KIEV, Ukraine -- Ukraine, by signing a normal, long-term contract with Russia for Central Asian gas, took a major step forward, bringing it in line with European economic realities.
How will the new price arrangement impact on the Ukrainian economy in 2009 and beyond? Will the country be able to pay the new gas prices? Will it finally begin to revamp its energy intensive economy and live within its means?For the past 10 years, Ukraine has been buying Turkmen gas, the price of which was not linked to the price of oil or to the laws of supply and demand. The formula for determining the final price was based on the arbitrarily negotiated price reached by Ukraine (later by Gazprom) with the unstable and highly corrupt former president of Turkmenistan, Saparmurat Niazov, plus the cost of transit from Turkmenistan to the Ukrainian border –roughly $40 for 1,000 cubic meters.It is therefore incorrect to say, as Vladimir Putin often does, that Russia has been subsidizing the price of gas to Ukraine. RosUkrEnergo’s Dmytro Firtash also has spread this lie in his recent television appearances by claiming that he and RUE subsidized Ukraine to the tune of over $2 billion. The truth is that Turkmenistan sold gas at a lower price than Russia, and Ukraine took advantage of this. The only subsidy was the abnormally low transit tariff Ukraine charged Gazprom and RosUkrEnergo.The large price difference between Turkmen gas and Russian gas – which was pegged to the price of oil – left a large margin of profit for intermediary companies such as RosUkrEnergo. It bought Turkmen gas as part of the Russian-Ukrainian gas contract and then resold part of the volume to European customers at close to European prices, making a huge profit on this.According to experts, the average European price for gas in 2009, barring any major jump in the price of oil, will be in the range of $210-$240 for 1,000 cubic meters.This will create mild hardships for the already ailing Ukrainian chemical and metallurgical industries, which will have to pay slightly higher prices for their energy-intensive production needs. These prices, however, will be lower than what European chemical and steel producers are paying, but higher than those paid by Russian producers, Ukraine’s main competitors.Yet grave problems are bound to arise for Ukraine in the future. These need to be examined in order for future Ukrainian governments to prepare for the gathering storm.The newly signed Ukrainian-Russian gas contract will expire in 2019. A major provision in the contract obliges Ukraine to pay the full European price for gas (without the 20 percent discount Ukraine will get in 2009) beginning in January 2010. Russia at that time will begin paying Ukraine the European transit tariff for gas going to Europe. Presently this tariff is $1.70 per 1,000 cubic meters for 100 kilometers; in 2010 it is scheduled to rise to about $4. According to press reports, the $4 transit fee will remain fixed until 2019, even if European transit fees increase – or decrease.In the first quarter of 2009, when the new price of gas will be relatively high, Ukraine should be able to cushion the pain by continuing to rely on its own gas stored underground and not buy large quantities from Gazprom. By the second and third quarters of the year, the price should continue dropping in line with the price of oil 9 months earlier (thus in September 2009, the gas price will be calculated based on the price of oil in January 2009 - $50-$35).If the world-wide recession ends by late 2009, oil prices are likely to rise. If the recovery continues into 2010 and beyond, it is almost certain that oil prices will rebound to $80-$90 or more per barrel and the European price for gas will reflect these price increases by mid-2011. Ukraine should be prepared to pay about $300-$325 for 1,000 cubic meters of gas at that time. If such a trend continues, it is altogether feasible that Ukraine will pay $350-$450 for 1,000 cubic meters of gas by 2015.The price for Ukraine in 2015 will also be affected by the North Stream and South Stream pipelines (if they are operational by then) which would most likely lead to a decrease in the volume of Russian gas shipped via Ukraine –thus lowering income from the transit fee.Ukraine has six years in which to complete a number of critical projects in the energy sphere:It is essential for Ukraine to drastically reduce its consumption of gas.The government of Ukraine must encourage new drilling for gas, including coal bed methane and remove the artificial barriers it has created which discourage foreign investors from entering the Ukrainian energy market.Ukraine should proceed to build an LNG regasification terminal on the Black Sea in order to diversify suppliers. By placing all its bets on Central Asian or Russian gas producers, Ukrainian governments could well find themselves without gas in the future.The price of gas sold to Ukrainian consumers, both industrial and household users, should be raised in increments to reflect the real price of gas and not maintain a foolish, politically motivated, subsidized price.Those responsible for energy policy must once and forever come to terms with reality. There is no going back to the old, corrupt schemes with crooked Central Asian leaders or using fly-by-night intermediaries. If Ukraine is to survive as a country its leaders must make hard and painful decisions.
Sunday, 25 January 2009
Cleaning Up Ukraine
Ukraine needs to reform its corrupt gas sector and reduce its dependency on Russia. It's in the EU's interest to help.
