Ukraine may have had no recourse when Russia took over/"annexed" Crimea, but the country is threatening to sue its hostile neighbor in an international arbitration court over the recent gas price increase.
Russian gas company Gazprom announced this week that it was raising Ukraine's prices by 81 percent: from $268.50 per 1,000 cubic meters to $485.50. (For a day, the price was $385.50, but then that went up.) The state-controlled company's justification for the increase, which will mean Ukraine is paying the highest price in Europe, is that Ukraine owes the company $2.2 billion (other reports say the debt is $1.7 billion). Two discounts were also cancelled this week: one given while Ukraine allowed Russian Navy to use Crimea's Sevastopol port; and the other as part of the loan deal Russia gave to Ukraine when former president Viktor Yanukovych turned down a trade deal with the European Union in November.
"[Ukraine] fully understand[s] why this discount has disappeared, they fully understand that the cancellation of the discount is Ukraine's fault," Gazprom's CEO Alexei Miller said. "We cannot supply gas for free."
Ukraine may not "fully understand" things as much as Miller thinks, as the country is refusing to accept the price hike.
"Russia was unable to seize Ukraine by means of military aggression," said Ukraine Prime Minister Arseniy Yatsenyuk today. "Now, they are implementing plans to seize Ukraine through economic aggression."
Yatsenyuk says his country will continue to buy gas at the old rate. If Gazprom doesn't accept that (and it's very likely it won't) Ukraine energy minister Yuriy Prodan said the country is prepared to take Gazprom to the Stockholm arbitration court, as per their contract. But he's hoping to reach an agreement with Gazprom before that is necessary.
This tactic has been employed by other countries in price disputes with Gazprom, most recently Lithuania, which was paying the highest rate for gas last year.
In the meantime, Ukraine is scrambling to find another source for its gas should Gazprom stop supplying it. Yatsenyuk said yesterday he is in "emergency talks" with the European Union. One option could be "reverse flow" gas, in which the pipeline that delivers gas from Russia to other countries -- which runs through Ukraine -- also delivers gas from those countries to Ukraine.
This article is from the archive of our partner The Wire.