Currently one quarter of Ukraine's oil is purchased from Russia, a jump from previous years, when they were more reliant on Central Asian supplies (inclement weather in that region has led to lower production). This is bad for Ukraine, given the relative expensiveness of Russian oil. In addition, as the country learned in 2006, the Russian government and its business offshoots can make for temperamental business associates. The rift between Russia and its former Soviet enclave has only widened with the appearance of a new pro-Western Ukrainian politics (including recent admittance to the WTO and a bid to join NATO). This continual crumbling of the old Eastern Bloc in the face of Western-style democracy and capitalism may tempt Russia to utilize what limited power it still has over Ukraine in terms of oil and military might.
The shut down of oil supplies, which had originally been scheduled for Monday morning, was thankfully averted by a political tête-à-tête between Ukrainian President Viktor Yushchenko and the increasingly curmudgeonly Vladimir Putin. Both sides have agreed on a plan for the repayment of the debt as well as the formation of a new, more direct process for organizing the purchase of oil from Russia. Said Yushchenko, "We have to get rid of intermediaries that could have a negative impact on our relations." It remains to be seen, however, whether the removal of middlemen can ease conflict over oil in Eastern Europe, or if something deeper lies at the root of all this.
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