Russia and Ukraine fight over natural gas and Black Sea Navy prices

Ukraine raises tariffs for Russian Black Sea Navy in Ukraine, while Russia raises sales prices for natural gas delivered to Ukraine

Deputy Foreign Affairs Minister of Russia, Grigory Karasin, arrived in Ukraine yesterday to have a meeting with the Black Sea Navy command to discuss the future of the Russian fleet in Ukraine. In the meantime, Ukraine has made the first legal step to raise tariffs for the deployment of the Russian Navy on its territory.

The Ukrainian government passed a decree to conduct the inventory of property of the former USSR's Black Sea Navy. “No one knows what kind of property it is exactly, how much of it Russia owns and who uses it,” Ukrainian minister for Economy, Arseny Yatsenuk told reporters yesterday. The official specified that the government of Ukraine would make the list of unregistered property. “We will then try to come to an agreement with Russian colleagues regarding its further usage. It is quite possible that Ukraine will revise tariffs,” the minister said.

”The decree is a technical, purely economic document which determines the Ukrainian government's responsibility for Ukraine-based property,” Yatsenuk said. The document stipulates that the Defense Ministry of Ukraine will control all military objects owned by the Russian Navy in Ukraine.

The government of the Ukrainian city of Sevastopol was very concerned about such a sudden turn of events with the Russian Black Sea Navy. The chairman of the municipal council, Valentin Borisov, stated that the navy should not be withdrawn from the city. “The Black Sea Navy of Russia and its infrastructure are highly important for the city economy. Furthermore, many Russian military men are married to Ukrainian women. There are families, in which one brother may serve in the Russian and the other one - in the Ukrainian navy,” Borisov said.

In the meantime, Ukrainian President Viktor Yushchenko tried to ease the situation not to make it grow into another political scandal with Russia. Yushchenko said that Russia was Ukraine's “eternal strategic partner.” The president also promised that Ukraine would make efforts to create the Russian-Ukrainian free trade zone in 2006. “We also hope to settle the gas problem with Russia. It would probably be easiest to coordinate the growing prices on the Russian natural gas with increasing rates for its transit via Ukraine's territory,” Yushchenko said.

Ukrainian citizens organized actions of protest in Kiev and several other Ukrainian cities. Having put up tents in front of administrative buildings, the protesters urged Russian President Putin not to put obstacles on Ukraine's European integration. The demonstrators call upon the Ukrainian government not to disregard Russia's intention to raise gas prices and respond adequately setting world prices for the Russian Black Sea Navy.

Ukraine's tough position pertaining to the Russian Navy has made Russia's Gazprom release harsh statements regarding the gas prices. “It is incorrect to say who will be the winner or the loser of this game. Russian-Ukrainian relations may suffer seriously,” Ukrainian analyst Vladimir Fesenko said.