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Russia, Ukraine Reach Gas Deal but NATO Tension Continues

Vladimir Putin and Viktor Yushchenko reached a last-minute agreement over Ukraine's debts to Russia, averting the Kremlin's threat to close off Ukraine's gas supplies. But serious issues still divide the two neighbors.

Russian gas pipeline

The agreement kept Russia from cutting gas deliveries to Ukraine

The Russian and Ukrainian presidents met for more than three hours in Moscow, before announcing that the deal had been concluded on Tuesday, Feb. 12.

At issue were the huge debts Kiev owes to Moscow for natural gas supplies to Ukraine. Ukraine said it will begin paying off those debts as of Thursday. In return, Russia said it would not make good on its threat to cut off gas supplies to Ukraine.

Putin and Yushchenko in Moscow

The deal averted a major international incident

Ukraine receives about one quarter of its natural gas from Russia. The rest comes from central Asia but passes through pipelines on Russian territory. Russian gas, in turn, is often transported through Ukraine to other countries.

EU Energy Commissioner Andris Piebalgs welcomed the deal as the basis to resolve future disputes. Most Russian gas exports pass across Ukrainian territory but both countries have assured Europe that westward gas flows will not be interrupted.

"The commission expects that this solution will establish the basis for a stable and solid bilateral energy relationship," Piebalgs said in a statement.

Disagreement remains over the extent of the debt. Moscow says it is owed 975 million euros ($1.45 billion), while the Ukrainian government says it is only 735 million euros in the red.

Russia and Ukraine have repeatedly squabbled over gas prices and supplies since Ukraine's Orange Revolution of 2004, but now the two sides agreed to form a working group to negotiate over future issues concerning the trade in and transport of natural gas.

Retargeting Russian missiles

A Patriot anti-missile missile being launched

Russia is strongly opposed to US plans for a missile defense system in eastern Europe

Putin and Yushchenko agreed to fix the price of Russian gas for Ukraine at 123 euros per 1,000 cubic meter for the remainder of this year.

But lest anyone have thought the tension between the two uneasy neighbors was over, Putin had a warning for Ukraine about that country's relationship with the Western military alliance NATO.

Kyiv hopes NATO will approve a Membership Action Plan for Ukraine -- a formal step towards membership -- at the alliance's Bucharest summit in April. Moscow, however, views the expansion of NATO as a threat to Russian security.

Should Kyiv allow NATO missiles to be stationed in Ukraine, Putin told journalists, "Russia would have no choice but to re-aim its [nuclear] warheads at Ukrainian territory."

"I draw your attention to the consequences that would follow," Putin said. "It is terrible to even think that in response to this. Russia cannot theoretically exclude aiming our offensive missile systems at Ukraine."

Russia has fiercely rejected US plans to establish a missile defense shield in Europe -- with parts of the system being located in Poland and the Czech Republic, both former Russian allies from the Soviet era.

Yushchenko defended his country's right to maintain an independent foreign and defense policy. But he said the Ukrainian constitution prohibited foreign troops from being stationed within the country.

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