Fergie Chambers, TF Contributor in Ukraine, and ‘Texas’ Bentley Report from Donbass Frontlines

Editor’s Note: The following represents the writer’s analysis and was produced in partnership by Newsclick and Globetrotter.

The current crisis of spiraling gas prices in Europe, coupled with a cold snap in the region, highlights the fact that the transition to green energy in any part of the world is not going to be easy. The high gas prices in Europe also bring to the forefront the complexity involved in transitioning to clean energy sources: that energy is not simply about choosing the right technology, and that transitioning to green energy has economic and geopolitical dimensions that need to be taken into consideration as well.

Gas wars in Europe are very much a part of the larger geostrategic battle being waged by the United States using the North Atlantic Treaty Organization (NATO) and Ukraine. The problem the United States and the EU have is that shifting the EU’s energy dependence on Russia will have huge costs for the EU, which is being missed in the current standoff between Russia and NATO. A break with Russia at this point over Ukraine will have huge consequences for the EU’s attempt to transition to cleaner energy sources.

The European Union has made its problem of a green transition worse by choosing a completely market-based approach toward gas pricing. The blackouts witnessed by people in Texas in February 2021 as a result of freezing temperatures made it apparent that such market-driven policies fail during vagaries of weather, pushing gas prices to levels where the poor may have to simply turn off their heating. In winter, gas prices tend to skyrocket in the European Union, as they did in 2020 and again in 2021.

For India and its electricity grid, one lesson from this European experience is clear. Markets do not solve the problem of energy pricing, as they require planning, long-term investments and stability in pricing. The electricity sector will face disastrous consequences if it is handed over to private electricity companies, as is being proposed in India. This is what the move to separate wires from the electricity they carry aims to achieve through Indian Prime Minister Narendra Modi’s government’s proposed amendment to the existing Electricity Act of 2003.

In order to understand the issues related to transitioning toward green energy, it is important to take a closer look at the current gas supply-related issues being faced by the European Union. The EU has chosen gas as its choice of fuel for electricity production, as it goes off coal and nuclear while also investing heavily in wind and solar. The argument advanced in favor of this choice is that gas would provide the EU with a transitional fuel for its low carbon emission path, as gas tends to produce less emissions than coal. It is another matter that gas is at best a short-term solution, as it still emits half as much greenhouse gas as coal.

As I have written earlier, the problem with green energy is that it requires a much larger capacity addition to handle seasonal and daily fluctuations that planners have not accounted for while advocating for switching over to clean energy sources. During winter, days are shorter in higher latitudes, and the world therefore gets fewer hours of sunlight. This seasonal problem with solar energy has been compounded in Europe with low winds in 2021 reducing the electricity output of windmills.

The European Union has banked heavily on gas to meet its short- and medium-term goals of cutting down greenhouse emissions. Gas can be stored to meet short-term and seasonal needs, and gas production can even be increased easily from gas fields with requisite pumping capacity. All this, however, requires advance planning and investment in surplus capacity building to meet the requirements of daily or seasonal fluctuations.

Unfortunately, the EU is a strong believer that markets magically solve all problems. It has moved away from long-term price contracts for gas and toward spot and short-term contracts—unlike China, India and Japan, which all have long-term contracts indexed to their oil prices.

Why does the gas price affect the price of electricity in the EU? After all, natural gas accounts only for about 20 percent of the EU’s electricity generation. Unfortunately for the people in the EU region, not only the gas market but also the electricity market has been “liberalized” under the market reforms in the EU. The energy mix in the grid is determined by energy market auctions, in which private electricity producers bid their prices and the quantity they will supply to the electricity grid. These bids are accepted, in order from lowest to highest, until the next day’s predicted demand is fully met. The last bidder’s price then becomes the price for all producers. In the language of Milton Friedman’s followers—who were known as the Chicago Boys—this price offered by the last bidder is its “marginal price” discovered through the market auction of electricity and, therefore, is the “natural” price of electricity. For readers who might have followed the recently concluded elections in Chile, Augusto Pinochet—who was a military dictator in Chile from 1973 to 1990—introduced the Constitution of 1980 in Chile and had incorporated the above principle in a constitutional guarantee to the neoliberal reforms in the electricity sector in the country. Hopefully, the victory of the left in the presidential elections in Chile and the earlier referendum on rewriting the Chilean constitution will also address this issue. Interestingly, it was not the former UK Prime Minister Margaret Thatcher—as is commonly thought—who started the electricity “reforms” but Pinochet’s bloody regime in Chile.

