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Ukraine ‘Plays Chicken’ on Gas Issue, Agreement Depends on Political Relations

WASHINGTON, October 30 (RIA Novosti) – Ukraine does not want to compromise in gas talks with Russia and Europe, but a final agreement depends only on all parties’ political will, experts told RIA Novosti.

“There is an element of ‘chicken game’ in Ukraine’s strategy: if it freezes this winter and there is a gas crisis in Europe, it knows that Russia will be blamed,” Pierre Noel, a senior fellow for economic and energy security at the International Institute for Strategic Studies said Wednesday.

“This way Kyiv also expects to strengthen its strategic position vis-a-vis the US and the EU,” Noel added.

“The EU should refuse this behaviour, which puts its energy security at risk, and condition its economic help to a return to the 2009 contract, which is the only basis for a stable gas relationship between Ukraine and Russia,” Noel told RIA Novosti.

Noel went on to say that if Russia accepted to sell at a heavily discounted price outside of the 2009 contract, the situation would be solved, but it seemed very unlikely, especially in a context of economic sanctions from the United States and the European Union.

“The real problem lies more in Ukraine’s intransigence,” the expert asserted. “Perhaps it simply hides the fact that they cannot pay any price.”

Signing the deal on gas deliveries to Ukraine, however, during winter months wholly depends on the political will of the negotiating parties, Simon Pirani, Senior Research Fellow at the Oxford Institute for Energy Studies, said.

“There is no commercial issues that are preventing the signing of an agreement. Whether it will be signed or not will be determined by the political relationship [between the sides], the researcher told RIA Novosti.

He described the current political relations between Russia and Ukraine as “very bad”.

The recent election in Ukraine has strengthened the hand of the Prime Minister relative to the President, and the Prime Minister has adopted a much tougher stance on gas, categorically refusing to import under the 2009 contract, Pierre Noel claimed.

“Unless Europe puts pressure on Ukraine [something it does seem ready to do], the talks might fail again,” Noel concluded.

Russia and Ukraine started a new round of gas talks, mediated by the European Commission, in Brussels on Wednesday. The meeting follows the trilateral discussions held on October 21, where Ukraine had agreed to the temporary price of $385 per 1,000 cubic meters of gas during winter.

Russian energy giant Gazprom switched Kyiv to a prepayment system for gas supplies in June over Ukraine’s gas debt of more than $5 billion.

In September, Russia and the European Commission proposed the so-called winter package, according to which Ukraine should pay $3.1 billion of its debt to Russia by the end of the year in exchange for gas deliveries during the winter period.

Following the trilateral Russia-Ukraine-EU talks in Brussels on October 21, Ukraine agreed to the temporary price of $385 per 1,000 cubic meters of gas during the winter months.