Russia’s state gas company Gazprom raised gas prices for Ukraine and still want to collect their $1.89 billion debt. On March 7, the company threatened to completely shut off gas to Ukraine if the debt was not paid.
Alexei Miller is the head of the company and one of the few in President Vladimir Putin’s inner circle who escaped sanctions from President Obama. He said the December discount was withdrawn and the new price is $383.50 per 1,000 cubic meters. They provided a discount after then-president Viktor Yanukovych chose a bailout from Russia over a trade deal with the European Union. From Reuters:
“The December discount for gas cannot be applied any more,” Miller said, adding that the transportation tariff for Gazprom’s gas to Europe via Ukraine was increasing by 10 percent, in line with earlier agreements.
Fifteen percent of Europe’s gas travels through Ukraine. The continent’s reliance on Russian energy forced leaders to hesitate on sanctions. After Gazprom threatened to shut off the gas, four ambassadors sent a letter to House Speaker Rep. John Boehner (R-OH) and asked the US to export more natural gas to Europe. Boehner penned an op-ed in The Wall Street Journal to argue the case and said it would create more jobs in America.
In 1981, the CIA sent a memo to President Reagan that said the US needed to warn Europe not to build a pipeline to then-Soviet Union and rely on it for their energy. The CIA was concerned Russia would hold Europe hostage over energy.