event

Russia - Ukraine Gas Dispute: What Next?

Tue. December 30th, 2008
Washington, D.C.

IMGXYZ1091IMGZYX Russia has threatened to cut gas supplies to Ukraine on January 1st if a $2 billion gas debt is not resolved, and both countries stand to lose if they fail to reach a settlement in time.  Carnegie experts in Washington and Moscow discuss the implications of the dispute for regional stability, European energy security, and Russia’s relations with the West.

Key points:

  • Both Russia and Ukraine stand to lose if they fail to reach a settlement: Russia will look brutal and ruthless; Ukraine’s reliability as a supplier to Europe will be called into question and its squabbling leadership will lose credibility domestically and abroad.
  • Russia, concerned about European perceptions of its actions, does not want a showdown. After the August war in Georgia, and the resulting chill in relations between Russia and the West, the Kremlin wants to project a less aggressive image.
  • Though Ukrainian political elites are embroiled in a power struggle, all sides want the crisis solved—but to their advantage—and none want to alienate Europe.
  • The global economic crisis adds urgency to the negotiations: Gazprom, strapped for cash, can’t afford financial losses from the European financial gas trade. Ukraine received a $16 billion IMF bailout and the government predicts a GDP contraction next year, thus can’t afford to pay higher prices.
  • A cutoff is likely, but it will probably catalyze both sides to reach an agreement shortly thereafter. Ukraine has enough gas stored that disruptions to European supply will be minor.
Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.
event speakers

James F. Collins

Nonresident Senior Fellow, Russia and Eurasia Program; Diplomat in Residence

Ambassador Collins was the U.S. ambassador to the Russian Federation from 1997 to 2001 and is an expert on the former Soviet Union, its successor states, and the Middle East.

Martha Brill Olcott

Senior Associate, Russia and Eurasia Program and, Co-director, al-Farabi Carnegie Program on Central Asia

Olcott is professor emerita at Colgate University, having taught political science there from 1974 to 2002. Prior to her work at the endowment, Olcott served as a special consultant to former secretary of state Lawrence Eagleburger.

Dmitri Trenin

Director, Carnegie Moscow Center

Trenin was director of the Carnegie Moscow Center from 2008 to early 2022.

Anders Aslund

Senior Associate, Director, Russian and Eurasian Program