[Ohio UZO News] Ukraine: AP; FT; NYT (2); EDM

[Deychak, Orest]

Associated Press

Ukraine meets leaders of gas-starved European nations, throws Moscow gas summit into disarray 

By MARIA DANILOVA 

Associated Press Writer

16 January 2009

10:04

KIEV, Ukraine (AP) - The Ukrainian president sought to throw Russia's plans for a weekend gas summit in Moscow into disarray by meeting Friday with European leaders in Kiev to discuss the natural gas crisis.

The French Embassy in Moscow said President Nicolas Sarkozy would not attend the Moscow meeting, and no head of state has publicly announced plans to attend.

Ten days into a natural gas shortage that has left over 15 European nations scrambling for alternative sources of energy, Russia and Ukraine are still deeply divided over what price Ukraine should pay for gas this year. With no solution, no Russian gas was heading to Europe over Ukrainian pipelines.

President Viktor Yushchenko's talks in the Ukrainian capital with his Slovak counterpart and the prime minister of Moldova were sure to irritate Russia. Yushchenko assured the visitors Kiev was doing its best do solve the dispute.

Ukraine doesn't oppose the idea of a summit, but insists it not be in Moscow.

Ukrainian Prime Minister Yulia Tymoshenko and Russian Prime Minister Vladimir Putin are still meeting in Moscow on Saturday, but this appears to be separate from Russian President Dmitry Medvedev's call for a full summit.

Czech Prime Minister Mirek Topolanek, whose country hold the rotating EU presidency, was sending his industry and trade minister to Moscow, but France said Sarkozy won't go.

"The conditions for a summit are insufficient," the French Embassy in Moscow said.

In a foreign policy speech, Sarkozy said the credibility of Ukraine and Russia were at stake.

"I know and understand political rivalries. They must not hold hostage an energy dispute which concerns millions of Europeans, who expect better. Ukraine's credibility is at stake," he said.

Turning to Russia, he added: "When one supplies two-thirds of the gas that Europe needs, you respect your clients, as the clients must respect the supplier."

The EU called weekend talks the "last and best chance" to settle the dispute and threatened to reassess relations with Russia and Ukraine if there was no resolution by Monday, but the comment appeared to have little impact.

Russia stopped shipping gas to Ukraine for domestic use on Jan. 1 when the countries could not agree on a price, then accused Ukraine of siphoning off Europe-bound gas and turned off the taps entirely on Jan. 7.

The cutoff has forced thousands of factories in eastern Europe to cut production or even close and left countless residents shivering in the grip of winter.

Bulgaria was seeking emergency energy deliveries from Greece and Turkey. Serbia and Hungary reported higher smog counts from using dirtier fuels in power plants, while Slovakia said the gas shortage was costing its economy 100 million euros ($150 million) a day.

"We're a victim of a political fight between Kiev and Moscow," Slovak Premier Robert Fico said.

Russia resumed piping gas toward Ukraine beginning Tuesday after both agreed to have EU monitors check flows, but the gas did not reach Europe. Russia says Ukraine is blocking shipments to European consumers. Kiev says Russia wants to send gas along a route that would disrupt supplies to Ukrainian consumers.

For the fourth straight day Friday, Ukraine refused Russia's request to send gas along to Europe.

Ukraine is also demanding that Russia supply the so-called "technical gas" needed to power compressors to push gas west toward Europe. Previously, Russia insisted that Ukraine pay for that gas but Putin suggested Thursday that a European consortium instead buy the technical gas from the Russian gas monopoly Gazprom <javascript:void(0);> .

Gazprom <javascript:void(0);>  deputy CEO Alexander Medvedev said Friday that Italian gas firm Eni SpA <javascript:void(0);>  has already agreed to join Gazprom <javascript:void(0);>  in creating the consortium -- and he expected Germany's E.On Ruhrgas and Gaz de France <javascript:void(0);>  to join shortly.

Gazprom <javascript:void(0);>  would sell the technical gas at $450 per 1,000 cubic meters, roughly what European countries now pay for gas, Medvedev said.

The Ukrainian gas company Naftogaz, controlled by Tymoshenko, said it would be happy to discuss the technical gas proposal. But an adviser to Yushchenko, Tymoshenko's political rival, dismissed the idea as a Kremlin attempt to acquire control of Ukraine's pipeline network.

"The idea of a consortium is a dead cat," said Yushchenko's deputy chief of staff Roman Bezsmertny.

