Tensions between Russia and Ukraine have been steadily increasing over the past few months as the two economies battle it out over debt repayment, gas flows, charges and threats of supply cuts. Gazprom cut supplies to Ukraine at start of the New Year as the parties involved failed to reach agreement on repayment of the outstanding debt of $2bn owed to Gazprom; the market price for the gas delivered; and a transit fee charged by Ukraine for transporting gas to Europe. Gazprom has since acknowledged that it has received $1.5bn in debt repayment but that this is insufficient, and that attempts to increase the transit fee charged to Gazprom are not in line with contractual agreements. In turn, they have said they will supply Ukraine at a cost of $418 per thousand cubic metres rather than its original offer of $250 per thousand cubic metres. Despite talk by Gazprom of supply to Europe being disrupted, the gas traded markets seem to have taken the dispute in their stride. In reality the dispute has been used to strengthen discussions regards alternative pipeline routes. The Ukraine has taken a loan of $16.4bn from the IMF as it struggles to cope with the economic downturn.