[Ohio UZO News] Ukraine: FT; AP; KP; WoE

[Deychak, Orest]

Financial Times

Medvedev wants Ukraine to pay gas debts

By Catherine Belton in Moscow

Published: November 21 2008 02:02 

Russia turned up the pressure on Ukraine on Thursday as Dmitry Medvedev,
president, ordered Gazprom to enforce payment on $2.4bn in gas debts
even as Kiev struggles to weather the global financial crisis and a
political crisis at home.

"We need to fully clarify our position on Ukraine's debt and recover it
either on a voluntary or compulsory basis," Mr Medvedev told Alexei
Miller, the Gazprom chief executive, in comments broadcast on Russian
television.

Mr Miller later told journalists Gazprom would charge Ukraine more than
$400 per thousand cubic metres for gas supplies next year, more than
double the $179.5 Kiev currently pays. Analysts had expected that
earlier calls for $400 would be lowered because of a more than
three-fold tumble in global oil prices, which gas prices are tied to,
since early summer.

Analysts warned Ukraine could find it impossible to pay down the debt as
its economy is struggling to survive the global financial crisis and is
locked in yet another political crisis. Kiev has received the first
tranche of a $4.5bn IMF loan to help shore up its embattled economy.

The comments, Mr Medvedev's strongest warning yet, raised fears of new
cut-offs like the ones that led to reductions in gas supplies to Europe
in 2006. But a Gazprom representative said "no-one is going to cut off
anything. We need to figure out how to collect the money and work out
the contract for next year."

Analysts warned that a new standoff with Russia over gas debts could
help tip the balance in upcoming parliamentary elections in December,
which Ukraine's pro-western president, Viktor Yushchenko, called
following another conflict with his prime minister, Yulia Tymoshenko. Ms
Tymoshenko has been courting Russia in recent months. 

"This could well be a critical issue in the election where Tymoshenko
could point to better ties with Russia," said Chris Weafer, chief
strategist at Uralsib investment bank in Moscow.

"Gas relations between Ukraine and Russia are hostage to the political
situation in Ukraine," said Valery Nesterov, energy analyst at Troika
Dialog investment bank in Moscow.

AP

Ukraine president says debt to Russia must be paid 

21 November 2008

KIEV, Ukraine (AP) - Ukraine's president on Friday accused the prime
minister of saddling the country with a huge debt to Russia and said her
government must urgently repay $2.4 billion owed for gas imports.

President Viktor Yushchenko accused Prime Minister Yulia Tymoshenko --
his political rival despite sharing executive powers -- of acting
irresponsibly by allowing the debt to accumulate.

He said she bore full responsibility for the problem and that the debt
should be settled within the next 5 days.

"I want to warn that such practice leads to a colonization of Ukraine,"
Yushchenko told a security council meeting.

The two politicians have jostled for power since they formed their
coalition last year, so although economic policy is within Tymoshenko's
mandate, Yushenko has in the past challenged her decisions by issuing
decrees.

The state gas company Naftogaz, which answers to Tymoshenko, continued
disputing the size and nature of the debt. Naftogaz said in a statement
Friday it actually amounts to $1.3 billion and is owed to an
intermediary company, not Russia's gas monopoly Gazprom
<javascript:void(0);> .

Russian President Dmitry Medvedev ordered Gazprom <javascript:void(0);>
Thursday to collect the debt from Ukraine, saying Russia would not take
no for an answer.

Gazprom <javascript:void(0);>  head Alexei Miller then threatened to
hike the price for natural gas for Ukraine from the current $179.5 per
1,000 cubic meters to over $400.

Tymoshenko, on a visit to Sweden Friday, expressed optimism that Russia
would stick by an agreement she reached earlier this year to raise the
price gradually over several years.

Russia's disputes with Ukraine over gas prices in the past have led
Moscow to cut off or reduce supplies, actions that affected natural gas
consumers in Western Europe, too.

Kyiv Post

 


Political leaders engage in mindless destruction


November 19, 2008

 

Legislators have a responsibility to their citizens, especially at a
time of global and national economic crisis

 

When Ukraine's parliament voted on an anti-crisis package Oct. 31, it
sent a reassuring signal that Ukraine's chaotic political scene was
returning to a pattern of cooperation and consolidation. But in the days
that followed, there were recriminations from the Volodymyr Lytvyn Bloc
on how the vote was taken. Those came with denunciations of the rescue
package by the Party of Regions, whose business stakeholders will
benefit from the currency stabilization and economic discipline that the
International Monetary Fund line of credit will impose. These outbursts
made clear that Ukraine's politics were returning to business as usual:
disharmony.