At present in the EU, natural gas is the marginal producer, and that is why the price of gas also determines the price of electricity in Europe. This explains the almost 200 percent rise in electricity price in Europe in 2020. In 2021, according to an October 2021 report by the European Commission, “Gas prices are increasing globally, but more significantly in net importer regional markets like Asia and the EU. So far in 2021, prices tripled in [the] EU and more than doubled in Asia while only doubling in the U.S.” [emphasis added].

The coupling of the gas and the electricity markets by using the marginal price as the price of all producers means that if gas spot prices triple as has been seen recently, so will the electricity prices. No prizes for guessing who gets hit the hardest with such increases. Though there has been criticism from various quarters regarding the use of marginal price as the price of electricity for all suppliers irrespective of their respective costs, the neoliberal belief in the gods of the market has ruled supreme in Europe.

Russia has long-term contracts as well as short-term contracts to supply gas to EU countries. Putin has mocked the EU’s fascination with spot prices and gas prices and said that Russia is willing to supply more gas via long-term contracts to the region. Meanwhile, in October 2021, European Commission President Ursula von der Leyen said that Russia was not doing its part in helping Europe tide over the gas crisis, according to an article in the Economist. The article stated, however, that according to analysts, Russia’s “big continental customers have recently confirmed that it is meeting its contractual obligations,” adding that “[t]here is little hard evidence that Russia is a big factor in Europe’s current gas crisis.”

The question here is that the EU either believes in the efficiency of the markets or it doesn’t. The EU cannot argue markets are best when spot prices are low in summer, and lose that belief in winter, asking Russia to supply more in order to “control” the market price. And if markets indeed are best, why not help the market by expediting the regulatory clearances for the Nord Stream 2 pipeline, which will ship Russian gas to Germany?

This brings us to the knotty question of the EU and Russia. The current Ukraine crisis that is roiling the relationship between the EU and Russia is closely linked to gas as well. Pipelines from Russia through Ukraine and Poland, along with the undersea Nord Stream 1, currently supply the bulk of Russian gas to the EU. Russia also has additional capacity via the newly commissioned Nord Stream 2 to supply more gas to Europe if it receives the financial regulatory clearance.

There is little doubt that Nord Stream 2 is caught not simply in regulatory issues but also in the geopolitics of gas in Europe. The United States pressured Germany not to allow Nord Stream 2 to be commissioned, and also threatened to impose sanctions on companies involved with the pipeline project. Before stepping down as the chancellor of Germany in September 2021, Angela Merkel, however, resisted pressure from Washington to halt the work on the pipeline and forced the United States to concede to a “compromise deal.” The Ukraine crisis has created further pressure on Germany to postpone Nord Stream 2 even if it means worsening its twin crises of gas and electricity prices.

The net gainer in all of this is the United States, which will get the EU as a buyer for its more expensive fracking gas. Russia currently supplies about 40 percent of the EU’s gas. If this stalls, the United States, which supplies about 5 percent of the EU’s gas demand (according to 2020 figures), could be a big gainer. The United States’ interest in sanctioning Russian gas supply and not allowing the commissioning of Nord Stream 2 has as much to do with its support to Ukraine as seeing that Russia does not become too important to the EU.

