Ukraine survives despite gas price hike

KIEV, Ukraine – The warnings in Ukraine verged on the apocalyptic when Russia sharply raised prices for natural gas a year ago. Many feared factories would close, leading to mass layoffs and grinding industry to a halt. But Ukraine’s economy leaped ahead, its businesses quickly adapting to the higher costs.

Now that other former Soviet republics have been hit by price hikes for Russian gas, Ukraine’s experience offers them a ray of hope, analysts say

Ukraine’s economy grew by about 7 percent in 2006 despite Russia’s nearly doubling its price for gas and appears in good position to absorb this year’s further increase.

In 2005 Ukraine paid $50 per 1,000 cubic meters of Russian gas, but now pays $130. The dispute led to temporary reductions of supplies to Western Europe and raised wide concern about Russia’s reliability as an energy partner.

AP