Putin and the Pipelines

I’ve only read the first two chapters of Marshall Goldman’s Petrostate, but I’ve already learned plenty.

Like, the fact that the gas pipeline system in the former Soviet Union was designed by, well, Soviets.  Consequently, there was no need to take into account whether a BTU of gas was coming from the Mother  Country or a ‘Stan.  It was still a Soviet BTU.

Fast forward to today.  Now Gazprom owns all the pipelines, and the former Soviet states of Central Asia are, well, screwed.  They have no western route for their product other than Gazprom pipes.  On the other end, the countries of Western Europe have precious few non-Gazprom options (Goldman points out that 40% of Germany’s gas comes via Russia).  The upshot:  Gazprom makes 70-80% margins on the gas it gathers in Central Asia and sells in Western Europe.

That’s what I call leverage.

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