The war in South Ossetia in August last year evidently taught Russian leaders the value of PR: however shaky your story, it's worth getting your side out there as loudly and as often as possible.Well before the dispute began, the Russian side was spreading its message in foreign-language media and in EU capitals that this was a "commercial" dispute, and that Ukraine was to blame. They set up a website to provide "facts" about the dispute. The site also carried English-language media reports that followed their interpretation.Even if we accept the argument that the spat began as a commercial argument, Moscow's PR efforts, combined with their actions during the crisis, have demonstrated a clear political aim: to discredit Ukraine and its leaders in the eyes of the EU and Ukrainians.By showing Ukraine as an unreliable transit partner, Russia hoped to push its case for the Nord and South Stream pipelines bypassing the country and to gain some amount of control over Ukraine's pipeline network. In this way it hoped to undermine Ukraine's primary bargaining tool in gas negotiations: its control over gas pipelines.Two of the main accusations about Ukraine's reliability need questioning. First, Russia accused Ukraine of siphoning gas from transit supplies, the reason originally given for cutting flows. The jury remains out on this, but EU energy commissioner Andris Piebalgs has said he has seen no evidence that Ukraine took gas without permission.Second, Russia accused Ukraine of not keeping its side of the agreement to resume gas supplies to Europe on 13 January. But not only did the Ukrainian side complain that the gas was sent in such a way that made delivery impossible, this was also confirmed by independent analysts and EU sources.To deliver the gas would have required supplies to be cut off to the populous areas in the east of the country, leaving the Ukrainian authorities between the devil (an angry EU waiting for deliveries) and the deep blue sea (a backlash from Ukrainians already angry at their handling of the economic crisis).One of the more ironic accusations from the Russian side was made by Russian prime minister Vladimir Putin on 8 January, when he blamed the crisis on the "high degree of official corruption" in Ukraine and the fact the Ukrainian leaders were fighting for "the possibility to maintain one or other intermediaries so that they can use the proceeds for their personal gain and also get resources for future political campaigns."The intermediary concerned was RosUkrEnergo, set up by none other than then-Russian president Putin (along with ex-Ukrainian president Leonid Kuchma) – 50% of which is owned by Gazprom.Gazprom itself has been described by one economist as "effectively an economic crime syndicate"; insiders have spoken of private slush funds and given detailed accounts of the complex nexus of political and business interests at its heart.Ukrainian prime minister Yulia Tymoshenko has, by and large, been singing from the same hymn sheet in obliquely accusing Ukrainian president Viktor Yushchenko of corruption through RosUkrEnergo.It suits both her and Putin to try to weaken Yushchenko. Tymoshenko is involved in a long-running political battle with the Ukrainian president, and should win points at home for showing she can do a deal with Russia and removing RosUkrEnergo from the trade; Putin is furious with Yushchenko for his moral support of Georgian president Mikhail Saakashvili during the war with Russia in August last year and clearly wants a more pliant leader in Kiev.But there has been one clear winner in the gas crisis – Ukraine's pro-Russian opposition leader Viktor Yanukovych. Already benefiting from public dissatisfaction at the authorities' handling of the economic crisis, the man defeated by the Orange Revolution has been able to pose as the only one who could strike a good deal with the Russians and follow Moscow in blaming Ukraine's "Orange" leaders for the problem. A recent poll put support for Yanukovych in the upcoming presidential elections at 23%, compared with Tymoshenko at 14% and Yushchenko at 5%.The relative success of Russian PR (compared to previous efforts) has been enhanced by the Ukrainian leaders' propensity to consistently shoot the country in the foot with their infighting and inability to deal with the corruption that cripples the country's gas sector.But the PR drive failed in its aim to obfuscate the corruption problems on Russia's own side of the gas trade and redefine our image of Gazprom as a purely commercial entity. In fact, by focusing on the Ukrainian side of the problem it has highlighted the country's potential role in a solution.By giving Ukraine incentives to clean up its gas sector, the EU can put to the test the claims of all three of its top political figures to be pro-European and at the same time reduce Ukraine's dependence on Russia.
