Via Stratfor (subscription required), an interesting report that certain European states have told Russian natural gas giant Gazprom that if the firm raises natural gas prices at the beginning of 2009, they will not be able to pay the bill.  As the article notes:

Europe gets roughly a quarter of its natural gas supplies from Russia, which is trying to decide whether it will decrease or drastically increase natural gas prices to its customers in Europe and its periphery. In July, Gazprom announced that it would eventually increase prices from the already uncomfortable $420 per thousand cubic meters (tcm) to $720 per tcm. This sent most European countries scrambling to figure out alternatives to Russian natural gas supplies. A combination of a global drop in other energy prices, an increase in both alternative natural gas sources and alternatives to natural gas, and a decrease in consumption led to the first drop in Russian exports to Europe in a decade — and forced Russia to reconsider its plan. Russia announced Nov. 12 that it was considering dropping its plan to raise prices — though Stratfor discovered that prices would remain low only for certain customers, meaning that Russia will trade better energy deals for what it wants politically.

It is unclear who in Europe will receive a break on natural gas prices from Russia. If Moscow decides not to spare most of Europe, high natural gas prices could break those countries most dependent on Russian natural gas supplies, like those in Central and Eastern Europe — countries that are already deep in an economic crisis.

Belarus, Ukraine, Slovakia, the Czech Republic and Hungary reportedly have told Gazprom that they could default on payments if they get charged higher prices. In the past, Russia has responded to such defaults by cutting supplies. This was the case in January 2006 when Ukraine and Russia were embroiled in a natural gas dispute. Russia cut Ukraine’s portion of the supplies out of its deliveries, which traveled across Ukraine to much of Europe. Ukraine then began siphoning off the supplies heading to Europe, leaving quite a few countries on the tail end of the supplies out in the cold.

Ukraine now is examining other options to pay its bill to Gazprom in order to avoid a repeat of 2006. Kiev is looking to fill the gap expected in January by raising natural gas prices to domestic consumers by 35 percent starting in December. This is a drastic measure for Ukrainegiven Belarus “loans” in order to pay off its energy debt to Russia. — which is already politically, economically, financially and socially shattered — and could trigger a massive response, including protests or a switch in government. But Ukraine, along with its neighbor Belarus, continually defaults on its payments to Russia. This has allowed Moscow to use energy as a major lever in negotiations on every front with Kiev and Minsk. Moscow has “forgiven” Belarus and Ukraine their debt, though at a cost. Moscow has even given Belarus “loans” in order to pay off its energy debt to Russia.

For EU countries that cannot pay, like Slovakia, the Czech Republic and Hungary, things will get dicey. The problem is that contracts between EU countries and Russia are supposed to be decided by the European Union as a whole, not by individual states. However, most of these countries are already financially strapped and are considering individually negotiating with Russia.

Slovakia is in a better position than its fellow Central European states in that it is the natural gas hub for Russian supplies going into Europe. Some 70 percent of Russia’s exports to Europe go through Slovakia’s system. For Slovakia to be able to handle higher payments to Russia, it can simply charge more for that energy transport. Slovakia also has the ability to use its position as such a large transporter as leverage against Russia during negotiations over natural gas prices.

The Czech Republic began feeling Russia’s wrath in the form of decreased oil supplies on the day Prague finalized missile defense plan with the United States. But the Czech Republic is now in private talks with Russia over both oil supplies and natural gas prices. The problem is that Russia has one thing on its mind when it comes to the Czech Republic: preventing the American missile defense deal. This puts the Czech Republic in a tough position, where it must look to outside sources for supplies or monetary aid.

Hungary is in the most extreme position because it is flat broke. Budapest has already turned to the International Monetary Fund, European Union and World Bank for a $25.5 billion loan because of the damage the global financial crisis caused to Hungary’s economy. Budapest certainly cannot handle the strain of higher energy prices, nor does it have much to offer Russia for a more lenient price. Hungary will most likely turn back to its European allies for either more aid or a solution to the crisis.

This could bring the European Union together in a common stance over its long-debated Russian energy dependence. But even a united front will not create supplies or alternatives that could bring immediate relief to countries in need. Coupled with Russia’s attempts to deal with each EU country individually, the new energy crisis could skewer the European Union — something that is in Russia’s interest as it looks to resurge and balance itself against other global heavyweights.”