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Our new security system prevents email messages coming through the AOL server from being delivered to our address. This is because of the probability of unwelcome and problematical attachments to messages from this source.  Correspondents wishing to contact TBR News are suggested to use another server. Ed.

Announcing TBR Ebooks!

Starting with a new publication concerning the background behind the 9/11 attacks, TBR News wil be presenting a series of interesting, informative and definitive works for our readers. Future titles will include the complete Voice of the White House with much more added material that was considered too controversial to post, the heavily-censored Armenian Holocaust of 1916, the Bush-Lay private correspondence, the Assassination of JFK,Pearl Harbor intrigues and rare documents, Malaparte’s inside study of the making of revolution, sensational selected articles from the German Rudolf historical revision files, unpublished before Rudolf’s arrest and forced deportation to Germany, World War II studies of holocaust history, taken from secret German files and much more. Please see the title page for more information.

The Editors

Descending Into Darkness: The Harring Report

THE VOICE OF THE WHITE HOUSE

And all the sons of Congressmen! And the two adorable 100 Proof Bush daughters! (Ginna and Tonic)

“As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people, On some great and glorious day the plain folks of the land will reach their heart’s desire at last and the White House will be adorned by a downright moron.”
- H.L. Mencken

“That we are to stand by the president, right or wrong is not only unpatriotic and servile, but is morally treasonable to the American public.”
-Theodore Roosevelt

"Actions are held to be good or bad, not on their own merits, but according to who does them.  There is almost no kind of outrage - - - -torture, imprisonment without trial, assassination, the bombing of civilians - - - - which does not change its moral color when it is committed by our side.  The nationalist not only does not disapprove of atrocities committed by his own side, he has remarkable capacity for not even hearing about them."
-George Orwell

"Under the Bush administration, openness and accountability have been replaced by secrecy and evasion of responsibility. They abuse their power, conceal their actions from the American people, and refuse to hold officials accountable."
-Senator Edward M. Kennedy

“George W. Bush is deeply interested in Deep Space Exploration. His next project will be to circle Uranus and search for Klingons…..”
-Dallas Herald

“Once a Republican, always a coprophile…:”
-Mother Theresa

“A government official is a man who has risen from obscurity to something worse.”
-Pat Robertson

"The voters decide nothing.  Those that count the votes decide everything."
-J.V. Stalin

“The Senior White House staff is living proof that Pentecostal mongoloids regularly cohabit with chimpanzees, frogs and Norway rats”
-Dr. Myron Kalbfuss, Biology Department, Stanford University

In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.

America’s Enemies!

There are four entities who represent the most dangerous enemies to American liberties since George III.

They are:

1.          The Neocons or Likudists who owe their personal allegiance to another country and now completely control our foreign policy. They lied and deceived us into the Iraq war and are demanding that more and more American soldiers die to preserve their own country and ideals.

2.          The Christian Evangelical right who is trying to force the United States into becoming a theocracy under their rule. They know in their hearts that they alone can restructure a secular humanist America into their idea of Heaven on Earth.

3.          An element of American society that call themselves Patriots and are obsessively militaristic and great admirers of the corporate or fascistic state. Many of these have been very minor members of the American military and as a counterbalance to their reserve or rear area tours of duty, are rabidly in favor of draconian military action, the bloodier the better. Usually these drumbeaters are too old, or too fat, to fight and have no sons of draft age.

4.          George W. Bush, who is the worst president in the history of the United States and directly responsible for the huge death tolls in Iraq, is determined to rule the United States until God puts a stop to him and is even more determined to force the American people into becoming obedient, Christian and self-sacrificing lemmings who worship at his shrine and march in step.

Recommended reading

We gather information, on a daily basis, from many websites. There are a number of publications that are well worth viewing for their intelligent reporting of national and international news. All of those sources, listed below, are daily newspapers with the exception of the Asia Times. The latter is a very well written site with in-depth articles that are worth reading.

