Prime Minister Vladimir Putin warned the European Union yesterday about possible problems with gas transit through Ukrainian territory resulting from payment issues. He mentioned the matter in a telephone conversation with Swedish Prime Minister Fredrik Reinfeldt, the current chairman of the EU. The issue was also the first thing that Mr Putin brought up at a meeting with the United Russia Party leaders earlier.
He had discussed the situation with Ukrainian Prime Minister Yulia Tymoshenko over the telephone just before the meeting. The matter is a serious cause for concern in Moscow, lest things deteriorate so much that Gazprom is forced to shut off gas supplies again in early January. By all appearances, Kiev has the money to pay, but not the political will.
The Ukrainian authorities have exactly one week to come up with the money to pay for Russian gas. The contract signed between Ukraine's Naftogaz and Gazprom calls for current payments to be made no later than the seventh day of the following month. But Naftogaz doesn't have the money. As Izvestia has already reported, the company is in technical default as a result of failing to redeem its bonds, and now it's facing bankruptcy.
According to Mr Putin, however, Kiev has other resources that can be used to pay for the gas.
The International Monetary Fund (IMF) indicated that the country's gold and currency reserves stand at $27-28 billion, while the minimum amount that ensures the stability of the national currency and supports foreign trade operations is around $12 billion.
Even the IMF agrees that the reserves can be used to pay for gas. Yet, Ukrainian President Viktor Yushchenko "is hindering normal cooperation between the Central Bank, which holds the gold and currency reserves, and the Government of Ukraine, and he is blocking the transfer of the funds." In other words, Mrs Tymoshenko would be glad to pay for the Russian gas if she could, but she can't. With Ukraine's presidential election campaign just beginning, the situation with gas payments may remain under question for quite some time.
"Question: what are we to do?" Mr Putin asked, before looking intently at each of his guests, Boris Gryzlov, Vyacheslav Volodin, Oleg Morozov and Andrei Vorobyov. "What is your opinion on the matter?"
Mr Gryzlov took the floor and responded: "I would like to comment on the situation. I think Ukraine is duty-bound to honour the contracts it has signed and there are simply no excuses."
"Okay," the Prime Minister nodded approvingly. "We'll have another chance to discuss it with Dmitry Medvedev (Medvedev and Putin discussed the gas payment situation on the same day - Izvestia). So we'll exchange our opinions and then make the final decision. Thank you."
The chances of Mrs Tymoshenko and Mr Yushchenko coming to some sort of agreement appear to be quite slim.
"I think Mrs Tymoshenko is criticising the President for refusing to print money and use the money to pay for gas. He has refused to do so and will continue to refuse," Alexander Shlapak, deputy head of Viktor Yushchenko's secretariat, promptly replied. He added that it was Ukraine's own internal problem and not for the Russian government "to form the business plan of the National Joint Stock Company Naftogaz Ukrainy". But the gas supply only seems to be a problem between Moscow and Kiev. A year ago, after failing to pay for gas for its own needs, Ukraine started taking the fuel intended for European consumers. The incident triggered a major international row which eventually led to an agreement being signed. Even though gas transit was resumed, Russia's image was severely tarnished.
The Europeans are already getting jittery. According to information received from the Elysee Palace, one of the top items on the agenda of the European Union summit in Brussels was energy security. Furthermore, the heads of 27 EU countries confirmed their readiness to carry out a concerted action in reaction to any possible interruptions in Russian gas supplies. Thus, Bulgaria, Slovakia and other East Europeans (who suffered the most from January's conflict) can rely on the common stocks of gas and oil that were built up earlier.
The European Union has categorically refused to lend money to Ukraine, however. The Russian leaders' attempts to bring home to the Eurocrats that they could secure gas supplies by lending Ukraine financial aid have not been met with success so far. Mr Putin indicated that the EU never gave Ukraine the promised money, "not a single cent, not a single hrivna." Russia has lived up to its side of the bargain: it has paid for gas transit through Ukraine in the period which includes the first quarter of 2010.