Russia and Ukraine signed a 10-year deal Jan. 19 to renew supplies of Russian gas to Ukraine and Europe, ending a dispute that has jeopardized Europe's gas supply since New Year's Day. "The transit of gas through Ukraine will be fully resumed in the near future," Russian Prime Minister Vladimir Putin said at the signing ceremony, also attended by Ukrainian Prime Minister Yulia Tymoshenko, Gazprom head Alexei Miller and Naftogaz head Oleh Dubyna. (Reuters, Dow Jones, Jan. 19)

Putin's apparent capitulation may have been motivated by fears that continued intransigence would have weakened Russia's position of dominance over European markets. Radio Free Europe/Radio Liberty editorialized days before Moscow blinked: "Having now denied many European countries gas for 10 days, Russia may have brutally exposed the vulnerability of the European Union. But it has also shot itself in the foot and forced the EU to get serious about cutting its exposure to Russian provisions." (RFE/RL, Jan. 17)

Of particular concern to Moscow is the renewed impetus the crisis gave to the planned Nabucco pipeline, an EU-backed project that would circumvent Russia by transporting gas from the Caspian and Central Asia to Europe via Turkey. On the same day of its gloating editorial, RFE/RL interviewed an ebullient Reinhard Mitschek, an official with Austria's OMV oil and gas group and managing director of the Nabucco project. Mitschek called Nabucco's prospects "excellent" in ligt of the crisis, adding: "Nabucco will contribute substantially to increasing the choice of options and to diversifying the routes for transporting gas to Europe. We are planning a technical capacity of 31 billion cubic meters of gas."

Mitschek admitted that the still rigidly closed government of Turkmenistan, a key source of the gas the project would tap, has not signed on—although he added optimistically: "I work on the assumption that Turkmenistan too will seek and find a market in Europe for its gas." (RFE/RL, Jan. 17)

See our last post on the regional pipeline wars.

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