Ukraine’s state-run energy corporation, Naftogaz, is four billion dollars in the red. This in a country whose entire national budget is something like ten billion. $3.5B of this money is due by the end of the year — a challenging prospect at this point.

Speaking of gas and energy, here’s an analysis from Harvard Business School that is rather sympathetic to the Russians:

“With regard to Ukraine, Russia had been subsidizing it and a number of other post-Soviet states for a long time. To keep those states close to Russia and its sphere of influence, Gazprom had been billing them less for natural gas than its European customers. However, when Gazprom and the Russian government resolved to compete more openly in world markets, the company decided to charge all its customers the same price to maximize profits.

Ukraine responded by telling Gazprom that it would refuse to pay the increase, and furthermore, it intended to charge Gazprom more to use Ukraine’s pipelines to transit gas to Europe. Russia waited until the existing contract between the two countries expired and then shut off its supply to Ukraine. Ukraine answered by siphoning off gas bought and paid for by European countries.”

Crossposted from Ukrainian Policy Daily