[Ohio UZO News] Ukraine: AP; WP; WSJ (2)

[Deychak, Orest]

AP News Alert

Ukraine's Naftogaz says it has paid Russia's Gazprom in full amid gas
cutoff threat 

5 March 2009

KIEV, Ukraine (AP) - Ukraine's Naftogaz says it has paid Russia's
Gazprom <javascript:void(0);>  in full amid gas cutoff threat.

The Washington Post

www.washingtonpost.com

 

A Section

Ukraine's Gas Company Raided; Two Leaders Clash on Reason for Probe 

John Pancake and Philip P. Pan 

Washington Post Foreign Service

5 March 2009

FINAL

A12

Masked state security officers armed with automatic weapons raided the
headquarters of Ukraine's national gas company Wednesday in a dramatic
escalation of the feud between the country's top leaders during a
crippling financial crisis.

President Viktor Yushchenko said the operation was part of a criminal
investigation into the firm, Naftogaz, which was at the center of the
dispute with Russia this year that left gas customers in much of Eastern
Europe shivering.

But Prime Minister Yulia Tymoshenko condemned the raid as an attempt by
"corrupt groups" to disrupt the company's operations just days before
Ukraine must make a critical payment to Russia or risk another gas
cutoff.

She demanded the release of a customs official detained in the
investigation, accusing Yushchenko of issuing "evil orders" and engaging
in "large-scale political repressions against people trying to resist
corruption," according to a statement from her office.

The accusations came as Yushchenko and Tymoshenko have been trying to
set aside their differences in an attempt to persuade the International
Monetary Fund to follow through on a stalled $16.4 billion economic
rescue program.

Ukraine's economy has been hard hit by the global financial crisis, and
battles between the two leaders have hampered the government's response.

Ukraine's failure to pay for natural gas from Russia triggered a
two-week impasse in January that halted Russian gas shipments through
Ukrainian pipelines to Europe. Tymoshenko worked out a compromise with
Russian Prime Minister Vladimir Putin to end the standoff, but
Yushchenko has repeatedly criticized it as a bad deal for Ukraine.

The security forces that raided Naftogaz were seeking the original
contract for the Jan. 19 deal, the company said. Marina Ostapenko, a
spokeswoman for the National Security Service, told the Associated Press
the agency was investigating whether Naftogaz had improperly diverted
about $900 million worth of natural gas.

Tymoshenko said the raid was an attempt by a shadowy intermediary
company that was cut out of the January deal to seize more than 11
billion cubic meters of gas belonging to Ukraine.

"They simply wanted to paralyze Naftogaz's activity and destroy the gas
distribution system in Ukraine," she told reporters in Paris after a
meeting with French President Nicolas Sarkozy. Tymoshenko has previously
accused the intermediary firm, RosUkrEnergo <javascript:void(0);> , of
having ties to Yushchenko and other political foes.

Presidential spokeswoman Iryna Vannikova defended the raid and said
Yushchenko was personally supervising the investigation.

"The special services acted strictly on a lawful basis, within the
framework of their authority as set down by legislation," she said in a
statement, adding that the "political noise that went up around the
case" signaled that "vested interests" had been affected.

The raid came three days before Naftogaz must make a payment of as much
as $400 million to the Russian energy giant Gazprom
<javascript:void(0);> .

A Gazprom <javascript:void(0);>  official was quoted by the Interfax
news agency expressing concern that the raid might cause Ukraine to miss
the deadline and disrupt shipments to Europe again. But Ukrainian
officials have issued assurances in recent weeks that they have the
money, and Naftogaz officials said the raid was unlikely to affect gas
deliveries.

Yushchenko and Tymoshenko were allies in the country's Orange
Revolution, and Ukraine remains one of the few robust democracies to
emerge from the former Soviet Union. The economy was one of the fastest
growing in Europe until last summer; since then, Ukraine's gross
domestic product has dropped an estimated 20 percent.

Pan reported from Moscow.

The Wall Street Journal

http://online.wsj.com/home-page

 

World News: Gas Dispute Prompts Raid In Ukraine 

By James Marson 

5 March 2009

A10

KIEV, Ukraine -- Ukraine's state-security service raided the head office
of state energy company Naftogaz, which played a central role in the gas
dispute between Russia and Ukraine that caused supply cuts to Europe in
January.

