[Ohio UZO News] Ukraine: Note; NYT; EDM; KP; WS

[Deychak, Orest]

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The New York Times

www.nytimes.com

August 4, 2009


Questions Surround Gas Deal Brokered by E.U. for Ukraine 


By JAMES KANTER

BRUSSELS - International banks have agreed to lend Ukraine about $1.7 billion to pay its gas bills to Russia and, at the same time, to drastically overhaul the country's murky energy sector, the European Commission said Monday.

But it was unclear whether the agreement - full of caveats and politically sensitive conditions for Kiev - would hold together long enough to avert another natural gas crisis in Europe this winter. 

As a consequence of the political agreement, Naftogaz, Ukraine's state-run energy company, probably will have to pass along steep increases in the cost of natural gas to its customers, perhaps beginning as soon as next month, so that it can afford to pay its own bills in the future. That could pose problems for Ukrainian leaders, particularly with a presidential election looming early next year.

The overall amount of loans also falls far short of the $4 billion originally sought by Ukraine. Under the agreement, Ukraine would get up to $300 million this year. Meanwhile, the debt-laden Naftogaz faces a deadline of Friday to make a payment of approximately $600 million to Gazprom, the Russian natural gas giant, for its imports in July. 

José Manuel Barroso, the president of the commission, noted that the agreement with international lenders, which was announced late Friday, was based on commitments made by the Ukrainian prime minister, Yulia V. Tymoshenko.

"I very much hope that the strict time frames set out in the reform agenda are fully respected," he said in a statement.

The agreement is intended to head off a crisis similar to what happened in January, when gas flows from Russia through Ukraine were halted. It was the biggest supply cut of its kind for the E.U.

Around 80 percent of Russian gas bound for Europe passes through Ukraine, which was formerly part of the Soviet Union.

Ukraine and Russia reached a settlement that brought an end to the stoppage, which was the second in three years. But by late spring, Gazprom was warning its E.U. customers about weak finances at Naftogaz, and said there was the prospect of a new dispute if Naftogaz fell behind on its payments and took natural gas that was meant for E.U. countries to meet its own needs.

Officials at the commission, the executive body of the E.U., oversaw delicate talks during the past few weeks aimed at resolving the dispute. On top of demanding that Naftogaz raise domestic prices, the lenders also asked Ukraine to take concrete steps to make the way that natural gas was sold and shipped much more transparent.

Under the plan, the European Bank for Reconstruction and Development would give Ukraine up to $300 million loan for its "immediate gas storage requirements."

Naftogaz also could apply to the E.B.R.D. from 2010 for up to $450 million for investments to upgrade Ukraine's natural gas transit system.

The World Bank offered up to $500 million in loans for measures including helping vulnerable Ukrainians pay their heating bills, but only "upon satisfactory completion of all the reform measures," a statement from the lenders said.

The European Investment Bank could offer up to $450 million in long-term loans for updating Ukraine's natural gas transit system. "Our aim is to improve the sustainability, accountability and above all, the transparency of the Ukrainian gas market to the benefit of both Ukraine and of energy security in all of Europe," Thomas Mirow, the E.B.R.D. president, said.

Eurasia Daily Monitor

http://www.jamestown.org/programs/edm/

July 31, 2009

Russia-Ukraine Diplomatic War

On July 27 the Kommersant, daily citing diplomatic sources, said that Ukraine intended to expel the Russian General Consul in Odessa, Oleksandr Grachov. The Ukrainian authorities have long accused the consulate of involvement in the illegal distribution of Russian passports to Crimean citizens. Kommersant described the expulsion of two Russian diplomats in close proximity as "the beginning of a diplomatic war between Moscow and Kyiv." Ukrainian sources revealed that the first diplomat that was expelled, a senior adviser to the Russian Embassy Vladimir Lysenko, had responsibility for maintaining contact and cooperating with "compatriots" in Ukraine. In effect, he provided finance for pro-Russian organizations in Ukraine, a Ukrainian diplomatic source told Ukrayinska Pravda (July 27). Lysenko was warned two years earlier by the Ukrainian foreign ministry. On that occasion Lysenko had questioned Ukrainian sovereignty over the Crimea in conjunction with the Black Sea Fleet base.

