From Persuasion to Coercion

1. From Persuasion to Coercion Russia & UkraineEnergy Crisis Case International Conflict Group Fundamentals of Conflict Studies Prof. Catherine Gerard

2. Presentation Outline • Discussion on persuasion & coercion • Energy Structure: Russia – Ukraine • Tit-for-Tat • Analysis • Group Exercise • Conclusion

3. Persuasive inducements Rewards as inducements Coercive inducements All three alternatives combined to form conflict strategy Three Types of Inducements Coercion Persuasion Reward

4. Persuasive Inducements • Persuasive inducements are efforts to influence an opponent by communicating arguments, information, or appeals that alter their perception of the conflict. If effective, the tactic of persuasion involves the recipient becoming convinced of the other's goal and voluntarily accepting it. Can be appeals to shared values or trying to convince other party what you want is also good for them. • Rewards can play a role in persuasion. Money, land, access.

5. Coercive Inducements • Coercion, or negative sanctions. Coercion refers to actions, including symbolic ones that injure or threaten injury to the adversary. The actions are intended to intimidate and deter the adversary from acting coercively themselves, and/or to force the opponent to yield to one's demands. The cessation of coercion is conditional on the opponent's compliance with these demands. • Can be threatened or actual acts. Usually coercion is threaten first. • Violent coercion and non-violent coercion. Violent coercion includes: acts of terrorism, sabotage, assassination, military attacks, and police suppression. Coercion can also be nonviolent: withholding purchases or services, as in boycotts or strikes

6. COERCION To induce an adversary to change against their will” In combination with non-coercive tactics When persuasive/coercive tactics are used PERSUASION • Use rewards in closing stages of a conflict. • Use rewards to transform a conflict • In combination with coercion

7. Four factors affect the escalation tactics and strategies • the disputants' goals in the conflict • their internal characteristics • the relations between them • their social environment.

8. Energy Structure: Russia-Ukraine

9. Russia • 22% of the world's total annual natural gas production. • Has a fifth of the world’s known reserves of natural gas. • Presently supplies about 25% of Europe's natural gas imports through Ukraine (Soyuz, Brotherhood) and Belarus (Yamal-Europe pipeline)

10. Gas Production Chart

11. Ukraine • 4th largest importer and 6th largest consumer of natural gas in the world • Corresponds to 85% of its annual energy needs • Highly dependent on imported gas from Russia • Important transmission site for gas exported from Russia to Western Europe • Gas transmission system is the second largest on the continent

12. Pipeline System: Russia to Ukraine • Ukraine has approximately 35,600 kilometers of gas pipelines, all operated by Naftogaz • Druzhba Pipeline (“friendship pipeline”) transports large quantities of Russian oil/gasto Europe • Countries include: Russia, Ukraine, Germany, Poland, Hungary, Belarus, Czech Republic, etc. • Disputes addressing taxation rights and ownership of the pipeline territory have occurred between Russia and Ukraine

13. Existing and planning pipeline to EU

14. Background • CIS formed in Dec 1st 1991 • Non-payment leads to shutting down supply (1992) • Gazprom and Naftogaz signed an 11 year Contract in 2002 • Addendum 4 (2004) fixed prices and rent per 1000 cubic meters

15. Crisis Builds Up • Moscow to continue subsidizing gas contingent upon political considerations • Orange Revolution (2004) • Gas price increased worldwide (2005) • Russia demands for price adjustment ($160) • Ukraine refuses relying on legal contract • Russia’s new demand increases ($230)

16. From Persuasion to Coercion • Russia offers to increase rent to Ukraine to $ 1.74 ( Tariffs range from $ 0.9 to $ 2.7 ) • Ukraine offered to pay price increase in weapons and also agreed to gradual increase • Russia argues they are paying for Ukrainian gas and offers a consortium • Ukraine threatens to revise Black Sea Fleet Contract • Russia refuses to revise the lease rate as it was against the provisions of the 1997 Treaty

17. Tipping the Scale • Ukraine strengthens ties with the West • Russia issues ultimatum to turn off gas supply • Ukraine suggests international arbitration on Dec 13th 2005 • Prime Minister Yuriy Yekhamrov visits Moscow for talks on Dec 19th to phase the hike • Russia offers a $ 3.6 billion loan to Ukraine to offset price increase • Also agrees to postpone increase to April 2006 contingent upon immediate agreement on price

18. For your entertainment

19. Interests & Motivations

20. Interests & Motivations • Rights of Pipeline Russia: --- Pro-Moscow president at the Ukraine --- Market Prices --- Secure supply (aging infrastructure) Ukraine: --- Political Independence --- Secure Energy source

21. Timeline Exercise • Identify when persuasion and/or coercion was used • Succinctly comment on its effectiveness • Discuss better Alternatives (if any) e.g. Interest-based Negotiation Mediation Litigation

22. Timeline Exercise Results • Strengthening of the Orange Revolution • Election of pro-western democratic leader • Russian finacial support (3.6bn loan) • Wake-up call to EU’s dependence on Russian energy supplies • EU to diversify energy sources

23. Debrief • Conditions when Persuasion is a better tactic • Conditions when Coercion is a better tactic • Mixing the tactics to obtain the most beneficial outcome

24. For your entertainment Continued

25. Aftermath • Russia resumes supply of gas to Ukraine on 3rd Jan 2006 • Agreement reached between Russia and Ukraine on 4th Jan 2006 • Gazprom receives $ 230 for Gas • Ukraine receives $ 1.60 as enhanced tariff

26. Thank you