Russia and Ukraine face EU sanctions threat

BRUSSELS - The European Commission on Friday (16 January) threatened to take unspecified sanctions against Russia and Ukraine unless gas flows to the EU resume after the weekend.

"It's a situation the seriousness [of which] goes beyond the specific issue of gas," commission spokesman Johannes Laitenberger said. "As of next week, if the gas does not flow again, we will have to look point by point at our relations with Russia and with Ukraine and assess in each case whether we can do business as usual."

"The meetings in the coming days offer the best and last chance for Russia and Ukraine to demonstrate they are serious about resolving the dispute."

Russian President Dmitry Medvedev has invited Ukraine President Viktor Yushchenko and EU leaders from the 18 countries affected by the dispute to hold a crisis "summit" in Moscow on Saturday.

It was uncertain on Friday if the Medvedev event would take place after Mr Yushchenko opted to meet senior politicians from Poland, Slovakia and Moldova in Kiev instead, while arguing that any summit should be held on neutral ground in Brussels or Prague.

The EU has offered to send energy commissioner Andris Piebalgs and Czech EU presidency industry minister Martin Riman, if Ukraine attends. But EU leaders from the affected states declined the invitation, prompting a rebuke from Russian foreign minister Sergei Lavrov.

"If someone's not interested, we won't force them to come to Moscow," he said at a press conference in Russia. "This is a case when the EU should show their famous solidarity and explain to their Ukrainian colleagues the inadmissibility of not fulfilling a contract."

Hopes for a resolution also hang on two bilateral meetings between Russian Prime Minister Vladimir Putin and German Chancellor Angela Merkel in Berlin on Friday and Mr Putin's talks with Ukraine Prime Minister Yulia Tymoshenko in Moscow on Saturday.

The complete stoppage of Russian gas to the EU via Ukraine - one fifth of the EU's daily consumption - continued for a 10th day on Friday.

The dispute, which began with Russia-Ukraine gas price haggling, is ostensibly stuck on who should pay for "technical gas" (needed to restart Ukraine's transit system) and which Ukrainian pipes Russia should use to resume EU supplies.

Conspiracy theories

But some EU officials suspect high-stakes politics and corruption lie behind the row.

Theories doing the rounds in Brussels include the belief Russia is trying to destabilise EU-Ukraine relations; that Gazprom is trying to seize control of Ukrainian pipelines; that Ms Tymoshenko is trying to undermine Mr Yushchenko ahead of presidential elections; and even that the fight is over who in Moscow and Kiev gets to siphon hundreds of millions of euros in gas payments into private bank accounts.

"It is shrouded in secrecy and we probably will never know [who is to blame]," Czech minister Mr Riman said earlier this week.

It is equally unclear what punitive measures the EU might take if the weekend talks fall through, beyond long-term plans to increase nuclear and renewable energy, buy more liquid gas from Qatar or build new pipelines to the Caspian Sea basin.

"The fact remains that for the foreseeable future, the EU will remain dependent on Russian gas and the vast majority of that gas will continue to come through Ukraine's pipeline system," one EU official said.

Ukraine more vulnerable

Ukraine, which hopes to inch toward EU accession under the "Eastern Partnership" scheme launched last year is in theory easier to punish. But any interruption to the European Commission's €120-million-a-year aid payments would have little impact, with most of the cash contracted to EU firms in any case.

The limitations of EU leverage against Russia became clear during the Georgia war last August. EU states took the minimalist step of pausing talks on a new bilateral treaty, even as Russian tanks parked less than 40 km from Tbilisi in a bloody campaign.

France, the European Commission and the office of EU diplomatic chief Javier Solana pushed to restart business as usual in November despite Russia's non-compliance with peace deals, saying the EU cannot afford poor Kremlin relations in trade and geopolitical terms.

"By Spring this crisis will be forgotten and the EU will be calling Russia a 'strategic partner' once again," an EU diplomat said.