Russia's demand that Ukraine pay $450 per 1,000 cubic meters of gas in 2009 -- more than twice what it paid last year -- is one of the main economic issues in the dispute, which also involves a struggle for dominance between the two neighbors.

Russia and Ukraine have been at odds since the 2004 Orange Revolution brought Yushchenko to power. His avid push for Ukraine to join NATO and the European Union has angered Moscow.

The Financial Times

West urged to open its doors to Ukraine 

By Stefan Wagstyl in Vilnius, Isabel Gorst in Moscow, Roman Olearchyk in Kiev and Joshua Chaffin in Brussels 

Published: January 15 2009 23:03 

Valdas Adamkus, the Lithuanian president, on Thursday urged the west to respond to Russia's heavy-handed tactics in the ongoing gas dispute by throwing open the door to Ukrainian membership in the European Union, Nato and the trans-Atlantic alliance.

In an interview with the FT, Mr Adamkus accused Moscow of playing politics in the gas trade to further ambitions of re-establishing itself as the region's "superpower" and advised Brussels to react with strong political backing for Ukraine's sovereignty.

"Russia wants to send a signal to Ukrainians that they are not at liberty to decide their own political future, including the questions of joining the EU, the trans-Atlantic alliance or Nato ... and show it can interfere in their internal affairs," said the veteran Lithuanian leader. "The question is whether Ukraine is free to make its own political decisions ... If the people of Ukraine want to become members of the EU, the EU should facilitate it and make this loud and clear."

Mr Adamkus's remarks came as frustration was mounting across Europe at a nine-day crisis that has resisted easy solutions, leaving thousands without fuel in the dead of winter. 

Ahead of a scheduled meeting on Friday with Vladimir Putin, the Russian prime minister, Angela Merkel, Germany's chancellor, warned Moscow that it risked losing the confidence of European energy partners.

Meanwhile, the International Energy Agency called the crisis another "wake-up call" to EU countries to restructure their energy supplies. "Russia has cut off its status as being a reliable energy supplier to Europe," said Fatih Birol, the IEA's chief economist.

Russia emerged with a new proposal late on Thursday, suggesting that European energy companies buy the 1.7bn cubic meters of gas needed to fill the Ukrainian pipeline and power turbines so that fuel can flow to Europe. Mr Putin pitched the scheme to Paolo Scaroni, chief executive of ENI, the Italian energy group.

Mr Putin said it was "logical" that Europe should share the transmission risk with Russia. Mr Scaroni called it an "innovative and constructive" proposal, although the EU has previously resisted Russian calls to help finance Ukrainian gas purchases. 

The next twist in the saga could come on Saturday when Yulia Tymoshenko, Ukraine's prime minister, will meet Mr Putin for talks in Moscow. It was unclear on Thursday whether she would also attend a broader summit meeting of affected countries proposed by Moscow on the same day in order to resolve the crisis.

Viktor Yushchenko, Ukraine's president, said he would only attend if the meeting was held on neutral territory.

A day after threatening legal action, the European Commission gave a tepid reception to Russia's invitation of a summit on the crisis, saying it would send Andris Piebalgs, EU energy commissioner, only if high-level Russian and Ukrainian leaders were fully involved and working toward a lasting solution.

"Any meeting cannot be used as an excuse for delay. All of this has gone on for too long," a commission spokesperson said after reporting that no Russian gas had been sent to Europe as of Thursday afternoon.

In a sign that Brussels was not expecting an imminent resolution of the crisis, the commission began to dispatch new monitors to relieve some of those who were previously posted at metering sites across Ukraine.

After being repeatedly frustrated by both Russia and Ukraine, the commission received one bit of good news on Thursday when Slovakia acceded to its demands and agreed to hold off on restarting an ageing nuclear reactor it had shuttered as a condition of joining the EU.

The New York Times

January 16, 2009


Russia-Ukraine Gas Dispute Enters 10th Day 


By DAVID JOLLY

PARIS - The Ukrainian-Russian dispute that has left Europe without most of its Russian gas supplies since Jan. 6 dragged on into its tenth day Thursday. 

Gazprom, the Russian gas monopoly, said Ukraine had "again today refused to transit Russian gas to Europe through its export pipelines." The Russian company said it had requested that Naftogaz, the Ukrainian gas company, accept nearly 100 million cubic meters of gas for export to Moldova, the Balkans and Slovakia, "but Ukraine has now declined on the grounds that there was not a technical agreement in place for gas transit throughout 2009."

