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Russia-Ukraine gas contracts to have annexes

Ukraine's Zerkalo Nedeli media source posted the text of a broad agreement between Moscow and Kiev on cooperation in a number of industries in addition to the gas business. First of all, this concerns the nuclear sector, which Vladimir Putin confirmed during his latest visit to Kiev (the Russian PM suggested establishing a large holding "uniting generating assets, the nuclear machine-building sector and the fuel cycle, activities in the nuclear fuel sphere). There are also proposals on cooperation in the shipbuilding and aircraft manufacturing industries but they have not been made concrete.

Russia's interest in Ukraine's concessions is quite clear as Russia has not received anything from Ukraine except a possibility to extend lease of the Sevastopol naval base for a $4bn annual gas discount. It should be noted that the real importance of the lease issue looks plainly overestimated by part of the Russian Establishment and the national-patriotic community. With cutting-edge military technologies and warfare methods a fleet on the Black Sea is not a factor of key importance; the air force and missiles can well replace warships that can be destroyed by missiles quite quickly.

By granting $40bn in a 10 year period to Ukraine Russia definitely has an opportunity to hope for its neighbor's calm behavior during construction of South Stream that will make Ukraine's gas transportation system unnecessary. But this is an issue of the future; so far Moscow would like to get at least some of Ukraine's valuable assets as compensation for the gas, e.g. in the oil refinery, machine-building and nuclear sectors, gas storage facilities, etc. Otherwise, the latest agreements will look like an act of Moscow's generosity to Kiev.

By Stanislav Mitrakhovich, NESF leading expert
 


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