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Ukraine Closer to Russia Gas Deal

Saturday, 31 May 2014 06:57 AM

Russia and Ukraine are moving closer to a deal that would keep gas flowing between the countries even as they spar over Russian support for separatists seeking to break away from the government in Kiev.

After talks brokered by the European Union in Berlin, Ukraine on Friday made its first payment in months to Russia’s OAO Gazprom, transferring $786 million to pay for gas received in February and March. While debts and future payments remain in dispute, EU Energy Commissioner Guenther Oettinger welcomed the steps as “building blocks for a package that, given the evident goodwill of all parties today, doesn’t seem out of reach.”

Talks are due to continue on Monday and Ukraine is prepared for arbitration as a solution to the price dispute.

“Those talks will end either with a signing of an agreement or with filing an arbitrage,” Ukrainian Prime Minister Arseniy Yatsenyuk said at a Cabinet meeting in Kiev Friday. Ukraine “will never accept” Gazprom’s “price of almost $500” per 1,000 cubic meters.

The Ukraine conflict escalated after protesters toppled the pro-Russian government in February and Russian President Vladimir Putin annexed Crimea a month later. Leaders in Kiev and their U.S. and EU allies accuse Putin of encouraging tumult in the eastern regions.

In eastern Ukraine, about 80 pro-Russian insurgents Friday night attacked a border guard base in the Dyakove village in the Luhansk region wounding 3 servicemen, the border guard service said on its website Saturday. A government forces’ fighter jet Su-27 helped repel the attack. Rebels probably used the night assault to distract attention while guns were being smuggled from Russia across other sections of the border, according to the statement.

Insurgents killed a Ukrainian soldier and wounded two in an attack on a military vehicle in the eastern Kharkiv region, the National Guard said Saturday. A day earlier, the separatists downed a military helicopter, killing a general and 13 soldiers.

This week’s flare-up in fighting halted gains in Russian financial assets. The benchmark Micex stock index fell 1.1 percent Friday. The ruble dropped for a fifth day against the dollar, posting a weekly loss of 2.1 percent, the most since January.

Yield on Ukraine’s government bonds due 2013 rose for the second day and closed at 8.913 percent Friday, the highest since May 26, data compiled by Bloomberg shows. The hryvnia strengthened to 11.7950 per dollar from 11.84 on May 29.

The markets had rallied in the previous few weeks as Putin made conciliatory gestures.

Russia has withdrawn at least two-thirds of the tens of thousands of troops it massed near the Ukraine border, Col. Steve Warren, a U.S. Defense Department spokesman, told reporters in Washington Friday. He said remaining forces also “appear to be packing up.”

However, Russia has yet to take the necessary steps to ease tensions and must “use its influence” over the rebels, Deputy National Security Adviser Ben Rhodes said in Washington.

Rhodes said President Barack Obama will meet with Ukrainian President-elect Petro Poroshenko during a trip to Europe next week. Poroshenko, who won elections on May 25 with 55 percent of the vote, has vowed rapid action to suppress the separatists.

 

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Russia and Ukraine are moving closer to a deal that would keep gas flowing between the countries even as they spar over Russian support for separatists seeking to break away from the government in Kiev.
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Saturday, 31 May 2014 06:57 AM
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