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It’s the Gas, Stupid

May 13th, 2014 - 6:22 am

Two related items on Ukraine this morning. The first is straight-up news from Bloomberg:

Russian gas-export monopoly Gazprom informed Ukraine it must pay in advance for gas by June 2 and will receive only those supplies it pays for, risking a cutoff, company spokesman Sergei Kupriyanov said in an e-mailed statement today. Ukraine owes $3.5 billion for fuel delivered in 2013 and through April this year, Gazprom Chief Executive Officer Alexey Miller said.

Ukraine, which depends on Russia for half of its gas consumption, has the opportunity to pay as it received the first $3.2 billion of an international aid package last week, Medvedev said.

And then an opinion piece by James Kunstler:

Kiev owes $3.5 billion to Russia for past-due gas bills and Moscow has asked Kiev to pre-pay for June deliveries. This is about the same thing that any local gas company in the USA would demand from a deadbeat customer. The International Monetary Fund has offered to advance a loan of $3 billion, of which Kiev claims it could afford to fork over $2.6 billion to Russia (presumably needing the rest to run the country, pay police salaries, et cetera). Ukraine is in a sad and desperate situation for sure, but is Russia just supposed to supply it with free gas indefinitely? As wonderful as life is in the USA, the last time I checked most of us are expected to pay our heating bills. How long, exactly, does the IMF propose to pay Ukraine’s monthly gas bill? In September, the question is liable to get more urgent — but by then the current situation could degenerate into civil war.

There’s no good out for a country which can’t pay its bills or keep itself warm.

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All Comments   (5)
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Fear not, Hunter Biden will save the day: http://burisma.com/board-of-directors/
23 weeks ago
23 weeks ago Link To Comment
I'm always surprised to see that kind of commentary and automatically question the motives of the author. What percentage of that bill is owed by the Crimea? How much is the Crimea worth? Certainly the value of that patch of land is more than 3.5 billion and every penny should be accounted for before the Ukraine gives a penny to Russia. Except...well, it's summer now. They have about 5 months to stop relying for their basic energy needs on a country determined to carve them up.

Funny too how Russia's demand almost perfectly matches the Ukraine's aid package.

As for Kunstler, I wonder about the look on his face as he typed a column pretending that Russia is just trying to collect a past due bill. Is he stupid? Or does he think we are?
23 weeks ago
23 weeks ago Link To Comment
Yup. $3.5 billion for Crimea. Not a good deal, especially considering how Russia collects its debt, but this isn't a perfect life.

Now, have a carrier fleet put in a courtesy call to Ankara, in the Bosporus, and then another at Gibraltar and one in Cairo. Russia may have its warm water port in Sevastopol, and might even make it into the Mediterranean. But she ain't making it any further.

Oh wait, for a second there I forgot who was president. Vlad will be enjoying his new naval base in Newport News, VA.

Damn, 11:30 am, too early to start drinking.
23 weeks ago
23 weeks ago Link To Comment
Left unmentioned is the fact that the pipe feeding significant percentage (50%? more? less?) of Russian gas sold to EU is controlled by Ukraine. All sorts of interesting scenarios are possible in the event of actual cutoff.

While having to pay your bills in undoubtedly a major consideration, so is the unacknowledged state of war between the two countries -- Crimea was annexed, however you slice it. Problem is, Putin can surely afford not to collect for a while in exchange for the festering instability he can use to further his ends.
23 weeks ago
23 weeks ago Link To Comment
Does dear liar's nanny state have a LEAP (Low-income Energy Assistance Program) program for countries? Surely we could get the FED to gin up an extra 3 or 4 billion a month in funny money for the downtrodden in Ukraine since they gin up $85 BILLION a month to GIVE to the poor downtrodden banker buddies of dear leader on Wall Street!
23 weeks ago
23 weeks ago Link To Comment
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