Ukraine, Russia To Extend Black Sea Fleet Lease

KIEV, Ukraine -- The presidents of Ukraine and Russia agreed on Wednesday to extend the stay of Russia's Black Sea Fleet in the Ukrainian port of Sevastopol after the existing lease expires in 2017, news agencies reported.

The move is among the strongest concrete signs since President Viktor Yanukovych took power in February that he will steer away from his pro-Western predecessor's drive to shed Russia's influence.

It also is likely to boost Yanukovych's standing at home by taking some pressure off Ukraine's beleaguered economy. The agreement includes Russia giving Ukraine steep discounts for the natural gas on which its industries depend.

The previous president, Viktor Yushchenko, had fought to kick the fleet out when its lease expired, calling it a hostile presence in Ukraine.

Russian and Ukrainian news agencies quoted Russian President Dmitry Medvedev as saying at a meeting in Kharkiv, Ukraine's second largest city, that Kiev will receive large discounts on gas shipments in return for certainty over the base's future — $100 for every 1,000 cubic meters of gas or 30 percent if the benchmark price falls below $330.

Ukraine for years bought Russian gas at well below market prices, but after Yushchenko took office and pledged to bring the country into NATO and the European Union, Russia repeatedly raised prices. Price disputes led to Russian gas cutoffs; the most severe, in early 2009, lasted two weeks and severely curtailed Russia's gas exports to Western Europe, most of which transit Ukraine.

The news reports said the base's lease would receive a 25-year extension. It was not clear whether the extension was effective immediately or upon the current lease's expiration, but Russian state agency ITAR-Tass cited an unidentified document as saying it was from 2017.

Russia currently pays $90 million per year for the base. There was no word on any change under the new deal.

The lease extension is likely to increase opposition to Yanukovych in the country's western provinces. Ukraine's split between the Russian-speaking east and Ukrainian-speaking west also is predominantly a political division, and leaders have always been forced to play a delicate balancing act for fear of upsetting either camp.

Russian gas company Gazprom said in a statement Wednesday that it has lifted all penalties for the failure to buy as much gas as contracted and said that the discounts for Ukraine "will not harm Gazprom's financials."

Ukraine has been hit by the global downturn harder than many other European countries, and it has been anxious for discounts for Russian gas.

Military analyst Mykola Singurovskiy of the Kiev-based Razumkov think-tank said the base agreement violates the Ukrainian constitution.

Source: AP