The Great Debate

from Breakingviews:

Gazprom/Ukraine dispute is proxy for Putin’s whims

By Pierre Briançon 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Europe has long been used to the perennial drama of “Ukraine versus Gazprom,” but this year’s version is not your run-of-the-mill gas price dispute. Making good on a longstanding threat, Gazprom has said it will deliver gas to Ukraine only if it has been pre-paid. This comes after the Russian energy group failed to settle a dispute with Naftogaz, its Kiev-backed counterpart, over what it claims are more than $4 billion of overdue bills.

As summer nears, the decision will have limited immediate consequences on Europe’s energy supplies. Gazprom says it will continue to provide gas to the rest of the continent and has the means to bypass Ukraine. The two sides may be headed to international arbitration – by far the best way to settle the dispute. Gazprom has some grounds for feeling that it has been too patient with its Ukrainian client.

But Gazprom is now asking Kiev to pay for arrears amassed by the previous, pro-Russian government. Ukraine, on the other hand, is contesting the 80 percent hike that Gazprom slapped on gas deliveries in the heat of tensions between Russia and Western powers over the annexation of Crimea. Of course, Kiev at some point can – and probably will – raise the question of how many billions it is owed by Moscow after the confiscation of part of its territory.

Gazprom’s toughening comes just after renewed military activities by Russian separatists in the east of Ukraine. Hopes for a normalisation of the situation between Kiev and Moscow are premature at best. The fact that the Ukranian and Russian presidents have started talking at last doesn’t mean that the region’s problems are over. And it is still hard to understand the Kremlin’s strategy – if there is one.

Ukraine gas crisis spurs EU energy policy

Paul Taylor Great Debate– Paul Taylor is a Reuters columnist. The opinions expressed are his own –

The gas dispute between Russia and Ukraine that has left hundreds of thousands of Europeans shivering in the winter cold is bound to accelerate plodding European Union efforts to build a common energy policy.

The cut-off of Russian gas supplies to Europe via Ukraine highlighted how little progress the 27-nation EU has made in connecting national energy networks and diversifying supplies since the first such crisis three years ago.