Ukrainian leaders are anxious that Russia will refuse to withdraw from Sevastopol in 2017, since Moscow continues to raise the question of extending the lease indefinitely and adding new vessels to the fleet. On July 26 the Commander-in-Chief of the Russian Navy Admiral Vladimir Vysotskiy attended the Black Sea Fleet annual parade, the first occasion that such a senior Russian officer has carried out the duty. Vysotskiy said during his visit that a portion of the fleet should remain in Sevastopol after 2017. "We are saying that Sevastopol is for us unfortunately not the main base of the Black Sea Fleet, as it is outlined in the 1997 agreement, but it is an important base" (Ukrayinska Pravda, July 26). Vysotskiy blamed political speculation by Ukrainian politicians for claims that the fleet could not remain beyond 2017.

The fleet is based there on a temporary article in the Ukrainian constitution that permits foreign bases for twenty years. After 2017 the article will not be valid and for the fleet to be permitted to remain beyond that date would require changing the Ukrainian constitution. This would be highly unlikely, as it would require 300 votes, which the pro-Russian forces could never muster. Opinion polls show that public support for Party of Regions leader Viktor Yanukovych and Communist Party leader Petro Symonenko total 40 percent, a long way from a two thirds constitutional majority.

The Ukrainian foreign ministry responded to Admiral Vysotskiy by saying that "we would like to stress that on the question of the term for the basing of the Black Sea Fleet of the Russian Federation there are no different viewpoints; there is simply a state (derzhavna) position declared on different levels." Documents on the termination of the basing agreement in 2017 are in preparation, the spokesman said, as the constitution forbids any alternative scenario (www.mfa.gov.ua, July 27). Tension surrounding the fleet remains high. The Ukrainian interior ministry, acting on intelligence provided by military intelligence and the security service, recently halted the transportation of fleet missiles on three occasions (since they lacked permits), as they were transported through the streets of Sevastopol. On two of these occasions the transportation did not include the required fire engine in case of an accident in a heavily populated area.

According to the 1997 agreement, the fleet is obliged to request from the Ukrainian defense ministry a permit for transportation of any kind outside the Sevastopol base. If no permit is received, then the transportation infringes Ukrainian legislation, an adviser to Ukraine's foreign ministry stated (Ukrayinska Pravda, July 24).

The National Security and Defense Council (NRBO) issued a statement on July 24 on the issue of transportation by the fleet. The NRBO stated that infringements had reached a "systematic character" that "continues to ignore what is laid out in the bilateral agreement, international law and in Ukrainian legislation. The result is that the inhabitants of Sevastopol and Ukraine's national security have been placed under serious threat." The statement continued, "It would appear that this is purposefully undertaken to demonstrate disrespect to (Ukraine's) national sovereignty..."

Admiral Vysotskiy admitted that this had broken the 1997 agreement and promised an investigation. Whether the investigation will lead to any change in the fleet's posture in Sevastopol is doubtful. During Leonid Kuchma's presidency from 1997-2004 the Ukrainian authorities turned a blind eye to the fleet's repeated flouting of the 1997 basing agreement.

The "rocket-diplomatic war," as Ukrayinska Pravda (July 24) described it, is a new phenomenon, as the current Ukrainian leadership has opted to force the fleet to adhere to every aspect of the 1997 agreement. One factor influencing President Yushchenko to adopt this policy is the shock in Kyiv over the use of fleet to attack Georgia in August 2008. Ukraine had not expected that its territory would be used to launch any aggression against an ally. The missiles illegally transported through Sevastopol were the same type used against the Georgian navy during the Russian aggression against Georgia.

On the eve of the fleet's annual parade attempts to hold a rehearsal were also blocked by the Ukrainian interior ministry due to the lack of permits for 22 Russian armoured personnel carriers to trundle through Sevastopol. One Russian diplomatic source described this as another "provocation" (Ukrayinska Pravda, July 23).

Tension in the Crimea is at its highest since Ukraine faced the separatist challenge in the mid-1990's. Externally, Russia has launched a widespread ideological campaign against Ukraine (and Georgia) that has made the former the third most disliked country in Russia. This tension in the Crimea is largely ignored by the E.U., NATO and the U.S. - though it is an increasing priority in Kyiv.

--Taras Kuzio


Kyiv Post 


 


Will Pukach's arrest solve Gongadze case?


