By Cutting Gas, Russia Forces Ukraine to Make Painful Choice

Ukraine must either leave its own citizens in the cold or antagonize its new European friends.

A Russian gas pipeline
A Russian gas pipeline (Gazprom)

Russia reduced its natural gas supplies to Ukraine on Monday after negotiations between the two countries over outstanding gas debts collapsed. But Russia continued to send gas down the pipeline for its European customers, forcing Ukraine’s government to decide whether to siphon off the gas and antagonize its Western backers or leave its own citizens in the cold.

“The gas for European consumers is being delivered at full volume and Naftogaz Ukraine is required to transit it,” a spokesman for Russia’s natural gas monopoly Gazprom told reporters.

Naftogaz is the national oil and gas company of Ukraine.

Russia previously shut off supplies to its former satellite in the winters of 2006 and 2009 in a series of “gas wars” that left millions of Central Europeans literally in the cold.

Germany, Gazprom’s biggest customer, since imports gas via a new pipeline on the bottom of the Baltic Sea, reducing its vulnerability to energy disputes in Eastern Europe. But the countries in the European Union still get between a quarter and a third of their gas from Russia and half of it flows through pipelines in Ukraine.

Talks between Russia and the Ukraine, which had been brokered by the European Commission, broke down in the early hours on Monday when the sides were unable to agree to changes in a 2009 contract that locks Ukraine into paying the highest gas price in Europe.

Gazprom also demanded that Ukraine pay off at least $1.95 billion of a $4 billion gas debt but the country is struggling to make ends meet as it is.

Rocked by political unrest and Russian protectionist measures — originally enacted to dissuade the country from seeking closer political and trade relations with the European Union — Ukraine’s foreign reserves fell 30 percent last year while the economy contracted 2 percent in the first quarter of 2014 compared to the year before. Its national debt, which equaled 41 percent of economic output before the crisis, has climbed to 53 percent of gross domestic product. Inflation is expected to come in at between 12 and 14 percent this year.

The gas cutoff comes as Ukraine’s forces battle pro-Russian separatists in its eastern border region. It accuses Russia of fomenting the rebellion there after the country annexed the Crimea in March. Russia denies it is supporting the uprising, even if it has expressed sympathy for it.

Ethnic Russians and Russian speakers in the east of Ukraine were rankled when demonstrators in the capital, Kiev, forced President Viktor Yanukovich, who was seen as somewhat pro-Russian, to resign in February after he pulled out of an association agreement with the European Union at the last minute. In an election last week, voters replaced him with Petro Poroshenko, a confectionary tycoon who has spoken in favor of eventually joining the bloc.

Poroshenko needs the West’s support to put down the uprising in the east of Ukraine without risking Russian military intervention and in order to revitalize his country’s economy. However, if Ukrainians are left without gas for a prolonged period of time, his popularity could quickly start to fall, especially across the restive southeast.

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