply Russian spoken people vs non-Russian spoken people. But beyond language, there’s a lot of money at stakes and that’s where the real game is played.

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