Punches thrown as Ukraine port keeps Russian navy

The Russian Black Sea Fleet was expected to relocate from Sevastopol to Russia’s Novorossiysk port, which was originally looking at possible expansion to accommodate the fleet.

However, a change of Ukrainian government meant closer ties with Russia, and a 25 year extension on the Russian navy’s presence at Sevastopol.

Since President Viktor Yanukovych took over from Viktor Yushchenko, the reconciliation between Kiev and Moscow has moved at a fast pace, shifting a long way from the era of Ukrainian support for Georgia during its 2008 war with Russia. Mr Yushchenko was likewise intransigent about moving the Russian Navy from the Black Sea Fleet base in Sevastopol, another position that has fundamentally changed.

However, pushing the about face is Ukraine’s need for cheap power. In return for the lease extension, Russia agreed to significant discounts on natural gas exports to Ukraine. High gas costs are one of the factors adding to the economic troubles dogging Ukraine’s economy. Ukraine’s Prime Minister Mykola Azarov pointed out that this lower gas price would in turn help the Ukrainian budget as the country struggles to secure a loan from the International Monetary Fund (IMF).

“The budget means agreement with the IMF, the possibility of getting investments,” he said. “It is a programme of development for Ukraine in the future.”

So, despite avoiding the costs of expanding Novorossiysk, Russia has landed itself with a hefty subsidy of Ukrainian power.