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.
Where Putin is concerned, Putinistas see no reason for International Law. He’s their hero.
Crimea is part of Russia now. And Russia does not recognize the current leadership of Ukraine.
Make a deal with a country to use their(Ukraine's) facilities (Crimea).
Invade their country and their facilities and rip up the deal.
Kiev signed contracts and it must honor its contracts. If it doesn’t want to do so, it can make alternative arrangements.
Every one else is paying market rate for Russian gas and you would be right it would be unjustified and exorbitant if the price being charged Ukraine was out of line with the prevailing price of the gas being supplied to Europe.
I bet they pay (in one way or another).
Come and get me copper!
I suspect the EU will pay.
It better not be us.
Is there no Ukranian Chris Rock? He would have a field day about paying the utility bills with this.
The current leadership in Kiev did not honor their agreement that was also signed by Yanukovych, Russia, Poland and Germany in late February.
Agreement on the Settlement of Crisis in Ukraine
Concerned with the tragic loss of life in Ukraine, seeking an immediate end
of bloodshed and determined to pave the way for a political resolution of the
We, the signing parties, have agreed upon the following:
1. Within 48 hours of the signing of this agreement, a special law will be adopted,
signed and promulgated, which will restore the Constitution of 2004 including
amendments passed until now. Signatories declare their intention to create a
coalition and form a national unity government within 10 days thereafter.
2. Constitutional reform, balancing the powers of the President, the government
and parliament, will start immediately and be completed in September 2014.
3. Presidential elections will be held as soon as the new Constitution is adopted
but no later than December 2014. New electoral laws will be passed and a new
Central Election Commission will be formed on the basis of proportionality and in
accordance with the OSCE & Venice commission rules.
4. Investigation into recent acts of violence will be conducted under joint
monitoring from the authorities, the opposition and the Council of Europe.
2 / 3
5. The authorities will not impose a state of emergency. The authorities and the
opposition will refrain from the use of violence. The Parliament will adopt the
rd amnesty, covering the same range of illegal actions as the 17th February 2014
Both parties will undertake serious efforts for the normalisation of life in the cities
and villages by withdrawing from administrative and public buildings and
unblocking streets, city parks and squares.
Illegal weapons should be handed over to the Ministry of Interior bodies within
24 hours of the special law, referred to in point 1 hereof, coming into force. After
the aforementioned period, all cases of illegal carrying and storage of weapons
will fall under the law of Ukraine. The forces of authorities and of the opposition
will step back from confrontational posture. The Government will use law
enforcement forces exclusively for the physical protection of public buildings.
6. The Foreign Ministers of France, Germany, Poland and the Special
Representative of the President of the Russian Federation call for an immediate
end to all violence and confrontation.
Kyiv, 21 February 2014 3 / 3
President of Ukraine: For the Opposition:
Viktor Yanukovych Vitaliy Klichko, UDAR
Oleh Tyahnibok, Svoboda
Arsenij Yatseniuk, Batkivshchyna
For the EU: For the Russian Federation
Poland Germany France
Radoslaw Sikorski Frank-Walter Steinmeier Laurent Fabius Vladimir Lukin
Foreign Minister Foreign Minister Foreign Minister Special Envoy
The world community should demand an election so Ukranians can vote these inept thugs out of power. Would any of this have happened if they didn't decree that Russian was no longer an official language?
I'm trying to apply logic. It isn't surprising that these eastern Ukranian cities and towns are having well-planned, well-armed coordinated protests. A majority of the military stationed in Crimea chose to leave the Ukranian forces and stay in Crimea. Those who stayed are trained military, they know the area, they have weapons (such as they are) left by Ukraine and probably their own. Of course they can run a counter-insurgency.
The Kiev thugs, what are they trying to prove? I'd think they'd be better off having a popular election while there's anyone at all left who supports them. I'd think if they'd done that after Crimea left they would've had a good chance of winning, since all of those Russians in Crimea wouldn't be voting.
This whole thing is amazing. The only reasonable conclusion is that those who write the globalist agenda want a war over Ukraine, or at the very least want a rebirth of Nazism there.
France was also a signatory to the deal between the Ukrainian leadership and opposition at the time, not just Germany, Poland and Russia.
Maybe I should just write my check directly to Putin, and cut out the middle man.
Wouldn't bet on it. It fits so well with Obama's plan to impoverish the US.
“The Kiev thugs, what are they trying to prove?”
It says a LOT that they couldn’t depend on local police and Special forces Units, and had to bring in the “National Guard” of 350 Right-Sector thugs, and Special Forces from Western Ukraine, to try and put this down, in one small city.
