Putin says Ukraine debt may disrupt gas supplies to Europe
Russian President Vladimir Putin’s letter to 18 mostly Eastern European leaders aimed to divide the 28-nation European Union and siphon off to Russia the billions that the international community plans to lend to Ukraine.
The Associated Press
MOSCOW — Vladimir Putin warned Europe on Thursday that it may face a shutdown of Russian natural-gas supplies if it fails to help Ukraine settle its Russian gas bill, a debt that far exceeds a bailout package offered by the International Monetary Fund (IMF).
The Russian president’s letter to 18 mostly Eastern European leaders, released Thursday, aimed to divide the 28-nation European Union (EU) and siphon off to Russia the billions that the international community plans to lend to Ukraine.
It was part of Russia’s efforts to retain control over its struggling neighbor, which is on the verge of financial ruin and facing a pro-Russian separatist mutiny in the east.
Putin’s message is clear: The EU has tried to lure Ukraine from Russia’s orbit and into its fold, so it should foot Ukraine’s gas bill or face the country’s economic collapse and a disruption of its own gas supplies.
The warning raises the ante ahead of international talks on settling the Ukrainian crisis that for the first time will bring together the United States, the EU, Russia and Ukraine.
The State Department on Thursday condemned what it called “Russia’s efforts to use energy as a tool of coercion against Ukraine.”
Meanwhile, hundreds of pro-Russia protesters — some armed — continued occupying Ukrainian government buildings in Donetsk and Luhansk while authorities sought a peaceful solution to the five-day standoff.
The amount Putin claims Ukraine owes is growing by billions every week, and his letter raises the specter of a new gas dispute between Russia and Ukraine that could affect much of Europe.
In 2009, Russia turned off gas supplies to Ukraine in winter, leading to freezing cities across Eastern Europe as Russian gas stopped moving through Ukrainian pipelines to other nations.
In the letter, Putin said Ukraine owes Russia $17 billion due to the termination of gas discounts and potentially an additional $18.4 billion as a take-or-pay fine under their 2009 gas contract.
He added that in addition to that $35.4 billion, Russia is holding $3 billion in Ukrainian government bonds.
The total is far greater than the estimated $14 billion to $18 billion bailout the IMF is considering for Ukraine.
Putin warned that Ukraine’s mounting debt is forcing Russia to demand advance payments for further gas supplies.
He said that if Ukraine failed to make such payments, Russia’s state-controlled gas giant Gazprom will “completely or partially cease gas deliveries.”
Putin told the leaders that a shutdown of Russian gas supplies will increase the risk of Ukraine siphoning off gas intended for the rest of Europe and will make it difficult to accumulate sufficient reserves to guarantee uninterrupted delivery to European customers next winter.
The letter was addressed to 18 heads of states in Europe, including Serbia and Bulgaria, which both rely on Russia for about 90 percent of their gas supplies.
Putin has been tightening the economic screws on the cash-strapped Kiev government since it came to power in February after Ukraine’s Russia-leaning president fled the country after months of protest.
Starting this month, Russian state energy company Gazprom scrapped all discounts on gas to Ukraine, meaning a 70 percent price increase.
Ukraine has also promised the IMF it will cut energy subsidies to residents in exchange for a bailout, which means gas prices were set to rise 50 percent May 1, even before Putin’s latest salvo.
In related developments:
• Ukraine’s acting president Oleksandr Turchynov said pro-Russian activists occupying government buildings in the eastern cities of Donetsk and Luhansk will not be prosecuted if they lay down their arms. Protest leaders defied the request to leave.
• Tensions remained high in Donetsk, where about 1,000 protesters stood outside the occupied building chanting “Russia! Russia!”
Activists also reinforced the barricades, piling up rubber tires or building brick walls out of cobblestones. They have demanded a referendum on broader autonomy or even secession from the Kiev authorities.