The war in South Ossetia in August last year evidently taught Russian leaders the value of PR: however shaky your story, it's worth getting your side out there as loudly and as often as possible.Well before the dispute began, the Russian side was spreading its message in foreign-language media and in EU capitals that this was a "commercial" dispute, and that Ukraine was to blame. They set up a website to provide "facts" about the dispute. The site also carried English-language media reports that followed their interpretation.Even if we accept the argument that the spat began as a commercial argument, Moscow's PR efforts, combined with their actions during the crisis, have demonstrated a clear political aim: to discredit Ukraine and its leaders in the eyes of the EU and Ukrainians.By showing Ukraine as an unreliable transit partner, Russia hoped to push its case for the Nord and South Stream pipelines bypassing the country and to gain some amount of control over Ukraine's pipeline network. In this way it hoped to undermine Ukraine's primary bargaining tool in gas negotiations: its control over gas pipelines.Two of the main accusations about Ukraine's reliability need questioning. First, Russia accused Ukraine of siphoning gas from transit supplies, the reason originally given for cutting flows. The jury remains out on this, but EU energy commissioner Andris Piebalgs has said he has seen no evidence that Ukraine took gas without permission.Second, Russia accused Ukraine of not keeping its side of the agreement to resume gas supplies to Europe on 13 January. But not only did the Ukrainian side complain that the gas was sent in such a way that made delivery impossible, this was also confirmed by independent analysts and EU sources.To deliver the gas would have required supplies to be cut off to the populous areas in the east of the country, leaving the Ukrainian authorities between the devil (an angry EU waiting for deliveries) and the deep blue sea (a backlash from Ukrainians already angry at their handling of the economic crisis).One of the more ironic accusations from the Russian side was made by Russian prime minister Vladimir Putin on 8 January, when he blamed the crisis on the "high degree of official corruption" in Ukraine and the fact the Ukrainian leaders were fighting for "the possibility to maintain one or other intermediaries so that they can use the proceeds for their personal gain and also get resources for future political campaigns."The intermediary concerned was RosUkrEnergo, set up by none other than then-Russian president Putin (along with ex-Ukrainian president Leonid Kuchma) – 50% of which is owned by Gazprom.Gazprom itself has been described by one economist as "effectively an economic crime syndicate"; insiders have spoken of private slush funds and given detailed accounts of the complex nexus of political and business interests at its heart.Ukrainian prime minister Yulia Tymoshenko has, by and large, been singing from the same hymn sheet in obliquely accusing Ukrainian president Viktor Yushchenko of corruption through RosUkrEnergo.It suits both her and Putin to try to weaken Yushchenko. Tymoshenko is involved in a long-running political battle with the Ukrainian president, and should win points at home for showing she can do a deal with Russia and removing RosUkrEnergo from the trade; Putin is furious with Yushchenko for his moral support of Georgian president Mikhail Saakashvili during the war with Russia in August last year and clearly wants a more pliant leader in Kiev.But there has been one clear winner in the gas crisis – Ukraine's pro-Russian opposition leader Viktor Yanukovych. Already benefiting from public dissatisfaction at the authorities' handling of the economic crisis, the man defeated by the Orange Revolution has been able to pose as the only one who could strike a good deal with the Russians and follow Moscow in blaming Ukraine's "Orange" leaders for the problem. A recent poll put support for Yanukovych in the upcoming presidential elections at 23%, compared with Tymoshenko at 14% and Yushchenko at 5%.The relative success of Russian PR (compared to previous efforts) has been enhanced by the Ukrainian leaders' propensity to consistently shoot the country in the foot with their infighting and inability to deal with the corruption that cripples the country's gas sector.But the PR drive failed in its aim to obfuscate the corruption problems on Russia's own side of the gas trade and redefine our image of Gazprom as a purely commercial entity. In fact, by focusing on the Ukrainian side of the problem it has highlighted the country's potential role in a solution.By giving Ukraine incentives to clean up its gas sector, the EU can put to the test the claims of all three of its top political figures to be pro-European and at the same time reduce Ukraine's dependence on Russia.
The CIA's Secret Triumph
MOSCOW, Russia -- Under the rules of the Swedish Academy, the Nobel Prizes archives may be opened 50 years after the awarding takes place. Thus, the documents of October 1958 may be declassified in January of this year.
