The dispute between the Ukraine , Russia , and the Russian natural gas monopoly Gazprom turned very ugly with the onset of the New Year. The Ukraine was denied natural gas shipments after refusing to agree to a fourfold price increase. The Ukraine relies on Russia for one-third of their natural gas supply. The Ukraine accused Russia of using economic blackmail against them because the Russian government does not like their Western-oriented foreign policy. For a discussion on Russia?s more aggressive foreign policy stance, please see the War Projections for 2006 (WAR Report). Russia accuses the Ukraine of siphoning off the natural gas that was being sent to Western Europe. This incident blew up, figuratively speaking, into an international incident. The pipelines to Western Europe cross the Ukraine, and as a result of this row, there was a pressure drop to Europe. The Ukrainian authorities claim that they did not steal the gas. Russia, in turn, pledged to deliver additional gas through the gas transportation system for Europe.
Yet, the three-day gas shut off to the Ukraine is having significant repercussions, and it appears that the Ukraine has blinked in this stand-off. Initially, Russia offered a deal that the Ukraine rejected but apparently has now accepted a deal in which the price has doubled. This deal is good for six months. While the Ukrainian government may have been trying to stave off gas shortages through the winter, the domestic situation is not very supportive. A no confidence motion has been passed in Parliament, and there has been a vote to dismiss the government. How constitutional this is remains to be seen, but it is a slap in the face to President Viktor Yushchenko . Ironically, he views this deal as a compromise that prevented an exorbitant price increase, yet many are worried that it does not protect jobs and industry and that Mother Russia is still pushing the Ukraine around.
Beyond the actual supply of gas, this crisis epitomizes that even though satellite states, such as the Ukraine, have tried to distance themselves from the old Soviet Union as they established their own independent route, there are ties that still bind and control. The Ukraine may want to consider how to wean itself off dependency with Russia so that Russia cannot use such ties as leverage against the Ukraine at their whim. It is likely that the relationship between these two states will remain tense for the foreseeable future.