Nord Stream 2 could help form a common pan-European market and a larger Eurasian consolidation. Just as it did in East and Southeast Asia, the United States has a vested interest in stopping trade following geography instead of politics. Interestingly, gas pipelines from the Soviet Union to Western Europe were built during the Cold War as geography and trade got priority over Cold War politics.

The United States wants to focus on NATO and the Indo-Pacific region, as its focus is on the oceans. In geographical terms, the oceans are not separate but a continuous body covering more than 70 percent of the world’s surface with three major islands: Eurasia, Africa and the Americas. (Although in the formulation of British geographer Halford Mackinder, the originator of the world island idea, Africa was seen as a part of Eurasia.) Eurasia alone is by far the bigger island, with 70 percent of the world’s population. That is why the United States does not want such a consolidation.

The world is passing through perhaps the greatest transition that human civilization has known in meeting the current challenges posed by climate change. To address these challenges, an energy transition is required that cannot be achieved through markets that prioritize immediate profits over long-term societal gains. If gas is indeed the transitional fuel, at least for Europe, it needs long-term policies of integrating its gas grid with gas fields, which have adequate storage. And Europe needs to stop playing games with its energy and the world’s climate future for the benefit of the United States.

For India, the lessons are clear. Markets do not work for infrastructure. Long-term planning with state leadership is what India needs to ensure supply of electricity to all Indians and ensure the country’s green transition—instead of dependence on electricity markets created artificially by a few regulators framing rules to favor the private monopoly of electricity companies.

Prabir Purkayastha is the founding editor of Newsclick.in, a digital media platform. He is an activist for science and the free software movement.

DONETSK, DONETSK PEOPLE’S REPUBLIC—The Russian “special military operation” in Ukraine reached its 90th day and the Western press continues to be inundated with unverified claims of war crimes Russian forces allegedly have committed. Accusations have been lodged against the Russian military for mass graves in Bucha, a narrative which has been widely accepted in North Atlantic Treaty Organization (NATO) countries. Despite requests from the Russian government and India, no independent inquiry has yet to take place.

Just four days ago, Newsweek published claims of Russian soldiers “targeting kids’ bedrooms” with explosives. Nestled far beneath the fiery headline is a soft disclaimer: “However, Newsweek has not independently verified any of the claims regarding children and explosives, which come from Ukrainian sources.” Such is the state of affairs in the U.S./EU/NATO aggression against Russia.

Perhaps these deluges of outrage would appear more sincere, if the well-documented plight of the civilians of the eastern Ukrainian breakaway region of Donbass had received passing mention in any mainstream Western outlets. In the Donbass region, two oblasts (provinces) known as Donetsk and Lugansk proclaimed their independence from Ukraine in 2015, shortly after the neo-Nazi-infected Ukrainian military began attacking their mostly Russian populations.

For eight years, war has raged in Donbass, and it has included an endless campaign involving shelling civilian areas, in violation of the Minsk Agreements between the Donbass republics, Ukraine and Russia. As of May 13, the Office of the Ombudsman in the Donetsk People’s Republic (DPR), put the total civilian death toll in DPR at 7,321, including 105 children. More than 14,000 people have been killed in the Donbass region since 2014, according to the International Crisis Group. The Ukrainian military did not respond to Toward Freedom’s multiple attempts to ask about attacks on civilians in Donetsk.

‘We Used to Hide in the Basement… Now, We Don’t Bother’

Toward Freedom sent this reporter to Donbass for nearly a month, and it took less than one day in Donetsk to witness the effects of Ukrainian forces purposely shelling civilians. That first afternoon, April 28, a local Telegram channel devoted to “online information about the current shelling situations by Ukrainian Armed Forces” reported the Sokol Market in the western Kirovsky District had been shelled. At 11:40 a.m., among the market’s busiest hours, Ukrainian forces—just miles away in Krasnogor—fired 10 BM-21 Grad rockets, or Soviet rockets. Initial reports on the scene were two dead, including a local high school teacher, but this has since been updated to five. This reporter arrived at 1 p.m., at which point the wreckage was apparent and two bodies remained on the ground.