This is a notable date for Russian culture. That year, the Academy awarded a Nobel Prize in literature to Soviet poet Boris Pasternak.Now that the archives have been declassified, the circumstances of the loudest scandal in the history of Nobel Prizes will be finally scrutinized.The story of the Pasternak award was crowned with quite a sensation. It transpired that the CIA made a contribution to the award. It was the CIA that printed the first Russian version of "Doctor Zhivago" without which Pasternak's nomination would not have been discussed because the Nobel Committee only reviews fiction in the original.Needless to say, Pasternak himself had nothing to do with intelligence. His genius was simply used as a powerful weapon in the Cold War between the West and the East. Until recently, this detective story has been couched in a thick veil of secrecy. It was solely owing to the persistence of philologist Ivan Tolstoy (from the famous Tolstoy family) that the secret was revealed and made public. It took him 20 years to resolve the enigma.Boris Pasternak started writing his legendary novel soon after the end of WWII, in 1946. It took him ten years. Upon completing it in January 1956, Pasternak started to wonder what to do next. The novel that was eventually called "Doctor Zhivago" (the initial title was "The Burning Candle") ran counter to the principles of Soviet literature. Should he just shelve it until better times? But when will these better times come, if at all? Also, he was no longer young.Pasternak decided to try to get it published. He took the novel to the editorial office of the popular literary journal Novy Mir. At the same time he gave a huge folder with its typed version to the young Italian journalist Sergio D' Angelo.A Moscow radio broadcaster, the Italian was looking for new Soviet novels for Giangiacomo Feltrinelli, a Milan-based ambitious young Italian publisher with communist views. Having found out about the new novel, the Italian journalist rushed to Peredelkino, outside Moscow, where the writer lived, and Pasternak handed it to him without any hesitation.Having learned about this, Pasternak's wife Zinaida almost burst into tears. She had no illusions about the consequences - arrest, a labor camp, separation. The poet was trying to put a good face on the matter, and reassured his family but felt that the clouds were gathering over him.Nonetheless, he decided to go to the end and gave two more typed copies to another two foreign visitors - British essayist and philosopher Isaiah Berlin, and French specialist in Slavic Studies Helene Peltier.At this point, secrecy cast its first shadow on the story. The CIA found out about Pasternak's novel. Its Russian section understood full well what political benefits could stem from the publication of a novel which was bound to be banned at home. It only remained to get the text.Here comes the most mysterious episode of the story. The aircraft carrying a passenger with a copy of the novel was ordered to land in the airport of Malta in the Mediterranean. The pilot apologized for the stopover.The annoyed passengers went to the airport's departure lounge, while CIA agents found the right suitcase, took out the text, and photographed it page by page. They put the text back into the suitcase, and two hours later the aircraft was airborne again. The passengers arrived at their destination. The owner of the suitcase was in blissful ignorance of what had happened with it.Approximately at the same time the KGB found out that Pasternak's novel had been taken abroad. The events began snowballing into an avalanche. The Novy Mir journal rejected the novel, and reprimanded the poet for the inadmissible text; the KGB and the Soviet Communist Party Central Committee exerted pressure on the publisher from Milan through the Italian Communist Party, but Feltrinelli published the novel and demonstratively quit the party.On November 23, 1957, the novel went out of print in Italian and exceeded all expectations. Its first edition of 12,000 copies was sold out in a matter of days. More copies were printed every two weeks but a boom did not subside. It became world famous, and was translated into English, German, and French. In the spring of 1958, Albert Camus nominated Pasternak for a Nobel Prize.However, under the Nobel Committee's rules, the novel had to be in the original. Here the CIA-copied version came in handy. Every hour counted in what was a now-or-never situation. Through proxy funds, the CIA gave money to urgently publish the novel in Russian. To cover up the traces of stealing, the CIA made galleys from the photocopies and printed the Russian version in the academic publishing house of Muton in the Hague without any copyrights in the August of 1958.The Swedish Academy had no more obstacles for awarding Pasternak, and on October 23, 1958 the Nobel cannon shot at the Soviet government. Pasternak received a Nobel Prize for outstanding merits in modern lyric poetry and for continuing the traditions of the great Russian novel.Pasternak sent a reply cable: "Immensely thankful, touched, proud, astonished, abashed."He naively hoped to go to Stockholm and receive his Nobel Prize from the hands of the King but the authorities twisted the arms of the woman he loved, Olga Ivinskaya. Stunned by such consequences and gripped with fear for his beloved, Pasternak turned down the Nobel Prize, and sent a relevant cable to Stockholm.The CIA operation was a success. The Soviet Union received a tangible blow.The Pasternak story revealed the shattering power of anti-Soviet literature in the West. Pasternak paved the way to a whole series of anti-Soviet publications which were crowned with the sensational "Gulag Archipelago," for which the dissident Alexander Solzhenitsyn was also awarded a Nobel Prize.
