Ukraine in trouble because of Russia's fuel price increase

(Baonghean) - During a meeting with Russian Prime Minister Dmitry Medvedev, CEO of Russia's leading fuel supplier Gazprom Alexei Miller said the price of gasoline sold to Ukraine will increase to $485 per thousand cubic meters from April. Just two days earlier, the price had been increased to $385.50 per thousand cubic meters from the old price of $268, an increase of 40%.

With the second price increase, the price of gasoline that Russia sells to Ukraine has increased by 80%, causing the country's economy, which is already on the brink of crisis, to further weaken. At the same time, Mr. Alexei Miller also asked the Ukrainian state oil company Naftogaz to quickly pay its debt of up to 2.2 billion dollars, one of the reasons given to explain the recent increase in gasoline prices. In case Ukraine does not quickly pay the debt, Gazprom will close the fuel pipelines...

Prime Minister of Ukraine, Mr. Arseniy Yatsenyuk.

In response, Ukrainian Prime Minister Arseniy Yatsenyuk announced on Friday, April 4, that the country was in urgent talks with its Central European neighbors to import fuel. In an interview with Reuters, Yatsenyuk said, "The only reason why Russia increased the price of fuel sold to Ukraine is political. We expect Russia to go further on the fuel issue, possibly limiting the transportation of exported fuel." It is known that 40% of the fuel that Russia exports to Western Europe is transferred through Ukraine, so the possibility of a fuel "leak" in Ukraine could prompt Mr. Putin to decide to stop all fuel shipments. Moreover, the recent mild winter has left European countries with abundant energy reserves, at least for countries with large fuel reserves such as France, Germany and Italy.

Prime Minister Yatsenyuk believes that this Russian tactic is aimed at the near-Russian regions of eastern and southern Ukraine, aiming to lure them by telling them: "If you join Russia, you will be happy and not have to live in the Western hell". He also firmly stated that "We can pay the price for our independence". It seems that Ukraine will approve a doubling of fuel prices from May 1, while the government continues to freeze pensions and salaries in an economy in recession (-3% in 2014) and high inflation (+15%), according to the World Bank. It is for this reason that the International Monetary Fund (IMF) has just agreed to lend between $14 and $18 million.

Three EU countries are able to transport fuel to Ukraine from their reserves: Slovakia, Hungary and Poland. According to Mr. Iatseniouk, this will allow the price of fuel to fall by about $ 150. But experts predict that the fuel imported will be about 10% lower than Ukraine's requirements, and the above-mentioned countries, no longer in the orbit of Russian influence, will also have to pay more for their fuel. It is also worth noting that the European fuel pipeline system was built in the 70s and 80s by large fuel corporations such as Russia's Gazprom, Germany's E.ON Rurhgaz or France's GDF Suez so that fuel flows from East to West. Restricting the flow of fuel across borders has been discussed for a long time, because the easy flow of fuel can cause fuel prices to fall. Therefore, in the contracts signed between fuel suppliers, there are strict provisions prohibiting the sale of fuel outside of a pre-determined geographical area.

It is not without reason that Ukraine accuses Russia of raising fuel prices as politically motivated. This is certainly one of the moves to retaliate against Ukraine, or rather against the European Union and the United States behind it. Last Thursday, Russia recalled its ambassador to NATO for consultations, two days after NATO member states severed cooperation with Russia over the Ukraine crisis. "Stirring up tensions is not our choice. But there is no other way, we do not see the possibility of continuing military cooperation with NATO according to the usual plan," Russian Deputy Defense Minister Anatoly Antonov told reporters. He also accused NATO Secretary General Anders Fogh Rasmussen of making "controversial statements" at this week's meeting of member states, and questioned NATO's involvement in Eastern European affairs.

Of course, saying that is one thing, knowing for sure that Russia's motives are political will not help Ukraine solve anything, as long as this country is still heavily dependent on Russia for energy. In the past, Russia has reduced fuel prices for Ukraine by up to $100 per thousand cubic meters, in exchange for extending until 2042 the right of the Russian navy to stay at long-standing military bases in Crimea, Ukraine. It can be seen that receiving favors and support from "big friends" always comes with an equally big price. Perhaps fuel is just the first card that Russia has used in its campaign to "threaten" Ukraine, because with a history of being pro-Russian and being influenced by Russia for many years, Ukraine still has many weaknesses that Russia can exploit! I wonder if Ukraine is "tough" enough to retaliate, or rather, are Ukraine's "new friends" "dedicated" to the end, or are they "abandoning their children"? To be honest, the European Union and the United States are also in the midst of intense negotiations on free trade agreements in Belgium last Friday, which also mention the energy sector. Whatever is said, before taking care of others, everyone still has to take care of themselves first. If Ukraine relies on help from Western Europe or the United States, it will just be "eating from another tree, fencing another tree" and not being independent at all.

Ganoderma