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Russia Doubles Price of Gas For Georgia

By ADRIAN BLOMFIELD, The Daily Telegraph | November 3, 2006

Russia unveiled the most punishing sanction yet in its campaign of retribution against Georgia yesterday with an announcement that the price of gas to its neighbor would more than double.

Already reeling from a string of punitive measures imposed by the Kremlin in recent months, Georgia's fragile economy will be dealt a massive blow by the proposal, which will raise prices from $692 a barrel to $1440 a barrel.

Gazprom, the state energy giant that critics say is used by the Kremlin as a political tool, defended the increase, claiming it was in line with international market prices.

It is a claim that will convince few in the West, however. Already poor relations between the states have been in crisis since the arrest and subsequent expulsion from Georgia last month of four Russian officers accused of spying.

After Gazprom quadrupled prices to Ukraine in January and then cut off supplies, triggering shortages across Europe, America accused Moscow of using its energy resources to "blackmail" former Soviet states that had pursued a pro-Western course.

Given the rapidly deteriorating relations between Russia and Georgia, now at their worst since the collapse of the Soviet Union, a price rise of some kind was not unexpected. Still, President Saakashvili's government will have been left reeling by how steep the rise is.

Although Gazprom says the price is still subject to negotiation, no other former Soviet state pays nearly as much for its gas. "They present it as a commercial deal, but there is also a big portion of politics involved," said Georgia's foreign minister, Gela Bezhuashvili, who was in Moscow yesterday in an attempt to defuse the tension between the two countries.

Russia has closed its border and airspace with Georgia, severed postal communications, and withdrawn its diplomatic staff from Tbilisi.


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