The New York Times:  www.nytimes.com
The Washington Post: www.washingtonpost.com
The Christian Science Monitor: www.csmonitor.com
The Guardian: www.guardian.co.uk
Seattle Post-Intelligencer:  www.seattlepi.nwsource.com
Asia Times www.atimes.com

Note: Very little of the information in this edition of TBR news has come from the mainline American media. It is just not there. Most of it has come from foreign sources and the Internet. Most of our sources can be seen on the main page.

The Voice of the White House

Note: We have had so much interest in our last VOTWH posting that we are repeating it, along with the latest submission. Ed.

December 29, 2005: “The sole topic of conversation inside knowledgeable Washington circles this holiday season is the coming impeachment of Bush and the removal of Cheney from office. And this is not solely restricted to Democrats by any means but also includes a growing majority of Republican lawmakers, the military commands, the senior federal judiciary and those who comprise the so-called Power Elite of this country.

Bush is seen as completely out of control.

It is known that he was put into the White House by powerful Republican, conservative, religious and business entities who were tired of Clinton and the American liberals and wanted to run the country along their own lines.

That their rigged candidate was known to be a useless failure in business, a drunk, a coke-head and of limited intelligence made no difference.

They reasoned that Bush Senior could control him (which, it turned out, he could not) and that the cunning Karl Rove would keep him on track and be able to control public opinion. Another factor was the crazy Dick Cheney, who was determined to be a Vice president That Would Matter and he firmly believed, as did many others, that he could completely control the dimwitted Bush.

The reign started out well enough and the spin doctors were able to convince Americans that all was right in heaven. Evangelical Christians, numerically inferior but, like the Communists during the Roosevelt era, well organized, fanatic and able to deliver winning blocs of votes at the critical elections immediately came on line, panting for a New Jerusalem and led by the biggest bunch of money-grubbing, psalm-singing hypocrites since the late Elmer Gantry.

It looked like plain sailing in those days.

The Republican plan,

·                     to strengthen their party in Congress to the point where it was invulnerable to any Democratic challenges,

·                     to marginalized the Democratic party to the point of being nothing but comic relief and to promulgate social programs that would reduce welfare for the disliked blacks and jobless of all races to nothing,

·                     to give huge tax benefits to the wealthy Republican cash cows,

·                     to appease the religious right by allowing creationism to be taught in all public schools, bringing the Ten Commandments of Moses into public buildings,

·                     to cater to the right wing and pro-Israel Jewish groups by appointing many of their co-religionists to positions of power in the determining of foreign policy (read ‘ Israeli needs both economically and politically in the Middle East’,

·                     to do everything in their power to assist, by any means, both American and British oil interests in obtaining a secure supply of oil and gas in the same Middle East as well as to secure economic control over Russian oil and gas,

·                     to secure pipeline rights across central Asia to guarantee more uninterrupted flow of oil to American tanker bottoms for shipment to the oil-starved United States..

All of these things appeared to be well under way until it started to become apparent that Bush himself was not that easily controlled and began to believe the propaganda his staff fed him on a daily basis. As Bush is a very weak man, he constantly needs reinforcement by those around him to assure him of his manliness and ability. He lacks both but his staff has spent years filling him full of sycophantic and dangerous propaganda to the point that Bush now actually believes that he is divinely protected and a great leader in his own right.

Imagine how the religious right, the Republican legislators and American business interests must have felt with each successive faux pas on the part of the President. There was:

·                     the obviously homosexual Gannon being allowed to roam all over the White House at night (by permission of the President),

·                     the vicious Plame scandal,

·                     the growing awareness of the utter corruption of Cheney and others,

·                     the obvious lies used by Bush and Cheney to trick Congress into permitting a premeditated attack on Iraq to gain their oil fields,

·                     the uncomprehending stupidity with which this attack was launched and the resulting very successful Iraqi resistance movement,

·                     the subsequent low morale and rising death tolls among the well-equipped but very badly disciplined American military,

·                     the destruction of Iraqi oil production and its total loss to the White House schemers,,

·                     the rising and intense international fear and hatred of the Bush policies and worse,

·                     the growing number of international political and business cartels designed to keep foreign oil from America as a punishment and as a warning to cease and desist irrational and violent activities outside its own borders.

