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Weapons of Mass Destruction (WMD)

Moscow, Kiev agree on gas-for-fleet tradeoff

RIA Novosti


KHARKOV, April 21 (RIA Novosti) - In a dramatic sign of improving ties, Moscow and Kiev on Wednesday agreed to extend the lease on a Russian naval base in the Crimea in exchange for a 30% cut in gas prices for Ukraine.

The documents were signed following negotiations between Russian President Dmitry Medvedev and his Ukrainian counterpart Viktor Yanukovych.

The lease agreement extends Russian naval presence in the port of Sevastopol for 25 years after the current lease expires in 2017, and may be further extended by another five years.

Medvedev stressed the importance of the base as key to regional security and vowed assistance in developing Sevastopol's socio-economic infrastructure in an effort to promote public relations and improve the Russian Navy's image.

"I will instruct the defense minister and the Black Sea Fleet commander to draft an agreement on the participation of our base in the socio-economic development of Sevastopol," Medvedev said.

Yanukovych has pledged to move Ukraine away from the pro-Western stance of former President Viktor Yushchenko, who vowed that Russia would have to look for a new main base for its Black Sea Fleet once the current deal expires in 2017.

The Ukrainian opposition, however, earlier said any prolongation of Russian military presence would require amendments to the Constitution as well as a national referendum.

Mykola Tomenko, deputy speaker of parliament and a leader of the Yulia Tymoshenko Bloc (YTB), said last Wednesday Article 17 of the Constitution forbids foreign military bases on Ukrainian soil.

On gas, Ukraine will get a discount of $100 per 1,000 cu m on the price of $330 and a 30% discount on other prices.

"Discounts for Ukraine will come into effect from April this year," Yanukovych said.

The discount will apply to 30 billion cubic meters of Russian natural gas to be supplied to Ukraine in 2010 and 40 billion cubic meters in subsequent years.

Yanukovych, who was inaugurated in February, vowed during his campaign to improve relations with Russia and renegotiate the January 2009 deal on gas supplies, which increased the price Ukraine paid for Russian gas, straining the country's troubled finances.

Ukraine asked Russia to lower the gas price to $250 or at least $260 per 1,000 cu m, Russian business papers reported on Monday.

The ex-Soviet republic currently purchases Russian natural gas at the average annual price of $337 per 1,000 cu m.

The gas price equaled $305 per 1,000 cu m in the first quarter, and increased to $330 per 1,000 cu m in the second quarter of this year.

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