No military presence was seen in this neighborhood—no base, no embedded soldiers, no checkpoints. Gennady Andreevich, an employee of the neighborhood safety commission and administrator of the Sokol Market, called it a “sleepy” district, where there is only this market, a strip of shops, a  park, and a number of Soviet-era residential buildings. The area, per Andreevich and numerous local residents, had sustained relentless strikes since 2014. Those hits have only intensified since February. One of the neighboring residential buildings had been hit as recently as two weeks prior.

These sorts of markets are the central point of social gathering, commerce, and employment for working-class people, who cannot afford to frolic in more luxurious, capitalist-developed urban centers. The eyes of bourgeois mass media are never fixed on the poor. As such, the regular targeting of Donbass civilians goes unmentioned.

Even as cleanup efforts went on, artillery fire remained constant in the background.

The following day, April 29, the Donetsk News Agency reported the Petrovsky District, also in the west end of the city of Donetsk, had just been hit with nearly 80 Ukrainian shells, resulting in casualties.

Upon arrival at 8 p.m., this reporter first found a small grocery store, smoking from the roof, completely destroyed. A small clean-up crew was inside, and one elderly woman—the shopkeeper—stood alone and bewildered, and appeared not ready to speak to anyone. Behind the store was a large residential building, also apparently damaged by the shelling.

At the entrance to the building, a husband and wife were slowly cleaning up pieces of glass and wreckage at the main entrance. They were initially spooked seeing journalists, thinking anyone could have been Ukrainian operatives in plain clothes. But when they understood members of the press had arrived, they were eager to share their story of not just what had happened that night, but of the previous eight years. The woman, Elena, identified herself by first name only.

Elena, whose apartment balcony had been completely destroyed, said that this kind of attack was a daily occurrence for the residents of Donbass, many of whom—herself included—considered themselves Ukrainians. She said that U.S./EU arms shipments were the primary cause of the continued death and destruction, and wished to personally address the citizens of those countries, to ask that they might pressure their governments to cease the deliveries of weapons.

“In the beginning of the war, in 2014, all of us in the building used to hide out in the basement when the shells flew; now, we don’t bother,” said her husband. “We just have to go on with our lives.”

Their children had moved east to Russia, away from the front lines. But for them—like many others—old age, a lifetime of attachment to one community and lack of economic flexibility made relocation impossible.

This particular building, in its entirety, was made up of 60 units, and was attached to a school.

As we parted, the couple saw our delegation of foreign journalists off warmly, entreated us to share their stories with the West in any way possible, and wished us peace.

‘God Will Sort Them Out’

In the frontline city of Kirovsk, a mining town in the Lugansk People’s Republic, this reporter visited the home of a man whose home was hit April 26 by a “Hurricane” rocket—another Soviet-era weapon—capable of destroying entire floors of large apartment buildings. But it failed to detonate as it plugged into an outer wall, next to his garden. The home was situated on a long dirt road, with only a handful of similar homestead cottages within range. The man explained that he believed the attack had been targeted from what he called “Ukro-Nazi” positions in the nearby town of Pervomaisk. Victoria Ivanovna, the mayor of Kirovsk, described such shelling as “constant,” and often targeted at schools, or other non-military locations important to the community.

Back in Donetsk, on May 10, a now-notorious U.S. expat-turned-DPR-combat-veteran named Russell “Texas” Bentley gave this reporter a tour of the districts on the edge of no-man’s land. The Petrovsky district was clearly hit the hardest; in places, block after  block contained not a single home untouched. In the center of the district, where a once-active market had since been abandoned, a monument stood for the civilian lives lost from 2014 to 2016. It listed more than 200 names.

Russell was no stranger to this kind of shelling. “They hit us out here, every (expletive) day. They always target schools, markets and grocery stores, never military. We never targeted any civilian areas; even aside from the ethical questions, it would just be (expletive) stupid. These are our people here. This is a fight for liberation. The last thing the DPR or [Russian President Vladimir] Putin want is to piss off the residents of places, which we believe will become liberated parts of the Republics.”

