Russia-Ukraine gas standoff

The gas crisis comes just as Ukraine heads into parliamentary elections, slated for March, in which Yushchenko faces tough opposition from his former pro-Moscow rival Viktor Yanukovych and his estranged ex-ally Yulia Tymoshenko. Even many Russian experts believe that standing up to the Kremlin could boost the image of Yushchenko, who has been flagging in opinion polls, amid allegations of corruption and signs of economic drift.

"By this step Russia complicates any possible union of our peoples in the future," says Leonid Ivashov, vice president of the pro-government Academy of Geopolitical Problems in Moscow. "Ukraine will continue drifting towards the West, while Yushchenko will get a chance to blame all his political and economic failures on Moscow."

Energy shortages are likely to hit hardest in heavily industrialized eastern Ukraine, which is, ironically, the main bastion of pro-Russian sentiment. Despite the Orange Revolution a year ago, Yushchenko defeated Mr. Yanukovych in free elections by just eight points, 52 to 44 percent.

Experts say those divisions between Ukraine's Russified east and the more nationalistic west remain very acute. Mr. Shushko says that many people in the east may blame Yushchenko for alienating Moscow and bringing hardships down on them.

"I think this crisis will have a polarizing impact within Ukraine," he says. "While it may strengthen support for Yushchenko among his supporters, those who didn't support him before may feel even more strongly against him."

Most dangerous, the dispute could spread to other potential flashpoints between Russia and Ukraine, especially the emotionally sensitive status of Crimea, a mainly Russian populated territory that was given to Soviet Ukraine as a "gift" by Nikita Khrushchev in 1954. Moscow currently pays Kiev about $98 million annually for the use of the warm water naval port at Sevastopol, where Russia's Black Sea fleet is based.

Last month Ukrainian Defense Minister Anatoliy Hrytsenko suggested that Kiev could start charging Moscow "market prices" of up to $500 million annually, for use of the facilities.

That brought an angry retort from Russian Defense Minister Sergei Ivanov, who said any attempt to renegotiate the deal could re-open the border issue. "The agreement on the Black Sea fleet base is one part of a bilateral treaty, the second part of which contains recognition of mutual borders," Mr. Ivanov said. "Trying to revise the treaty would be fatal."

A tiny border incident over a sandbar in the Kerch Strait between Crimea and Russia two years ago inflamed passions on both sides and had some nationalist politicians talking of military mobilization. "There is real potential for this crisis to spread," says Sergei Markov, a Kremlin adviser. "In Crimea the population is 95 percent Russian-speaking, but they are forced to [conduct official business] in Ukrainian. There is really explosive material here."

Mr. Markov says the stakes are high, and the Kremlin is unlikely to back off its harsh stance toward Ukraine. "Failure will undermine Russia's image, but victory will strengthen it," he says. "To be a guarantor of energy security, it's important to be firm. If Moscow were to agree to continue paying for Ukraine's anti-Russian behavior, who would ever take us seriously?"

Europe gets 80 percent of its Russian natural gas via Ukrainian pipelines. On Monday, Russia cut off gas supplies to Ukraine, but Ukraine was supposed to allow Europe's share to keep flowing. Some European countries are already seeing shortages.

• Hungary says natural gas imports from Russia have fallen by more than 40 percent.

• Austria's oil and gas group OMV says Russian supplies have fallen by about 33 percent.

• Slovakia, Croatia, and Romania say that Russian gas coming via Ukraine dropped by 30 percent on Monday.

• Italy, which gets about 30 percent of its gas from Russia, says that less gas is arriving. It has stocks to last 15 days.

• Poland reports a 14 percent reduction in gas supplies since Russia cut off gas to the Ukraine. It's working to increase flows from Belarus.

• Germany, which gets more than one-third of its gas from Russia, says it has stocks to last 75 days. But larger companies may suffer cutbacks if Russian gas doesn't start flowing again soon.

Source: Reuters

Page: 1 | 2