The CIA, under orders from Bush, toppled the pro-Russian governments in Georgia and the Ukraine and have tried, without success, to foment rebellions in many other former Soviet republics…all because of the oil-rich areas. Putin, who is twice the man Bush is and no fool, struck back and took control of the Russian oil  and gas industries, costing American and British firms hundreds of millions of dollars they had spent on bribes to the now-powerless Russian Oligarchy that ran all the oil and gas fields.

That all of these oligarchy members were Jewish street thugs who banked their billions in Israeli banks is something not widely known and Putin’s sequestering of their ill-gotten bribes has enraged Israel, prompting them to launch attacks on Putin’s perceived ‘dictatorial ways’ in their many media outlets.

In addition to the Plame scandal, the public watched as the mask slipped during the Katrina disaster. They saw, very clearly and very often, how the current Administration held poor blacks in utter contempt and through a terrible mixture of racism and gross incompetence, permitted the suffering of poor, non-voting blacks to be proclaimed throughout the land (and the entire horrified world) and unto all the inhabitants thereof.

This outrageous callousness marked the turning point in the public, as opposed to the professional and political, opinion and Bush’s public ratings have been steadily dropping. And this in spite of clearly rigged positive  polls by the administration’s spin-doctors and that shrinking portion of the American media that still do the White House’s biddings.

Now, the cherry on the sundae is the open admission by Bush that he personally ordered unlimited telephone tapping by the NSA, the FBI, DHS and the CIA of mail, email, fax communications and even first class mail of any American, or foreign, citizen that either Bush, Cheney or those having their ear wanted to spy on and, hopefully discredit.

That these actions are very clearly a violation of federal law means nothing to Bush or Cheney. They both feel, and have publicly stated, that they are the law and may do as they wish. They have used the willing services of the telephone networks, SBC and AT&T, the computer internet firm of AOL (and to his credit, Bill Gates refused to allow this on his Microsoft network for such illegal spying which will, no doubt, get him investigated by the DoJ as quickly as possible) all of whom needed no order to comply with a flagrant violation of specific American law.

It is all of these factors that have so frightened the American Congress and federal judiciary that the movement in these circles to impeach Bush and remove Cheney has rapidly accelerated in the days following Bush’s foolish and arrogant boast that he not only ordered unlimited surveillance on American and foreign individuals, firms and government entities but flatly refused to cease this completely illegal process.

As I said above, this is not a Democratic Party scheme but one that encompasses all levels and party affiliations. In the Christmas week, in private homes, in the Cosmos and Metropolitan Clubs, in the dining rooms of the Jockey Club and the Hay-Adams hotel, there have been small, private meetings on the subject of how to remove Bush. No one initially wanted a reprise of the Nixon removal but at this point, all of them realize that Bush has three more years of this insanity and that as the forthcoming mid terms would no doubt be a disaster to the Republicans, concrete action is at last being formulated.

As an interesting, if somewhat sinister, side note to this topic, according to a signed memo, Cheney has spoken with Rumsfeld about the attitude of senior military commanders about supporting a declaration by Bush of Martial Law in America.

Fortunately, the military leaders, with two exceptions, would have none of this and after a brief, quiet, internal and certainly very private, polling of their numbers, the subject was permanently shelved. When news of this leaked out, however (there are no secrets in Washington, believe me) it terrified many members of the legislative branch on both sides of the aisle and now the plans for an impeachment proceeding are taking on a new and well-supported life.

