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Ukraine gas crisis: uncomfortable deja vu for Europe

Ukraine gas crisis: uncomfortable deja vu for Europe
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The gas war has erupted again after three years marked by ups and downs between Moscow and Kiev over its cost. No deal, no supplies. It’s the same scenario as in the winter of 2006. Back then, Gazprom halted all supplies to Ukraine after the two failed to reach agreement on the price of gas. The rest of Europe, which relies on gas transiting through Ukraine, was also affected by the row. The dispute was finally solved after months of discussions.

Russia wanted to increase the price for Ukraine to 172 euros per 1,000 cubic metres from 37. Ukraine agreed to pay double, but no more. Last year, Russia demanded 172 euros per 1,000 cubic metres, but got 134. Now, Moscow is asking for 186 euros per 1,000 cubic metres, and threatens to nearly double the price bringing it to EU standards if Kiev refuses to pay up. “Ukraine, like many former states of the former Soviet Union, is unable to pay the same price for Russian gas that Germany or Italy pay,” said political analyst Dmitri Babich. “And we know very well why that happens. Seventy years of Soviet-planned economy made Ukraine a much poorer country than Germany or Italy. And Russia until now showed understanding for this. The idea was that the price would be increased slowly and steadily. But the problem is that Ukraine wants Russia to continue subsidising it forever.” A cruel reminder for Europe of its dependence on Russian gas, and of its need for alternatives like the Nabucco pipeline – due to be completed in 2013 – and which avoids completely both Russian and Ukrainian territory.