Russia Offers Ukraine Cheaper Gas to Join Moscow-Led Group

From Bloomberg

By Irina Reznik & Henry Meyer

Russia will offer cheaper natural gas to Ukraine if the government in Kiev opts to join a Moscow-led economic bloc after halting free-trade talks with the European Union, according to First Deputy Prime Minister Igor Shuvalov.

Ukraine’s economic difficulties will be best resolved if it chooses integration with Russia, Shuvalov said in an interview last month in Bloomberg News’ Moscow office.

“No one other than Russia can provide Ukraine with the necessary funds so quickly and in such a quantity,” Shuvalov said. “A gas agreement could help relieve Ukraine of a huge problem. We can also give them a loan, but we will not help them without commitments on their part.”

Ukraine failed to sign an EU free-trade accord last week, suspending talks in order to repair economic ties with Russia. The country is a key route for natural gas shipments to the EU, while both Russia and the EU buy about 25 percent of Ukraine’s exports. Russian President Vladimir Putin’s ambitions for an economic bloc of former Soviet nations to rival the EU have put him in conflict with European leaders including German Chancellor Angela Merkel.

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