Most do not know of currently-discussed plans among certain foreign countries to force Bush and Cheney before the World Court on charges of war crimes to include planned massacres of unarmed civilians, theft of private property, making illegal warfare and lesser charges such as the deliberate killing of foreign journalists. None of this has come to pass…yet… but the very discussion of the idea in the chancelleries and foreign offices of Europe, and the Middle East is only adding fuel to the fires now lit under two of three branches of the American government.

The Executive is dangerously beyond control but the Legislative and Judicial are rising to the call.

These will be interesting times indeed!”

January 1, 2005: “I see that Putin is getting even with both the Ukraine and the U.S. for the so-called ‘Orange Revolution’ last year. We know that the CIA bribed an anti-Moscow element in the Ukraine to rebel and declare themselves free of Russian influence. Like most CIA disruptions, it was a nasty business and while it appeared to have worked, in the end it will prove to be an utter disaster. For example, the rich (in oil and coal) Donetz basin in eastern Ukraine is almost entirely Russian in population and any attempt on the part of American business interests to get their hooks into this would immediately result in a demand from the locals for a referendum to separate from the Ukraine and, when that vote passed, to request a permanent union with the Russian Republic. Putin has already agreed to do this and the main motive for the CIA-fomented revolt will be completely nullified.

This whole business has been about oil. Since I was personally involved in some of this, let me enlighten you in a brief, and perhaps simplistic way.

Regan toppled the Communist regime by using the completely fake “Star Wars” program, that would never have worked but which drove the badly shaken Soviets into eventual bankruptcy trying to keep up with it. The Soviets, by the way, were far more afraid of the U.S. launching a strike against them than they were concerned with attacking America.

Once the corrupt and over-buraucraticized Soviet Union fell apart, the United States had an unparalleled opportunity of working politically and economically, with the new Russian government. Instead, and true to form, they installed the drunken Yeltsin (who was entirely in our pocket) and then tried to take over the enormous and potentially very lucrative Russian oil and gas fields.

A group of thugs, again sponsored by the U.S., took over the newly-privatized oil and gas industry, aided by their co-religionists in the World Bank and the IMF. Once they had their hands on everything, they immediately sold out a controlling interest in their extorted holdings to a consortium of American and British oil developers.

But they entirely underestimated the apparently colorless Vladimir Putin. A former Colonel in the KGB, Putin followed the old Italian dictum that he who goes softly goes safely and he who goes safely goes far.

Little by little, Putin regained state control over the oil and gas resources, hounding the Oligarchy out of control, either jailing them or forcing them into exile. He managed to get his hands on much of the bribe money, forcing Bush to beg for its return when he met with Putin at Bratislava last year.

Putin’s response to what must have been an embarrassing question on the part of the oil-industries front man, Bush, was that since the deals had been made with the now-departed Oligarchy, perhaps the oil people might wish to sue them in Russian civil courts. He, himself, could do nothing.

At the same time this was happening, the CIA, working with the same oil people, instigated political upheavals in some of the former Soviet Republics who controlled land over which vital oil and gas pipelines had to cross to bring these products to ports where they could be shipped to the West.

They were successful in the Ukraine and Georgia but Putin struck back and regained de facto control over sufficient territory to effectively block a pipeline. Putin also began to develop the Russian oil and natural gas fields with the idea of bringing large amounts of foreign currency into the states’s coffers.  He has made deals with Venezuela, China, Japan and other countries and now, in retaliation for the rebellion in the Ukraine, shut off their natural gas shipments.

Since the Ukraine has no money to pay Putin’s greatly inflated gas prices (for the Ukraine only), that state has privately appealed to the United States for financial aid but just as privately been turned down. The solid Russian control over their gas production coupled with the probable defection of the vital Donetz area has made the Ukraine very unattractive to the United States.  As we did in Afghanistan and will do in Iraq, we have quietly abandoned them.

When the gas stops and the savage Russian winter grows colder, there will no doubt be another change of government in the Ukraine.

Vladimir Putin is far from stupid and Bush is far from intelligent with the result that the former’s entirely legitimate economic warfare will do more permanent damage to U.S. economy than any military attack ever could.

