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The Financial Times

Moscow irked at Kiev's EU overture

http://www.ft.com/home/europe

By Joshua Chaffin in Brussels and Roman Olearchyk in Kiev 

Published: March 24 2009 02:00 

Vladimir Putin threatened to review Russia's ties with the European Union yesterday after Ukraine held talks in Brussels about refurbishing its Soviet-era gas pipeline system.

"If the interests of Russia are ignored then we will have to start re-examining the principles of relations with our partners," the Russian prime minister said. "There's no point in deciding the problem of increasing supplies of our gas without us."

He made the threat after Ukraine and the EU signed a declaration to invest billions of euros in improvements to the ageing transit pipes that carry Russian gas to the EU.

The Russian foreign ministry said keeping Moscow out of agreements over modernising the pipeline "could lead to higher gas costs for Ukrainian and European consumers", Interfax reported.

Sergei Shmatko, Russia's energy minister, complained that Moscow had not been consulted.

He warned that efforts to overhaul the system without the full participation of Russia, the network's chief supplier, could lead to more instability. "Such a one-sided approach could cause significant los-ses to EU energy security," he warned. A third of the EU's natural gas comes via the Ukrainian system.

Mr Shmatko's comments came as rivals Victor Yushchenko and Yulia Tymoshenko, Ukraine's president and prime minister, appeared in Brussels.

They promised to stamp out corruption and improve the transparency of the network as they sought to make a case for €5.5bn ($7.5bn, £5.2bn) in fresh investment from western partners.

"We are determined to improve the functioning of the gas market, to root out all kinds of corruption," Mr Yushchenko told an audience that included western energy companies and the president of the European Investment Bank.


NEWSWEEK - From the magazine issue dated March 30, 2009


http://www.newsweek.com/id/190389


How The West Turned From Kiev


The last thing Ukraine needs is for Paris and Berlin and Washington to create a new kind of axis of complacency.

Denis MacShane

Just five years ago Ukraine was the toast of pro-democracy politicians the world over. The Orange Revolution seemed to be the next strand of the thread going back to the 1989 Velvet and other peaceful European transitions. Despite the bullying of Moscow, the Ukrainians stood their ground and said they wanted to become another Euro-Atlantic nation.

But now, like parents with a sulky, wayward child who just won't grow up, the world's democracies are turning their back on Ukraine. U.S. President Barack Obama will clink glasses with Russian and European leaders in London, Strasbourg and Prague and drop in to say hello to Turkey. But Ukraine, Turkey's Black Sea neighbor, is off his radar. Silvio Berlusconi openly supports Russia every time there is a dispute over gas. Angela Merkel used to visit Ukraine regularly and hold annual Berlin-Kiev summits, but now she ignores the country. Russia's ambassador to NATO, the ultranationalist Dmitry Rogozin, boasted to France's Nouvel Observateur that French President Nicolas Sarkozy "opposed America's desire to see Ukraine join the Atlantic alliance," adding that the French president was "Moscow's ally in Europe." That may be just Russian bombast, but increasingly Kiev looks west and sees no alternative.

Yes, Ukraine faces many internal domestic problems that the EU and the United States are largely powerless to influence. Its economy is a shambles. With 40 percent of GDP linked to steel and aluminum, it is seeing a nose dive into negative growth as exports slump. Ukraine's politicians squabble openly and try to tear each other down. Yet everyone in Kiev agrees that democracy has sunk deep roots. Ukraine has its oligarchs who wheel and deal and buy influence, but they live in their own country and not (as has happened to some of their Russian counterparts) in exile in London waiting for a dose of plutonium to arrive with the coffee or banged up in a Russian prison. There is no state police, journalists at last are free, and Kiev sparkles and looks more energetic and full of well-dressed people, bustling stores, offices and public spaces and new cars—despite the recession. Unlike neighboring Georgia, which remains a favorite of the West, Kiev avoids provocation. It has abolished nuclear weapons. It has sent troops to all NATO missions. Ukrainians have remained calm about Russia's Black Sea fleet, and they are fed up with being linked to Georgia as if they were a double act, when Ukraine has a stand-alone claim to be taken seriously as a European nation that wants to fit in with the Euro-Atlantic community.

There was once real hope that Europe meant it when a procession of visitors from Brussels and other EU capitals said Ukraine was en route to a European future. But the West got frightened last August, after the Russian invasion of Georgia, and bought into the Russian line that plans to admit Ukraine to NATO meant trouble and strife—though this had also been the Russian line on NATO membership for Poland, the Baltic states and Black Sea nations like Bulgaria and Romania. Now this kind of nyetpolitik is getting the upper hand. Earlier this month U.S. Secretary of State Hillary Clinton staged a photo op with her opposite number from Moscow pressing a "reset" button. But reset for Moscow means a free hand to dictate Ukraine's internal affairs.