This is a notable date for Russian culture. That year, the Academy awarded a Nobel Prize in literature to Soviet poet Boris Pasternak.Now that the archives have been declassified, the circumstances of the loudest scandal in the history of Nobel Prizes will be finally scrutinized.The story of the Pasternak award was crowned with quite a sensation. It transpired that the CIA made a contribution to the award. It was the CIA that printed the first Russian version of "Doctor Zhivago" without which Pasternak's nomination would not have been discussed because the Nobel Committee only reviews fiction in the original.Needless to say, Pasternak himself had nothing to do with intelligence. His genius was simply used as a powerful weapon in the Cold War between the West and the East. Until recently, this detective story has been couched in a thick veil of secrecy. It was solely owing to the persistence of philologist Ivan Tolstoy (from the famous Tolstoy family) that the secret was revealed and made public. It took him 20 years to resolve the enigma.Boris Pasternak started writing his legendary novel soon after the end of WWII, in 1946. It took him ten years. Upon completing it in January 1956, Pasternak started to wonder what to do next. The novel that was eventually called "Doctor Zhivago" (the initial title was "The Burning Candle") ran counter to the principles of Soviet literature. Should he just shelve it until better times? But when will these better times come, if at all? Also, he was no longer young.Pasternak decided to try to get it published. He took the novel to the editorial office of the popular literary journal Novy Mir. At the same time he gave a huge folder with its typed version to the young Italian journalist Sergio D' Angelo.A Moscow radio broadcaster, the Italian was looking for new Soviet novels for Giangiacomo Feltrinelli, a Milan-based ambitious young Italian publisher with communist views. Having found out about the new novel, the Italian journalist rushed to Peredelkino, outside Moscow, where the writer lived, and Pasternak handed it to him without any hesitation.Having learned about this, Pasternak's wife Zinaida almost burst into tears. She had no illusions about the consequences - arrest, a labor camp, separation. The poet was trying to put a good face on the matter, and reassured his family but felt that the clouds were gathering over him.Nonetheless, he decided to go to the end and gave two more typed copies to another two foreign visitors - British essayist and philosopher Isaiah Berlin, and French specialist in Slavic Studies Helene Peltier.At this point, secrecy cast its first shadow on the story. The CIA found out about Pasternak's novel. Its Russian section understood full well what political benefits could stem from the publication of a novel which was bound to be banned at home. It only remained to get the text.Here comes the most mysterious episode of the story. The aircraft carrying a passenger with a copy of the novel was ordered to land in the airport of Malta in the Mediterranean. The pilot apologized for the stopover.The annoyed passengers went to the airport's departure lounge, while CIA agents found the right suitcase, took out the text, and photographed it page by page. They put the text back into the suitcase, and two hours later the aircraft was airborne again. The passengers arrived at their destination. The owner of the suitcase was in blissful ignorance of what had happened with it.Approximately at the same time the KGB found out that Pasternak's novel had been taken abroad. The events began snowballing into an avalanche. The Novy Mir journal rejected the novel, and reprimanded the poet for the inadmissible text; the KGB and the Soviet Communist Party Central Committee exerted pressure on the publisher from Milan through the Italian Communist Party, but Feltrinelli published the novel and demonstratively quit the party.On November 23, 1957, the novel went out of print in Italian and exceeded all expectations. Its first edition of 12,000 copies was sold out in a matter of days. More copies were printed every two weeks but a boom did not subside. It became world famous, and was translated into English, German, and French. In the spring of 1958, Albert Camus nominated Pasternak for a Nobel Prize.However, under the Nobel Committee's rules, the novel had to be in the original. Here the CIA-copied version came in handy. Every hour counted in what was a now-or-never situation. Through proxy funds, the CIA gave money to urgently publish the novel in Russian. To cover up the traces of stealing, the CIA made galleys from the photocopies and printed the Russian version in the academic publishing house of Muton in the Hague without any copyrights in the August of 1958.The Swedish Academy had no more obstacles for awarding Pasternak, and on October 23, 1958 the Nobel cannon shot at the Soviet government. Pasternak received a Nobel Prize for outstanding merits in modern lyric poetry and for continuing the traditions of the great Russian novel.Pasternak sent a reply cable: "Immensely thankful, touched, proud, astonished, abashed."He naively hoped to go to Stockholm and receive his Nobel Prize from the hands of the King but the authorities twisted the arms of the woman he loved, Olga Ivinskaya. Stunned by such consequences and gripped with fear for his beloved, Pasternak turned down the Nobel Prize, and sent a relevant cable to Stockholm.The CIA operation was a success. The Soviet Union received a tangible blow.The Pasternak story revealed the shattering power of anti-Soviet literature in the West. Pasternak paved the way to a whole series of anti-Soviet publications which were crowned with the sensational "Gulag Archipelago," for which the dissident Alexander Solzhenitsyn was also awarded a Nobel Prize.
Victory: Tymoshenko
KIEV, Ukraine -- In the ongoing blood sport that is Ukrainian politics, Prime Minister Yulia Tymoshenko appears to have scored a key victory over her political rivals — especially President Viktor Yushchenko — in reaching a gas agreement with Russia last week.
