Ultima Thule

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Wednesday, December 28, 2005

Gas dispute between Ukraine and Russia reflects power struggle over political direction

By Aussiegirl

Ukraine and Russia continue their tense standoff over gas prices. There are many articles on the subject, but this one brings into sharp focus the political motivations behind the dispute. Russia is using energy as a tool to punish Ukraine for the Orange Revolution and for turning its face towards Western Europe, NATO and the EU, and hopes to be able to continue to exert its political hegemony over that vital region. Russia continues to subsidize and provide below market gas rates for countries such as Byelorus. These motivations were made abundantly clear when Russia stated that any attempt by Ukraine to charge market rates for the lease of its Crimea seaports to the Russian Navy would be "fatal" and bring into question the issue of sovereignty of the Russo-Ukrainian border, a less-than-veiled threat of military invasion and war. It is blatant thuggish threats like this that completely put the lie to the Russian cover story that they are merely desirous of instituting market values for their gas. So far Yushchenko is holding his own in this tense standoff, but the deadline of January 1 draws very near.

Russia and Ukraine widen gas dispute - Business - International Herald Tribune: "Gazprom, Russia's state-owned natural gas monopoly, sharply criticized Ukraine on Tuesday after that country's prime minister asserted that Ukraine had a right to take 15 percent of the gas that Russia exports via Ukraine to Western Europe, fanning a dispute that has pitted the Kremlin against a former satellite and one of Russia's most important neighbors.

Characterizing Ukraine's plans as theft served to escalate a war of words while Gazprom moved forward with plans to more than quadruple the price it charges Ukraine for gas at the start of the new year. The acrimony reflects a determination by both sides to hold out over a dispute that could have long-term consequences for the foreign policy of both nations.

'If Ukraine holds out and manages to strike a compromise with Russia, then Russia's ambitions to restore its influence in this part of the former Soviet empire could be finished,' said Bruce Jackson, president of Project on Transitional Democracies, a U.S. group that has supported former Communist countries joining the NATO military alliance.

'This is Russia's last chance to influence Ukraine,' he said. 'And it is no coincidence that it is using energy as its tool against President Yushchenko before Ukraine's parliamentary elections that take place "

Here's the relevant quote about the Crimea seaport rental from the Independent:

Ukraine has sought to have the increase phased in over several years and upped the stakes this month by saying it was considering raising the $98m in annual rent Moscow pays for the use of its naval base in Sevastopol, on Ukraine's southern Crimean peninsula.

The Russian Defence Minister Sergei Ivanov warned yesterday any attempt to change the terms of Moscow's lease would threaten agreements recognising Ukraine's post-Soviet borders. "The accord on conditions for the presence of the Russian Black Sea fleet is part of the main Russian-Ukrainian treaty, the second part of which includes the point on recognition of the inviolability of state borders ," he told state television. "To revise those agreements would be fatal."

Here's the Washington Post's take on the situation:

Democracy's High Price

A YEAR AFTER Ukraine's Orange Revolution, Russia's effort to combat the spread of democracy in Eastern Europe continues unabated. Its latest weapon is natural gas. As the heating season got underway this month, Moscow announced through its state-controlled energy company, Gazprom, that it would more than triple the price it charges Ukraine for gas supplies, to $160 per 1,000 cubic meters. When Ukraine's government sought to negotiate a more gradual increase, Moscow threatened to raise the price further, to more than $200, or cut off supplies as of Jan. 1. Russian President Vladimir Putin chose to trigger this crisis just as Ukraine approaches a crucial parliamentary election on March 26. Thanks to Mr. Putin, soaring energy prices for Ukrainian consumers may be a punishing issue for the former Orange revolutionaries.

Washington Post


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