23 September 2011
Kommersant reported yesterday that Russian President Dmitry Medvedev and Prime Minister Vladimir Putin plan to give Ukrainian President Viktor Yanukovych an ultimatum when they meet in Moscow on Saturday – join the Belarus-Russia-Kazakhstan Customs Union or no new gas deal. Ukrainian Prime Minister Mykola Azarov has said the government was considering breaking its 2009 gas contract with Russia in court. Ukrainian prosecutors are currently trying former Prime Minister Yulia Tymoshenko for negotiating the 2009 accords. Russia has said it would respect the 2009 agreement, signed by Tymoshenko and Russian Prime Minister Vladimir Putin, and has rebuffed Kyiv’s attempts this year to renegotiate for cheaper gas. Brad Wells: Kyiv has yet to, at least publicly, offer anything to Moscow in return for a more generous pricing policy other than the undue pressure the current gas prices place on the Ukrainian economy. Full Customs Union membership is at odds with Ukraine’s ambitions of signing an Association Agreement with the European Union in December. Yanukovych has repeatedly said the EU Association Agreement is Ukraine’s priority and we believe it is unlikely to alter Ukraine’s European trajectory. Thus, we do not expect a breakthrough in talks this weekend, with the gas issue looking more and more like it will head to international arbitration.