Ukraine-Russia Gas Disputes

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Ukraine and Russia Gas Conflict
Abstract
In the recent years, the relations between Ukraine and Russia have been hostile. Russia is the largest producer of gas while Ukraine is the largest importer of the same commodity from Russia. Gas fro Russia to the EU countries, east and southern Europe passes through the Ukrainian territory and Russia has to pay transit fee. It is this issue of the supply and prices of gas that precipitated a very big conflict between the two countries and the impact was felt allover Europe. In this paper, the historical background of the issue, the current sate of the conflict, the solutions to the conflict; the future of gas supply and the effects of the 2009 conflict to Europe will be addressed. Preview

In the recent years, the relations between Ukraine and Russia have been hostile and they went to their worst in 2008 when the Russian Prime Minister Putin said that if Ukraine were to Join NATO, Russia would annex the eastern part of Ukraine. Russia is known to be a bully that uses its energy resources to intimidate its smaller and dependent neighbors. Apart from the NATO issue, the other problem between the two former Soviet Union states is the issue of Gas. Russia is the largest producer of gas while Ukraine is the largest importer of the same commodity from Russia. Gas from Russia to the EU countries, east and southern Europe passes through the Ukrainian territory and Russia has to pay transit fee . It is this issue of the supply and prices of gas that precipitated a very big conflict between the two countries and the impact was felt allover Europe. In this paper, the historical background of the issue, the current sate of the conflict, the solutions to the conflict; the future of gas supply and the effects of the 2009 conflict to Europe will be addressed (Mankoff 252). Gas disputes

There have been a number of disputes between the Russia and Ukraine pitting the Naftohaz Ukrainy., a gas company based in Ukraine and Gazprom, a gas supplier based in Russia over the supplies and prices of natural gas. This dispute has brought about political differences between the two countries and has also jeopardized the supply of gas in numerous European countries that depend on gas from Russia that is transported to the countries through Ukraine. More than 25 percent that is consumed within the Europeans union comes from Russia, while 80 percent of the gas is transported to the EU by Ukraine. One of the most serious disputes occurred in 2005 and the issue was gas and transit prices. Russia made claims that Ukraine failed to pay for the gas and it was diverting the gas exported from the pipeline to the European Union. The last accusation was vehemently denied by Ukraine but later, the Ukrainian gas company confessed withholding some of the gas from Russia meant to be transported to other countries for the domestic needs . The culmination of this dispute came at the start of 2006 after Russia disconnected gas supplies that were passing through Ukraine. It was not until a preliminary agreement was reached that there were a restoration of the supply and the calming of the situation. The other most recent disputes arose because of the debts that the Ukraine Company owed Russia and the amount of gas that Ukraine imported from Russia (Mankoff 252). Historical Background of the conflict

The Soviet Union collapsed towards the end of the 80’s and Ukraine became a sovereign country. In 1998, oil prices from Russia to Ukraine made global market levels but the gas import prices and the fees for transit to Europe were not determined by the world market, the were set by a some bilateral negotiations between the two countries. The prices and the fees were set below the world market and the European levels . Ukraine was still the major transit corridor for gas exports to Russian. The first dispute about gas came immediately after the separation of the countries that made the Soviet Union (Ebel and Rajan 128). The first...
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