Russia Cuts off Gas to Ukraine in Dispute over Payment and Price -Western European Supplies Under Threat

Gazprom (Russian state gas monopoly) has stopped its gas supply to Ukraine at 10:00am January 1 Moscow time due to unpaid debt, though 300,000 cubic metres is still passing through Ukraine, as Gazprom has promised to maintain supplies to Europe. Ukraine’s Naftogaz (state gas monopoly), claims that it sent 1.5 billion dollars to settle its debt. Gazprom claims to have received no money. The talks over the contract for the 2009 supply have collapsed with no agreement.

Ukraine according to Vladimir Putin had been offered a price for gas of $250 per 1,000 cubic metres, a large increase on the $180 it had been paying but significantly lower than the free market price of $418. Ukraine is believed to have offered US$201 per 1000 cubic metres. Ukraine's currency the hryvnia has halved in value in the the past six months. This increases repayment costs for gas to Gazprom. Kiev has however three to four months supply of gas in storage-17 billion cubic metres.

There are a number of possible implications. The cut off could cause a drop in pressure in the transit pipelines or the Ukraine could halt the flow to Western Europe as a negotiating tool. The largest consumers are Italy, Germany and the UK. The Ukraine has stated that it cannot fully guarantee the transit of gas through its country. However it appears today to have modified its position and guaranteed supplies to Western Europe. In January 2006 gas supplies destined for the EU were disrupted for several days in a similar dispute. EU countries must expedite measures to increase self -sufficiency in energy supply. This will involve the construction of more nuclear power stations and a greater concentration on renewable energy.

Ireland’s No vote on Lisbon Treaty blows French attack on Ireland’s Corporation Profits Tax out of the water

Today Shane Ross has an excellent article on this topic in todays Sunday Independent.
France will assume the EU presidency in July from Slovenia. It will chair all meetings of the EU finance ministers at the Council of Ministers. The European Commission plans to introduce a common consolidated corporate tax base (CCCTB). The plan to introduce this proposal was delayed until after the Irish referendum to avoid damage to the Yes campaign. This plan will result in the imposition of harmonised corporate tax rates on EU states contrary to Commission denials. The Commission has Ireland’s 12.5% Corporation Profits Tax in its sights-contrary to denials. France is a strong supporter of (CCCTB).

Prior to Irelands referendum on the Lisbon Treaty Christine Lagarde, French Finance Minister was determined to push ahead with the proposal under the French Presidency. Shane Ross alludes to this. According to last Thursdays Financial Times Christine Lagarde, French Finance Minister, said "that while the proposal for a common consolidated corporate tax base had not been abandoned altogether, Paris would no longer press other governments to back it over the next six months.
"It is on the agenda, but we are not pushing it," said Ms Lagarde in an interview. "It is alive, but not kicking very much."
She is basically admitting that The EU intends to dismantle Ireland's tax advantages by stealth. It is prepared to hold off until a second referendum on the Lisbon treaty is held in Ireland. As Shane Ross points out the No vote has stopped the French in their tracks.

So this plan has been parked temporarily. Now is the time for Ireland to ensure that all threats to Irelands 12.5% Corporation Profits Tax are removed. The threat lies dormant for the present. This is a matter of life and death for Irish industry as Ireland is on the periphery of Europe and consequently industry sufferers from higher transport costs to key EU markets. France and Germany do not suffer from this handicap. The 12.5% helps to compensate for this disadvantage. Removal will devastate Irish industry.

Hands off the 12.5% Corporation Profits Tax. If this issue is not satisfactorily resolved it will emerge with greater intensity in any second vote on the Lisbon Treaty.