Background: Relations between Russia and Ukraine have been severely strained for years. Russia wants to bring Ukraine, part of the buffer between it and the West, back into its sphere of influence. Kyiv wants to reclaim Crimea from Russia and restore its authority in breakaway, pro-Russian eastern regions.
What Happened: Russia’s Federal Customs Service accused a tanker of smuggling 80,000 tons of Russian oil, worth more than 2 billion rubles ($27 million), to Ukraine. According to the customs agency, the oil was loaded in Novorossiysk and was supposed to go to an Italian port, but it was unloaded at Ukraine’s Yuzhny port instead. This violated a Russian ban on the export of fuel and energy products to Ukraine.
Bottom Line: This is not the first case of fuel smuggling into Ukraine since Russia imposed sanctions, but it’s a hot issue at the moment because Ukraine is threatened with potential shortages. A supply agreement with Russia could offer a way out, if the two governments can work out their differences. Interestingly, Russian President Vladimir Putin wrote an article earlier this week arguing that Ukrainians and Russians were one people and that Ukraine could achieve true sovereignty only through partnership with Russia. Needless to say, Kyiv’s pro-Western government is unlikely to read Putin’s article as an attempt at reconciliation.
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