Monday, January 12, 2009

Eastern Gas

The NY Times reports that a deal has been struck to resume gas supplies between Russia and Europe via Ukraine and to send European monitors to the area today. 

Russia says, barring any future obstacles, the pipes will open tomorrow morning.  Still, the agreement does not address the demand by Russia that Ukraine begin paying higher prices for gas close to market value.  

Russia has been selling the gas to the Ukraine at a discount to help that country develop, but now says Ukraine has reached a level of development that requires it pay near-market-value prices. Ukraine maintains this would bankrupt the country's fragile economy.

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