Stirring the Ukrainian Pot

   So what else is new?

   In 2006, Ukraine and Russia disagreed on the price of natural gas, which Russia was selling to Ukraine. Ukraine was paying well below the market rate and Russia's Gazprom company wanted a price more in keeping with market conditions.       

    Western media piled on Russia, focusing on the "four-fold increase" in the price that Russia was demanding. The implication was that Russia was dramatically and unfairly increasing the cost of gas to Ukraine. However, what the media failed to mention was that the new Russian proposed price was still less than 50% of the world market rate, the actual price other Gazprom customers such as France and Austria, were paying.  

    Also in the two-year agreement between Kiev and Moscow was the understanding, that within the next two years, a new contract would be drawn up, one in which Ukraine would gradually start to pay higher rates until it was purchasing this natural gas at close to market rates.

    The two years are now up, and there was no progress on a new contract. Ukraine is still paying$187.50 per 1,000 cubic metres of Gazprom natural gas, while Europe pays $418-$440 for the same amount. Gazprom again granted favorable terms to Ukraine, asking only for $250. Ukraine refused to budge, and said any increase in price would be met with a corresponding increase in Ukrainian transit fees for transport of Russian gas to other European countries.      

    Why should Ukraine be of the mindset that they are entitled to special consideration by a Russian company? Ukraine is a sovereign nation, it is not a Russian welfare responsibility.   

    Ukraine and Georgia, in part goaded by the US, and trying to right ancient wrongs, have been incresingly hostile to Russia. Why should Russia grant special consideration to a hostile entity?

    Met with intransigence by the Ukrainians, Gazprom on Jan. 1 withdrew an offer to sell Ukraine gas at $250 (U.S.) per 1,000 cubic metres as the Ukrainian side pushed for a cheaper rate, saying the country must now pay a European market price of $418.

      After a flurry of meetings, an agreement was signed by the two sides.  However, Yulia Tymoshenko, signing the agreement, added a supplemental note to the agreement that, among other things, stated Ukraine owed nothing to Russia.

      What is the purpose of negotiation, if, at the end of the "negotiation," one party is simply going to sign a different "agreement"?

      The Western media looks at this as Russian extortion, this demand that Ukraine pay more than the old welfare price.

    If there is any extortion going on. it is by the Western-supported Ukrainian government. It seems that they are assured of Western media and political support, so they are emboldened to demand of Russia anything they want. 

     Ukraine has now decided they will tell foreign companies how much they will pay to purchase their products. If the company disagrees on this price, Ukraine feels it has the right to steal the merchandise.

     When does the customer telling the business how much he will pay? I suppose it would be nice if I could go my local Safeway, and tell them, "No, I'm not going to pay $3.49 for Chuck Steak. I will pay you $1.29, the same as last year. And, if you don't sell to me at this low price, I will block all your other customers from buying it at $3.49 by giving flat tires to all your delivery trucks supplying the steak."

      Although Ukraine is, presently, an economic basket case, Ukrainian animosity towards Russia (banning the use of the Russian language in schools, public discourse, etc., supporting Georgia in its assault on South Ossetia and Abkhazia, allowing Western NGO's to inspect voting irregularities in only one-half of the country - the ethnic Russian half)  will probably not gain them preferential nor favorable treatment by Russian-owned Gazprom.