[Ohio UZO News] Ukraine: EDM (2); Economist

[Deychak, Orest]

I'm taking the rare step of sending two mailings in one day, as the following articles are well-worth reading, and as my next mailing will not be until January 21at the earliest. OD 

 

Eurasia Daily Monitor

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

January 16, 2009 - Volume 6, Issue 10

Gazprom's Destabilization Plan for Ukraine and Southeast Europe

 

Roman Kupchinsky


When the tense horse trading among the EU, Ukraine and Russia about allowing EU monitors to observe how Russia was renewing the flow of gas to Europe and how Ukraine was transporting this gas ended on January 13, most Western observers were mildly optimistic that at long last the January 2009 gas blockade of Europe had come to an end. Few, however, took into account the fact that Gazprom was bound to a hidden agenda that dictated its moves and negotiating position. Gazprom is not and never has been a private company. It is a Russian state-owned monopoly, operated and controlled by the government; and this does not allow it to behave as a private entity, independent of the Kremlin's foreign policy goals and the ambitions of Russia's leaders and their subservient oligarchs.

When Russia partially opened the gas valve at the Sudzha pumping station on January 13 to supply gas to Ukraine in order to satisfy the agreement with the EU, the Ukrainians refused to accept the flow. Why?

Oleh Dubyna, the head of the Ukrainian state-owned Naftohaz Ukrainy, explained that the route proposed by Gazprom would force his company to cut off supplies to the heavily populated industrial regions in eastern Ukraine. Dubyna proposed that Gazprom pump gas to the EU via two other stations, Pysarivka and Valuyky. For unexplained reasons the Russians chose not to do so. Bohdan Sokolovsky, the Ukrainian presidential energy envoy, stated that Gazprom's choice of the metering stations was "provocative" because it set a "technologically unrealistic" task for Naftohaz (Interfax, January 13).

"Naftohaz also needs Russian gas coming in at the other two import terminals in order to feed the Balkan pipeline," said Mikhail Korchemkin, director of the U.S.-based East European Gas Analysis consultancy. "Russia's decision to use just one metering station indicates that it wants to extend the conflict, he said" (Moscow Times, January 14).

If Gazprom is successful in stopping the flow of gas to southeastern Ukraine by insisting that gas to Europe go via Sudzha, the Kremlin's strategy of provoking mass disturbances in these regions in order to precipitate a "popular" anti-Tymoshenko-Yushchenko uprising would intensify calls in these critical regions to join the Russian Federation. With the Ukrainian Party of Regions seemingly more loyal to Moscow than to Kyiv, Putin and Medvedev apparently feel confident that such a strategy would transform Ukraine into a second, pro-Russian, Belarus-like puppet state in the CIS and give Russia control over the Ukrainian gas pipeline to Europe. The consequences of this for the EU would be disastrous. For Gazprom, however, it would be a major coup, allowing it to abandon the costly South Stream pipeline project and, at long last, to destroy the Nabucco pipeline scheme.

It was no coincidence that on January 14, the pro-Russian Party of Regions called on the Ukrainian parliament to impeach Viktor Yushchenko and disband the Tymoshenko government because of their handling of the gas conflict.

Gazprom's policy of selectively renewing the flow of gas to Europe and blaming Ukraine for delays is aimed at making the leadership in Romania, Bulgaria, and Moldova mistrust the Ukrainian authorities. At the same time, it is intended to provoke civil disturbances in these states in order not only to win the PR war against Ukraine but also to generate popular suspicion about the decision of these former Warsaw Pact states to join NATO. The message the Kremlin wants to convey to these countries is that NATO cannot supply you with gas, so why join this organization. It is in your best interest to stick to Russia, a reliable supplier of gas.

The recent Bulgarian riots are a case in point. Demonstrators in that country revolted not only against corruption in their homeland but also over the Russian gas blockade. (www.kyivpost.com/world/33290).

Will the protests succeed in creating a pro-Russian wave of public opinion as the Kremlin hopes? Hardly. But the managers of Gazprom and their masters in the Kremlin appear to have set a firm course to reintegrate not only the former USSR, but the Warsaw Pact as well. The only means they have at their disposition is the gas weapon, a powerful tool as the past two weeks have proven.

Last night, Medvedev said Gazprom had declared "force majeure" on its gas exports to Europe and warned that it would unleash its "entire legal arsenal" against Ukraine.





Russian-Ukrainian Gas Crisis Fuelled by National Identity

Taras Kuzio

Western media coverage of the latest Ukrainian-Russian gas crisis has largely ignored the national identity component of the conflict, and yet this is the main factor fuelling poor relations between Ukraine and Russia. Inter-elite corruption in the energy sector comes second to national identity issues.

