This is where the "free market" rhetoric of the EU and US is running into the "democracy" rhetoric of the Orange revolution. From the Russian point of view, it surely looks like this: Why shouldn't Russia charge what the market will bear, if Ukraine is no longer an ally deserving of subsidy? And why shouldn't the EU and US pay the price difference, if Ukraine is valuable to them? That is, let the EU and US subsidize Russia, rather than Ukraine?
The response--predictable--of the State Department and EU has been a little ham-handed and Cold War-like, to say the least. First, because Russia made a point of honoring all its contracts with the EU, shipping the gas paid for by EU countries. It is Ukraine that has diverted gas, reducing EU supplies, not Russia. Second, because the EU and US are paying for their ill-considered Central Asian policies--Russia bought up all the Turkmen gas that previously went to Ukraine before launching its price hike. Quite simply, the EU and US have no alternative cheaper supply to offer Ukraine at this time.
So, if it is just a business matter, Russia actually is in the right. However, if the Ukraine question is a matter of weakening Russia, then by raising gas prices to the Ukraine, Russia has exposed the political agenda of the EU and US. Either Ukraine will have to pay the increase, or the US and EU will have to do it for them. Neither the EU or US are in a place where they can threaten Russia militarily or economically.
Right now, unless there is some unforeseen development, hiking Ukraine's gas prices looks like a win-win move for Russia...
UPDATE: More on this crisis from the BBC.
UPDATE: It looks like this gas crisis might lead to Russia and Ukraine both joining the WTO.
