(L-R) German Chancellor Angela Merkel, Ukrainian President-elect Petro Poroshenko and Russian President Vladimir Putin in Benouville, France, on the 70th anniversary of the D-Day landings, June 6.(Guido Bergmann/Bundesregierung via Getty Images)
Analysis
It appears that Ukraine and Russia are heading toward a possible compromise on energy deliveries after months of tense negotiations and threats of a Russian cutoff. Each side has given concessions on the technical sticking points and issues such as price. Currently, the energy talks have been drawn out another week, as Moscow and Kiev each weigh the possibility of larger talks between the two countries on the greater Russian-Ukrainian relationship. The progress comes as the leaders of both Russia and Ukraine -- President Vladimir Putin and President-elect Petro Poroshenko -- traveled to France for the D-Day anniversary ceremonies in Normandy. In France, both leaders separately met with many European heads of state, including British Prime Minister David Cameron and German Chancellor Angela Merkel. The Europeans are pressuring both sides to hold direct talks between Putin and Poroshenko. The future of the energy negotiations hinge on the overall relationship between Russia, Ukraine and the West, though no side wants to see a deterioration that would lead to energy disruptions.
Below are recent Stratfor analyses of these and related issues.
Russia-Ukraine Energy Negotiations
Russia Strikes Energy Deal with Ukraine
Dec. 13, 2013: Ukrainian president Viktor Yanukovich met earlier today with Russian President Vladimir Putin to negotiate energy discounts and other economic relief measures for Ukraine. The meeting took place weeks after the Ukrainian government visibly turned its back on the European Union in favor of a closer relationship with Russia, a rejection that sparked the largest pro-Western protests in the country since the 2004 Orange Revolution.
Ukraine Faces Energy Dilemma
April 11, 2014: Ukraine's dispute with Russia over energy prices has been intensifying, raising fears in Kiev that another natural gas cutoff is possible and prompting the Europeans to intervene. Ukrainian Energy Minister Yuriy Prodan said April 11 that Ukraine plans to take Russia to court over what it deems unfair natural gas prices, and EU Energy Commissioner Gunther Oettinger said the bloc would help Ukraine in paying its natural gas bills to Russia. While the Europeans have supported Ukraine rhetorically in the country's standoff with Russia over energy, it is unlikely that they will be able to finance the country sufficiently given the price Russia has set. Russia will use its energy supplies and the threat of a cutoff as a means of getting the West to negotiate on broader political issues in Ukraine -- not just those related to energy.
Ukraine and Russia: Signs of Compromise in Energy Standoff
June 2, 2014: On June 2, Gazprom CEO Alexei Miller announced that his company received payments from Ukraine for February and March natural gas deliveries, worth a total of $786 million. In response, Gazprom agreed to postpone the deadline by which Ukraine would fully repay its debts and begin pre-payments for future deliveries from June 2 to June 9. Gazprom has also indicated that it would be willing to lower the natural gas price from its initial offer of $485 per thousand cubic meters, or mcm, of gas to $385.50 per mcm if Kiev repaid its debts.
Russia-Ukraine Tensions
Russia Examines Its Options for Responding to Ukraine
March 18, 2014: The fall of the Ukrainian government and its replacement with one that appears to be oriented toward the West represents a major defeat for Russia. After the collapse of the Soviet Union, Russia accepted the reality that the former Eastern European satellite states would be absorbed into the Western economic and political systems. Moscow claims to have been assured that former Soviet republics would be left as a neutral buffer zone and not absorbed. Washington and others have disputed that this was promised. In any case, it was rendered meaningless when the Baltic states were admitted to NATO and the European Union. The result was that NATO, which had been almost 1,600 kilometers (1,000 miles) from St. Petersburg, was now less than approximately 160 kilometers away. This left Belarus and Ukraine as buffers. The loss of Ukraine as a buffer to the West leaves Russia without that depth and hostage to the intentions and capabilities of Europe and the United States.
Crimea Joins the East While Ukraine Looks West
March 20, 2014: Two major events in the unfolding Ukraine crisis will occur Friday. First, Russia's Federation Council will ratify a treaty with Crimea concluding Russia's formal annexation of the territory. Second, Ukraine will sign the political chapters of an association agreement with the European Union. Both events show just how much the standoff between Russia and the West over Ukraine has escalated, leading the country to split in two. They also make the future uncertain for what is left of Ukraine. The government in Kiev is sure to face greater pressure from Russia while not being clear on exactly what to expect from the West.
Protests in Eastern Ukraine Stoke Tensions
April 7, 2014: Demonstrations in eastern Ukraine over the weekend raised the stakes in the country's ongoing political crisis and could signify upcoming action in terms of Russia's position in the country. Pro-Russian protesters stormed regional administration buildings in the eastern Ukrainian cities of Donetsk, Kharkiv and Luhansk on April 6. As of April 7, the buildings remained occupied by demonstrators, some of whom were armed. Although a Russian military intervention in eastern Ukraine remains unlikely, Moscow could support an informal security presence in these regions in order to advance its political goals in Ukraine.
Russian-Western Tensions over Ukraine
EU Links to Russia Will Constrain Actions Against Moscow
March 26, 2014: Several events from the past few days highlight the degree to which the Russian and European economies are intertwined and how, despite current frictions over Ukraine, both actors will maintain strong economic links. Citing energy and trade, tourism and infrastructure projects, many members of the European Union recognize the need to preserve their links with Russia and vice-versa. This will severely affect the European Union's next moves against Russia and limit the possibility of meaningful sanctions.
Russia and United States Negotiate Future of Ukraine
April 1, 2014: During the Cold War, U.S. secretaries of state and Soviet foreign ministers routinely negotiated the outcome of crises and the fate of countries. It has been a long time since such talks have occurred, but last week a feeling of deja vu overcame me. Americans and Russians negotiated over everyone's head to find a way to defuse the crisis in Ukraine and, in the course of that, shape its fate. During the talks, U.S. President Barack Obama made it clear that Washington has no intention of expanding NATO into either Ukraine or Georgia. The Russians have stated that they have no intention of any further military operations in Ukraine. Conversations between Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State John Kerry have been extensive and ongoing. For different reasons, neither side wants the crisis to continue, and each has a different read on the situation.
Past Russian Energy Cutoffs Related to Ukraine
Russia: Winter's Chilling Effects on EU's Attitude Toward Gazprom
Jan. 18, 2006: Russian state natural gas monopoly Gazprom reduced its natural gas exports to Europe to deal with extremely cold temperatures and energy requirements within Russia. Had this happened a month earlier, the Europeans would have been sympathetic, but in light of the recent crisis with Ukraine, the European Union is putting increased pressure on its member states to diversify energy sources.
Ukrainian Politics and the Natural Gas Crisis
Jan. 12, 2009: On Monday, the 12th day of a natural gas crisis, Russia, Ukraine and the European Union signed an agreement -- for the second time -- for Russian natural gas supplies to Europe to resume. The deal resolved the cutoff prompted by a pricing and debt dispute between Moscow and Kiev and Ukraine's subsequent siphoning of supplies transiting its territory. The deal also included a plan to deploy European monitors to Ukraine, to check Russian natural gas flows to Europe.
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