Since utilizing economic warfare to disrupt and control is a long-time American specialty , it is clearly apparent that Putin believes that it is indeed lawful to be taught by your enemies.”

Russia turns up the gas pressure

As arguments over Ukraine's pipelines to the West heat up, Europe's energy supplies are at stake, writes Oliver Morgan

December 18, 2005
The Observer

http://observer.guardian.co.uk/business/story/0,6903,1669717,00.html

Russia and Ukraine are wrangling bitterly over how gas is exported from Russia through its southern neighbour via a network of pipelines to destinations beyond the former Soviet Union.

Far from being a remote dispute in a far-away part of the world, it poses a problem for western Europe and the UK. According to the International Energy Agency, 50 per cent of Europe's gas supplies now comes from Russia - of which 85 per cent comes through Ukraine. In France, the 11.2 billion cubic metres (bcm) it gets from Gazprom, the monolithic Russian gas operator, amounts to around a quarter of all gas imports and dwarfs its 1.9bcm domestic production. In Germany, the 32.6bcm it imports accounts for more than a third of its total imports, and is far more than its 22.2bcm domestic resource.

Fatih Birol, chief economist at the International Energy Agency (IEA) says: 'There could be serious implications for western Europe if the problem is not resolved. This highlights the fact that relying on one supplier for a major part of a supply is very very risky.'

Despite the fact that Britain relies less on gas imports than other western European countries it is not isolated from these implications.

In fact, its location at the 'end of the pipe', raises fundamental questions about the future security of our energy supplies. And the timing could hardly be more sensitive. UK gas prices have recently been at historic levels but there are potential shortages. Doubts have been expressed about the true openness of a European gas market filled with state monopolies that is not supplying to the place where the price is highest - the UK.

On top of that, two weeks ago the government launched its energy review, looking to tackle the two key issues facing policymakers over the coming decades. The first is climate change, the second is security of supply. As energy minister Malcolm Wicks pointed out, production in the North Sea has declined so that we are now a net importer of gas. On this matter the review boils down to asking whether we should build new nuclear power stations and boost renewables to avoid the need for imported gas as the major generator of power.

That is where worries over Russia loom large. The government drew attention to the question in its 2003 energy white paper. It made clear how important engaging with Russia and the Caspian region states, as well as with north African and Middle Eastern countries, was to encouraging investment and the availability of supply.

It added that it needed to focus its attention on 'good governance and the development of stable investment and transit regimes'.

More recently, ministers have tried to press home the issue. Trade and Industry Secretary Alan Johnson talked about energy supply and transit at the Permanent Partnership Council with Russia on 3 October, and it was raised again at the EU-Ukraine summit on 1 December. Wicks discussed security of supply in Moscow at the end of October.

But events suggest that vigilance will be needed. Last week, Alexander Medvedev, the man in charge of export at Gazprom, said that the volume of gas it supplies to Ukraine could be cut in the dispute over how much Kiev pays for its supplies and how much it is allowed to take in lieu of payment for pumping the gas through its territory under the terms of a 2003 agreement between the two states. This could affect the volume ultimately passed through to western Europe.

According to industry analyst Wood Mackenzie, Russia is selling gas to members of the Commonwealth of Independent States (CIS) at $50-$80 (£28-£45) per thousand cubic metres (mcm). Ukraine is at the lower end of this scale. This compares to $160 per mcm on the border between the former Soviet Union and Europe.

Ukraine is also expected this year to receive 23bcm of Gazprom's output as 'payment' for shipping under the agreement in 2003. This represents some 18 per cent of the total 128bcm Gazprom will transport through the country.

Ukraine receives 30 per cent of its gas direct from Russia and a further 45 per cent from Turkmenistan via Russia. Gazprom wants to increase what Ukraine pays for the gas it uses, replacing the 2003 agreement and demanding cash for all of the supply instead of an output share.

