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Weapons of Mass Destruction (WMD)

Russia may have to pay Ukraine $2 bln for Sevastopol base lease

RIA Novosti

25/09/2008 20:27 (Adds Ukrainian defense minister's statements in paras 9-10)

MOSCOW, September 25 (RIA Novosti) - Russia may have to pay $1.5-2 billion a year to Ukraine for the lease of the Sevastopol naval base, if the Black Sea Fleet stays there after 2017, a Russian expert close to talks said on Thursday.

Under the 1997 bilateral treaty, Russia currently pays $98 million annually and its Black Sea Fleet is to be withdrawn from the base in the Crimea after 2017. Moscow has repeatedly said it would like to extend the lease.

"We can assume with certainty that the sum will be not less and most likely even more because the Ukrainian negotiators mentioned these figures back in 1997. However, Moscow managed to convince Kiev at the time that Ukraine's energy debt must be taken as a starting point for the agreement on the price of the lease," the source said.

As a result, the debt was divided over a period of 20 years and the annual payment came to $98 million, which Russia writes off every year from the Ukrainian energy debt.

"There is no doubt that by the end of the lease, the appetites of Ukrainian politicians will only become bigger," the expert said.

At the same time, the source said that there is an additional sum of $800 million that did not become part of the amount considered in 1997 as a base for calculating the annual lease.

"It is a kind of a time bomb. If Ukraine refuses to continue talks on the lease extension, it will have to pay the $800 million, plus the interest accrued over 20 years," he said.

Meanwhile, Ukrainian President Viktor Yushchenko, who is seeking NATO and EU membership for the former Soviet republic, has called for the Russian navy's early withdrawal from the Sevastopol base, as well as tougher deployment requirements and higher fees, demands that have not been backed by his former coalition ally, Prime Minister Yulia Tymoshenko.

Ukraine's Defense Minister Yuriy Yekhanurov ruled out on Thursday the possibility of extending the lease.

"The year 2017 is written in the constitution," Yuriy Yekhanurov said. "When this year comes, Ukraine will have no foreign bases on its territory."

Russia-Ukraine tensions heightened after several Black Sea Fleet warships dropped anchor off the Georgian coast during and after last month's armed conflict with Tbilisi over breakaway South Ossetia.

Ukraine's Foreign Ministry said late on Wednesday that Ukrainian and Russian delegations would meet in Kiev on Thursday for a new round of discussions on the operation of the base in the context of the Georgia conflict.

In a bid to extend the lease of the Sevastopol base, Russia may submit an array of attractive proposals to Ukraine.

"We are ready to submit an array of proposals that would be beneficial for both countries," the Russian Defense Minister Anatoly Serdyukov said on Tuesday.

Commenting on Serdyukov's statement, Vyacheslav Popov, a former commander of the Northern Fleet who now sits in the upper house of Russia's parliament, said on Wednesday that Moscow may offer Ukraine contracts to build aircraft carriers for the Russian Navy.

Russia's naval base in the Crimea currently has 50 warships and patrol boats, along with around 80 aircraft, and employs coastal defense troops.

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