As if that was not enough, any remaining glimmer of hope for a new
consensus disintegrated with the Rada vote on Nov. 12 to remove Arseniy
Yatsenyuk from the post of speaker. As someone who was new to
legislative politics, some criticized Yatsenyuk's command of
parliamentary procedures and his handling of the difficult task of
balancing diverse party interests. But Yatsenyuk is unquestionably one
of the few macro-economically literate members of the legislature.
Moreover, he is the most economically capable legislator from the
once-staunchly pro-presidential Our Ukraine bloc. One would have thought
that as a globally-wired former minister of the economy and the former
acting head of the central bank, he would be seen as essential in
heading the legislature at a time of global economic crisis. 

That Yatsenyuk was done in by the internecine maneuverings of several
former allies in the Our Ukraine bloc (including a godmother to the
president's son, Taras, and leading political allies of the president's
chief of staff) after reportedly earning the disfavor of Yushchenko, is
all the more regrettable. 

Ukraine does not have an endless supply of economically literate
politicians to take a turn leading the legislature. And Yatsenyuk was
understood to be one of the country's best economists. 

It is fair enough to point out that a parliament has its own legitimacy
and its members are free to vote as they wish. But legislators also have
a responsibility to their citizens, especially at a time of global and
national economic crisis. Perhaps Yatsenyuk's dismissal will be followed
by the rapid election of a new speaker who can work effectively. But it
is highly unlikely to be followed by someone more economically astute.

Through my work, I frequently interact with analysts from major
international investment banks and financial institutions. In the past,
Ukraine's endless shifts of governments, its frequent elections, its
appalling parliamentary violence and its byzantine betrayals were
shrugged off as immaterial. After all, Ukraine's economy was growing
smartly. And when crucial votes (such as IMF legislation) came along,
powerful business interests in the Rada could be counted on to deliver
the requisite minimum support for the country to muddle through. Today,
Ukraine's internecine political chaos is raising serious questions in
investment circles about whether Ukraine will be able to respond quickly
to the mounting effects and future challenges of the crisis.

This moment is categorically different from any since Ukraine's
independence. Estimates suggest that Ukraine's economy will decline from
around seven percent growth in the first three quarters of 2008 to 2.5
percent next year. And if the recession in the advanced industrial
countries is more substantial than now estimated, that number could
decline even further. This means there is little margin for error or
dalliance and that legislators, the government, and the president must
be ready to act in consolidated fashion. Yet Ukraine's political leaders
continue to behave as if there is no global financial crisis and as if
Russia had not moved with a massive militarily incursion into the
territory of a sovereign country for the first time since the Prague
Spring.

At a time when the global economic crisis has led to growing national
solidarity throughout the world, there is in all Europe no more deeply
divided and unconsolidated political leadership than that of Ukraine.
And even if there are new elections late in the winter or early in the
spring, there are few signs that any broad-based political consolidation
is on the horizon.

The level of mutual mistrust already among political leaders is having
an important effect. Two cases in point: while the economic crisis has
buried any hope for lucrative major privatizations, the last year was a
wasted one for major privatization, largely because the President, his
supporters, and the opposition did not trust that Yulia Tymosehnko would
use privatization proceeds wisely and have kept in office a radical
Socialist at the head of the state privatization agency. 

Similarly, Ukraine today sits on over seven billion euros worth of
carbon credits created under the terms of the Kyoto Protocol. These
credits could be sold to Kyoto compliant countries such as Japan or
Germany, who want them to offset their excess carbon pollution. Yet, as
of this date, not a cent of this asset has been converted into hard
currency for Ukraine's troubled economy.

There is no secret for lack of progress on this front.  It is not only
due to the lack of trust between the president and the prime minister,
but also because the two leaders are unable to compromise on what to do
with this unrealized asset.