But analysts say the battle among the country’s ruling elite is far from over, and could spell further instability in the coming months.Millions in eastern Europe were stranded without electricity and heat just after the new year, when Russia cut off all gas deliveries through Ukraine because of a pricing dispute (about 80 percent of Russian gas headed for Europe traverses Ukraine). Tymoshenko traveled to Moscow Jan. 17, where she and Vladimir Putin, her Russian counterpart, held an all-night session behind closed doors, during which they hammered out an accord that permitted shipments to resume.Under the accord, Ukraine agreed to pay $360 per 1,000 cubic meters of gas: The amount was 20 percent less than what Moscow was aiming for, but was significantly higher than the $200 that Kiev wanted. At the same time, Ukraine agreed not to raise Russia’s transit price.Observers took note that it was the two countries’ prime ministers — and not their heads of state, Yushchenko and Dmitri Medvedev — who were tasked with, or more likely took on the responsibility for, brokering the deal. Equally significant was the fact that the two leaders seemed to work well together, a remarkable development given both the acrimonious atmosphere that had characterized the gas dispute and relations in general with the Ukrainian president.Tymoshenko "has added to her image as a ‘can do’ leader,” wrote Christopher Weafer, chief strategist at the Russian bank UralSib.“Tymoshenko was the winner,” agreed Mikhailo Pogrebinsky, director of the Kiev Center for Political and Conflict Studies. “She showed herself to be a more acceptable partner for Russia — one with which it is difficult, but in the end possible, to reach agreement.”Pogrebinsky and others also said that Tymoshenko strengthened her position by apparently eliminating RosUkrEnergo — which is owned by Russian gas giant Gazprom and two Ukrainian businessmen — as the intermediary company that sells Russian gas to Ukraine.RosUkrEnergo’s activities are highly opaque, but analysts believe — without any documentary proof — that the company, which enjoyed vast profits from its middleman position, is linked to Tymoshenko’s political rivals. By removing it, Tymoshenko has simultaneously added an element of transparency to the Ukrainian gas trade and possibly starved a major source of financial support for her competitors.“Tymoshenko came out of the tawdry affair looking better than President Victor Yushchenko,” according to an editorial in the English-language Kyiv Post. “He emerged from the deal looking like an incompetent, corrupt bumbler who got caught trying to prop up the shady RosUkrEnergo for reasons of personal gain.”Tymoshenko's victory may be fleeting, however. The ink was scarcely dry on the agreement before knives were drawn among the Ukrainian political elite, pointing towards further infighting and possibly political deadlock. Oleksander Shlapak, Yushchenko's economic aide, said that the deal might have to be re-negotiatiated. And the president himself lashed out at Tymoshenko, albeit without mentioning his one-time Orange Revolution ally by name."We must not blindly believe alluring promises,” he said. “We must not blindly believe politicians who, within an instant, betray the national interest.”The prime minister gave as good as she got: “I believe that if the president could have secured better conditions, there was no one to stop him.”Tymoshenko, 48, is a controversial figure in Ukrainian politics. She is a striking figure who sports a halo of blond braid wrapped around her head — almost giving her the air of a mythical heroine. Some supporters practically worship her. Her critics, meanwhile, claim she is corrupt and voraciously ambitious, and point to her extensive involvement with the country’s energy sector, both as a businesswoman and as government deputy minister. She is sometimes referred to as the “gas princess” or “Lady Yu.”She is also the political leader most closely associated in the public mind with the economy, and as the country’s financial woes deepen, she may suffer for this. Analysts anticipate political and social unrest in the spring.“The most important issue at the moment is the economic crisis,” said Volodymyr Fesenko, director of the Penta Center for Political Studies. “Tymoshenko’s victory may be relative and short-term.”
But analysts say the battle among the country’s ruling elite is far from over, and could spell further instability in the coming months.Millions in eastern Europe were stranded without electricity and heat just after the new year, when Russia cut off all gas deliveries through Ukraine because of a pricing dispute (about 80 percent of Russian gas headed for Europe traverses Ukraine). Tymoshenko traveled to Moscow Jan. 17, where she and Vladimir Putin, her Russian counterpart, held an all-night session behind closed doors, during which they hammered out an accord that permitted shipments to resume.Under the accord, Ukraine agreed to pay $360 per 1,000 cubic meters of gas: The amount was 20 percent less than what Moscow was aiming for, but was significantly higher than the $200 that Kiev wanted. At the same time, Ukraine agreed not to raise Russia’s transit price.Observers took note that it was the two countries’ prime ministers — and not their heads of state, Yushchenko and Dmitri Medvedev — who were tasked with, or more likely took on the responsibility for, brokering the deal. Equally significant was the fact that the two leaders seemed to work well together, a remarkable development given both the acrimonious atmosphere that had characterized the gas dispute and relations in general with the Ukrainian president.Tymoshenko "has added to her image as a ‘can do’ leader,” wrote Christopher Weafer, chief strategist at the Russian bank UralSib.“Tymoshenko was the winner,” agreed Mikhailo Pogrebinsky, director of the Kiev Center for Political and Conflict Studies. “She showed herself to be a more acceptable partner for Russia — one with which it is difficult, but in the end possible, to reach agreement.”Pogrebinsky and others also said that Tymoshenko strengthened her position by apparently eliminating RosUkrEnergo — which is owned by Russian gas giant Gazprom and two Ukrainian businessmen — as the intermediary company that sells Russian gas to Ukraine.RosUkrEnergo’s activities are highly opaque, but analysts believe — without any documentary proof — that the company, which enjoyed vast profits from its middleman position, is linked to Tymoshenko’s political rivals. By removing it, Tymoshenko has simultaneously added an element of transparency to the Ukrainian gas trade and possibly starved a major source of financial support for her competitors.