Upholding the Sanctity of Contracts: Is Gazprom Listening?

I don’t know whether to laugh or cry at Dmitri Medvedev’s stirring defense of the sanctity of contracts:

President Dmitry Medvedev on Monday accused Ukraine of seeking changes to a contract for the transit of Russian gas across its territory, the latest row over energy between the two feuding states.

Medvedev told the head of state-run Russian gas giant Gazprom that Russia would not accept any move by the Ukrainian authorities to demand advance payment for the transit of Russian gas to European consumers via its soil.

Gas supplies and transit have been a constant sticking point in relations between Ukraine’s pro-Western leaders and Moscow. A dispute over debts and payments sparked supply cuts which left parts of Europe freezing in January.

Speaking at a meeting at the Kremlin, Alexei Miller, Gazprom chief executive, told Medvedev that Ukraine had sought to change the terms of payment for gas transit fees.

He said that such a change was not stipulated in the current contract.

“As far as an idea of an advance payment for tariffs, then I would like to ask you a simple question — is it stipulated in a contract?” Medvedev asked Miller in televised comments.

After receiving a negative answer from Miller, Medvedev said: “Then don’t pay! There’s a need to act in accordance with the contract that has been signed.

“We’ve specially prepared it, it was born in the throes of pain, has been quite seriously developed and we are currently working in line with it.”

“There’s a need to act in accordance with the contract that has been signed.” Amen. Words to live by: what’s sauce for the goose is sauce for the gander, no? Try it some time, Dmitri.

I suggest that Turkmenistan, or any of those who have suffered from Russia’s–-and notably Gazprom’s (OGZPY.PK)-–one-sided interpretations of contracts, throw those words back in Medvedev’s (or Putin’s) face some time soon. And since this little dialog between Medvedev and Miller was recorded for posterity, the Turkmenis (or whomever) should be ready to do a Warner Wolff “Let’s go to the videotape” complete with slo-mo and reverse action in order to make it as embarrassing as possible.

And speaking of recording for posterity, I find these little dramas acted out in Medvedev’s office, or in Putin’s, to be extremely odd. (I remember another scene, during January’s Gas War, involving Putin and Miller, that was similarly stagey.) Can anybody offer an explanation as to why these kind of Kabuki plays are evidently so appealing to Russian audiences? (I presume that Medvedev, Putin, and others would not repeatedly employ them unless they were effective.)

Comments

[john1940:]

These kabuki dances are popular with the Russian people because it helps them feel good and remember when Russia was a superpower.

Sep 08 08:21 AM

[NUCLEAR1929:]

observers.france24.com...

Sep 08 09:45 AM

[John Bowman:]

When will nations and corporations learn that Russia can never be trusted?

Sep 08 10:15 AM

[Ferdinand E...:]

I trust the Russians. They have the oil and gas and we need it, and so they are determined to make us pay for it. I don't see how it is possible to mistrust people who want more money rather than less.

Sep 08 10:31 AM

[searcher:]

History shows that misplaced nationalism or ideology often trumps mutually beneficial exchanges. Even mass starvation has been shown to be an ineffective deterrent.

Sep 08 12:03 PM

[LKofEnglish:]

this is actually a very interesting article since natural gas is dirt cheap. russians are like bankers: they're all for sanctity of contracts until they're not.

Sep 08 01:03 PM

[adamnb:]

Another Russian bashing article by a no-nothing. It would be nice if just for once the western press printed an article that stated the Ukraine/Russian problem is mainly centered on Ukraine's refusal to paying the EC price for natural gas, maintaining it's right to be subsidized by Russia, as if it were still a satellite of Russia, while negotiating to join NATO.

Sep 08 06:13 PM

[bcncv:]

I agree with the article, but I've also been around long enough to realize that contracts are meaningless in the eyes of those with the power to define contract law.

Russia will do what makes sense to them at the moment, regardless of any piece of paper. In some cases, this extends to contracts written by their state owned/influenced companies as well. Invest there with the same caution you would use in Venezuela.

Sep 30 01:51 PM