In some ways Russia and Gazprom have a strong hand, according to Hilary McCutcheon, analyst at Wood MacKenzie: 'There is leverage because Ukrainian industry is very reliant on Russian gas.' In addition, there are threats that other interests can make - for example switching oil refining from facilities owned by Russian companies in Ukraine to spare capacity at home.

But Russia needs the money. 'Gazprom wants to increase the amount paid three times,' Birol says, 'But for Russia there are significant problems. About three-quarters of Russian gas production comes from three super-giant gas fields in western Siberia - Medvezhe, Yanburg and Urengoye. These are going through a severe decline in production and need a great deal of investment.'

The IEA estimates that in excess of $170bn will be needed to develop Russian gas production. 'Clearly Gazprom needs to maximise the revenues it gets from its current resources,' Birol explains.

McCutcheon suggests that the situation is part of ongoing friction between Russia and its neighbours over gas supply, but indicates that the most recent stand-off may simply come down to the fact that Gazprom simply does not wish to miss out on high world gas prices.

'The running down of the big three gas fields is not a new development,' she says. 'Gazprom have seen it coming for quite some time. They have taken some steps such as some additional investment to stave off serious production decline.'

However, she does not believe this is directly linked to the recent stand-off with Ukraine. 'Because prices are much more controlled in Russia and the CIS, the rising European price has not fed through so markedly to the domestic market. So the difference between the two has become more stark. Gazprom wants to maintain its control over the high revenue export market and take advantage of the higher price.'

Whatever Russia's short-term motivations, Birol believes its long term position, indeed credibility as a leading gas supplier to Europe and elsewhere, is affected by arguments such as it is having with Ukraine.

'Many consuming nations are becoming more and more aware of the security of gas supply and are looking at their gas imports very carefully. If such things continue to happen, it will play an important role in countries' plans for future supply.'

In his view, there are two alternatives. 'If they want to stick to gas they can look at other countries to import from, such as Algeria, Egypt and Qatar. If they want to look at other fuels and diversification, they may want to look at renewables and nuclear.'

This all sounds familiar to UK ears. Indeed, the government says that looking at other fuel renewables and nuclear is exactly what it has been doing since the energy white paper. When the recent energy review was announced the government re-emphasised the point that we are now importers of gas.

A DTI spokesman says: 'It's in everybody's interest that current negotiations between the Ukraine and Russia on gas and transit prices are constructive and businesslike. Both are aware of the importance of these negotiations for EU gas supply - 40 per cent of gas destined for Europe transits Ukraine - and we are confident that agreement satisfactory to both sides can be concluded rapidly.'

There are mitigating factors. Gazprom is building a controversial new pipeline under the Baltic Sea to Germany that will increase supply direct to western Europe. Notwithstanding this, ministers here do not want energy policy decisions as fundamental and politically expensive as building new nuclear reactors precipitated by spats between Moscow and Kiev.

As Ukraine Balks at Gas-Price Rise, Russian Company Renews Cutoff Threat

December 31, 2005
By C. J. Chivers
New York Times

MOSCOW, Dec. 30 - Worries of a winter gas shortage in Ukraine intensified Friday as Russia's energy giant, Gazprom, renewed its threat to cut supply lines to Ukraine on Sunday morning if the country did not accept a nearly fourfold increase in price.

The impasse showed no sign of easing. Gazprom rejected an appeal from Viktor A. Yushchenko, Ukraine's president, to freeze prices and maintain the flow of natural gas through Jan. 10 to allow for further negotiations. The company also said it had run technical tests and was capable of stopping flows for Ukraine, through which much of Europe's gas travels, while meeting export obligations to countries downstream.

The European Union proposed an emergency meeting of energy officials on Jan. 4. The call reflected worries that the stalled negotiations could tighten supplies in European countries, many of which buy large portions of their gas from Gazprom but receive it after it has passed through Ukrainian pipelines.

