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Taking part in the meeting were Prime Minister Dmitry Medvedev, Federation Council Speaker Valentina Matviyenko, State Duma Speaker Sergei Naryshkin, Chief of Staff of the Presidential Executive Office Sergei Ivanov, Secretary of the Security Council Nikolai Patrushev, Foreign Minister Sergei Lavrov, Interior Minister Vladimir Kolokoltsev, Defence Minister Sergei Shoigu, Director of the Federal Security Service Alexander Bortnikov, Director of the Foreign Intelligence Service Mikhail Fradkov, and permanent member of the Security Council Boris Gryzlov.

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President of Russia Vladimir Putin: Good afternoon, colleagues,

We will discuss routine matters today. I wanted to start though with a question for the Foreign Minister. What is happening with my request to get to our European partners and gas customers the information that I set out in a letter following the meeting with Government members on the situation with our cooperation with Ukraine?

Foreign Minister Sergei Lavrov: We have carried out your instruction to send the letter to the leaders of European countries that receive Russian gas via Ukrainian territory. Our ambassadors in the countries concerned delivered the letters to their intended recipients yesterday. Everyone has given the letter their serious attention and promised to promptly give it their consideration and draft their response. We hope the response will be constructive. We have received only a preliminary reaction from Europe so far, but we have already heard from Washington, where an official State Department spokesperson said that Russia should not politicise gas affairs with Ukraine, should let the market decide prices, and called the arguments that we set out for our European partners “gas blackmail.”

Vladimir Putin: This is somewhat curious. I say this first of all because it is not the proper thing to read others’ letters. I did not write to Washington after all, but to our gas customers in Europe. We are already used to the fact that our American friends eavesdrop on everyone, but it is really not the done thing to sneak a look at others’ correspondence. 

Seriously though, I’m obviously going to have to remind everyone that the formula we use to calculate the gas price was agreed in the official contract the Russia’s Gazprom signed with Ukraine’s Naftogaz in 2009. The people currently responsible for the energy sector in today’s government in Kiev held the same office back then too and took part in signing that contract. No changes have been made to the formula since that moment.

Yes, it is true that we offered various discounts for various reasons at different times. In December 2013, as you know, we offered Ukraine a loan of $3 billion and discounted the gas price under condition that debts for 2013 be settled and that current payments be made on time. Neither of those conditions was met. What’s more, the lowest prices were in effect over the first quarter of this year, but even at this very lowest price our Ukrainian partners stopped making their payments.

The latest deadline in the gas contract’s schedule – payment for March 2014 – fell on April 7. Of a total expected payment of more than $500 million — $540 million, I think the figure comes to – we received not a single dollar or ruble. We received nothing at all. There is simply no way that we can tolerate this situation. Faced with these circumstances, Gazprom rescinded the discounts, in accordance with the earlier agreement. 

If we want to be clear about the root of these recent problems, the fact of the matter is that Russia cannot continue to bear such a burden all on its own. It was for this reason that we appealed to our partners and friends in Europe in the hope that we can organise a meeting as soon as possible to work out ways of helping and supporting Ukraine's economy. Whoever really does care about Ukraine and the Ukrainian people should make their contribution to preventing the country’s economy from going bankrupt.

This will take more than handing out pies at the Maidan. That’s all not enough to keep the Ukrainian economy from slipping into total chaos. Our American partners have responded so negatively to our proposal, which is very strange to see. We know that they have declared their willingness to make a $1-billion loan available, not in the form of credits and assistance, but in the form of guarantees. What does this mean? It means guarantees for banks that would be ready to lend to Ukraine, but there are no such banks and thus this amounts to no assistance at all. This really is a very strange situation and we have every reason to be concerned about it. 

Let me say once again too that we have no plans or intention to cut off gas supplies to Ukraine. But in accordance with the contract that was signed and has been in effect since 2009, and which no one has cancelled, Gazprom has the right to ask for advance payment, and this is what the Russian Government is proposing. What this means is that next month, Ukraine will receive only as much gas as it pays for this month. 

The contract gives us this right. I ask the Russian Government and Gazprom to show our European partners the relevant terms in the contract. Incidentally, in my letter I made reference to these same terms. You could take the relevant sections from the contract and send them to the European capitals as an appendix to my letter, all the more so as the contract long ago got ‘leaked’ anyway onto the internet during all the political battles in Ukraine.

I ask the Foreign Ministry to deliver this additional information to our partners and remind them that Gazprom is not just a Russian commercial company but is a joint-stock company with almost 50 percent of shares in it being held by private companies, including foreign ones. Even as big a company as Gazprom cannot bear the entire burden of subsidising Ukraine’s economy. This is simply not possible and everyone needs to understand this.

Russia is being very careful in its action and is taking a very balanced and respectful line towards all of our partners. We most certainly guarantee that we will fulfil in full our obligations to our European gas customers. It is not Russia that is the issue. The problem is one of ensuring gas transit via Ukraine. I ask the Foreign Ministry to carry out this instruction as rapidly as possible. 

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