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Kyiv Post


Editorial


 


 


Friends again, for now


March 25, 2009

 

Feuding Ukrainian President Victor Yushchenko and Prime Minister Yulia
Tymoshenko made nice long enough to get an agreement signed on March 23
with the European Union to increase the capacity of the nation's natural
gas pipeline.


The European Union agreed on March 23 to help upgrade Ukraine's network
of natural gas pipelines in exchange for greater transparency and other
improvements in the country's energy management system. The 27-nation
bloc is seeking to avoid a repeat of the January dispute, in which
Russia - which supplies roughly a quarter of Europe's gas - cut off
supplies through Ukraine for two weeks. Ukraine wants to improve the
capacity of its 40-year-old vast pipeline network by another 60 billion
cubic meters of gas each year, to 200 billion cubic meters. In return,
Kyiv hopes to lure billions of dollars in funding and Western expertise,
although the EU did not say how much it would commit for the work.
Ukrainian Prime Minister Yulia Tymoshenko (left) has said the project
could cost $7 billion. In a rare sign of unity, Ukrainian President
Victor Yushchenko (center) and his rival, Tymoshenko, attended the
summit together and are shown joking and smiling with European
Commission President Jose Manuel Barroso (right), who described their
political ceasefire as "a very important signal." A delegation from
Russia, which was not included as a party in the agreements, left early
in protest. "Such a one-sided approach could cause significant losses to
EU energy security," warned Russian Energy Minister Sergei Shmatko, who
left just after the bilateral EU-Ukraine agreements were signed. 

 


Kyiv Post


Reuters


Tymoshenko wants constitutional change


March 26, 2009

 

TOKYO, March 26 (Reuters) - Ukrainian Prime Minister Yulia Tymoshenko,
describing herself as "Ukraine's biggest nationalist", on Thursday
called for an overhaul of the constitution to end "chaos" in the way the
country was run.

Interviewed by Reuters on a visit to Japan, Tymoshenko also dismissed
any suggestion that Ukraine would fail to meet its foreign debt
obligations to the letter.

A loan programme with the International Monetary Fund, she said, would
soon be back on track to enable Ukraine to withstand the world financial
crisis.

With a presidential election set for early 2010, Tymoshenko remains one
of Ukraine's most popular politicians, after breaking with President
Viktor Yushchenko. Allies in the 2004 pro-Western "Orange Revolution",
they now disagree on nearly all issues.

Twice appointed prime minister by Yushchenko, she said Ukraine's
constitution needed further change to end arguments over the division of
powers. That could mean new reductions of presidential powers, as
occurred during the "orange" upheavals.

"I believe a presidential system with a logical set of responsibilities
is good, responsibilities to civil society," she said.

Alternatively, she said, there should be a parliamentary system built on
a set of checks and balances, with the aim of having a strong branch of
authority. "The main thing is to have logic in the system of running the
country and not chaos," she said.

Presidential powers have been trimmed in Ukraine since the Orange
revolution and the president has lesser sway now over the appointment of
key ministers.

In Sepetember, Tymoshenko's bloc and the opposition Regions Party joined
forces in parliament and voted in laws enabling the government to ignore
presidential decrees, sparking the coalition to collapse. Parliament
later overturned the laws.

GAS DEAL

Tymoshenko rejected allegations that she had sought to please Russia to
help her electoral prospects and hurt the national interest in a January
deal that restored suspended gas flows to Europe, but raised prices for
Ukraine.

"All reasonable analysts understand that all these notions about
Tymoshenko betraying the national interest in favour of Russia in some
way are purely a public relations stunt before the presidential
election," she said.

"I have been and remain Ukraine's biggest nationalist," she said.

Yushchenko, lagging far behind Tymoshenko and opposition leader Viktor
Yanukovich in opinion polls, sees the gas accord that Tymoshenko helped
clinch in January as a defeat. She said it was the best available deal
and eliminated gas intermediaries she had long denounced as corrupt.

Ukraine, she said, now scrupulously paid its bills to Russia for
imported gas, ruling out any new disruption of supplies.

