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News Analysis: What is behind Russia-Ukraine gas dispute?
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09:15, January 16, 2009

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Russia, Ukraine and the European Union (EU) signed an agreement on Monday to restore Russia's gas supplies to Europe via Ukraine as early as Tuesday morning.

But Russia and Ukraine afterward blamed each other on the issue, and Russia has yet to supply gas to Ukraine and Europe.

European Commission President Jose Manuel Barroso said on Wednesday that the EU may take legal action against the Russian and Ukrainian gas companies if supplies from Russia cannot be resumed swiftly. What is really behind the gas disputes?


After the Rose Revolution in Georgia in 2003 and the Orange Revolution in Ukraine in 2004, Russia has been deeply dissatisfied with Ukraine's zealous efforts to join NATO, support for Georgia in the Russia-Georgia conflict last August, and a passive attitude toward Russia's Black Sea Fleet.

Currently, the ongoing global financial crisis has severely hit Ukraine's economy, the West-leaning president Viktor Yushchenko suffered a sharp decline in domestic support, and different political forces are wrestling with each other before the general elections scheduled late this year or early next year.

Under these circumstances, Russia, which controls rich gas supplies, would certainly play the gas card, press pro-West forces in Ukraine, and gain more economic interests, analysts say.

Eastern European countries, who have actively supported Ukraine's entry into NATO, are suffering most from the latest gas dispute. The countries may adjust their policies toward Russia as they have more clearly realize their dependence on Russia's gas, observers say.

Moreover, Russia is attempting to gain the right to control part of Ukraine's gas pipelines by cutting supplies, as Ukraine would have to sell some its pipelines if it cannot pay the gas fees.


The Russia-Ukraine dispute has absorbed more and more politicalelements, analysts say.

The worsening bilateral relationship is one of the major factors preventing the two sides from reaching a gas supply deal. Meanwhile, Ukraine's intensified internal political struggle has hindered the negotiations.

The gas dispute has also effected Ukraine's domestic political situation. Ukraine's biggest opposition party the Party of Regions on Tuesday demanded a no-confidence vote in the government led by Prime Minister Yulia Tymoshenko, and the start of an impeachment process against President Yushchenko.

Ukraine imports over 50 billion cubic meters of gas from Russia every year, and is heavily dependent on Russia's energy. Russia and Ukraine are interdependent on their economies.

Analysts say the ongoing gas dispute would harm the two countries' economies and images, and both sides are willing to reach a deal as soon as possible by agreeing on proper gas prices.


The EU imports a quarter of its natural gas from Russia, about 80 percent of which is shipped through Ukraine's pipelines. As a result, the EU inevitably falls victim to any gas dispute between Russia and Ukraine.

To add to its frustration, the EU now has no card up its sleeve other than calling on its member states to increase gas reserves if possible and to lend a helping hand to each other to cope with the winter freeze.

In the long term, the EU is also seeking to diversify its energy resources in a bid to reduce dependence on Russia.

However, analysts say the EU's dependence on Russia is most likely to sustain and a practical approach for the EU is to intensify energy cooperation with Russia, starting with building gas pipelines bypassing Ukraine.

Despite the shadow cast on EU countries, the increasing bickering between Russia and Ukraine on gas supplies will not spell an end to EU-Russia energy cooperation since neither the EU nor Russia is willing to let go of what is supposed to be a win-win situation.


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