Ukraine failed to unblock deliveries of Russian natural gas on Thursday when Russia demanded firmer commitments from European Union member states to help pay for Ukraine’s gas bill.
Talks in Brussels collapsed, Russian energy minister Alexander Novak told Russian media, when European countries wouldn’t guarantee in writing that they could fund Ukraine’s gas needs. “If there is an accord between the European Commission and Ukraine, then we can expect to sign all the trilateral documents,” he said.
Agreement was reached on the price Ukraine will pay for gas this winter as well as the payment of some $3.1 billion in unpaid gas bills. But Russia, which cut off supplies in June when it stepped up its support for pro-Russian separatists in the east of Ukraine, wants legal assurances that its former satellite state can pay about $1.6 billion for new gas up front.
Rocked by an armed insurrection in the east and Russian protectionist measures — originally enacted to dissuade the country from seeking closer political and trade relations with the European Union — Ukraine’s ability to pay is questionable. Its foreign reserves have plummeted and its economy is in recession. Ukraine’s gross domestic product has shrunk almost 5 percent since last year. Inflation is running at 14 percent.
The crisis was triggered when former Ukrainian president Viktor Yanukovich unexpectedly pulled out of trade talks with the European Union late last year. Hundreds of thousands of Ukrainians took to the streets to protest the decision, leading to Yanukovich’s downfall and a Russian military intervention. In March, Russia annexed Ukraine’s Crimean Peninsula, headquarters of its Black See Fleet. It has since supported a separatist uprising in the southeastern Donbas region.
Ukraine’s current president, Petro Poroshenko, nevertheless signed the association agreement with the European Union in June, the same month Russia cut off gas supplies to the country.
Russia also reduced natural gas supplies to European Union member states Poland and Slovakia. The European Union as a whole gets roughly a third of its gas from Russia.
Thursday’s impasse in the talks came as Ukraine’s government reported an increase in fighting in the east, where separatists intend to call an election this weekend, and days after NATO reported it had intercepted dozens of Russian bombers and fighter planes close to European airspace.