for purchases of natural gas, with arrears reportedly reaching $1.2 billion. Gazprom wants the Ukrainian government to convert the unpaid bills into government bonds, as had been done with $1.4 billion in energy debts in 1995. Ukrainian leaders have balked this time, telling Gazprom to collect its debts from the companies that bought the gas.

Russian industrialists and bankers also want to buy in to Ukraine’s oil refineries, power plants, and other state-owned assets slated for sale. Ukrainian officials are apparently prepared to accept Russian capital so long as Kyiv retains control. Gazprom, however, has ruled out a debt-for-equity swap, saying "we need cash, not equity." The debt debate with Gazprom could turn nasty. Ukraine has no real alternative source of supply, and Gazprom has few alternative customers.