- The Washington Times - Tuesday, December 27, 2005

MOSCOW — The war of words between Russia and Ukraine over gas prices escalated to new levels yesterday, as Kiev threatened to tap Russian gas shipments headed for Europe and Moscow warned that attempts to raise the rent that Russia pays to base its Black Sea fleet in a Ukrainian port would have “fatal” consequences.

The countries are locked in a dispute over plans by state-controlled Russian gas giant Gazprom to more than quadruple the price it charges Ukraine for natural gas, from about $50 per 35,000 cubic feet to $230, in line with world prices. Gazprom provides about one-third of Ukraine’s gas and has warned that it will turn off the taps Sunday if Kiev rejects the price increase.

“Relations between Russia and Ukraine have reached their lowest point since the collapse of the Soviet Union, and they are only going to get worse,” said Volodymyr Saprykin, a political analyst with the Kiev-based Razumkov think tank.

Ukraine, which has sought to have the increase phased in over several years, upped the stakes earlier this month by saying it was considering raising the $98 million in annual rent Moscow pays for using facilities in Sevastopol, on Ukraine’s southern Crimean peninsula, to base its fleet.

Russian Defense Minister Sergei Ivanov shot back yesterday, warning that any attempt to change the terms of Moscow’s lease would threaten agreements recognizing Ukraine’s post-Soviet borders.

“In my view, to revise these agreements would be fatal,” Mr. Ivanov said on state television.

Ukrainian Prime Minister Yuriy Yekhanurov also stoked the fire yesterday, saying Ukraine has the “unquestionable legal right” to take 15 percent of Russian gas shipments to Europe that pass through its territory as a transit fee. About 80 percent of Gazprom’s European exports pass through Ukraine, and the company supplies about half of the European Union’s gas.

Sergei Kuprianov, a spokesman for Gazprom, said any attempt by Ukraine to siphon off gas destined for Europe would be regarded as theft.

Mr. Kuprianov also denied assertions by Ukrainian Energy Minister Ivan Plachkov yesterday that a deal had been reached to phase in the price increase. Mr. Kuprianov called Mr. Plachkov’s statement “a provocation.” Russian Energy Minister Viktor Khristenko similarly denied an agreement was in place.

Russian officials insist that the gas price increase is financially justified because it will end Moscow’s long-standing energy subsidies to its former Soviet partner. But many Ukrainians see the move as punishment for the country’s pro-Western course under President Viktor Yushchenko, who was elected after the “Orange Revolution” that overthrew a pro-Moscow government last year.

Gazprom also has announced gas price increases for Georgia and Moldova, both ex-Soviet republics seeking stronger ties with the West, but has extended a deal with Belarus, which is strongly allied with Russia, that will price natural gas at $46.68 per 35,000 cubic feet.

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