Naftogaz could not immediately be reached for comment. In a telephone conversation early Thursday, the Ukrainian prime minister, Yulia V. Tymoshenko, discussed the crisis with Prime Minister Vladimir V. Putin of Russia, and the two leaders agreed to meet Saturday in Moscow, according to her official Web site. The Russians have also invited officials from gas-consuming countries in Europe. 

Ms. Tymoshenko also said she sent a telegram to the Russia government guaranteeing that Ukraine would pay for so-called technical gas - the natural gas used to operate the Ukrainian pipeline network - immediately after the price for Russian natural gas for Ukraine is worked out. 

While the underlying cause of the crisis is a breakdown in negotiations on the price Ukraine will pay for its own supplies of Russian gas, an accord reached Monday to restore deliveries to Europe that were cut off Jan. 6th foundered over the question of who would provide the technical gas. 

In Brussels, Johannes Laitenberger, a spokesman for the European Commission, confirmed that no gas was shipped Thursday to Europe. He also said the European Union energy commissioner, Andris Piebalgs, and Martin Riman, the Czech energy minister, would attend the Moscow talks. 

On Wednesday, the European Commission president, José Manuel Barroso, called the situation "both unacceptable and incredible," but he offered little in the way of carrot or stick. "I would like to convey a very clear message to Moscow and Kiev," Mr. Barroso said in an address to the European Parliament in Strasbourg. "If the agreement sponsored by the European Union is not honored as a matter of urgency, I will advise European companies to take this matter to the courts and call on member states to engage in a concerted action to find alternative ways of energy supply and transit." 

Russian officials, who said Gazprom had lost about $1.2 billion as a result of the conflict, have sought to place the blame on Ukraine. "No transit country has the right to abuse its transit status or gamble on it to hold consumers in Europe hostage," Mr. Putin said Wednesday in a meeting with the prime ministers of Bulgaria, Slovakia and Moldova. 

Despite historically close ties with Moscow, the three countries and the former Yugoslavia have been among the hardest hit since Russia shut off the valves last week. Mr. Putin also said the European Union "could do more" to reach a deal by putting pressure on Ukraine. The prime ministers refrained from assigning blame, instead calling on both sides to quickly reach an agreement and resume the flow of gas. 

"We do not want to determine who is right and who is guilty because the bilateral disagreement with Ukraine does not interest us," Robert Fico, the Slovakian prime minister, told Mr. Putin, adding that European leaders were also putting pressure on Ukraine. "I am here to find a concrete solution for Slovakia," he said, according to a Russian translation of his remarks on the Russian government Web site. 

Michael Schwirtz contributed from Moscow. 

 

The New York Times

Metropolitan Desk; SECTA

CORRECTION 

16 January 2009

Late Edition - Final

CORRECTION APPENDED

The Memo From Moscow article on Wednesday, about the underlying issues that have complicated the natural-gas dispute between Russia and Ukraine, misstated the portion of the Ukrainian population that is ethnic Russian. It is about 17 percent, not ''nearly half.''

CORRECTED BY THE NEW YORK TIMES Fri Jan 16 2009 

Eurasia Daily Monitor 

Volume: 6 Issue: 9

January 15, 2009 

Category: Eurasia Daily Monitor, Vlad's Corner, Ukraine, Energy, Hot Secondary List 

Ukrainian Law Bars Transferring Ownership of the Gas Transit System

By: Vladimir Socor <http://www.jamestown.org/articles-by-author/?no_cache=1&tx_cablanttnewsstaffrelation_pi1%5Bauthor%5D=132>  

Gaining some form of control over Ukraine's state-owned gas transit system has been a constant objective of Russian policy since the 1990s. That 30-year-old system's worn-out condition, its mismanagement, and the insolvency of its operator Naftohaz Ukrainy are providing Gazprom with a wide opening to gain control under the guise of investing in the system's modernization. Moscow has sought to achieve its goal through a Gazprom-dominated international consortium but has not succeeded in creating such a consortium thus far (see article above), nor has it persuaded Ukraine to share the country's single most important economic asset with Russia.

