Russia Says Ukraine’s Unpaid Gas Debt Threatens Economic Growth

11:03, 23 December 2008
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Russians could suffer from Ukraine row?

Russia accused Ukraine of threatening its economic growth by withholding about $2 billion in payment for natural-gas supplies.

“Not paying for gas effectively lowers the production cost of Ukrainian goods and makes them more competitive on foreign markets, including in Russia,” the Kremlin press service said today in an e-mailed statement.

Russia has told Ukraine, which ships about four-fifths of the nation’s gas exports to Europe via its pipelines, that it will cut deliveries in the event of a failure to be paid for energy shipments in 2008. The gas exporter shut off deliveries three years ago amid a price disagreement.

The Moscow-based Institute of Energy and Finance estimates that each ruble in capital investment adds five rubles to economic growth, meaning non-payment by Ukraine could reduce Russia’s gross domestic product by 301 billion rubles ($10.6 billion), representing lost growth of 0.7 percent, the press service said.

Viktor Zubkov, chairman of Russia’s gas exporter OAO Gazprom, said yesterday that Ukraine should be held “fully responsible” for any disruption in Russian gas supplies to Europe as the sides struggle to resolve the dispute by a Jan. 1 deadline.

Bloomberg

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