ROBERT SIEGEL, host:
There are worries in Europe about another energy crisis. Russia says it will cut natural gas supplies to Ukraine early tomorrow. The two countries are in a dispute over prices, most of the gas that Russia supplies to Europe travels through Ukraine. Both sides promised that European Union countries will receive gas as usual, but as NPR's Gregory Feifer reports, that's not what happened during a previous dispute between Russia and Ukraine.
GREGORY FEIFER: An automated valve regulating gas flow at a production facility in Western Siberia. Most of the natural gas heading to Europe comes from Siberia via Ukraine. The last time Russia's state monopoly Gazprom cut supplies to Kiev over a price dispute back in 2006, it caused temporary disruptions of deliveries to Europe and prompted fears of an energy crisis during a bitterly cold winter.
Now for the 4th year in a row, Russia and Ukraine are locked in dispute again, Gazprom says Ukraine must pay a 2-billion dollar debt and shell out much more for gas next year. Today, Gazprom's export chief Alexander Medvedev accused the Ukrainians of planning to confiscate gas destined for Europe.
Mr. ALEXANDER MEDVEDEV (Export Chief, Gazprom)
FEIFER: Such a move can only be called blackmail Medvedev said of Russia, Gazprom, and Western Europe. Europe gets a quarter of its gas from Russia. Even though Kiev says it will guarantee the 80 percent of it that passes through Ukraine, European countries are watching events nervously.
The Ukrainians say they've paid the debt they owed Gazprom. But now the price of gas for 2009 is the big issue. At one point, Russia was talking about doubling the rate although it reduced that demand today.
President VICTOR YUSHCHENKO (Ukraine): (Ukrainian spoken)
FEIFER: Last week, Ukrainian President Victor Yushchenko said Russia's dramatic price hikes are unacceptable. But Moscow's response has been to step up its attacks on the Ukrainian leadership. And angry President Dmitri Medvedev said Ukraine's failure to pay its debts showed the impotence of the government in Kiev.
President DMITRI MEDVEDEV (Russia): (Russian spoken)
FEIFER: It's embarrassing to watch, Medvedev said, and he warned of unspecified sanctions from Moscow. The dispute is about much more than the price of gas. Russia insists it's charging a fair market rate, but most analysts believe Moscow was using its control of vast energy supplies as a political weapon against Ukraine, a pro-Western former Soviet country on its border. Andrei Illarionov, who used to be chief economic adviser to then-President Vladimir Putin.
Mr. ANDREI ILLARIONOV (Former Chief Economic Adviser to Putin): (Through Translator) Since Ukraine's Orange Revolution four years ago, Moscow has done everything it can to make life more difficult for Kiev. We've seen the same kinds of policies carried out against Georgia, although thankfully in Ukraine's case it hasn't yet led to war.
FEIFER: Gazprom is desperate for cash after losing billions of dollars in the global financial crisis. But Ukraine has been hit even harder than Russia and has already faced power cuts. Energy experts say Kiev would be very hard pressed to come up with more cash for its Russian gas bill. Gregory Feifer NPR News, Moscow.
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