Meanwhile, the Kremlin and Gazprom are nevertheless milking Naftohaz and underpaying for the use of Ukraine's transit system through the shadowy intermediary companies RosUkrEnergo and UkrGaz-Energo, which are driving Naftohaz and the transit system into bankruptcy, precluding its modernization, and facilitating its ultimate de facto takeover by Gazprom under some flag of convenience. Ukraine's political system has tolerated these arrangements, indeed allowing those two companies to network with elements in the Party of Regions and around the president.

Nevertheless, the Ukrainian political system has reacted sharply whenever Moscow has attempted overtly to gain control of the gas transit system. One such attempt in 2007 prompted Ukraine to pass strong blocking legislation, which now stands in the way of Russian Prime Minister Vladimir Putin's latest proposal to create a Russo-German or international consortium to operate the gas transit system on Ukrainian territory (www.premier.gov.ru <http://www.premier.gov.ru> , January 8; Interfax, January 7, 8, 11; German ARD TV, January 11; Nezavisimaya Gazeta, January 13).

As President of Russia in 2007, Putin called for "unifying" Ukraine's gas transit system with Russia's through some common entity, which he did not publicly specify. In return he offered Ukrainian "access" to oil and gas extraction projects on Russian territory, also unspecified. The proposal was meant as a basis for negotiations ahead of a Russian-Ukrainian presidential meeting. Putin claimed that Ukrainian President Viktor Yushchenko and the government, headed by Viktor Yanukovych at that time, favored such a trade-off and had even initiated the proposal.

Putin's proposal on February 1, 2007, backfired instantly and powerfully in Ukraine. Opposition leader Yulia Tymoshenko initiated and the Verkhovna Rada (parliament) adopted a law on February 6 that prohibits any form of a legal change of ownership of Naftohaz Ukrainy's assets. It rules out any deals that would involve the sale, transfer, merger, concession, lease, collateralization, entry into joint venture, joint or trust management, mortgaging, or any change in the status of ownership or control of Ukraine's gas transit system and other Naftohaz assets. The law also stipulates that Naftohaz may not be declared bankrupt, an ultimate safeguard against Russian debt collection through the takeover of assets. The law would only allow transfer of Naftohaz assets hypothetically to an entity that would be 100 percent Ukrainian state-owned.

The 2007 law expanded on previous legislation and closed all avenues for parting with these Ukrainian assets. Kyiv's proponents of such transactions were forced on the defensive by Putin's crude indiscretion and Tymoshenko's initiative. The political atmosphere made it impossible even for Gazprom-friendly deputies to stop the passage of the law. It garnered 430 votes, with none opposed, in the 450-seat Verkhovna Rada (www.kremlin.ru <http://www.kremlin.ru> , February 1, 2007; Interfax-Ukraine, UNIAN, February 3-6, 2007; see EDM, February 7, 2007).

That law gave Ukraine breathing space to involve the European Union (not just Gazprom with a German fig leaf) in the needed modernization of Ukraine's gas transit system, in the EU's own interest. The EU and Ukraine equally failed, however, to use that breathing space. The context in January 2009 is markedly different. Russia has created a supply crisis preparatory to reactivating the consortium scheme and has not even asked for Ukraine's opinion. Instead, Moscow assails Ukraine as "thieving" and "criminal" and accuses Washington of orchestrating Ukraine's behavior. Meanwhile the United States is hobbled by its interregnum. All parties are forced to consider Moscow's proposal under time pressure in mid-winter and amid a deepening economic recession.

Germany is the primary target audience of Putin's proposal. Klaus Mangold, chairman of the powerful East Commission of German Business (Ostausschuss der Deutschen Wirtschaft, representing companies with interests in Russia) has endorsed Putin's proposal in principle. Economics Minister Michael Glos (Christian Social Union), a long-time believer in Russia's "reliability" as an energy supplier, regards the proposal as "worth considering" (Frankfurter Allgemeine Zeitung, January 14).

These initial reactions stop short of addressing the decisive point: Would the proposed consortium be dominated by Gazprom or be genuinely European? As some German commentators note, the issue is a vital one for the EU and can only be addressed successfully with the EU's direct participation (Financial Times Deutschland, January 14).

The European Commission plans to hold a donors' meeting in Brussels in March on financing the modernization of Ukraine's gas transit system and internationalizing operational control. The consortium issue will probably come up for consideration there. In that context, the EU is expected to ask Ukraine to change the 2007 law, which provides safeguards against Gazprom. That step would be worth taking to enable genuine European oversight, investment, modernization, and part-ownership of Ukraine's gas transit system, as opposed to placing Gazprom in the driver's seat.

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