We've seen this movie before, right? Not quite--this is the sequel. The European Union shivered when Russia shut the natural gas spigot to Ukraine early in 2006, and energy politics are at play again.

The countries of the Former Soviet Union have adjusted to the fall of their former mega-state with varying strategies. When I attended a conference in Tallinn, Estonia, sponsored by that Baltic country's equivalent of the Wall Street Journal, I learned about favorable taxes to innovation and investment, and a strong ethnic bond with Finland, just across the sea.

Kazakhstan, in former Soviet Central Asia, shares a feature common to most post-Communist states in the FSU since it is still led by the people who used to head up the local Communist Party.

And as Russia is the primary supplier of natural gas to its neighbors, these countries are also bound by a sort of hostage dilemma, as the Russia Ukraine gas dispute continues. Simply put, warming up to Moscow means your people will stay warm through the long, harsh winters on the steppe.Thus, they must decide how to deal with the fact that though Soviet friendship is preferable to frostbite, it comes at a higher cost these days.No longer in the mood to patronize its sphere of influence, Russia demanded a major increase in payments for natural gas from Ukraine in 2006, and the two countries ended up agreeing to a full doubling in cross-border rates.

This week, Russia is threatening a repeat of the same episode if Ukraine doesn't agree to a price hike by October's end.

Russia Blames Ukraine, Ukraine Blames Russia... the Dispute with No End in Sight

The countries of the European Union, which lie west of Ukraine, felt the gas pressure drop as Russia's price pressure went up. All across Europe, supply disruptions were reported. Moscow blamed Kiev for siphoning gas as negotiations turned ugly, and Kiev alleged that Moscow had intentionally turned down pipeline pressure to create the impression of wrongdoing.

This week, Russian president Vladimir Putin announced that he would accept the invitation of the United Russia party to stand as the head of its parliamentary list in the upcoming elections for the Russian duma. He is not allowed by the constitution to sit in the presidency for a third consecutive term, as with a 70-80% approval rate he is surely tempted to do. Indeed, many in the public would love for him to stay, since during his tenure Russia has re-insinuated itself in the upper echelon of world leadership.

In everything from the Middle East peace quartet (where Russia has no real business) to the bizarre race to the bottom of the North Pole to claim unexplored resource reserves, Putin and his broad-chested quest for Russian renewal has brought the country a long way from the bread lines of two decades ago.

His attitude has also affected European energy policy, since the Kremlin has asserted its resource sovereignty in unsavory ways, including seizure of oil giant Yukos and other companies from Russian oligarchs as oil and gas prices increased and machinations in Ukraine, which seem always to move in favor of Russian-friendly politician Victor Yanukovich.

Opposition that cemented itself against Yanukovich during the Orange Revolution from 2004-2005 has since broken into political blocs, dividing ethnic Ukrainians in a prime situation for voters to restore Yanukovich and Russian dominance.

Meanwhile, in Moscow we may see Putin remain the most powerful man in Russia, even if he no longer sits as president. The top candidates are all seen as loyal to the judo master and former spy, and the United Russia party that has asked Putin to lead it holds a full half of the seats in the Duma. From 70% approval as an individual to the shot-caller and potential prime minister in a party that enjoys tremendous popularity, Putin isn't going away anytime soon.

And Gazprom, though its share price over the past five years has had its ups and downs, is still an excellent way for adventurous investors to play Russia's continuing consolidation of its political, economic, and natural resources.

It trades as an American Depositary Receipt under OGZPY.PK in the over-the-counter pink sheets, currently standing just above $45 per share. Figures shown below are for London-traded shares, which you can purchase under the symbol GAZ.

Invest wisely, and don't forget that international investing can be as political as it is economic.

Regards,

Sam Hopkins