January 02, 2006|By ERIKA NIEDOWSKI | ERIKA NIEDOWSKI,SUN FOREIGN REPORTER
MOSCOW -- The tense relationship between Russia and Ukraine soured further yesterday when Russia's natural gas monopoly made good on its threat to cut shipments to its western neighbor after the two sides failed to agree on the terms of a price increase.
The bold step by Gazprom, a monopoly that supplies Ukraine with about a third of its natural gas, came after Ukraine rejected an 11th-hour proposal by Russian President Vladimir V. Putin that would have delayed for three months a steep increase.
Although Gazprom had insisted that supplies to Western Europe - which receives gas through the same pipelines - wouldn't be affected, some countries said last night that they were feeling the effects of the shutdown. Russia accused Ukraine of siphoning off for its own use gas shipments destined for the West, which Ukraine denied.
On the surface, the dispute between the two countries, both once part of the Soviet Union, is simply over the price of a natural resource that is critical to the two nations' economies.
Ukraine has been importing natural gas from Russia for use as heat as well as fuel to run many of its largest factories at a cost well below what some of Gazprom's other customers in Europe pay, in part as a holdover from Soviet times, and Russia has demanded an increase to bring the cost into line with world markets.
But what should have been a routine business deal turned into a politically charged crisis, as Russia seeks to maintain its influence in former satellites intent on gaining greater political and economic independence.
Gazprom, which could not act without at least tacit approval from the Kremlin, is seen in Ukraine as punishing the country for the peaceful revolution that toppled Ukraine's pro-Kremlin government last year and installed Viktor A. Yushchenko as president.
"They want to get closer and closer to the European Union," Andrei Kortunov, head of the Moscow-based New Eurasia Foundation, said of Yushchenko and his government. "I think that is something which really accelerated [Russia's] rather radical and rigid position toward gas."
"It's very difficult to see an exit in general," said Tatyana Stanovaya, an analyst at the Center for Political Technologies in Moscow. "What Ukraine is offering, Russia doesn't want to accept, and vice versa. This is only a political matter. After the change of government in Ukraine, the special relationship between Russia and Ukraine came to an end."
Yesterday, as Gazprom reduced the amount of natural gas flowing from a supply center in southern Russia across the border into Ukraine, Ukrainian officials tried to reassure residents that the country had enough heating fuel to get homeowners through the winter, even if it meant reducing commercial use. Ukraine has a domestic natural gas supply that can cover about a fifth of its needs; it also has significant storage capacity, though the country has not said how much natural gas it has set aside.
Gazprom, which provides the European Union with about 20 percent of its natural gas, said any disruption to supplies was a result of theft by Ukraine. News agencies said Hungary experienced a 25 percent drop, while Poland's supply was reportedly down 14 percent.
Last month, when Gazprom first threatened to cut off gas shipments, Ukraine's prime minister suggested that his country would be justified in siphoning off supplies destined for other customers, a threat Gazprom denounced at the time as amounting to "state theft." Ukrainian officials said last night that the country had not diverted any gas and that Gazprom's move to limit flow in one pipeline could reduce pressure in all the lines and reduce supplies to Europe as a result.
"We have not consumed a single cubic meter of Russian gas," Prime Minister Yuri Yekhanurov told reporters in Kiev.
Yesterday, the Russian news agency Interfax quoted Gazprom spokesman Sergei Kupriyanov as saying that Ukraine's rejection of Putin's last-minute proposal - which was valid until midnight New Year's Eve - would "entail catastrophic consequences for the Ukrainian economy and, unfortunately, the fraternal people of Ukraine."
"We believe that it will be extremely difficult - impossible, to be more precise - for the authorities of Ukraine to explain to their people the reason for such a shortsighted policy," he said.
Each side has accused the other of using the dispute over natural gas to try to influence the outcome of Ukraine's parliamentary elections in March. Yushchenko and his allies face a significant challenge from his former opponent in the presidential election, Viktor F. Yanukovych, who was openly favored by the Kremlin. Yushchenko's party is also being challenged by Yushchenko's former prime minister, Yulia Tymoshenko.
