ABSTRACT
Overall energy production exceeds the aggregate domestic consumption of the Commonwealth of Independent States (CIS) and Georgia, but all the former Soviet republics face rocky energy futures. Oil production is falling sharply in Russia, natural gas production is down in Turkmenistan, coal output is declining in Russia and Ukraine, and many CIS states face problems in their electric power industries. These production problems will lead to increased frictions between states with energy surpluses and those dependent on imports.
Nevertheless, the web of interdependencies spun by decades of Soviet planning will keep the energy sectors of the republics entangled; 478no republic will be able to implement energy policies in isolation from its former Union partners. Russian economic reforms, which include the sharp price increases for energy of May 1992 and plans for freeing energy prices in the future, will adversely affect the terms of trade of the energy-importing republics. As energy exporting republics such as Turkmenistan, Azerbaijan, and Uzbekistan follow Russia’s price lead, republics that import most of the energy they consume—especially Moldova, Armenia, and Georgia—will be the hardest hit.
Among the large republics, Ukraine is in the most difficult situation because of its rapidly falling coal production, shrinking electric power generation capacity, and its need to import large amounts of increasingly expensive oil and gas. Even energy-rich Russia remains dependent on its former union partners for access to international markets, energy equipment, the integrity of its electric power grid, and uranium for its nuclear power program. Throughout the CIS economies, the iron and steel and electric power industries are the most affected by the upheavals in the energy sectors of the republics.
