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Putin sees 'crisis' as Russia-Ukraine gas dispute nears deadline

Discussion in 'BBS Hangout: Debate & Discussion' started by tigermission1, Jan 1, 2006.

  1. tigermission1

    tigermission1 Contributing Member

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    http://news.yahoo.com/s/afp/20051229/bs_afp/russiaukraineenergy

    Putin sees 'crisis' as Russia-Ukraine gas dispute nears deadline

    MOSCOW (AFP) - Russia and Ukraine are in "real crisis," President Vladimir Putin said, as negotiations to resolve a gas price dispute neared a January 1 deadline for Ukraine to accept a steep increase or see supplies cut off.

    "You have simply created a real crisis and not only in the energy sector," Putin said on state television in a rebuke to negotiators from both sides. "This crisis looks like a crisis between two countries. That is very bad."

    Russian state-controlled behemoth Gazprom has announced a more than four-fold increase in natural gas prices to neighbouring Ukraine and says that if Kiev does not agree by Sunday the supply will be shut down.

    A gas cut off could disrupt the huge shipments through Ukraine to western Europe.

    Talks between high-level Russian and Ukrainian negotiators ended late Thursday in Moscow with no deal but were set to resume Friday, Russian news agencies reported.

    Ukraine currently pays 50 dollars (42.21 dollars) per 1,000 cubic metres (35,316 cubic feet) of gas. Gazprom wants the price to be 220-230 dollars, which is close to world market levels.

    Ukrainian President Viktor Yushchenko called the Gazprom demand "provocative" and offered a price of 75-80 dollars for the gas late Thursday but the compromise was immediately rejected by a Gazprom spokesman speaking on Russian television.

    "The proposal... is ridiculous. Our partners in Europe know very well what market prices are -- a level of more than 250 dollars per 1,000 cubic metres," Sergei Kupriyanov said.

    At the meeting with Putin, Alexei Ivchenko, head of Ukraine's state-owned Naftogaz, indicated a possible compromise, telling the Russian president that he wanted a transition period of lower prices up to April 1, when they would be able to "switch to the classic form of market relations."

    Putin said one way out would be for Russia to offer Ukraine a 3.6-billion-dollar (3.0-billion-euro) loan to cover the cost of changing to new prices.

    "We are ready to extend a commercial credit directly to your company Naftogaz under guarantee from one of the first-class international banks," Putin was quoted as saying by the news agency Interfax.

    Putin's loan offer however was quickly rejected by Yushchenko.

    "We do not need this loan," Yushchenko was quoted by Interfax as saying in Kiev.

    "Ukraine will use its own means to pay a reasonable price, formulated correctly and objectively," Yushchenko said, adding that the transition to market prices should take three years.

    Western Europe is closely following the row as nearly one fifth of its gas imports come from Russia via Ukraine. Kiev has said it has a contractual right to 15 percent of Russian gas shipped through its territory.

    In Brussels, the European Commission said it would not intervene, but was hoping for a last-minute resolution. "We expect that the difficulties that are appearing now can be resolved in the coming hours before the deadline," commission spokesman Amadeu Altafaj Tardio said.

    Germany's ambassador to Kiev, Dietmar Stuedemann, said that Ukraine should be allowed "a gradual path to market prices."

    "Ultimatums are inacceptable," he was quoted as saying by the daily business newspaper Delo.

    Relations between Moscow and Kiev have become increasingly strained since last year's "orange revolution" in which Yushchenko led huge crowds to force an annulment of rigged presidential elections in which a pro-Kremlin candidate had been declared the winner. He then won the re-run.

    Russia's state-run gas giant Gazprom says the dispute is strictly commercial.

    However, some ex-Soviet republics that have toed a more pro-Kremlin line continue to enjoy significant discounts. For example, Belarus has secured a deal to pay just 46.68 dollars per 1,000 cubic metres next year, President Alexander Lukashenko said Thursday.
     

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