“Tymoshenko came out of the tawdry affair looking better than President Victor Yushchenko,” according to an editorial in the English-language Kyiv Post. “He emerged from the deal looking like an incompetent, corrupt bumbler who got caught trying to prop up the shady RosUkrEnergo for reasons of personal gain.”Tymoshenko's victory may be fleeting, however. The ink was scarcely dry on the agreement before knives were drawn among the Ukrainian political elite, pointing towards further infighting and possibly political deadlock. Oleksander Shlapak, Yushchenko's economic aide, said that the deal might have to be re-negotiatiated. And the president himself lashed out at Tymoshenko, albeit without mentioning his one-time Orange Revolution ally by name."We must not blindly believe alluring promises,” he said. “We must not blindly believe politicians who, within an instant, betray the national interest.”The prime minister gave as good as she got: “I believe that if the president could have secured better conditions, there was no one to stop him.”Tymoshenko, 48, is a controversial figure in Ukrainian politics. She is a striking figure who sports a halo of blond braid wrapped around her head — almost giving her the air of a mythical heroine. Some supporters practically worship her. Her critics, meanwhile, claim she is corrupt and voraciously ambitious, and point to her extensive involvement with the country’s energy sector, both as a businesswoman and as government deputy minister. She is sometimes referred to as the “gas princess” or “Lady Yu.”She is also the political leader most closely associated in the public mind with the economy, and as the country’s financial woes deepen, she may suffer for this. Analysts anticipate political and social unrest in the spring.“The most important issue at the moment is the economic crisis,” said Volodymyr Fesenko, director of the Penta Center for Political Studies. “Tymoshenko’s victory may be relative and short-term.”
Saturday, 24 January 2009
It's Been A Gas
KIEV, Ukraine -- As traumatic and as pointless as the three-week gas war seemed to be, Ukraine actually gained a lot from this open conflict. True, the nation’s reputation and its ambitions to integrate more closely with the West took a severe beating.
Many worldwide got the unfortunate impression that Ukraine is ruled by corrupt, incompetent leaders who don’t pay their bills, who steal gas and who don’t play by market rules.Russia picked this fight for self-serving reasons and its reputation slid much further than Ukraine’s.But the difference is that Russian leaders don’t care much about their international reputation or, particularly, about integrating with Western institutions. Ukraine does.Still, the agreement brokered by prime ministers Yulia Tymoshenko and Vladimir Putin – at least as we, Brussels and Washington understand it – will be a big help for two reasons: market prices and transparency.If Ukraine is finally forced to buy gas at market prices, then perhaps the nation will be less wasteful and more resourceful about its vast energy needs, as well as less subservient to manipulation from Moscow.Also, if the deal eliminates RosUkrEnergo and other shady intermediaries once and for all, then the notoriously corrupt gas trade stands a chance of being cleaned up.Tymoshenko came out of the tawdry affair looking better than President Victor Yushchenko. Yushchenko emerged from the deal looking like an incompetent, corrupt bumbler who got caught trying to prop up the shady RosUkrEnergo for reasons of personal gain.When Putin, who rules as a Mafia don, can justifiably call you on the carpet for corruption, you are finished politically.In the end, Yushchenko was left lamely complaining about the price Tymoshenko negotiated.Still, no true leadership has emerged yet in Ukraine.Real statesmanship would find ways to improve Ukraine’s reliability, as well as improve its vast but neglected state-owned pipeline network.Such domestic improvements would let the air out of the arguments for building costly alternative routes – such as North Stream, South Stream and Nabucco – that bypass Ukraine.Without gas to transport, Ukraine will find itself with hundreds of kilometers of useless pipes.
Many worldwide got the unfortunate impression that Ukraine is ruled by corrupt, incompetent leaders who don’t pay their bills, who steal gas and who don’t play by market rules.Russia picked this fight for self-serving reasons and its reputation slid much further than Ukraine’s.But the difference is that Russian leaders don’t care much about their international reputation or, particularly, about integrating with Western institutions. Ukraine does.Still, the agreement brokered by prime ministers Yulia Tymoshenko and Vladimir Putin – at least as we, Brussels and Washington understand it – will be a big help for two reasons: market prices and transparency.If Ukraine is finally forced to buy gas at market prices, then perhaps the nation will be less wasteful and more resourceful about its vast energy needs, as well as less subservient to manipulation from Moscow.Also, if the deal eliminates RosUkrEnergo and other shady intermediaries once and for all, then the notoriously corrupt gas trade stands a chance of being cleaned up.Tymoshenko came out of the tawdry affair looking better than President Victor Yushchenko. Yushchenko emerged from the deal looking like an incompetent, corrupt bumbler who got caught trying to prop up the shady RosUkrEnergo for reasons of personal gain.When Putin, who rules as a Mafia don, can justifiably call you on the carpet for corruption, you are finished politically.In the end, Yushchenko was left lamely complaining about the price Tymoshenko negotiated.Still, no true leadership has emerged yet in Ukraine.Real statesmanship would find ways to improve Ukraine’s reliability, as well as improve its vast but neglected state-owned pipeline network.Such domestic improvements would let the air out of the arguments for building costly alternative routes – such as North Stream, South Stream and Nabucco – that bypass Ukraine.Without gas to transport, Ukraine will find itself with hundreds of kilometers of useless pipes.