Clearly, the Kremlin has never adjusted to the idea that Ukraine is its own nation—"whole and free," to use the first President Bush's phrase about the nations that emerged after the end of Sovietism. Russian leaders still think of Kiev as Russia's "mother," compared to its heart in St. Petersburg and brains in Moscow. And, obviously, Russia matters more than Ukraine to both Obama and Europe. On Iran, on nuclear-weapons treaties, on transit access to Afghanistan, Russian cooperation is the goal of post-Bush foreign policy. But help for Ukraine can come in the form of soft power. EU leaders can visit more and encourage trade and investment. Brussels might end a repressive EU visa regime that means a Ukrainian university professor who used to need only a multiple-entry visa to go repeatedly to universities in Western Europe must now apply for each single trip. The Ukrainian military needs help to modernize, and it should get that help as a thank-you for taking part in NATO missions.

Indeed, with Russia breathing down its neck, the last thing Kiev needs is for Paris and Berlin and Washington to create a new axis of complacency that uses the incoherence of Ukrainian politics to justify accepting the Moscow world view that places Ukraine firmly in Russia's sphere of influence. What's needed now is a new policy that treats Ukraine, warts and all, as a European nation. Instead of listening to the nyet from Moscow, the United States and the EU need to start saying da to Kiev's moderate and modernizing politicians. Certainly this will be hard for Moscow to accept, but bringing Ukraine into Europe—in the full sense of a path toward EU and NATO membership—might even help encourage Russia to see itself as a future partner of the EU and the United States, in place of the scratchy rivalry Moscow now creates in the Euro-Atlantic community.

MacShane is a British Labour M.P. and was Britain's minister for Europe. 

 

The Economist

Political turmoil in western Ukraine

Mar 23rd 2009 
From The Economist Intelligence Unit ViewsWire


Yuliya Tymoshenko's party has been beaten soundly in its heartland in Ukraine 

 

http://www.economist.com/agenda/displaystory.cfm?story_id=13354254

 

The result of a controversial regional election points to a collapse in support for Ukraine’s prime minister, Yuliya Tymoshenko, in her political heartland, with voters flocking to a radical nationalist opposition grouping. In the context of a deep recession, a fall in support for the government is not surprising—and is reflected in opinion polls. However, the Ternopil result points to extreme levels of dissatisfaction with all established politicians. Thus it is far from certain that the 2010 presidential election will be a straight fight between Ms Tymoshenko and the runner-up in the 2004 ‘Orange revolution’ vote, Viktor Yanukovych.

Five days after the west Ukrainian region of Ternopil held an election for its regional assembly, the country’s national government continues to contest the outcome. On March 18th a court in the capital, Kiev, issued an injunction banning the publication of official results, pending the resolution of a suit brought by one of the parties in Prime Minister Yuliya Tymoshenko’s government. On March 19th, however, a representative of the Central Electoral Commission said that the results had already been published and so the election process was at an end.

The election result amounts to a political earthquake in Ukraine. In the 2007 parliamentary election, the Yuliya Tymoshenko Bloc (YTB) won Ternopil with 51% of the vote. It was the YTB’s third-best result across the country’s 27 administrative regions. In the March 15th election, with turnout estimated at a respectable 51%, the YTB finished a distant fourth with 8.1%. The clear winner was the radical national bloc Svoboda, led by Oleh Tyahnybok, with 34.9%. United Centre, a new grouping formed by the head of the presidential administration, Viktor Baloha, came second with 14.2%. The Party of Regions (PoR), led by the former premier and de facto leader of eastern Ukraine, Viktor Yanukovych, came in third with 9.8%. Our Ukraine-People’s Union, the party established by President Viktor Yushchenko, but now only partially loyal to him, was sixth with 5.5%.

The election was controversial even before the results were published. It was called in December 2008, but on March 3rd the YTB and PoR joined together in the national parliament to cancel the election, although Ternopil's courts ensured that it went ahead. Seemingly, both parties feared that they would perform poorly if the vote was held. The YTB now insists that the election was manipulated by Mr Baloha, noting that the head of the Ternopil regional administration, Yuriy Chyzhmar, was the first name on the list of the United Centre Party. Moreover, the YTB says it did not campaign and so the result cannot be viewed as an accurate indicator of its level of support in the region.

 

Contested collapse

Given the circumstances surrounding the election, drawing firm conclusions from Ternopil about the national situation is tricky. The YTB’s claims about its level of support being suppressed, and United Centre’s being inflated, cannot be dismissed out of hand. Moreover, although turnout was impressive at 51.1%, this was appreciably lower than the 76.5% turnout recorded in Ternopil for the 2007 parliamentary election.