What is surprising in all this is the relative passivity of business
interests. While business leaders often express private contempt for the
ongoing political deadlock, they are invisible in the public debate.
Where in all of this are the vaunted oligarchs, and the millionaires and
billionaires who numerically are said to dominate the parliament? Why
are they not on the front lines of the effort to press for a nationwide
consensus on how to diminish the effects of the coming economic decline?
Why are they not pressing Ukraine's elite to establish a modus vivendi
that could create a government with broad-based cross-regional support
that would enable it to weather the coming storm.

Ukraine's public, too, is becoming increasingly discontented with its
political leaders. Over time, this will create an opportunity for the
emergence of a new generation of leaders and new political projects. But
in the context of economic decline, public discontent could be exploited
by anti-liberal political extremists.

There is still a way out of the impasse. It will require decisive
action, political courage, and the willingness of Ukraine's key leaders
to put personal advantage on the back burner and to agree to compromise.

But this will demand statesmanship, which appears in short supply in
today's Ukraine. Instead, Ukraine's political leaders shine in their
venality and duplicity, and in their command of the politics of mutually
assured destruction.

Adrian Karatnycky is a senior fellow with the Atlantic Council of the
United States and managing partner of Myrmidon Group LLC, a business
advisory group.

Window on Eurasia: Was There Another Yalta at Nice?

 

Paul Goble

 

            Kuressaare, November 20 - A Ukrainian publisher who a close
friend of the family of French President Nicolas Sarkozy says that the
French leader met privately with Russian President Dmitry Medvedev
during the recent EU-Russia summit and agreed to recognize each other's
sphere of influence in Europe.

            As they are accustomed to doing whenever Moscow and the West
make a decision about them without them, the Ukrainian media have
labeled this "deal" as another Yalta, a reference to the 1945 accord
between the United States and Great Britain, on the one hand, and the
Soviet Union, on the other, that left Eastern Europe under Moscow's grip
for nearly 50 years.

            Because of the sensitivities involved and because neither
the French nor the Russian government has confirmed this report, it is
necessary to describe the report itself as it appeared in the Ukrainian
newspaper "Segodnya" this week, before considering what in fact it may
mean (www.segodnya.ua/news/12093619.html).

            The paper says that Omar Arfush, a Ukrainian publisher who
is close to the Sarkozys, told its journalists that the Nice summit was
"preceded by an informal meeting between Sarkozy and Russian President
Dmitry Medvedev at which, according to information in the possession of
Arfush, some very important agreements were achieved."

            In the Ukrainian publisher's account, "before the summit
Sarkozy invited Medvedev to meet with him" with only their closest aides
for a dinner in the old city of Nice.  At that session, Sarkozy
reportedly asked Medvedev directly "What do you want?" And the latter
replied that he wanted the two to agree on the partition of Europe into
two spheres of influence.

            There will be "my" regions, the Russian president said, and
there will be "yours." In this way, you help me and I will help you,"
adding that he was especially interested in preventing the deployment of
anti-missile systems in Eastern Europe and blocking the expansion of
Western influence in Georgia and Ukraine.

            To this, Arfush continued, Sarkozy replied "'If I will help
you in this, then you must give me a promise that you will support me in
relations with the United States and that you will not interfere in
Europe."

            In other words, the Ukrainian paper's Elena Tribushnaya
writes, "a little Yalta took place in Nice: two presidents met and
decided who will influence what in Europe and also agreed to work as a
team on the world stage in order to finally take away the influence of
the Americans and expand their own."

            Because there has been no confirmation of this
Sarkozy-Medvedev "understanding" - and there isn't likely to be - it is
impossible to say whether this report is true or whether it has been put
out for one of several purposes.  But it is certainly the case that the
exchange between the two leaders, if that is all that took place,
qualifies as "a new Yalta" or even a "little" one.

            On the one hand, such exchanges, in which each side seeks to
find out what the other really thinks in an informal setting, are part
and parcel of diplomatic life. Consequently, it may be that Arfush
reported accurately but that he and the Kyiv journalists over-read and
over-reacted to what was said. 

            But on the other, it is possible that this report is not
accurate but rather an effort by Moscow to divide the West by setting
Paris against both other European capitals and Washington and to
intimidate the Ukrainians and the Georgians into doing Russia's will by
convincing them that their supposed friends are now no friends at all.

            If that latter interpretation is correct, then it suggests
that Western countries, including France, have overcome the Yalta
approach but that the rulers of the Kremlin have not and still believe
that big countries have the right to get together and make decisions not
only for themselves but for smaller states as well. 

 

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