Ukraine threatens to seize Russian assets

By Dimtry Zaks, AFP
March 19, 2014

Kiev (AFP) – Ukraine ratcheted up its standoff with the Kremlin on Tuesday by threatening to nationalise Russian property in response to Crimea’s claims to its own assets in the breakaway Black Sea peninsula.

President Vladimir Putin on Tuesday signed a treaty making Crimea part of Russia following the flashpoint region’s overwhelming vote in favour of a break from Ukraine and return to Kremlin rule.

The predominantly Russian-speaking peninsula’s switch of allegiance has not been recognised by any other country and has been condemned as illegal by the new Western-backed administration that toppled pro-Moscow authorities in Kiev last month.

The self-declared rulers of Crimea — an underdeveloped region of two million people with large offshore energy reserves — announced a number of measures on Monday aimed at severing their ties with Kiev and shoring up the creaking economy in the short term.

These included a claim to the pipelines as well as offshore oil and natural gas platforms of Ukraine’s state-owned Chornomorneftegaz and Ukrtransgaz energy firms.

The Crimean authorities also threatened to nationalise several Ukrainian banks.

Ukraine’s Justice Minister Pavlo Petrenko called the measures illegal and warned Russia that it faced reprisals should it back Crimea’s moves.

“If the Russian Federation officially recognises (Crimea’s) actions, then Ukraine reserves the right to take adequate steps to compensate these losses at the expense of property belonging to the Russian Federation on the territory of Ukraine and in other states,” Petrenko said in a statement.

“We are going to do this in strict accordance with Ukrainian and international law,” he added.

Petrenko’s statement did not specify what property he was referring to or how Ukraine intended to claim ownership of Russian assets in other states.

Russia’s state-owned natural gas giant Gazprom has a vast pipeline network running through Ukraine that feeds clients in southern and western Europe.

Other top Russian assets in the former Soviet nation include branches of Sberbank — the largest lender in Russia and third-biggest in eastern Europe.

But Ukraine’s Liga.net independent news site said Petrenko had separately told reporters that Kiev would consider compensating its potential Crimean losses by claiming the rights to property belonging to Gazprom.

Ukraine and the energy giant — often accused of being wielded by the Kremlin as a political weapon against ex-Soviet neighbours seeking closer ties to the West — has a long history of bitter relations with Kiev.

Disputes over price saw Gazprom cut off gas supplies to Ukraine twice since 2006 — moves that shook the vast firm’s reputation because the interruptions also impacted its southern and western European clients.

Gazprom slashed Ukraine’s price for gas by a third under a December economic rescue agreement Moscow struck with Kiev following its decision to ditch an historic EU trade pact the month before.

But Kremlin-backed president Viktor Yanukovych’s ouster on February 22 saw Gazprom again threaten to cut off Ukraine’s gas supplies over debts it estimated at $1.89 billion.

Gazprom also announced that it was ending its price discount for Ukraine starting on April 1.