Energy War: Putin Threatens To Turn Off The Gas

  • Date: 11/04/14
  • David Blair and Emily Gosden, The Daily Telegraph

President Vladimir Putin threatened the “extreme measure” on Thursday of cutting off Russian gas for Ukraine unless the country pays in advance for all its supplies. Russian president acknowledges gas deliveries to the European Union would also be jeopardised.

 

In a stark letter to 18 world leaders, Mr Putin acknowledged that, in such a “critical situation”, gas deliveries to the European Union would also be jeopardised.

The EU buys a third of its gas from Russia, about half of which arrives through pipelines running across Ukraine. But Mr Putin accused the EU of causing the current crisis, leaving Russia with “no alternative” but to toughen its approach.

Mr Putin’s threat suggests that Russia is preparing to use its control of gas supplies to escalate the pressure on Ukraine and the country’s European allies.

Ukraine is particularly exposed because it depends on Russia for almost all of its gas. But the EU is far less vulnerable. The reliance of its members on Russian gas supplied via Ukraine ranges from 80 per cent in the case of Hungary to zero for Britain.

The time of year also reduces Mr Putin’s leverage: in summer, the EU buys very little gas from Russia.

Nonetheless, his letter suggests that Russia is opening a new front against Ukraine. Mr Putin has already deployed between 35,000 and 40,000 troops on Ukraine’s eastern frontier, raising the possibility of a full scale invasion.

On Thursday, Nato released 20 satellite pictures of this military build-up, showing a concentration of tanks, helicopters and MiG-31 jet fighters close to the border.

Brigadier Gary Deakin, from Nato’s military headquarters, said this “very capable” force could go into action within 12 hours of receiving the order, adding that the strike aircraft were only a “few minutes” flying time from Ukraine.

Pro-Russian activists have also seized control of government buildings in two regional capitals inside eastern Ukraine. By threatening Ukraine’s gas supplies, Mr Putin is now using economic leverage against his neighbour.

In the letter, he claims that Russia has always tried to help the “stability of the Ukrainian economy by supplying it with natural gas at cut-rate prices”.

These “unprecedented privileges and discounts” had saved Ukraine $17 billion (£10.2 billion) since 2009. In addition, the country had failed to pay various fines totalling $18.4 billion (£11 billion).

All in all, Russia had provided a subsidy of $35.4 billion (£21.2 billion) to Ukraine’s economy, claimed Mr Putin. Russia’s only thanks for this generosity, he added, was that Ukraine had stopped paying for its gas last August.

Gazprom, the Russian state energy giant, would respond by demanding “advance payment”, wrote Mr Putin. “In the event of further violation of the conditions of payment,” he added, Gazprom would “completely or partially cease gas deliveries”.

From now on, Russia would supply “only” the volume of gas that Ukraine had paid for “one month” in advance.

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