Ukraine: Gazprom threatens to shut off the gas again

The gas crisis in Ukraine is heating up again as CEO of Gazprom Alexei Miller reminded his Ukrainian counterparts at Naftogaz that Russia can shut off natural gas within two days due to a dispute over payments. These disputes have stretched into the past long before the conflict in Ukraine even began, but their renewed presence adds a complicating dimension for EU officials like German Chancellor Angela Merkel who have unsuccessfully tried to broker a ceasefire.

The issue this time is that Ukraine has not made any prepayments for its March gas delivery – Miller noted that this would cause gas prices to skyrocket throughout Europe as well. However, Ukraine cites the terms of the previous October’s gas deal, under which $3.1 billion in past bills was paid and supplies were to be continued through the winter on a prepaid basis.

Ukraine likely has a slightly more powerful bargaining position than in October, due to the expected delivery of an IMF aid package of $17.5 billion which it will likely borrow against in order to satisfy its balance of payments. However, the IMF has yet to receive a capital injection of IMF cash since September, and details on this new package are scant.

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News Briefs:

  • As relations with Russia decline, the EU has stepped up its diplomatic rhetoric with Azerbaijan and Turkmenistan in bids to open potential energy delivery agreements. Brussels is unveiling its official strategy later today and officials have stated that toping the list of alternative suppliers are Azerbaijan, Turkmenistan, and Algeria. The proposed initiatives mandate “southern corridor” like the TransAdriatic Pipeline owned by BP.
  • Former Kazakh minister and power broker Rakhat Aliyev was found dead in his cell in Austria, where he was being held on murder charges. The death was apparently suicide as he hanged himself from a coat hook and was only discovered several hours after time of death. Aliyev was a longtime associate of Kazakh President Nursultan Nazarbayev, and is also his son-in-law, having been married to Dariga Nazarbayeva. Aliyev developed a reputation for expansion and avarice in his business dealings – but his fortunes fell when he questioned the affirmation of Nazarbayev as President-for-Life in 2007. He was quickly stripped of all government titles and diplomatic immunity – it is anyone’s suspicion what actually happened to Mr. Aliyev.
  • Another human rights activist has been jailed in Azerbaijan. Taleh Xasmammadov was accused of beating another man – but this may have just been a trumped up charge. In 2011, Xasmammdov was convicted of disorderly behavior and resistance to the police and sentenced to roughly 4 years in jail, but was released less than a year later on presidential amnesty.

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