Russian Prime Minister Vladimir Putin criticized the European Union for not doing more to negotiate a settlement between his country and Ukraine, which Russia accuses of stealing natural gas bound for countries further east in Europe. Ukraine denies the charges, but Russia's national gas giant Gazprom turned off the taps because of the alleged theft, causing a shortage in many parts of Europe and an outright crisis in countries like Bulgaria that get almost all of their gas from Russia. And of course this all happens during one of the worst cold snaps in Europe in the past decade.
Just in case you haven't been following this story - on January 1 Russia's Gazprom cut off natural gas shipments to Ukraine after their government failed to pay up on a $2 billion debt for gas deliveries. Eighty percent of the natural gas shipped to Europe goes through pipelines that run across Ukraine. Almost immediately European countries (15 in total) reported that gas supplies to their countries were falling, leading Gazprom to accuse Ukraine of siphoning off some of the gas bound for Europe to use at home. Finally yesterday Russia turned off the taps to all of the Ukraine pipelines - to prevent ongoing theft, they said - causing the shortages across much of Europe.
In addition to the $2 bil owed to Gazprom, Russia and Ukraine can't agree on a price for gas sales for 2009. Russia has been under pressure to stop selling natural gas to Ukraine, and other former Soviet states, at cut-rate prices. But now Ukraine, suffering from its own economic crisis, is balking at paying what Europe pays, instead proposing a rate for 2009 at about half the going fair market. Ukraine is proposing to charge Russia the market rate to ship gas across their country, something Russia says they will agree to, only if Ukraine then pays the same price for gas as the rest of Europe.
The European Union has stepped into the dispute, and it looked like they had at least secured an agreement to get the gas flowing. They proposed having EU monitors watch the pipelines to make sure Ukraine wasn't siphoning off gas (Gazprom’s charge against them), but that deal fell apart when Russia asked to also have their own monitors work with the EU team, something Ukraine refused.
Putin blamed corruption and incompetence in the Ukrainian government for the problem, while Ukraine's national gas company, Naftogaz, said that Russia was using gas as a weapon to destroy both it and the entire Ukrainian economy. Meanwhile the shortages have prompted rationing in several central European nations and have caused a couple of countries to think about restarting old Soviet-vintage nuclear reactors to make up for the shortages in power in their nations.
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