Putin Warns of Conflict over Gas Supplies
Cut-offs likely in January
Friday, November 6, 2009
Putin has previously warned that payment problems could lead to difficulties for European consumers receiving Russian gas via Ukraine. It was such a dispute between Moscow and Kiev that left millions of Europeans without gas in January.
The Russian Prime Minister said on Friday that his Ukrainian counterpart, Yulia Tymoshenko, had told him by telephone that President Viktor Yushchenko was blocking payments for Russian gas supplies.
The Kremlin has pointed out that according to Russian intelligence, Ukraine currently holds gold reserves of $27-$28 billion - $12 billion is required to cover the obligations to Russia.
Putin appears to be trying to draw the EU into its dispute, which one might see as manufactured in a committee room just off Red Square, claiming that Brussels is making the situation worse by refusing to subsidise Kiev. The Ukraine had asked the EU for a $4.2 billion loan to pump Russian gas into its underground storage tanks. "The EU has not given Ukraine any money," Putin told leaders of his United Russia party on Friday. "Ukraine has not received a single cent, not one hryvnia."
The flames are being fanned by the looming Ukrainian presidential elections, scheduled for January. Tymoshenko is trying to walk a fine line, by maintaining her pro-EU position, whilst also satisfying the pro-Kremlin factions that have their own favoured candidate in Viktor Yanukovych.
This crisis increasingly appears to be choreographed, with many dynamics involved. It might be argued that this crisis may, as in previous years, suit Russia in its timing: Gazprom simply cannot fulfil its obligations to its domestic consumers, due to its decrepit infrastructure, and power cuts are an everyday occurrence in many Russian cities. A temporary cut in exports during the time of peak demand enables them to paper over the cracks.
