Russian President Vladimir Putin has written to the heads of government’s that import gas from Ukraine threatening to cut off supplies of gas to Kiev should the country fail to fullfil Gazprom’s payment conditions and accusing the EU of running Ukraine’s economy to the ground.
Putin says that despite Ukraine being grante a string of “unprecedented privileges” including cut-rate prices, by the Russian gas giant, it is in arrears by more than $2 billion.
“In such conditions … Gazprom is compelled to switch over to advance payment for gas deliveries, and in the event of further violation of the conditions of payment, will completely or partially cease gas deliveries. In other words, only the volume of natural gas will be delivered to Ukraine as was paid for one month in advance of delivery,” Putin’s letter says.
The Russian President claims that “during the past four years Russia has been subsidizing Ukraine’s economy by offering slashed natural gas prices worth 35.4 billion US dollars.”
He adds that Russia also granted a $3 billion loan to Kiev in December. .
He accuses meanwhile the EU of using Ukraine as a source of raw materials while exporting there high-end goods, “thereby creating a deficit in Ukraine’s trade balance amounting to more than 10 billion US dollars. This comes to almost two-thirds of Ukraine’s overall deficit for 2013.”
The letter which appear appears to aim both at Ukraine’s domestic political scene as well as to its European recipients.
“What about the European partners? Instead of offering Ukraine real support, there is talk about a declaration of intent. There are only promises that are not backed up by any real actions,” Putin writes.
Putin says that the EU is refusing to go ahead with consolations on the issue by instead is repeating appeals to lower contractual prices on Russian natural gas.
“Russia cannot and should not unilaterally bear the burden of supporting Ukraine’s economy by way of providing discounts and forgiving debts, and in fact, using these subsidies to cover Ukraine’s deficit in its trade with the EU member states,” the Russian President warns.
Putin is demanding an advance payment of $5 billion.
“Undoubtedly, this is an extreme measure,” he says. “We fully realize that this increases the risk of siphoning off natural gas passing through Ukraine’s territory and heading to European consumers. We also realize that this may make it difficult for Ukraine to accumulate sufficient gas reserves for use in the autumn and winter period. In order to guarantee uninterrupted transit… this will require a payment of about 5 billion US dollars.”
Putin adds that "there can be only one way out of the situation that has developed. We believe it is vital to hold, without delay, consultations at the level of ministers of economics, finances and energy in order to work out concerted actions to stabilize Ukraine’s economy and to ensure delivery and transit of Russian natural gas in accordance with the terms and conditions set down in the contract."