That people are now getting killed shouldn’t be a surprise to anyone. This will now spiral out of control, giving Russia any pretext they need to act, if they choose to.
The idiots running the show in Kiev obviously aren’t very smart. All they had to do was allow referendums. Despite the propaganda, did they think they would lose an open election?Instead, they choose the violent route.
The MP's in the Rada passed the law.
Yanukovich never signed it!!
And of course regardless it wouldn't excuse Russia for invading Ukraine and ripping up their gas deal.
and so, the battle for resources continues...little difference today, as in 1940 when Japan was forced to run blockades to have oil...hence Pearl Harbor...
“Poland pays $500/tcm to Gazprom. Why should Ukraine pay $268/tcm?”
1. Because that was the amount in the long-term contract.
2. The former price just a few years ago was less than $200, but Russia has been raising the rates to extortionist levels in later negotiations because it has been useful in destablizing the economies and governments in Europe.
3. Poland is currently willing to temporarily pay more only because it has not yet fully succeeded in replacing the Russian volumes of natural gas. Poland has reduced its volumes from 90% of its natural gas supplies to 60%. Poland is paying more to import LNG from Qatar in order to negotiate for better prices from Russia until such time as PAoland can despense with Russian supplies altogether, if need be in the event of further strained relations or war.
4. Ukraine cannot afford the increase in price, which is precisely why Russia has tripled the prices to Poland, the Ukraine, and other nations in the last few years. Russia knew the customers would face mcuh higher replacement costs for a number of years before anyone could replace the Russian supplies with alternative supplies at more normal market prices.
5. Russia is now engaged in a war of aggression against the Ukraine and is violating Ukrainian territorial integrity, which gives the Ukraine the natural legal authority to void or suspend all prior contracts and seize all Russian assets, including the accounts receivable owed by the Ukraine to Russia, as war reparations.
Ukraine opposition leaders sign deal with government
Friday 21 February 2014
Ukraine’s president, Viktor Yanukovich, and three opposition leaders have signed an agreement intended to end a crisis that sparked bloody clashes between protesters and police on the streets of the capital, Kiev.
The deal sets out plans to hold early presidential elections, form a national unity government and revert to the 2004 constitution, removing some of the president’s powers. Yanukovich did not smile during a signing ceremony lasting several minutes in the presidential headquarters, but he did shake hands with the opposition.
The deal was also signed by two European Union foreign ministers who helped broker it in tortuous negotiations that lasted more than 30 hours. “This agreement is not the end of the process. It’s the beginning of the process,” the German foreign minister, Frank-Walter Steinmeier, said after the signing.
There were two separate gas discount agreements with Russia and Ukraine, one discount for the Black Sea Fleet lease and another as part of the December 2013 loan package designed to keep Ukraine out of default.
After Yanukovitch was overthrown the Russians halted the loan package and as of April 1st the gas discount associated with it.
Russia later on decided they no longer would abide by the Black Sea Fleet agreement, which they had pre-paid a portion of, because Ukraine still wasn’t paying anything for the gas they consumed and because Crimea is no longer part of Ukraine.
So there were really two gas discounts that Russia was giving, neither of which really mattered since Ukraine was a complete deadbeat about paying for any of it.
So Ukraine owes Russia for the gas and it owes Russia for the portion of the loan it got in December, and it still owes the IMF for a loan it got in 2008, and with less legal certainty it owes for the portion of the Black Fleet lease that Russia pre-paid.
All of which will soon be transferred to the tab of the US taxpayers, thanks to the meddlesome neocons at the Obama State Dept. and the Republican pep squad in the US Senate.
As I pointed out to you Yanukovich broke the agreement(that he signed) by NOT signing the Rada law that restored the Constitution to its 2004 form.
Do you now understand?
Well, finally someone got it right.
The 2013 loan package wasn't signed off by either side.
The only discount active was the Black Sea Fleet lease discount.
The Right Sector Nazis condemned the deal and said they wanted Yanukovich’s head immediately after it was signed. And then Yanukovich fled Kiev to get the hell out of town. How was he supposed to sign the bill when the Bandera Nazis were fully in control of Kiev?
The only discount active was the Black Sea Fleet lease discount.
More precisely I should say the 2013 loan package was never ratified and Russia never bought the bonds.
You forgot the part where Russia owes Ukraine a naval base and some territory. If the deal is torn up.
Read Monmouth78’s post #3 above. As he points out, the existing price was subsidized. It is now being raised to the European market price.