Thus, the actual level of support for the YTB in western Ukraine—Ms Tymoshenko’s political heartland—may not be down to a single digit. As a corollary, the prime minister’s party may not actually trail behind the PoR in a region that Ms Tymoshenko is counting on if she is to have any chance of winning the presidential election due in 2010.

However, it is difficult to dispute the conclusion that the YTB’s support has collapsed; the only argument is about the scale of the collapse. The PoR, by contrast, has seen its support in Ternopil more than treble compared with 2007, although this is from a very low base of just 3%. Our Ukraine fared very badly too, polling to 5.5% compared with the 35.2% share it claimed (in alliance with People’s Self Defence) in 2007. It is reasonable to assume that Mr Baloha’s United Centre was a beneficiary of the collapse in support for the YTB and Our Ukraine.

The turn against established parties and their leaders is a nationwide trend. A Razumkov Centre poll published in mid-March, asking voters whom they would support in the event of a snap presidential election, showed that support for Mr Yanukovych stood at 17.1%, compared with 27.8% a year earlier, and that support for Ms Tymoshenko had fallen to 15.7% from 25.3% a year ago. Support for Mr Yushchenko fell to 3.5% from 11.6% over the same period. The Ternopil result suggests the level of disenchantment with the established order is much higher, however. And there is support for this view in a mid-February poll by the Research and Branding Group, which asked voters to describe their attitude towards the authorities (respondents could agree to more than one description). Just 2.8% indicated respect for the authorities and 3.4% showed support; 18.5% were indifferent. The final two numbers are the most shocking: 20% felt hatred and over 71% distrusted the authorities.

 

It’s the economy, stupid

That the public should have turned against their leaders is not particularly surprising. Ms Tymoshenko enjoyed high opinion-poll ratings last year, when the economy was growing and her government busied itself with inflationary increases in wages and benefits, as well as a vote-grabbing scheme to compensate those who had lost money in the old Soviet savings bank. The fact that inflation was running close to 30% for several months in the middle of the year remained a background issue.

However, from autumn 2008 the Ukrainian economy started to turn down. Industrial output contracted by around 24% year on year in the final quarter, exports shrank sharply, the government rushed to conclude a US$16.4bn IMF package to stave off a financial crisis, and domestic sources of credit came close to a standstill. The currency, which for several years has traded at roughly HRN5:US$1, fell to HRN8:US$1 by the end of the year. Loan defaults and redundancies rose sharply. In 2009 the economy has contracted further, inflation is stuck above 20%, gas prices are set to rise sharply as a result of the deal Ms Tymoshenko negotiated under pressure with Russia’s Vladimir Putin and government squabbling has put the IMF deal in jeopardy. Although the country appears on the edge of ruin, Ms Tymoshenko and Mr Yushchenko seem to devote an inordinate amount of time to fighting with each other rather than fixing the economy.

 

Open contest

YTB allegations that administrative resources in Ternopil were deployed in favour of United Centre, thus skewing the result, miss the point. Mr Tyahnybok’s Svoboda took 2.4 votes for every one claimed by United Centre, and there are no suggestions that its success was the result of administrative resources. The party’s success in the strongly nationalist region suggests that voters disenchanted with the current crop of politicians are shifting their support primarily to leaders espousing populist chauvinism as real wages decline, loan burdens increase and redundancies grow.

One question that arises from the Ternopil poll concerns the attitude of the electorate in eastern and southern Ukraine. Are fringe parties there ready and able to exploit dissatisfaction with established parties by eating deeply into the PoR’s core electorate? Or will Mr Yanukovych be shielded because he is not in government, and his allies have perhaps a tighter grip on society and regional media in the east and south of the country? The PoR leader might take comfort from Ternopil, not only because his appeal has seemingly risen there but also if he calculates that his support is more recession-proof than Ms Tymoshenko’s.

In several European countries, local elections are a way for voters to fire a warning shot to incumbent governments, rather than a firm statement of future voting intention. If the Ternopil voters were not engaging in signalling behaviour, Ms Tymoshenko’s presidential ambitions are in serious jeopardy. Even if the electorate was sending a warning, it is tempting to conclude that the prime minister has a mountain to climb: there is little or no scope in the budget for popularity-raising giveaways, while the economy is yet to hit the bottom and seems unlikely to return to growth before the presidential election must be held.

For all Ms Tymoshenko’s efforts to build support in eastern Ukraine and neutralise Russian opposition to her candidacy, with a view to boosting her chances of beating Mr Yanukovych in a run-off, it may be the recession that defeats her. It is dangerous to write off a politician of Ms Tymoshenko’s acumen at this juncture, but in the wake of Ternopil, it can no longer be taken for granted that she and Mr Yanukovych will face off for the presidency in one year’s time.






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