RUSSIAN PRESIDENT Dmitry Medvedev and his Ukrainian counterpart Viktor Yanukovych have struck two major deals this week at a meeting in Kharkov to strengthen co-operation between the two countries.
In return for extending the lease on Russia’s Naval base in Crimea, Ukraine is set to benefit from a 30 per cent discount on gas supplies.
The most significant meeting of the two heads of state since Mr Yanukovych came to power in February this year seemed to confirm predictions that the new administration would seek closer ties with Moscow.
Under a new agreement, the Russian navy can count on a presence in Sevastopol for 25 years after the current lease expires in 2017. President Medvedev stressed the base’s important role in regional security and promised to invest in socio-economic development projects in Sevastopol.
Recent negotiations are in stark contrast to the tone taken by the previous administration, led by Viktor Yuschenko. The former president had set 2017 as the final withdrawal date for the Russian navy from Crimea. Members of the opposition in Ukraine have already threatened to challenge the new deal, claiming it would require amendments to the constitution and a national referendum.
Russian news agency RIA Novosti, however, reported that Ukraine’s constitutional court had ruled the extension of a lease on Russia’s naval base in Crimea conformed to the country’s constitution. Boris Gryzlov, speaker of Russia’s lower house of parliament, claimed the deal could be ratified as early as next Tuesday.
In return, the Ukrainian president has secured the discount on gas shipments. Ukraine will get a discount of $100 on current prices of $330 per 1,000 cubic metres for Russian natural gas. Mr Yanukovych said the new prices will come into force from April this year and will apply to 30 billion cubic metres shipped to Ukraine in 2010 and a further 40 billion shipped in the future. Arguments over gas supplies were a major point of tension between Moscow and the previous Ukrainian government.
Disputes not only left Ukrainian domestic consumers short, but also threatened Ukraine’s lucrative position as a transit country for Russian gas exported to the EU.
Mr Yanukovych had vowed to renegotiate supply contracts when he came to power. Ukrainian national energy company Naftogaz also issued a statement in the wake of news of the deal. The firm said the Russian discount would help it avoid bankruptcy.
Russian media claim the deal could be worth up to $40 billion over the next decade.