The security service, the SBU, said the raid was part of a criminal
investigation into alleged misappropriation of gas by Naftogaz.

The investigation is fueling tensions in the political rivalry between
President Viktor Yushchenko and Prime Minister Yulia Tymoshenko, who are
expected to face each other in presidential elections in January. The
SBU answers to the president, and Naftogaz is responsible to the prime
minister.

The raid occurred after Ms. Tymoshenko announced earlier Wednesday that
11 billion cubic meters of gas had been cleared by customs and was the
property of Naftogaz.

The gas had been claimed by RosUkrEnergo <javascript:void(0);> , the
former intermediary between Russia and Ukraine that Ms. Tymoshenko
ousted from the industry in January in a deal with Russia. She has
accused Mr. Yushchenko of lobbying for RosUkrEnergo
<javascript:void(0);> , which he has denied.

Ms. Tymoshenko, on a visit to Paris, later linked the raid to the "fight
for 11 billion cubic meters of gas" between Naftogaz and RosUkrEnergo
<javascript:void(0);> . The president's press secretary said the SBU's
actions were within the law.

Naftogaz is due by Sunday to pay $400 million to Russia's OAO Gazprom
<javascript:void(0);>  for February's gas supplies -- nonpayment of
which could threaten supply, as it did in January.

Gazprom <javascript:void(0);>  expressed "concern" about the raid. "We
hope that these events will not affect the full and timely [payment] by
Naftogaz for Russian gas supplied to Ukraine in February," it said.

A Naftogaz spokesman said he foresees no problem with the payment.

Mr. Yushchenko and Ms. Tymoshenko came together on Monday in a sign of
harmony to send a letter to the International Monetary Fund in hopes of
securing the second installment of a $16.4 billion loan, needed to
support Ukraine's banks and currency.

Presidential elections, which must be held by the end of January, are
adding pressure to the situation. The current front-runner is Viktor
Yanukovych, the candidate defeated by the Orange Revolution that swept
Mr. Yushchenko to power in 2005.

There are also articles in today's NYT and FT on the raid. Below is a
commentary well worth heeding, especially the last paragraph:

The Wall Street Journal 

Heard on the Street / Financial Analysis and Commentary 

4 March 2009

C12

 Kiev Nears the Brink On IMF Aid 

 The IMF is back in Ukraine this week, keen to hand over a check for
$1.9 billion, part of $16.4 billion in emergency financing agreed last
year. But even if Kiev's government puts aside its difference and agrees
to the conditions for the payment, the IMF funds can only go so far.

Ukraine's woes may overwhelm the IMF's capacity to help. Collapsing
demand for Ukrainian exports has sent the economy into a tailspin.
Output contracted at an annualized 20% in January, raising doubts over
the ability of local companies and banks to refinance the $30 billion to
$40 billion in debt due this year. And the hyrvnia is down 46% against
the dollar in five months, adding to pressure on the private sector,
which has $84 billion in foreign-currency debt, equivalent to about 60%
of GDP.

Heading off a private-sector default would involve bringing together EU
and Russian banks, Ukraine's main creditors, to reschedule debt. It
would underpin IMF efforts to help recapitalize the banking sector,
provide reserves to the central bank, and support government finances.

A precondition is for Kiev's political leaders to agree on how to handle
the crisis. Squabbling over the IMF conditions delayed the second
tranche of emergency funds and led Standard & Poor's
<javascript:void(0);>  to downgrade Ukraine's debt to the level of
Pakistan's.

But the consequences of political paralysis could be catastrophic. Mass
private-sector defaults could turn a recession into economic collapse,
wiping out creditors, raising the specter of a run on the hryvnia and
causing mass unemployment. If that doesn't concentrate minds in Kiev, it
is hard to imagine what will.

-- Matthew Curtin

 

-------------- next part --------------
A non-text attachment was scrubbed...
Name: not available
Type: application/ms-tnef
Size: 15609 bytes
Desc: not available
URL: <http://clevelanduzo.org/pipermail/uzonews_clevelanduzo.org/attachments/20090305/62f1f0bb/attachment.bin>