The rationale behind Iran’s new gas pipeline to Ukraine is now becoming clear. The analysis, quoted by RosBusinessConsulting (RBC), confirms my worst suspicions. That Teheran intends to become the main presence in the Black Sea regional economy by controlling its energy sources.

Iran’s increasing contacts with Ukraine is crucial to this effort. The new pipeline from Iran could strengthen Kiev’s negotiating position with Gazprom, Russia’s gas consortium. Analysts with United Financial Group (UFG) have concluded that the pipeline project may enable Kiev to negotiate over more profitable prices for gas or transit tariffs immediately.

Other than losing part of the Ukranian market, Gazprom’s positions in Turkey, Greece and several other states will also become weaker. Gazprom’s exports to Central and Eastern Europe could also be reduced since Ukraine can utilize its system of backbone pipelines to deliver to those markets, supplanting Gazprom.

Officially these developments require Russia’s approval. One of the projects cuts right across Russia’s planned Blue Stream pipeline between Russia and Turkey. Unofficially Moscow’s weakened position in the Caucasus and Central Asia will cause the Putin’s adminstration position to become weaker and in no real position to support Gazprom.

This is why my analysis has such an economic angle to it. With fighting having spread east to Dagestan, bordering the Caspian, putting at extreme risks all the energy projections there, and now with Teheran, expertly taking advantage of the lingering hostility between Moscow and Kiev, then Russia and Gazprom’s position will receive nothing more than a polite hearing in Kiev who will then inform Teheran and Ankara.

The message being that Russia’s weakening position matches its military retreats in the Caucasus and Caspian. Reports have admitted that there is so much fighting and incidents in Dagestan that not all of them are being reported.

Willard Payne

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