The corrupt and opaque intermediary RosUkrEnergo is only half controlled by Gazprom. Blame for energy corruption should therefore be distributed equally between the Russian and Ukrainian elites. Prime Minister Vladimir Putin's claim that the gas crisis is a product of the "struggle of clans" in Ukraine is therefore only true up to a point as both the Ukrainian and Russian elites are enveloped in corruption (Ukrayinska Pravda, January 10). Gazprom has been at the heart of the gas intermediaries Eural Trans Gas and its replacement RosUkrEnergo. Putin's claims also ignore the consistent opposition to the use of intermediaries by Prime Minister Yulia Tymoshenko and her eponymous bloc. The October 2008 Tymoshenko-Putin memorandum signed in Moscow called for the removal of gas intermediaries. The Tymoshenko government and Naftohaz Ukrainy have blamed these intermediaries for the current crisis (Reuters, January 7).

Putin's allegations also ignore the influence of the corrupt gas lobby of the Party of Regions, which has had a cooperation agreement since 2005 with the Unified Russia party. Regions' gas lobby has taken over the financing of the party from oligarchs such as Renat Akhmetov, and sabotaged negotiations to establish a BYuT-Regions coalition in fall 2008 because of Tymoshenko's opposition to the role of intermediaries.

At the heart of the gas crisis are very poor relations between Ukraine and Russia that worsened following Russia's unsuccessful, high-profile intervention in the 2004 Ukrainian presidential elections. Russia has continued to intervene in Ukraine's domestic affairs by issuing passports and developing a new policy of "Russian Cards" for Ukrainians. The cards would be issued to Ukrainian citizens on the basis of their allegiance to Russian culture and language and would enable them to enter Russia without visas and have the same rights as Russian citizens, including access to free education (Ukrayinska Pravda, December 3, 2008). The implicit threat of such brazen intervention can be seen in the claim by a deputy head of the presidential secretariat Roman Besmertnyi that the gas crisis was planned by Russia to mobilize eastern Ukraine against Yushchenko (Ukrayinska Pravda, January 12).

To disguise the utter failure of Russia's intervention and its abject lack of understanding of Ukrainian domestic politics and nation-building, Moscow has continually held to a neo-Soviet version of the Orange Revolution, namely, that it was not the product of legitimate popular protest against electoral fraud and a decade of Leonid Kuchma's rule but was the outcome of an American conspiracy.

Viktor Yushchenko's election was therefore illegitimate because, in Russian eyes, he was imposed on the country by the "political technology" imported from the United States that had been developed earlier in Serbia's Bulldozer and Georgia's Rose Revolutions. Yushchenko's policies on seeking NATO membership, obtaining international recognition of the 1933 genocide famine, his refusal to extend the Black Sea Fleet lease, and "Ukrainization" have only served to confirm to Russia that he is acting at variance with the wishes of the Ukrainian narod.

Russia's view of Ukraine is built on deep-seated Russian conceptions of the "artificiality" of Ukraine. In the 1990s the Russian media portrayed Ukraine as a country artificially kept independent by corrupt elites, while the narod sought to re-unite with Russia. Russian leaders therefore continually raised the specter of Ukraine joining the Russian-Belarusian union.

A Novosti commentary (March 31, 2008) on the eve of the Bucharest NATO summit claimed, "In fact, present-day Ukraine is an artificial heir to the Ukrainian Soviet Republic, with borders appointed at the arbitrary will and volition of Soviet rulers." At the April 2008 NATO-Russia Council, Putin said to his American counterpart George Bush, "But George, don't you understand that Ukraine is not a state." Putin claimed that most of Ukraine's territory was a Russian gift in the 1950s and that if Ukraine joined NATO, Russia would detach eastern Ukraine and the Crimea, which would end Ukraine's existence as a state (Zerkalo Nedeli, April 24, 2008). In reality, the only region transferred from Russia to Ukraine was the Crimea in 1954, while numerous Ukrainian territories were transferred to Russia in the 1920s.

Russian attitudes to the Orange Revolution, Yushchenko, and Ukraine better explain the level of vitriol in the annual gas crisis. During a press conference at his residence in Novo-Ogaryovo on January 8, Putin said, 'The Ukrainian leadership is unable to organize a normal, transparent functioning economy based on market principals." He went even further, alleging that, "we are witnessing a political collapse in Ukraine." In effect, Putin placed Yushchenko in the same "illegitimate" category as Georgian President Mikheil Saakashvili, with whom the Russian leadership has refused to deal since the 2008 Georgian-Russian war (Russia Today, January 8).

Another national identity aspect to the gas crisis relates to Moscow's unwillingness to accept the post-Soviet status quo. Russia recognized Ukraine's borders and its inheritance of the gas pipelines de jure but has never accepted them de facto. It is galling to Moscow that Ukrainian pipelines control 80 percent of Russia's gas exports which are central to Russia's policies to revive its great-power status (Ukrayinska Pravda, January 10).

