Skip to comments.Ukraine Suspends Gas Payments to Russia
Posted on 04/13/2014 9:46:36 AM PDT by Kaslin
The crisis in Ukraine took a turn for the worse this weekend. Many distinct events are in play. Here are a few top headlines
Armed Men Seize Police Station in Slavyansk
The Wall Street Journal reports Pro-Russia Protests Spread, Police Station Seized.
Pro-Russia protests spread Saturday in eastern Ukraine as armed men, some in unmarked, military-style uniforms, moved to commandeer more government buildingsa dramatic escalation that the Ukrainian government and Washington tied to Moscow.
Ukraine's acting president called an emergency meeting of the country's top security officials in the capital, Kiev, as police clashed with attackers in several spots in the largely Russian-speaking, eastern part of the country.
Some 20 men wearing camouflage, some with military-style equipment and weapons, commandeered a police station and security-service office early Saturday in Slavyansk, a small city that previously hadn't seen the kind of pro-Russian fervor that erupted anew in the area last weekend.
Ukraine's Interior Minister Arsen Avakov said Saturday evening that police were fighting with attackers in the nearby town of Kramatorsk and had repelled a similar attack in a third town, Krasny Liman.
Saturday afternoon, police in Poltava Region said they had stopped several buses carrying what they said were pro-Russian activists carrying gasoline bombs and makeshift weapons. They were headed to Kharkiv, where protests were scheduled. Police detained about 70 of the activists.
Protesters remain barricaded Saturday in the regional government headquarters in Donetsk and the security-service offices in Luhansk, which they had occupied last Sunday. Authorities pushed a group out of a government building in Kharkiv earlier in the week.
Western officials say Moscow has tens of thousands of troops on its side of the border that could invade Ukraine in a matter of hours. Moscow denies that.
Ukraine Prepares Armed Response
Reuters reports Ukraine Prepares Armed Response as City Seized by Pro-Russia Forces.
Armed separatists took virtual control of a city in eastern Ukraine on Saturday and Kiev prepared troops to deal with what it called an "act of aggression by Russia".
Pro-Russian activists carrying automatic weapons seized government buildings in Slaviansk and set up barricades on the outskirts of the city. Official buildings in several neighboring towns were also attacked.
The developments have increased concerns of a possible "gas war" that could disrupt energy supplies across the continent.
Washington backed Kiev's assessment that Moscow was responsible. "Worrisome violence in ... Ukraine today. Russia again seems to be behind it," State Department spokeswoman Jen Psaki said on Twitter.
ROADBLOCKS AROUND CITY
On a road leading into Slaviansk, other members of the group, armed with automatic rifles, set up a roadblock and checked vehicles entering the city, a Reuters reporter said.
There was no sign of any Ukrainian law enforcement officials in the city.
Ukraine's Western-backed government warned of tough action if the militants did not lay down their weapons, but it was unclear if the local law enforcement agencies were taking orders from Kiev any more after the local police chief quit.
Kostyantyn Pozhydayev came out to speak to pro-Russian protesters at his offices in the regional capital, Donetsk, and told them he was stepping down "in accordance with your demands". Some of his officers left the building.
The occupations are a potential flashpoint because if protesters are killed or hurt by Ukrainian forces, that could prompt the Kremlin to intervene to protect the local Russian-speaking population, a repeat of the scenario in Crimea.
Ukraine's acting foreign minister, Andriy Deshchytsia, said he had spoken by telephone with Russian Foreign Minister Sergei Lavrov and demanded Moscow stop what he called "provocative actions" by its agents in eastern Ukraine.
Lavrov, in a statement issued by his ministry, said there were no Russian agents in the region and that it would be "unacceptable" if Ukrainian authorities were to order the storming of the buildings.
Ukraine Suspends Gas Payments to Russia
Reuters reports Ukraine Suspends Gas payments to Russia
Ukraine's state-run energy company Naftogaz has suspended gas payments to Russia until the conclusion of price talks, chief executive Andriy Kobolev was quoted as saying on Saturday.
Russian gas giant Gazprom earlier this month increased gas price for Ukrainian consumers to $485 per 1,000 cubic meters (tcm) from $268 for the first quarter, saying Kiev was no longer eligible for previous discounts.
"The question of repayment of debt is directly linked to the maintenance of gas prices at the level of the first quarter," Kobolev told the Zerkalo Nedely weekly in an interview, referring to the original price of $268 per tcm.
"We see no reason to revise the price. We consider the price at around $500 as non-market, unjustified and unacceptable. Accordingly, we have suspended payments for the period of the price negotiations."
Russian President Vladimir Putin warned on Thursday that Moscow could cut off gas to Ukraine, potentially threatening European supplies, but later played down the threat.
"I want to say again: We do not intend and do not plan to shut off the gas," he said on Friday.
Given that Ukraine has suspended payments, I find Putin's statements puzzling. If Putin will not shut off the gas, then Ukraine has no incentive to pay.
Expect Putin to quickly change his mind about shutting the pipeline if Ukraine does indeed refuse to pay. He will have a legitimate reason.
