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Interview: The Business and Politics Behind the Russia-Ukraine Gas Dispute

Council on Foreign Relations

Interviewer: Bernard Gwertzman, Consulting Editor, Council on Foreign Relations
Interviewee: Jeffrey Mankoff, Adjunct Fellow for Russia Studies, Council on Foreign Relations

January 9, 2009

Jeffrey Mankoff, an expert on Russia, says the dispute that led Russia to cut off natural gas to Ukraine and other European states has its origins in differences over pricing as well as Ukraine's interest in closer ties with the West, including membership in the North Atlantic Treaty Organization (NATO). With new elections due to take place this year in Ukraine, he says the Kremlin hopes a more pro-Russian government will take over, and that "some of these problems will go away."

Russia has turned off the spigots on natural gas to Ukraine and, as a result, this has prevented the natural gas that goes through Ukraine to Europe from flowing. What's the background to all of this?

The background is a long-running dispute between Russia and Ukraine in terms of gas relationships over two things: One is over the price that Ukraine pays, and the second is over debt that Ukraine owes Russia for gas shipments in the past that it hasn't paid for. There's also a political subtext because Ukraine, since 2004, has had a government that is interested in pursuing integration with Euro-Atlantic institutions, including NATO. As a result, the foreign policy landscape for Russia and the shipments of natural gas from Russia have changed. Historically, like other parts of the former Soviet Union, Ukraine had been receiving its natural gas from Russia at a subsidized price, subsidized relative to what European consumers further downstream pay.

That's because after the Soviet Union broke up in 1991, there was the Commonwealth of Independent States (CIS)?

Yes. For a time in Russia, the Kremlin could argue that there were noneconomic benefits accruing to Russia from subsidizing gas sales to CIS countries. It was an inducement to them to act in ways that Russia found conducive to its own interests.


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Copyright 2009 by the Council on Foreign Relations. This material is republished on GlobalSecurity.org with specific permission from the cfr.org. Reprint and republication queries for this article should be directed to cfr.org.



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