How Western Aid to Ukraine Will End Up in Moscow

With both the United States and the European Union committing tens of billions of dollars in aid to the Ukraine, it appears that much of that money will actually end up in Russia, according to analysts.

The reason? A large chunk of those aid dollars will go to paying for fuel, which Ukraine buys from Moscow. And with Ukraine rich with aid dollars, analysts expect Moscow to jack up the price of energy substantially. Ukraine is heavily dependent on Russian energy, meaning the more western aid that flows to Kiev, the higher Moscow can inflate the price it charges, knowing that western dollars will subsidize paying the higher costs.

"The possibility of this is quite high," Mikhail Korchemkin, director of U.S.-based firm East European Gas Analysis, told the Moscow Times.

Moscow has already boosted some energy prices dramatically. Gazprom has announced that as of April Ukraine will pay an additional $370 per 1,000 cubic meters of natural gas. Some experts, like Valentin Zemlyansky, an independent gas industry analyst in Kiev, are already warning that steep energy price increases will severely harm the Ukrainian chemical and cement industries.

If Crimea declares its independence from Ukraine and announces it wants to join Russia, there might be a bit of irony at play, says Anatoly Medetsky in the Moscow Times. Because Crimea has no external sources of energy, it will be dependent on the Ukraine for its energy supplies.


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