As for market prices, Russia can charge what it wants in my opinion. Countries can either pay or not pay.
This is the consequence of being dependent on a single supplier.
Will Europe subsidize it for Ukraine to keep it flowing?
The old gas price was far below market rates, a subsidy meant to buy influence. The new price is market based. Anyone who misleads about that has zero credibility.
Russian gas giant Gazprom earlier this month increased gas price for ~Ukrainian consumers to $485 per 1,000 cubic meters (tcm) from $268 for the first quarter, saying Kiev was no longer eligible for previous discounts.
“The question of repayment of debt is directly linked to the maintenance of gas prices at the level of the first quarter,” Kobolev told the Zerkalo Nedely weekly in an interview, referring to the original price of $268 per tcm.
“We see no reason to revise the price. We consider the price at around $500 as non-market, unjustified and unacceptable. Accordingly, we have suspended payments for the period of the price negotiations.”~
Western Europe pays around $500.
Ukraine has just rejected a trade agrement and any special ties with Russia for EU.
Why special price?
Obama doubles American’s energy costs = Good.
Putin doubles Ukraine’s energy costs = Bad.
I think there was a contract involved. (That being said, there’s no dispute that Russia was in fact subsidizing Ukraine’s gas imports).
Unless I’m mistaken there are a whole lot of gas pipelines thet go through Ukraine to Western Europe.
What’s to keep the Ukrainians from raising their transit fee or diverting some of that to their use???
“As for market prices, Russia can charge what it wants in my opinion. Countries can either pay or not pay.”
Actually, no, Russia does not have the authority to unilaterally hike the price of its natural gas deliveries to the Ukraine. The contracts and international laws regarding coercive and unreasonable non-market pricing of such goods prohibit such actions by Russia.
Furthermore, Russia’s acts of aggression in the Crimea and now in the other Oblasts of the Ukraine have caused a state of war to exist between Russia and the Ukraine. Consequently, the Ukraine has the right to seize and impound all Russian assets, including accounts receivable for the natural gas payments, and turn those over to a trustee to manage pending the outcome of the belligerancy and any damages payable to the Ukraine from Russia for its unlawful aggressions agianst the Ukraine. the Ukraine also has the right to make legal claims against the Russian assets in other nations in accordance with the normal international laws and customs.
Tis cannot be good..
The Right Sector/Svoboda keep handing Russia pretexts for action.
Contracts deserve respect.
International laws — not so much.
“Consequently, the Ukraine has the right to seize and impound all Russian assets, including accounts receivable for the natural gas payments”
Okay, that one there is durned funny!!! Guns, jets, and artillery defeat lawyers, every single time.
You have never read Machiavelli, have you?
LOL—as if Russia needs “pretexts.” Even if there aren’t any, it manufactures them.
Poland pays $500/tcm to Gazprom. Why should Ukraine pay $268/tcm?
What’s in it for Russia? Ukraine wants special treatment im exchange for NOT joining the Russian-led Customs Union.
Kiev is going to learn it can’t have it both ways and as a consequence, Moscow is going to shut off the gas for non-payment. Its fully within its rights to do so.
That’s an act of war. Even Kiev is not that stupid.
“Contracts deserve respect.”
Yet Russia does not respect them with impunity and the support of many of the people posting on FR.
“International laws not so much.”
Without “International law” there would be no enforceable international contracts. Without “International law” Russia would have no right to exist and no right to territorial integrity of its own.
He who denies international law is authoritative is an outlaw deserving no more protection from honest and law-abiding citizens than any brigand or pirate who under international law are the enemies of all mankind.
Kerry and the EU have already said that they will pay off Ukraine’s gas arrears to Russia if Ukraine agrees to move towards paying market pricing on a planned timeline. Putin isn’t going to cut off gas. He wants Kerry and the EU to pay off Ukraine’s gas debt on a faster timeline.
And Russia extended Ukraine an unconditional loan on very favorable terms - far better than the West is going to offer Kiev.
In view of the present attitude of the Maidan regime, it makes no sense in Russia’s national interests to subsidize a hostile regime. Its not going to happen.
The West does not have the means to finance Kiev on the terms its prefers. Every one knows this.
So now the US taxpayer gets stuck with the bill.
You're misleading about this. You have no credibility (you're words).
President Dmitry Medvedev announced after a meeting with Ukrainian counterpart Viktor Yanukovych that Russia would give a 30 percent discount for most of Ukraine's gas imports. Ukraine will record the savings as an increase in Russia's lease payment for the naval base, Medvedev said.
These issues are directly and unequivocally linked in the agreement, Medvedev said at a news conference that the two presidents gave in Kharkiv, the biggest Ukrainian city near the Russian border.
The gas deal a revision of the stringent gas trade contract signed with Ukraine's previous government last year and permission for the Russian Black Sea Fleet to rent the Sevastopol base through 2042, are the first major steps toward an improvement of bilateral ties that deteriorated after former President Viktor Yushchenko swept to power in Kiev five years ago.
... The discount will apply to 30 billion cubic meters of gas sold this year and 40 bcm of gas annually until the contract expires in 2019, Gazprom said in a statement.