30 July, 2009 

Roman Kupchinsky says Yushchenko apparently needs a spectacular show to regain his lost popularity and the arrest of Pukach could be the answer to his prayers on Hoverla Mountain in the Carpathian Mountains.

The Ukrainian justice system has many ways of pulling the wool over your eyes. At first glance, everything seems to be in perfect order. Prosecutors, according to the law, refrain from discussing the details of ongoing cases, which are later dropped due to a mysterious lack of evidence. Judges remain clean and untouchable, until they are selectively exposed for taking graft, and no high-profile cases are ever brought to trial. 

In many ways it is a carbon copy of the Russian justice system, a system manipulated by those in power to protect those who promulgate the rampant corruption that has overwhelmed Russia. 

Is the Ukrainian justice system willing to prosecute Oleksiy Pukach, the former head of the Interior Ministry's investigation department, who was recently apprehended by the State Security Service (SBU) in an obscure village in Zhytomyr Oblast? He is alleged to be the murderer of Internet journalist Georgiy Gongadze in 2000. Will the prosecutor's office have the will to learn from Pukach who ordered the murder of Gongadze and tell Ukrainians the truth? Will President Victor Yushchenko allow them to do so?

The bitter truth is hard to swallow.

For years, the current president of Ukraine has promised to solve the Gongadze murder and, for various undisclosed reasons, has not been able to fulfill his multiple promises. Now that the January 2010 election campaign has begun, Pukach was suddenly arrested and has allegedly told the prosecutor's office who ordered the killing and where Gongadze's severed head is hidden. But, as always, the prosecutor's office sticks to legal procedures and refuses to disclose who Pukach named. Everything appears to be consistent with the law of the land. Yet... and there always seems to be a yet. 

Ukrainians have learned the hard way not to trust their leaders or their criminal justice system. Many continue to believe that it was former President Leonid Kuchma who ordered, or suggested, that Gongadze "be removed." Yushchenko is still widely suspected of giving Kuchma immunity from prosecution in exchange for allowing the third run-off vote in the contested 2004 elections. The alleged pledge to Kuchma might not be operable today. Some suspect that Yushchenko is finally willing to throw the old, discredited former president, to whom he once pledged total loyalty, to the dogs. 

While I have no love for Kuchma and his gang, I am beginning to have less love for Yushchenko and his gang.

Yushchenko is not known to keep his word on many issues. So why should he change his moral standards now? 

Today, Yushchenko apparently needs a spectacular show to regain his lost popularity and the arrest of Pukach could be the answer to his prayers on Hoverla Mountain in the Carpathian Mountains, where he recently announced his bid to run for re-election.  

But it is not only Yushchenko who is interested in the final outcome of the Pukach affair. Rada speaker Volodymyr Lytvyn, whose voice was allegedly recorded on the Mykola Melnychenko tapes as urging Kuchma to deal forcibly with Gongadze, is also scared of what Pukach might reveal. Lytvyn has also announced his presidential bid. Any revelations by Pukach that he was an active co-conspirator in the Gongadze murder would destroy his chances forever and make him liable to criminal charges. 

The SBU appears to be a willing tool in the hands of Yushchenko. And while many rank and file SBU officers are decent men and women, the leadership is beholden to the president of the country. The deputy head of the SBU, Yushchenko appointee, Valery Khoroskovsky, appears to understand intelligence and criminal investigation as much as a wolf understands astronomy.  

This blend of political intrigue, self interest and convenient image building could be another disastrous last straw attempt by Yushchenko to remain in power. It can also extract a heavy price on Ukraine's credibility around the world.   

 Roman Kupchinsky is a partner in AZEast Group, a political risk consultancy based in the United States. He can be contacted at Kupchinsky at AZEast.com.

 

The Weekly Standard

Speaking the Truth 
Biden on Russia. 
by David J. Kramer 
08/01/2009 

 

Vice President Biden had just completed a successful visit to Ukraine and Georgia last week when he created a new controversy with dire predictions about Russia. His comments, arguably ill-timed for his boss's efforts to reset relations with Moscow, were not the only ones in the past few days offering a gloomy outlook on Russia. The outgoing European Union Ambassador to Russia Marc Franco similarly warned that Russia would maintain "many characteristics of a Third World economy" unless it established real rule of law. 