Ukraine President, Prime Minister Row Again Before Key Meeting
KIEV, Ukraine -- Ukraine's president and prime minister, at odds over the merits of a deal to restore Russian gas flows to Europe, traded new barbs on Thursday ahead of a meeting of top officials about the agreement.
Prime Minister Yulia Tymoshenko, who praises the accord and the 2009 gas price as a "victory" for Ukraine, said the National Security and Defence Council had no right to derail the deal she struck at weekend talks in the Kremlin.President Viktor Yushchenko says the deal's provisions for Ukraine to pay European prices less 20 percent damaged the national interest. He made no direct reference to the premier but warned in a speech against "alluring promises".Yushchenko and Tymoshenko were allies in the 2004 "Orange Revolution" that swept Ukraine's pro-Western leaders to power. They have since been at odds on nearly all policy issues, particularly since Tymoshenko was made prime minister for a second time in late 2007.In an address marking the 1919 proclamation of a shortlived Ukrainian state that was crushed by the Bolsheviks, Yushchenko said Ukrainians would not be duped by groundless pledges."We must not blindly believe alluring promises. We must not blindly believe politicians who, within an instant, betray the national interest," he told dignitaries.Tymoshenko said a meeting on Friday of the National Security and Defence Council could in no way alter the deal's provisions to do away with what she denounces as "corrupt" intermediaries in trade between the Ukrainian and Russian gas companies."I will not allow the president to bring back corrupt intermediaries between (Russia's) Gazprom and (Ukraine's) Naftogaz, no matter what sort of council meeting he holds," Tymoshenko told a news conference."I believe that if the president could have secured better conditions, there was no one to stop him. A meeting of the Council should have taken place in the middle of the crisis."The premier says the Council, whose decisions must in theory be implemented under the constitution, has no powers to overturn the deal clinched in two tough Kremlin negotiating sessions.In her comments, Tymoshenko renewed her attack on the central bank, saying its "speculative manoeuvres led to such an abrupt and groundless fall in the hryvnia (currency), which has placed the economy in such a difficult position".The hryvnia fell to 50 percent of its former value late last year, but has since regained ground.Tymoshenko has urged the president to sack the central bank chairman and said parliament must determine his responsibility in the currency's decline, which has increased the cost of loans taken out by millions of Ukrainians to purchase cars or homes.A year before a presidential election, Tymoshenko rides high in polls just behind Viktor Yanukovich, the Kremlin-backed candidate initially declared the winner in a rigged 2004 presidential poll that sparked the "Orange Revolution" protests. Yushchenko trails far behind in surveys.
Dubyna Hospitalized After Emergency Heart Surgery
KIEV, Ukraine -- Oleh Dubyna, chairman of Ukraine’s state gas company, Naftogaz, was hospitalized and underwent emergency heart surgery, Prime Minister Yulia Tymoshenko said appearing on TRK Ukraina television channel late on Jan. 23.
“The head of Naftogaz is in intensive care; he had a very difficult operation on his heart,” she said adding that stress during the gas crisis likely built up upon Dubyna.Tymoshenko said that Dubyna was under a lot of stress during the gas dispute because Ukraine's president, Victor Yushchenko, gave him "diametrically" different instructions from her government."It was very difficult for him," she adding that the president and lawmakers in the Regions party close to middlemen company Rosukrenergo purposefully tried to sabotage her chances of finalizing an agreement before the New Year.Interfax-Ukraine reported that Dubyna was in stable condition at Kyiv's Feofania hospital, were the country's elite are traditionally treated.
“The head of Naftogaz is in intensive care; he had a very difficult operation on his heart,” she said adding that stress during the gas crisis likely built up upon Dubyna.Tymoshenko said that Dubyna was under a lot of stress during the gas dispute because Ukraine's president, Victor Yushchenko, gave him "diametrically" different instructions from her government."It was very difficult for him," she adding that the president and lawmakers in the Regions party close to middlemen company Rosukrenergo purposefully tried to sabotage her chances of finalizing an agreement before the New Year.Interfax-Ukraine reported that Dubyna was in stable condition at Kyiv's Feofania hospital, were the country's elite are traditionally treated.
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