It's the Gas, Stupid

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.