Ukrainian officials and industry analysts played down any immediate risk, saying gas reserves in Ukraine would ensure that its supply was maintained for at least two days and perhaps longer than two weeks. Europe's reserves would also prevent any immediate shortages there."I hope Gazprom will not turn off the tap," said Valery Nesterov, an energy analyst at Troika Dialog, an investment firm in Moscow. But he added that if the flow was cut, "They still have the time to negotiate."

The test of wills underscored enmities that have tainted relations between Ukraine and Russia since Mr. Yushchenko and his supporters overturned a fraudulent election last year, defeating a Kremlin-backed candidate and pledging to steer Ukraine toward a more Western foreign policy. It also marked Russia's willingness to use its state-controlled natural gas monopoly as an instrument of foreign policy, even coercion, in dealing with neighbors.

That policy is not without risk. The Kremlin and its allies at Gazprom have seized a strong position in the short term. But their threats against Ukraine, their mocking of Ukrainian proposals and concerns, and their willingness to foster worries among other gas customers have raised fresh questions about whether Gazprom, Russia's largest company, is a reliable energy partner.

The dispute centers on Gazprom's politically influenced pricing system. Ukraine, through a deal arranged under former President Leonid D. Kuchma, has been paying $50 for 1,000 cubic meters of gas, reflecting Russia's practice of providing discounted energy to former Soviet nations still in the Kremlin's orbit.

Gazprom, with President Vladimir V. Putin's approval, has proposed charging $220 to $230 for 1,000 cubic meters, in line with prices in Europe. Mr. Putin has offered a $3.6 billion loan to Ukraine to help cover the costs, a gesture variously seen as pragmatic or patronizing.

Mr. Yushchenko's government has said Ukraine is prepared to pay more, but not so much or so fast, and proposed a transition period with a much smaller increase. Mr. Yushchenko has also turned down the loan offer, saying Ukraine should pay for energy itself.

Ukraine's volatile domestic politics lie just beneath the surface.

Ukrainian parliamentary elections are scheduled for March 26. The elections will be accompanied by constitutional changes, negotiated near the end of the protests that ushered in a new government last year, that will weaken the Ukrainian presidency and strengthen the Parliament and prime minister. The combination of the new Constitution and the elections means that the faces and policies of Ukraine's government could shift remarkably once again. Russia has made clear its disaffection from Mr. Yushchenko and his government, and the gas dispute is widely seen as an effort to undermine him in part to weaken his party's standing before voters.

A gas shortage during heating season could discredit the president and weaken his party, perhaps leading to a more pro-Russian government in Kiev, Ukraine's capital. Ukrainian officials have acknowledged the risks. At a news conference on Thursday, Anatoly Kinakh, secretary of Ukraine's National Security and Defense Council, said if talks broke down, the effects on Ukraine's heavy industry would be severe.

"It is forecast that Ukraine's G.D.P. will decline 4 to 5 percent in 2006," he said, according to a translation by the BBC. "Inflation will be at 27 to 30 percent. The social and economic situation in the country may worsen significantly." He added, "There is the potential loss of hundreds of thousands of jobs."

Gazprom has been unflinching. Aleksei Miller, its chief executive, reiterated the threat on Friday. "If Ukraine does not sign a contract on the purchase of gas in the remaining hours before the start of the new year, on Jan. 1 at 10 a.m. Moscow time, gas supplies from the territory of the Russian Federation to Ukraine will be completely cut off," he said in televised remarks.

Gazprom officials later clarified his statement, saying gas would still be sent through Ukraine to European customers, but flow would be reduced to account for the cut to Ukraine. Mr. Nesterov, at Troika Dialog, said it was impossible for Gazprom to meet contractual obligations to European customers without sending gas through Ukraine, because other transit options, through Turkey or Belarus, lack the capacity for those markets.

This raised the possibility that without a settlement, Ukraine might divert transiting gas for its own use, which earlier in the week Prime Minister Yury I. Yekhanurov threatened to do. Gazprom said that would be theft. Ukraine's threat, if acted upon, could create shortages in Europe.

