Russia Stops Natural Gas Sales to Ukraine

Russia's gas monopoly Gazprom halts natural gas sales to Ukraine, after Kiev refuses to agree to a four-fold price hike. The move has affected the flow of gas to other European countries and raised worries about Russia's use of energy as a political weapon.

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Russia has cut off natural gas supplies to Ukraine, and that move has brought a reproach from the United States, affected the flow of gas to other European countries and raised worries about Russia's use of energy as a political weapon. NPR's Gregory Pfeiffer reports.

GREGORY PFEIFFER reporting:

It's day two of a new literal Cold War between Russia and Ukraine. As temperatures dropped yesterday, Russia's natural gas monopoly, Gazprom, turned off pipelines to its southern neighbor after Kiev had refused to agree to a fourfold price hike. The decision is raising serious questions about Russia's hopes to position itself as a reliable energy provider amid worries over global supplies. Former State Department official Clifford Kupchan says Russian President Vladimir Putin is seriously gambling with his country's image.

Mr. CLIFFORD KUPCHAN (Former State Department Official): I think he's chosen to do this in order to show the world that Russia is indeed a global power in the energy sector and to enhance Gazprom and other Russian state firms.

PFEIFFER: Moscow says Ukraine should pay market prices for its gas instead of Soviet-era subsidized rates. Ukrainian President Viktor Yushchenko agrees, but is calling for a gradual transition. He says an immediate hike would ruin the country's economy. Yevgens Lutadoroff(ph), a leader of PARA(ph), a Ukrainian liberal party, agrees.

Mr. YEVGENS LUTADOROFF (PARA): (Through Translator) The question is how civilized the process is. It shouldn't be done on the basis of blackmail but on the basis of concrete agreements that prices are raised according to a certain schedule.

PFEIFFER: Western countries are worried about how the standoff will affect them. Russia provides Europe with a quarter of its gas needs. About 80 percent of those supplies flow through Ukraine. Austria, Hungary and Poland are already reporting significant drops in deliveries of Russian gas. Moscow has accused Kiev of illegally siphoning off gas bound for other countries, but Kiev denies the accusations, saying the drop is due to a fall in pressure in transit pipelines from Russia to western Europe. The State Department issued a statement saying Russia's creating insecurity in the region's energy sector. Russia expert Clifford Kupchan.

Mr. KUPCHAN: Russia is, as the US State Department remarked today, apparently using gas as a political weapon in order to influence politics in Ukraine by weakening current President Yushchenko, who is not on very friendly terms with Russia.

PFEIFFER: Andrei Illarionov quit as Putin's top economic adviser last week, saying he refused to take part in pressuring Kiev over gas. He says the Kremlin can blame only itself for having signed a five-year contract with Ukraine to boost the previous administration's pro-Moscow candidate in presidential elections in 2004. Illarionov says Russia's insistence on market prices is misleading.

Mr. ANDREI ILLARIONOV: (Russian spoken)

PFEIFFER: He says it's well known that gas prices are fixed by state pricing agencies. Gazprom says Ukraine will be seriously affected by the shutdown, but Ukrainian officials say there's enough gas to last the winter. As the standoff moves towards its third day, the world is watching to see whether Moscow and Kiev will step back from the brink and how long Ukraine will be able to last on its own without Russian gas. Gregory Pfeiffer, NPR News, Moscow.

MONTAGNE: This is NPR News.

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