Russian gas company Gazprom announced today that it will hike up oil prices in Ukraine by more than 40 percent, canceling a subsidy agreement struck while ousted Ukrainian president Viktor Yanukovych was still in charge.
According to Gazprom CEO Alexei Miller, the decision "follows from Ukraine’s non-performance of obligations to repay the debt for gas supplies in 2013 and the lack of 100 percent payment for the current supplies."
This means that Ukrainians will now have to pay $385.5 per 1,000 cubic meters of gas. Currently, Russia sells gas in Ukraine for $268.5 per 1,000 cubic meters. The announcement comes soon after Ukrainian leaders said they would be increasing gas prices as part of austerity measures designed to show the EU — which offered the country a $27 billion bailout — its commitment to financial stability.
According to Miller, Ukraine owes Russia a total of $1.7 billion for gas purchased since 2013, as the gas discount negotiated by Yanukovych "can no longer be used." According to Bloomberg Businessweek, Gazprom's harsh decision could be a sign that it won't sell to Ukraine in the future, something which would be bad news for the EU, as well:
The move raises the prospect that state-run Gazprom may threaten to cut supplies to Ukraine, which buys about half its gas from Russia, something that’s happened at least twice since 2006 because of payment disputes... Ukraine is also critical to Europe’s energy security because about 15 percent of its gas supplies travels through its Soviet-era pipeline network. In January 2009, a dispute between Russia and Ukraine disrupted deliveries to Europe for about two weeks during freezing weather.
Meanwhile, officials in Kiev are struggling to contain the new threat posed by the ultra-nationalist group Right Sector, which stormed the parliamentary building last week after their leader, Oleksandr Muzycho, was killed in a shootout with police. Last night, a member of the group shot and injured three people, including a deputy city mayor, in Kiev. The Associated Press describes the scene:
Police responded by surrounding the downtown Dnipro Hotel, which Right Sector had commandeered as its headquarters, demanding that the radicals lay down their weapons and leave. Avakov said that Right Sector members got into buses Tuesday morning leaving their weapons behind and headed to a suburban camp under the escort of officers of Ukraine's Security Service. The Ukrainian parliament then voted to order police to disarm all illegal armed units.
RT aired footage of members of the group forcibly leaving their hotel in Kiev:
Watch right-wing Right Sector leaving its HQ in Kyiv's Dnipro Hotel, forced by police http://t.co/POWSIL9Wz3— Maxim Eristavi (@MaximEristavi) April 1, 2014
The AP adds that if Ukrainian officials successfully disarm threatening groups, Russia's claim to Crimea would take a blow:
It would undermine Russia's key argument: the allegation that the new Ukrainian government was kowtowing to nationalist radicals, who threaten Russian-speakers in southeastern Ukraine.
While leaders in Kiev face financial and security threats, NATO leaders are meeting for the first time since Russia annexed Crimea.
According to the organization's website, the crisis in Ukraine will be the main focus of the two-day summit:
The ministers’ first working session will focus on increasing support for Ukraine and on the consequences of Russia’s illegal military actions against Ukraine for NATO-Russia relations. They will also discuss ways to improve the way NATO works with partner countries, including through supporting those states which need to reinforce and reform their security sector. NATO foreign ministers will then meet with their Ukrainian counterpart Andrii Deshchytsia in a session of the NATO-Ukraine Commission. This will be an opportunity to take decisions on how the Alliance can further support Ukraine with its defense reforms.
So far, all efforts by Western leaders to keep Russia away from Crimea have ended in failure.