Russell, 62, who served in the explicitly Marxist “Sut Vremeni (Essence of Time)” unit of the DPR army—as well as in the DPR special forces until 2017—lives with his wife, Lyudmila, in the Petrovsky district. Their home has not been hit to date, but a family of six just a few doors down had not been so lucky. The mother of the family showed this reporter the impact point of a shelling from the week before; it had destroyed their front wall, killing their dogs and barely missing the family room behind.

Katya ladnova, 25, a member of Donetsk-based Marxist feminist collective Aurora, said shelling is no longer news.

“We walk right past it,” she said. “Our complaint to Putin is not that he sent Russian troops into Ukraine, but that he sent them eight years too late.”

In spite of 8 years of attacks, and now endless constraints from isolation and sanctions, including a limit on running water to a few hours in the evening, the city of Donetsk, like all of Donbass around it, continues to move on with life; shops remain open, public transport runs, children go to school every day.

“There is absolutely no military reason to strike places like this. They do this to strike fear in our hearts,” said Andreevich, the Sokol Market administrator. “But it does not work.”

Andreevich’s own administrative office had been hit this past March. Two of his co-workers were killed in that attack. At the end of our exchange, he looked sternly and said, “Sooner or later, God will sort them out, the people who are doing this.”

Fergie Chambers is a freelance writer and socialist organizer from New York, reporting from eastern Europe for Toward Freedom. He can be found on Twitter, Instagram and Substack.

While the Russian “special military operation” in Ukraine turns three weeks old today, energy-rich Azerbaijan is trying to preserve good ties with both Moscow and Kyiv.

Although the situation worries the Caucasus nation snuggled along the western shores of the Caspian Sea, the Azerbaijani government—based in the capital of Baku—tends toward preserving its neutrality and it potentially benefits from exporting additional gas to Europe.

Immediate Impact of War

Two days before the invasion, Azerbaijan signed an alliance agreement with Russia. The two countries are now de facto allies, although their parliaments still have not ratified the deal. According to the document, Moscow and Baku intend to deepen cooperation in the energy sector and strengthen military ties. It is worth noting Russia is already an ally of Azerbaijan’s arch-enemy, Armenia, and the agreement Russian President Vladimir Putin and his Azeri counterpart, Ilham Aliyev, signed in Moscow on February 22 is expected to reinforce Moscow’s positions in the South Caucasus.

Still, Russia’s isolation in the international arena could have an impact on its relations with Azerbaijan. Baku already has suspended all flights to the Russian Federation, and fears have emerged that remittances the approximately 650,000 Azeris working in Russia send home will significantly decline. Moreover, Russia is Azerbaijan’s top import partner. If Moscow eventually limits exports of various goods, including food, Baku likely will have to strengthen economic and political ties with another ally, Turkey.

Double-Edged Sword

It is not a secret Ankara supplied Baku with sophisticated Bayraktar drones prior to the 44-day war between Azerbaijan and Armenia over the Nagorno-Karabakh region. This landlocked mountainous terrain is internationally recognized as part of Azerbaijan, although it was under the control of Armenian forces for more than two decades. It is believed the Turkish-made weapons were a game changer in the war. As a result of the conflict, Baku restored its sovereignty over large portions of the mountainous territory, as well as surrounding areas, and some 2,000 Russian peacekeepers were deployed to the region. More importantly, Azerbaijan and Turkey became official allies, after Aliyev and Turkish President Recep Tayyip Erdoğan signed in June the Shusha Declaration.

Azerbaijan is now an ally of both Russia and Turkey, which could be a double-edged sword for Baku. Although the Caucasus nation supports Ukraine’s territorial integrity, it has avoided condemning Russia’s actions or imposing sanctions on the Russian Federation.

