The European Commission summoned ministers back from their Christmas holiday to an emergency meeting on 4 January. But before they met it was suddenly announced that the Russian and Ukrainian presidents had reached a deal. On the face of it, the agreement was a decent compromise: Ukraine agreed to pay the market rate for Russian gas, but Gazprom would also sell it much cheaper gas from Turkmenistan, bringing the overall price down to $95 per 1,000 cubic metres; to sugar the pill Gazprom would also pay 47 per cent more to Ukraine for transporting gas to Europe.
The West’s new worries arose because all the gas would now be sold not directly by Gazprom but by a murky Swiss-registered trading company called Rosukrenergo, which was half-owned by Gazprom, partly owned by two shady Ukrainian businessmen. Rosukrenergo’s creation in July 2004 was overseen by Putin and ex-President Kuchma of Ukraine. Western observers could not understand why Yushchenko had now got involved with it.
The American ambassador John Herbst recalls: ‘The Ukrainians came in and described the deal. And I was dumbfounded. My German colleague and my other European colleagues were all dumbfounded. Because again we thought that the Ukrainians had a reasonable negotiating position and a reasonably strong one. And the result was less than optimal, to be diplomatic.’21
Damon Wilson described the consternation back in Washington: ‘Here we are with a president who presides over a deal with Russia that introduces Rosukrenergo, an intermediary with all sorts of shady transactions and dealings, in a process that, it became increasingly clear to us, was a vehicle for facilitating side payments, facilitating the worst of business practices in Ukraine. This was corruption at the heart of the Orange Government.’
Yushchenko’s chief of staff, Rybachuk, conceded it was a controversial deal, but they had no choice: ‘Yushchenko’s position was: Putin is president; yes I understand that gas is a dirty business but we can’t do business with Russia in any other way.’
So now Washington and Europe found their dreams fading. The Ukrainian democrat they had championed was proving to be decidedly flaky. Wilson described it as a moment of disillusionment, of realisation that old habits were still strong in the “new Ukraine’. And in Moscow, Putin had demonstrated his willingness to use a weapon never tried before – energy supplies. Those few days of gas cuts in early January caused immense nervousness throughout Europe and triggered a radical rethink of the EU’s energy policies. From now on, Vladimir Putin was not a man the West enjoyed doing business with.
8
A NEW COLD WAR
Tempers get frayed
Now a spiral of disenchantment began to wreck relations between Washington and Moscow – and even between the ‘friends’, Bush and Putin, each of whom began to accuse the other of bad faith. At a bad-tempered summit in the capital of Slovakia, Bratislava, in February 2005 (just after the Orange Revolution), Putin pulled a pack of 3-by-5 cards from his inside jacket pocket – the Americans called them his ‘grievance cards’ – and began lecturing Bush about… well, about how fed up he was being lectured to by the Americans. The rant went something like this: We’ve done everything we can to accommodate you, we supported you in the war on terror, we closed down bases, we let you destroy the ABM treaty without making a big fuss, we didn’t even let Iraq get between us, and what did we get in return? Nothing. You haven’t abolished Jackson-Vanik, you keep moving the goalposts on our WTO entry, you don’t even ratify the Conventional Forces in Europe arms control treaty, you want to build a missile shield that makes us vulnerable, and you’re trying to bring all our neighbours into NATO. Instead of praise for our policies aimed at reforming our economy and tying it into the world system, all we hear are complaints about our internal affairs – about human rights, about our supposed ‘backsliding’ on democracy, about Chechnya, about our media, about Khodorkovsky. When will it end?
Bush’s new national security adviser, Stephen Hadley, recalled that this was ‘probably the testiest meeting the two leaders had had’.1 It was here that Putin tried to turn the tables on Bush by claiming that America did not have a free press – as witnessed by the fact that Bush had allegedly had CBS’s senior news anchor Dan Rather fired for criticising him.2 Bush tried to explain that this was not the case, but Putin was in no mood to listen. Instead, he hit back on American democracy, too. The American people did not elect their president, Putin asserted, but an electoral college did. Bush replied: ‘Vladimir, don’t say that publicly whatever you do. You will just show everyone you don’t understand our system at all.’
Three months later there was a chance for reconciliation. Putin invited a host of world leaders to Moscow on 9 May to celebrate the 60th anniversary of the Allies’ victory over Nazi Germany. For the first time, an American president stood on the reviewing stand to observe a Soviet-style display of military might on Red Square. Putin appreciated the gesture (President Clinton had boycotted a similar parade ten years earlier in protest at the first Chechen war), but he did not like what went before or after it.
On his way to Moscow Bush had stopped in Riga, the capital of Latvia, where he sided fully with the Baltic nation’s interpretation of post-war history – namely, that the liberating Soviet army had overstayed its welcome and become an occupation force, replacing Nazi rule with another totalitarian regime. Soviet oppression in Europe, said Bush, was ‘one of the greatest wrongs of history’. The fact that the Baltic nations perceived Soviet ‘liberation’ as occupation is a truth the Russian government finds very hard to stomach, because, it claims, it insults the memory of Soviet servicemen who fought to free the country from the Nazis.
Even worse than his interpretation of the past was Bush’s gloss on the present. From Moscow he flew straight to Tbilisi, where the Georgians laid on a hero’s welcome and Bush reciprocated by calling the country a ‘beacon of liberty for this region and the world’ and apparently urging other former Soviet states to follow suit. He praised Georgia for providing troops in Afghanistan and Iraq, and proclaimed: ‘Your courage is inspiring democratic reformers and sending a message that echoes across the world – freedom will be the future of every nation and every people on earth.’ The words caused fury in the Kremlin, which was at that very moment tightening the screws on Georgia – banning imports of its world-famous wines and mineral waters on ‘health grounds’.
As 2005 progressed, and the West watched powerless as Putin curtailed democracy, created Nashi, cracked down on NGOs and turned off gas supplies to Ukraine, the rhetoric on both sides peaked. In early May 2006 Vice-President Dick Cheney travelled to another former Soviet Baltic republic, Lithuania, with the express purpose of delivering another broadside at Russia – one that was intended to be seen not as a wayward attack by a sometimes off-message vice-president, but as the considered view of the administration. Damon Wilson, at the National Security Council in the White House, explained: ‘We knew that this would be an important opportunity to continue to echo the president’s messages about the freedom agenda. There was a tendency often in Moscow to discount what Vice-President Cheney said, to say, this is Vice-President Cheney, we all know he’s radical, he’s the neocon in the administration, but at the end of the day, we’re doing business with President Bush. And so we worked very closely with the vice-president’s office and his speech writers to make sure that this wasn’t Vice-President Cheney out on a limb. We prepared a speech that was actually well vetted, very much circulated in the Interagency, delivering key messages on the democracy front, pretty tough-hitting words on what was happening in Russia.’3