Tuesday 6 January 2009

Gazprom/Ukraine

History, Marx suggested, repeats itself, first as tragedy, then as farce. Gazprom's first big gas shut-off to Ukraine, in 2006, was seen as the Russian bear mauling plucky Ukraine, months after its pro-democracy revolution. This time round, it is hard to pity either side.

Russia in 2005 signalled its intentions to stop subsidising gas to former Soviet neighbours and to start charging market prices. It is time Kiev and Moscow ended annual price wrangles and signed a long-term contract similar to Russia's agreements with western Europe, where a formula links gas prices, with a six- to nine-month lag, to oil prices.

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