Bilateral talks between Russian President Vladimir Putin and Ukrainian President Petro Poroshenko on Oct. 17 failed to produce either a concrete gas deal or regime for monitoring the unruly ceasefire in Ukraine's east according to Interfax-Ukraine.
Poroshenko and Putin were in Milan to participate in a meeting of the so-called Normandy Four (France, Germany, Russia and Ukraine) following the Asia-Europe summit.
The talks failed to encourage much optimism from their participants with Kremlin spokesman Dmitry Peskov saying they were marred by “misunderstandings and disagreements” and German Chancellor Angela Merkel expressing concern that any agreement could be reached during the talks.
Following the four-party talks there were hopes that Putin and Poroshenko would agreed to a deal that would resume the delivery of gas from Russia to Ukraine.
“We have reached an agreement on the main parameters of the contract and the talks on the sources for covering the deficit of funding needed to finance the contract are now coming to an end,” Poroshenko said.
An additional bilateral meeting just between Putin and Poroshenko failed to meet those expectations with Poroshenko stating that nothing practical had been agreed upon but that he hoped to find a solution before a meeting between Ukrainian, Russian, and European Commission delegations in Brussels on Oct. 21.
Russia cut off gas supplies to Ukraine on June 16 after a dispute over the amount of money owed to Russian state-owned gas company Gazprom by Ukraine’s state gas firm Naftogaz. Gazprom says Naftogaz owes them $4.5 billion, but Naftogaz says it has been “overcharged” for gas since 2010.
A proposal that has been under discussion for some time would see cash-strapped Kyiv settle $3.1 billion in exchange for a resumption of supplies, according to Agence-France Presse.
With winter quickly approaching Kyiv has been under pressure to find alternative supplies of gas while trying to cut domestic gas usage. Ukraine has increasingly turned to its western neighbors to indirectly gain access to Russian gas through a process known as reverse flow.
Supplies from EU countries have proven unreliable as Russia cut the flow of gas to Poland and Slovakia after they began sending gas to Ukraine.
Timothy Ash, head of emerging-market research for Standard Bank in London, said that Putin’s threat to require pre-payment from Ukraine for Russian natural gas supplies is not a good sign.
“So let’s cut to the chase. Russia claims Ukraine owes $5.3 billion for gas supplied for 2013-2014 – Ukraine still disputes that,” Ash said by email. “But for gas to flow, Ukraine has to pay up for the gas supplied, and Europe has to open a tab to allow them to clear the debts. So if Europe does not want to freeze this winter, it has to lend money to Ukraine to pay off debts, and re-pay for gas. The total tab is $6.8 billion.”
Talks in Milan also failed to deliver a deal on regulating an unruly cease-fire on in eastern Ukraine.
Representatives of Ukraine and Russia, as well as the self-proclaimed Donetsk and Luhansk People’s Republics signed the Minsk Protocol on Sept. 5 to end fighting in Ukraine’s Donbas that included a ceasefire agreement.
International observers, however, say that the ceasefire is regularly violated by both sides. Ukraine’s Foreign Ministry said on Oct. 16 that 68 Ukrainian soldiers and 51 civilians had been killed during the ceasefire.
