Dispute Between Ukraine, Russia Heats Up

KIEV, Ukraine -- A dispute between Ukraine and Gazprom, Russia's state-owned natural gas monopoly, grew more intense Tuesday as Ukraine threatened to take a portion of Russian gas exports to Europe and Gazprom called such a move theft.

Protesters holds placards reading 'Gas-the price we pay for your NATO ' during a mass rally in front of Ukraine President Viktor Yushchenko's office. Yushchenko urged compromise in a bitter dispute with Russia over natural gas prices as Russian state-controlled giant Gazprom threatened to cut off supplies to Ukraine.

The verbal sparring escalated as Gazprom insisted that it would more than quadruple the price of natural gas exports to Ukraine and the Ukrainian prime minister asserted that Ukraine had a right to take 15 percent of the gas that Gazprom exports through Ukraine to Western Europe.

Gazprom has said it will shut off gas exports to Ukraine on Sunday if the country fails to agree to the new price. Ukraine's president, Viktor Yushchenko, has said the country will accept higher prices, but only if they are phased in over two years.

The acrimony reflects a determination by Russia and Ukraine to stand firm in 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 NATO.

"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 in March."

Since the Orange Revolution in Ukraine last year, in which Yushchenko was elected president, Ukraine's foreign policy has shifted toward the European Union and NATO.

While the Kremlin has accepted its former satellites in the Baltic States and throughout Eastern and Central Europe joining those groupings, it has been reluctant to see Ukraine go in the same direction because of its size, geography and importance to Russia's foreign policy goals and economic interests.

Energy experts said Gazprom's tough statement against Ukraine reflected that struggle.

For weeks, Ukraine has said it would be willing to increase the price it pays for gas from Russia as well as place all its energy relations with Russia on a cash basis instead of a semi-barter system. But it wanted a two-year transition period, during which it was prepared to gradually raise the prices to European levels, raise domestic energy prices and introduce energy-saving changes.

Yushchenko and President Vladimir Putin agreed Tuesday that Yushchenko would send the Ukrainian energy minister, Ivan Plachkov, to Moscow today in an effort to reach a compromise with Russian energy minister Viktor Khristenko.

Their conversation came hours after Ukraine's prime minister, Yury Yekhanurov, said the country could take 15 percent of the gas Russia exports via Ukraine to Western Europe. More than 80 percent of the gas Russia exports there goes through Ukraine.

Gazprom said the price of gas and the price of shipping it were not comparable and that any siphoning by Ukraine of Russian gas destined for Europe would be considered theft.

Natural gas is one of the key commodities for Russia, whose economy heavily depends on exports of natural resources.

As the price dispute intensified, Ukrainian officials began suggesting that the country hike the rent it charges Moscow for the Russian navy's Black Sea facilities. The port in Sevastopol provides the Russian navy its only convenient access to the Mediterranean.

Source: The New York Times

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