Mr. Nesterov said that if there was no settlement, Gazprom's position could harm it over the long term. Gazprom is aggressively seeking new markets, but its competitors might now raise new questions about how it makes its decisions, and whether it can be trusted. "This will not get the company international good will," he said. "The gain is tactical, but the loss would be strategic."

The company seemed undeterred. According to the RIA Novosti news agency, it said it would invite Russian television stations to broadcast the reduction in gas flow live on New Year's Day.

Europe, US uneasy after Russia cuts Ukraine gas supply

January 1, 2006
by Meg Clothier
Reuters

MOSCOW (Reuters) - The United States said Russia's halting of gas supplies to Ukraine raised questions about use of energy as a political weapon, and European countries voiced concern their supplies could be hit at the height of winter.

Russia, taking over the G8 chairmanship for the first time this month aiming to promote itself as a reliable energy source, cut its neighbor's gas supplies on Sunday.

Moscow said it had no choice but to act after Kiev refused to sign a new contract that would have jacked up prices fourfold, ending the preferential treatment of Soviet days.

The Kremlin describes the dispute as a purely commercial matter. But Kiev sees an attempt to undermine its pro-Western government and says cutting Ukrainian supplies will undermine deliveries passing through the same pipeline complex to Europe.

The move appeared to be affecting deliveries to central Europe by early evening, with both Hungary and Poland reporting reduced deliveries.

Washington stepped into the row, with the State Department saying it regretted Russia's move.

"Such an abrupt step creates insecurity in the energy sector in the region and raises serious questions about the use of energy to exert political pressure," State Department spokesman Sean McCormack said in a statement.

"The U.S. has encouraged a compromise solution, and we remain hopeful that a resolution will be reached between the two sides that provides energy security and predictability for all concerned."

Western Europe, where demand is near peak levels because of freezing weather, imports 25 percent of its gas from Russia, with most of that delivered by pipelines running across Ukraine.

The Russian state monopoly, Gazprom, said enough gas was still being piped via Ukraine to meet its commitments to other countries. If they were not getting all their gas, it said that meant Ukraine was tapping into it.

GAS PLEASE

Hungary's gas wholesaler MOL said its Russian deliveries via Ukraine had fallen by more than 25 percent, forcing it to order big consumers to switch to oil where possible. Poland also said supplies were down by 14 percent.

Germany's largest gas supplier, E.ON-Ruhrgas, warned there could be problems for big wholesale customers if the dispute dragged on.

"If the reduction in supplies should prove to be especially large or last for a long time or the winter turns out to be especially cold, then we will hit the limits of our capacities," chief executive Burckhard Bergmann said on Sunday.

German, Italian, French and Austrian energy ministers have made a joint appeal to Moscow and Kiev to keep gas flows steady and an emergency European Union meeting is due on Wednesday.

Western-leaning Ukrainian President Viktor Yushchenko is trying to take his state into the EU and NATO. This annoys Moscow, which does not like the idea that its influence over the former Soviet Union might be waning.

Ukrainian officials say that is why the Kremlin is punishing Ukraine with a huge price increase while giving Moscow-friendly ex-Soviet states such as Belarus a much easier ride.

Yushchenko, struggling to live up his people's high hopes after the "Orange Revolution" a year ago, says Ukraine is prepared to pay more for its gas -- but will not agree to a big jump all at once. Moscow wants to raise the price to $230 per 1,000 cubic meters from the current $50.

Ukraine had threatened to retaliate by raising the rent that Russia's navy pays to use the Ukrainian port of Sevastopol as headquarters for its Black Sea fleet.

It also says it is entitled to skim off 15 percent of gas to cover transit fees, but Gazprom is accusing Ukraine of siphoning off gas destined for Europe illegally.

Ukraine still has gas thanks to reserves and the country's own modest output and officials say there is enough in store to see households through the winter.

But they are making no comment on the security of supplies to industry and shortages could begin to bite within days.