Tuesday, December 13, 2005

The Ukrainian-Russian Gas Wars

I haven't commented on it before now, but if you follow Ukrainian politics at all, you'd have noticed the ongoing dispute between Russia and Ukraine over the transit tax that Ukraine wants Russia to pay for the natural gas that goes through the pipeline in Ukraine to Europe.

Additionally, since the Orange Revolution Russia has been unwilling to continue to provide natural gas at the same prices as before. Russia is telling Ukraine to buy it at the market prices, which it was definitely not before, and that it is not willing to pay a hiked the transit tax. Furthermore, Russia is now threatening to cut off the gas supply altogether unless an agreement is reached by January 1st.

Yuschenko already sacked his Energy Minister for the inability to reach an agreement with Russia. It's...ugly. Ukraine needs the extra revenue. Russia needs the ubercheap transit taxes. A compromise would be in order. However, Russia is tiffed for having lost a satellite and his playing games to try to get her back.

Will it work?

We shall see.

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