In an interview with the Wall Street Journal on July 23, Biden described a Russia with a looming demographic crisis, a "withering economy", and a banking sector in trouble. He noted Russia's interest in negotiating further cuts in nuclear weapons because they cannot afford to maintain even current levels. Russia is having difficulty adjusting to "loss of empire," Biden said, adding that it is "clinging to something in the past that is not sustainable." 

In a separate interview over the weekend with Reuters, Franco cited Russia's insufficiently developed civil society and lack of freedom of the press. "I do believe," Franco said, "that you cannot have rule of law without the basic elements of democracy, implying free elections and a vibrant civil society supported by a free press."

In their descriptions of current Russia, both Biden and Franco were on the mark. Russia's economic troubles (the World Bank predicts GDP will decline 7.9 percent this year) are compounded by its continued dependence on the export of raw materials (energy, metals), leaving it vulnerable to outside factors beyond its control. Over the past eight years despite the bounty from high oil prices, Russia's leaders failed to diversify the economy or invest in its declining infrastructure and energy sector, production in which has flattened out and likely to decline in the next several years. At the same time, Russian corporate debt is estimated at $500 billion, $130 billion of which is due this year.

Meanwhile, Russia's population has been declining by an average of 700,000 per year and may reach a low, in worst case scenarios, of 100 million by 2050 from roughly 143 million today. This will have enormous implications for Russia's labor force, its military, and its ability to control restive regions like the North Caucasus, one of the few places where the population is on the rise. Corruption remains a huge problem, while civil society activists, journalists, and opponents of the government deal with regular harassment, attacks, and even murder. Russia, in other words, faces a very difficult future.

In an appearance on Sunday's Meet the Press, Secretary of State Hillary Clinton described Russia as a "great power" and reiterated President Obama's hope to see a "strong, peaceful, and prosperous" Russia. White House press secretary Robert Gibbs said in a statement Saturday evening, "The president and vice president believe Russia will work with us not out of weakness but out of national interest." 

Alas, that is wishful thinking. Contrary to Biden's description of Russia's leaders as "pretty pragmatic in the end" and likely to cooperate with the U.S. out of national interest on issues such as Iran, the very problems he identified are likely to make Russia a more difficult country with which to engage. We and Russian leaders simply do not share many national interests, to say nothing of common values.

A Russia facing the kinds of problems Biden and Franco described is more apt to deflect its population's attention from the growing number of difficulties at home by projecting onto others like neighboring Georgia or Ukraine. There's nothing like a "threat" from Tbilisi or Kyiv -- or from NATO enlargement -- to drum up popular support and take everyone's minds off the problems at home, at least temporarily. Even on the issue of arms control, Russian leaders have insisted that a final agreement be linked to the U.S. abandonment of missile defense plans in Poland and the Czech Republic. If Russia cannot afford to maintain its current declining levels of nuclear warheads and delivery vehicles anyway, Obama need not cave to Russian demands to link a post-START agreement to missile defense. Russian leaders need an arms control treaty more than we do. 

On Iran, Biden said, "I can see Putin sitting in Moscow saying, 'Jesus Christ, Iran gets the nuclear weapon, who goes first?' Moscow, not Washington." This, too, is wishful thinking given that Russian leaders have repeatedly declined to get tougher with Iran over its nuclear weapons aspirations. They would much prefer the United States and its allies play the role of the heavy vis-à-vis Tehran while Russia reaps the benefits of economic, energy, and arms sales ties with Iran.

A Russian leadership facing the kinds of problems Biden and Franco describe is less, not more, likely to work together with us on a whole host of issues. Its leadership is apt to clamp down even more against the slightest possible threats to its control, increasing the dangers to the country's own human rights activists and journalists such as Natalya Estimorova, murdered in Chechnya July 15. Sadly, these are not the characteristics of a "great power" or even a country with a leadership that reflects "pragmatism" or "shared interests" with us. As the Obama administration seeks to reset relations with Moscow, it should do so very much keeping in mind the truth, inconvenient and ill-timed though it may be, spoken by the vice president.

David J. Kramer is a Senior Transatlantic Fellow at the German Marshall Fund of the United States and served as Assistant Secretary of State for Democracy, Human Rights and Labor and a Deputy Assistant Secretary of State responsible for Russia, Ukraine, Belarus, and Moldova, in the George W. Bush Administration.

 

 

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