Will The Russian-Ukrainian Gas Deal Be Reconsidered?   1 comment

23.01.09 ukrainian_flag

Ukrainian President Viktor Yushchenko has stated he would like to revisit a natural gas deal with Russia later this year, sd the terms could exacerbate the deterioration of the Ukrainian economy.

Yulia Tymoshenko, the prime minister who signed the deal and Yushchenko’s political rival, made clear it will not be reconsidered.

The conflicting statements caused concern in European countries still suffering from the recent cutoff of their gas supplies.

Yushchenko’s economic adviser Olexandr Shlapak told the media that while the agreement will be honored, Ukraine may try to revise it this summer because the prices are still too high. He said Ukraine will propose changes to the contract after consulting European experts. Tymoshenko’s top aide, First Deputy Prime Minister Volodymyr Turchynov, dismissed the statements as irresponsible. He said the deal serves Ukraine’s national interests and the government will not allow it to be revised.

The CEO of Russia’s state-controlled gas monopoly, OAO Gazprom, Alexei Miller, said the deal would not be reconsidered.

The deal, which ended the politically charged dispute between the two neighbors and restored supplies to Europe and Ukraine, doubled the price Ukraine has to pay for Russian gas in the first quarter of 2009. Gas prices will be revised on a quarterly basis and are expected to fall sharply later this year.

The Ukrainian national currency, the hryvna, has lost more than 40 percent of its value since September, the banking sector has suffered a run on banks, and the economy is plunging into a painful recession.

Ukraine is relying on a $16.5 billion loan from the International Monetary Fund to avoid an all-out collapse. Yushchenko met Friday with IMF officials, who are evaluating the country’s progress on fulfilling the loan requirements before releasing a second tranche of the money.

Neither Gazprom nor Ukraine’s state gas company, Naftogaz, would comment on whether the published contract was authentic. The deal also stipulates that Naftogaz will have to make advance payments if it fails to pay its bill on time. If Ukraine fails to pay on time, it could lead to another gas dispute in which European countries are again held hostage.


One response to “Will The Russian-Ukrainian Gas Deal Be Reconsidered?

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  1. The former Soviet territory always had two troubles: roads and fools. But life goes on, and the list of troubles gets certain national colour. It seems, that in Ukraine now it is necessary to be afraid not only of “fools” and “roads”, but “ crisis struggle” and “Euro 2012 preparation”.

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