It is in this area that Russia's inability to understand Ukrainian domestic politics is again evident. Russia will never find a politician in Ukraine who would be "pro-Russian" enough, while no Ukrainian parliament will ever vote to privatize the pipelines. In February 2007 Tymoshenko mobilized 420 parliamentary votes, including those of most Regions deputies, to prevent privatization. Tymoshenko has supported a strong line during the crisis and demanded reciprocity from Russia, permitting EU observers into Ukraine only if Moscow allowed them to enter Russia (Ukrayinska Pravda, January 9).

A deputy head of the presidential secretariat Andriy Honcharuk called for a toning down of Russian rhetoric and a "dialogue among equals" (Ukrayinska Pravda, January 12). As the failed Belarusian-Russian union shows, Honcharuk was whistling in the wind.


The Economist

Russia, Ukraine and gas 

War-war, not jaw-jaw

Jan 15th 2009 | MOSCOW 
>From The Economist print edition


The disappointing failure of efforts to end the gas wars
THE greater the build-up to a truce, the bigger the upset when it fails. This adage was confirmed as the gas war between Russia and Ukraine persisted this week. On January 12th, after fraught talks in Brussels, the Russians agreed to resume gas supplies to Europe via Ukraine. The next day the gas taps were reopened-but the gas did not get through. Ukraine said it could not handle the transit. "Unbelievable," seethed a senior Gazprom executive. It was clear that Ukraine had been stealing gas and was entirely responsible for blocking the flow to Europe, the Russians averred. 

Ukraine retorted that Gazprom had deliberately tricked its European customers. Instead of restarting full supplies to Europe, it put too little gas into the system and chose a technically tricky route. Hryhory Nemyria, Ukraine's deputy prime minister, says that after Russian gas stopped flowing completely on January 7th, the pipeline was used to take gas from storage in the west of the country to industrial users in the east. Had Ukraine reversed course by transporting gas to the Balkans, it would have been forced to cut supplies to its own users.

European Union monitors, deployed to verify the transit of gas, could shed little light on the situation. But what is clear is that the interests of freezing consumers are coming second in this spat. Although few Europeans defend the Ukrainians, many are angry that Russia should seem keener to expose Ukraine as an unreliable transit country than to serve its ultimate customers (see article). 

Russia has long argued that its gas contract with Europe should be separate from its bilateral one with Ukraine, and has sought direct or indirect control of the Ukrainian gas-transport system. As Rory MacFarquhar, an economist at Goldman Sachs, notes, the Russians have never come to terms with the fact that Ukraine, as the main transit country, is an integral part of the whole business. Now, he adds, Ukraine, whose bargaining power was its ability to disrupt transit to Europe, has chosen to exercise this "nuclear" option. 

There are many hidden and conflicting interests in the row. That they have together produced such a lengthy crisis reflects institutional weakness in both countries. Russia and Ukraine have tried to discredit each other, but have ended up discrediting themselves. Both run the risk of lawsuits from frustrated consumers. 

Vladimir Milov, a Russian opposition politician, thinks Russia wanted a clash with Ukraine, and says the firmness of its action and language resembles that seen in the war with Georgia last August. In both cases the aim was to discredit pro-Western leaders. And in both conflicts Russia blames America. Alexander Medvedev, deputy head of Gazprom, said this week that it looks like the Ukrainians "are dancing to the music which is being orchestrated not in Kiev, but outside the country." Yet Russia has run a better public-relations campaign than it did over Georgia. Far from shunning European intermediaries, the Russians have tried to engage the EU to put pressure on Ukraine. 

Mr Putin's personal involvement has made the clash more political. "We will always proceed from the premise that we have a special historical relationship with Ukraine. Our actions are aimed not at worsening the situation in Ukraine, but on the contrary at improving it and ridding the Ukrainian people of all sorts of swindlers and bribe-takers," he said, even as he insisted that the row was commercial. 

In both Ukraine and Georgia, Russia has exploited the failings of its opponents. Ukraine's political in-fighting, the existence of a controversial trading intermediary, its opaque system of gas distribution, the weakness of its law and the extent of corruption all make it vulnerable. Mr Putin has identified clan rivalries in Ukraine as a weak spot. President Viktor Yushchenko has undermined the efforts of his prime minister, Yulia Tymoshenko, to do a deal. He has tried to shore up his own flagging support by fulminating against Russia.

That Russia should try to exploit weaknesses is not surprising. But it is not clear that either country will gain from the stand-off. The Russians have called a summit in Moscow this weekend. Gazprom has lost $1.1 billion of export revenues and had to shut some 100 wells. Both countries' reputations have suffered. As José Manuel Barroso, president of the European Commission, put it this week, "Without judging intentions, there is an objective fact: Russia and Ukraine are showing they are incapable of delivering on their commitment to some member states."






 

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