Russia can’t support Ukrainian economy forever- Putin

Russia can’t continue to prop up Ukraine’s faltering economy, and this responsibility should fall on the US and EU, which have recognized the authorities in Kiev but not yet given one dollar to support the economy, President Putin has said.

“The situation is - to put it kindly, strange. It’s known our partners in Europe have recognized the legitimacy of the government in Kiev, yet have done nothing to support Ukraine – not even one dollar or one euro,” Putin said at a meeting with government officials at his residence outside of Moscow.

The Russian Federation doesn’t recognize the legitimacy of the authorities in Kiev, but it keeps providing economic support and subsidizing the economy of Ukraine with hundreds of millions and billions of dollars. This situation can’t last indefinitely,” Putin said.

In December, Russia provided Ukraine with a $3 billion loan, which was a part of a bigger $15 billion aid package agreed the same month. Russia also offered a 33 percent gas price discount that would have saved more than $7.5 billion. The head of the International Monetary Fund Christine Lagarde said that Russia’s loan tranche last year was vital for the collapsing Ukraine economy. In the meantime, the West hasn’t yet effectively provided any money to Ukraine. The International Monetary Fund has agreed to provide Ukraine a bailout package of up to $18 billion, but the details are still being worked out. The US has also promised $1 billion in loan guarantees to help the collapsing Ukraine economy.

Gassing over gas

At the same meeting, Russia’s Ministry of Energy Alexander Novak said that Ukraine’s debt to state monopoly Gazprom stands at $2.238 billion. Ukraine has not paid for Russian gas since the beginning of 2013, and with all discounts withdrawn it is now charged $485 per 1,000 cubic meters of gas.

This is a price Ukraine says it will not pay, claiming it is much higher than most of the rest of Europe pays for Russian gas.

President Putin also asked Gazprom to refrain from asking advance payments from Ukraine, until further consultations are held.

“This certainly complies with the contract, but given the difficult situation in Ukraine and the incompleteness of our negotiations with the EU, I would ask the Government to hold off on such measures [advance payments - RT] that appear in the contract until additional consultations, if, of course, our partners agree to such consultations.”

“If they don’t agree, we’ll act according to the existing contract,” Putin added.

Ukraine’s reserves of natural gas have dwindled to 6.5 billion cubic meters which is not enough for the coming winter, Gazprom’s Deputy Chairman Vitaly Markelov said at the meeting. Kiev will need 11.5 billion cubic meters to keep the lights on, Markelov added.

Ukraine’s overall debt to Russia, including the bill for gas, now stands at $16.6 billion Prime Minister Dmitry Medvedev said.

"Three billion dollars is Ukraine's debt, the accumulated gas debt stands at $2.2 billion, and what we consider Russia's profit shortfall, at $11.4 billion, in total, $16.6 billion."

Moscow turned off gas transit through Ukraine to Europe in the winter of 2006 and 2009 after Kiev failed to pay its Gazprom bill, leaving parts of Europe without energy during the winter months. Moscow has accused Ukraine of siphoning off supplies intended for Europe during these periods, an accusation Kiev refutes.