“We have never taken decisions on imposing sanctions on any country,” Azerbaijani Deputy Foreign Minister Elnur Mammadov told Toward Freedom in an interview. He pointed out he does not expect any pressure from the West for Azerbaijan to impose sanctions on Moscow.

Fueling Demand

The European Union expects Azerbaijan to increase gas supplies to the continent, especially if Moscow eventually decides to turn off the taps. Indeed, the EU will need Azerbaijan’s energy resources to cope with possible Russian gas disruptions. But the problem is the country now does not have much more gas to export.

“In 2021, we exported 8.2 billion cubic meters of natural gas to Europe,” said Orkhan Zeynalov, the head of the International Cooperation Department of Azerbaijan’s Ministry of Energy, in an interview with Toward Freedom. “This year, we’re planning to increase the export up to 9.1 billion cubic meters.”

Such a small amount will not meet European needs for energy. In the long term, however, Azerbaijan will be able to provide more gas to Europe if it manages to increase the share of renewable energy sources for electricity production. Baku aims to turn Nagorno-Karabakh into a “green energy zone,” where foreign corporations, such as United Kingdom-based BP and United Arab Emirates-based Masdar, plan to build solar power plants. In addition, Saudi Arabian utility company Acwa Power is expected to build a 240-megawatt wind turbine farm in Azerbaijan, which should reduce the amount of gas the country currently uses.

Nakhchivan Corridor

In 2021, Azerbaijan increased its gas exports by nearly 40 percent, but the country is unlikely to ever replace Russia as Europe’s major energy supplier. Still, the growing demand for Azerbaijan’s gas will almost certainly have a positive impact on the country’s budget. Baku is expected to invest money in the construction of the Nakhchivan corridor, also known as Zangezur corridor, which seems to be a top priority for the Caucasus nation.

“We are already building 110 kilometers (68 miles) of the railway, and 124 kilometers (77 miles) of the highway in the region,” Mammadov said. “Our plan is to finish the construction by the end of 2023.”

Why is this transportation network so important for Azerbaijan? The Nakhchivan corridor will allow the energy-rich nation a land connection with its exclave, the Nakhchivan Autonomous Republic. At the same time, it will connect Azerbaijan with its ally, Turkey. The challenge, however, is 45 kilometers (28 miles) of the road will have to go through Armenian territory. Yerevan, unlike Baku, does not seem to be in a hurry to finish construction of the corridor, even though the railroad portion will connect Armenia with its ally, Russia, through Azerbaijan’s mainland. Yerevan, however, seems to be more interested in the construction of the North-South road corridor that will connect Armenia with Russia, through Georgia.

Georgia did not impose sanctions on Russia, even though the two nations fought a brief war in 2008. That is why the Kremlin does not see the former Soviet republic as an “enemy country,” which leaves room for normalization of relations between Moscow and Tbilisi. In the long-term, such a development would be beneficial for Armenia, given it would secure a land connection with Russia.

Although Moscow reportedly supports the project, and is actively dealing with issues on unblocking transport links in the region, it is not very probable Yerevan will complete the construction of its section of the corridor any time soon, if it all. Quite aware of that, Azerbaijan reportedly decided to bypass Armenia and connect its main territory with Nakhchivan via Iran. On March 11, Baku and Tehran signed a Memorandum of Understanding on establishing communication links in the region. Indeed, such a move could create a new geopolitical reality in the Caucasus.

But as long as the Russia-Ukraine conflict goes on, the final implementation of all the deals in the region will likely remain on hold. For the time being, both Azerbaijan and Armenia are expected to preserve good relations with Moscow, hoping the war in Ukraine will not spill over into the South Caucasus, an area the Kremlin sees at its “near abroad.”

Nikola Mikovic is a Serbia-based contributor to CGTN, Global Comment, Byline Times, Informed Comment, and World Geostrategic Insights, among other publications. He is a geopolitical analyst for KJ Reports and Enquire.