“Russia was unable to seize Ukraine by means of military aggression,” Ukraine’s PM Yatsenyuk blasted, “Now they are implementing plans to seize Ukraine through economic aggression.” His comments come after Russia’s Gazprom raised prices for gas 81% from $268.50 to $485.50 (on the basis that the previous discount was a subsidy for allowing the use of the Black Sea port of Sevastopol, which Russia now has annexed) to which Yatsenyuk chided “political pressure is unacceptable, and we are not accepting the price of $500.” Mr. Yatsenyuk, as WSJ reports, said his government will not pay the new price and will raise the issue in the Stockholm Arbitrage court, which was selected by the two countries years ago to settle the gas disputes – but warned his people that the country should prepare for Russia switching off natural-gas supplies.
As The Wall Street Jorunal reports, Ukraine’s prime minister warned Saturday that the country should prepare for Russia switching off natural-gas supplies, as the energy monopoly Gazprom said it will raise the price for gas for Ukraine by 81%.
Speaking at a cabinet meeting, Arseniy Yatsenyuk, said Moscow’s price increase was a form of “economic aggression,” adding that Kiev will not recognize the new price and is ready to challenge it in the international arbitrage court.
Russia’s natural gas monopoly Gazprom’s Chief Executive Alexei Miller said Saturday in a televised interview the company has raised the cost of gas to Ukraine to $485.50 from $268.50 for 1,000 cubic meters from April 1.
Moscow says the price change is due to Kiev’s failure to pay its bills.
Mr. Yatsenyuk responded aggressively:
“Political pressure is unacceptable, and we are not accepting the price of $500,” Mr. Yatsenyuk told ministers.
“Russia was unable to seize Ukraine by means of military aggression,” Mr. Yatsenyuk said. “Now they are implementing plans to seize Ukraine through economic aggression.” he added.
He said Ukraine ” will not touch” any of the gas destined for Europe if Russia limits supply for Ukraine. Mr. Yatsenyuk said Ukraine will continue to try to negotiate the new gas deal with Russia.
Gazprom’s additional argument for raising the price (aside from credit-risk-adjusting for the billions already owed) is somewhat remarkable…
Mr. Miller said Ukraine owes Gazprom $2.2 billion for March deliveries, and another $11.4 billion the country saved as part of a discount agreement that Moscow recently scrapped.
Mr. Miller the discount was a prepayment for the Russian Navy’s use of Ukraine’s Black Sea port of Sevastopol through 2017, but as that port had been annexed by Moscow, along with the rest of Crimea, Ukraine should repay $11.4 billion it saved, Mr. Miller said, following similar statements by Russian Prime Minister Dmitry Medvedev.
In other words, because we annexed territory for which we had previously given you a discount for, you now need to pay us full price.
Mr. Yatsenyuk said his government will not pay the new price and will raise the issue in the Stockholm Arbitrage court, which was selected by the two countries years ago to settle the gas disputes.
With the US and IMF lining up to give “aid” to Ukraine, we wonder how all those taxpayers will feel when the hard-earned money gets greatly rotated from Ukraine’s balance sheet straight to Gazprom’s… or how the ‘newly liberated’ people of non-Crimean Ukraine will feel about their leaders when the country goes dark and cold…
And if Yatsenyuk thinks he can wait it out… starving Gazprom of potential revenue (that they are not even paying anyway) think again… As Reuters reports,
Gazprom Neft has not been affected by Western sanctions over Russia’s annexation of Crimea but is ready to move away from dollars in its contracts and to redirect oil flows to Asia if needed, the CEO of Gazprom’s oil arm said.
“As for sanctions, they have not affected the company’s business in any way,” Dyukov said in St. Petersburg, where Gazprom Neft is now based.
He suggested that Western companies did not want broader sanctions imposed on Russia, but that Gazprom Neft would reduce its reliance on the U.S. dollar if necessary and turn to Asia if doorways to the West were shut.
“No such task has been set (by the government),” he said. “But … we have discussed with our buyers the possibility of switching contracts to euros and … 95 percent said they are ready.”
“This shows that in principle there is nothing impossible – you can switch from dollars to euros and from euros, in principle, to roubles,” he told reporters in remarks authorised for publication on Monday.
“Of course, I have had meetings, contacts with representatives of Western business circles … In principle, they are not interested in escalation of tensions,” Dyukov said.
So once again, actions by the West that were supposed to show strength will ‘boomerang’ back and do more to weaken the appearance of any global might that may remain.