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Russia's natural gas monopoly Gazprom
headquarters with a flag showing the company's logo on the foreground
seen in Moscow, Sunday, Jan. 1, 2006 |
Russia
says neighboring Ukraine is stealing gas that is supposed to go on to
western Europe, a charge officials in Kiev deny. The accusations come
amid the bitter dispute between the two countries over gas prices,
which is now also affecting other countries in Europe.
Russian officials say Ukraine is siphoning gas out of a pipeline
that passes through its territory carrying gas to western Europe.
Ukrainian officials deny this, but say they could take such a measure
soon if necessary.
The flow of gas has decreased since Sunday when Russia cut off
supplies to its neighbor in a dispute over prices. But the action is
also affecting countries including Poland, Hungary and Austria.
Officials in Hungary say supplies have gone down by 40 percent since Sunday.
Russia wants to quadruple the price of gas sold to Ukraine, from the current $50 to $230 per 1,000 cubic meters.
Ukraine responds that any increase should be phased in gradually and
accuses Moscow of applying political pressure. One year ago pro-Western
president Viktor Yushchenko took power in Ukraine, leading to a strain
in relations.
Roland Nash with Renaissance Capital in Moscow says there are both political and economic issues involved.
"Clearly it is better for Gazprom to get paid more for its gas," he
said. "But it is more than coincidence that this takes place after a
more pro-European, anti-Russian regime is in place in Ukraine."
The gas dispute comes as Russia is taking over the G-8 group of industrialized nations for 2006.
President Vladimir Putin says his primary goal for the year will be
to increase energy security, a logical step given Russia's position as
one of the world's major energy exporters. But the dispute with Ukraine
is raising concern that Moscow can use its vast gas and oil reserves to
apply a big stick when necessary.
Europe depends on Russia for up to half of its supply of natural gas, along with a large amount of its oil.