After the Gas Conflict: Economic consequences for Russia, Ukraine, and Germany

Abstract:

In January 2006, the conflict between Russia and Ukraine over future gas prices, which had escalated by the end of 2005, was settled for the time being with a compromise. While the Russian company Gazprom has benefitted from the agreement, the reputation of Russia as a reliable energy supplier has been damaged.

The case raises some additional questions: What strategy will Gazprom pursue in the post-Soviet area? Is Russia in a position to exert pressure on its European customers? What can the European Union, and in particular Germany, do to improve energy relations with Russia?