"There are no complaints in terms of the timetable or amounts paid," she
said. "We removed a great corrupt cancer from the gas sector. And we
removed it completely, we carried out thorough chemotherapy. Our oil and
gas sector now has healthy financing."

PM VOWS NO DEFAULT

Ukraine, she said, would meet all its foreign debt obligations without
fail despite lingering doubts in the West.

"Let me do away with this notion once and for all. Ukraine is nowhere
near being in a position of default," Tymoshenko said.

"We are implementing our budget and meeting all our debt obligations,
even those that are being called in ahead of term. I do not see even the
slightest threat that this might occur."

Tymoshenko issued her pledge a day after a similar assurance from
Yushchenko.

The prime minister blamed any notion of default on "irresponsible
Ukrainian opposition politicians who are trying to engage in some
profiteering in times of economic crisis".

The New York Times

March 25, 2009

Letter

The Ukraine Famine 

To the Editor:

"A New View of a Famine That Killed Millions" (Kiev Journal, March 16),
about the Holodomor, death by starvation, which took place in Ukraine in
1932-3, was most welcome. It is a tragedy that is not sufficiently well
known.

In 1986, the United States government established the United States
Commission on the Ukraine Famine. I served as one of the six public
members, together with two senators and five representatives. We
collected data and testimony from the survivors of the artificial
famine, and we pieced together a tragedy of horrific proportions.

Thank you for shedding light on one of the greatest tragedies in human
history, when a country that was feeding Europe, a country known as the
"breadbasket of Europe," was left to starve in a deliberate policy of
Holodomor put in place by Stalin and the Soviet Union. 

Ulana Mazurkevich 
Philadelphia, March 18, 2009

Radio Free Europe/Radio Liberty

March 25, 2009 


EU-Ukraine Pipeline Agreement Piques Moscow 


by Bruce Pannier 

The European Union's announcement that it will finance the modernization
of Ukraine's gas pipeline system has sparked fresh tensions with Russia,
whose state-run gas behemoth now looks like the odd man out as EU
companies get set to propel the project forward. 

Prime Minister Vladimir Putin was among the first Russian officials to
respond to the news of the EU-Ukraine agreement. His reaction left
little room for ambiguity.

"If Russia's interests are going to be ignored, we will be compelled to
begin reviewing the principles of our relations with our partners,"
Putin said. 

If Russia's sentiments needed clarification, the following day Putin and
President Dmitry Medvedev announced that a planned meeting next week
between Putin and Ukrainian Prime Minister Yuliya Tymoshenko had been
postponed indefinitely. The meeting was to discuss cash-strapped Kyiv's
request for a $5 billion loan from Russia. 

Putin's warning suggests that relations between Russia and the EU and
Ukraine, at least concerning gas supplies, may once again be entering
rough waters. Tensions calmed only recently after a dispute this winter
over Ukrainian debts to Moscow and gas and transit prices led to
temporary cuts in Russian gas supplies to the EU.

Moscow Miffed

Europe gets about 40 percent of its imported gas from Russia, and much
of that comes via Ukraine. 

Kyiv's pipeline system is in desperate need of modernization, and for
years Gazprom has assumed it would do that work and become at least a
part-owner. But Kyiv has been clear about not wanting to hand over any
part of its pipeline system to any Russian company. 

On March 23, the EU and Ukraine announced that the EU would provide 2.5
billion euros to upgrade Ukraine's 13,500 kilometers of natural-gas
pipelines. While the deal did not explicitly say it, analysts appear
convinced that EU companies are likely to carry out that work. The deal
also raised speculation that EU firms may become operators of Kyiv's
pipeline system.

Adding to the fresh tensions is the EU's Eastern Partnership program,
officially unveiled last week, which aims to improve relations with
ex-Soviet republics (Armenia, Azerbaijan, Belarus, Georgia, Moldova and
Ukraine) and similarly does not involve Russia directly.

Russian criticism of the EU-Ukraine deal has focused on Moscow's
involvement in the project, given that the pipelines carry Russian gas.

Politics is clearly part of Russia's calculation, but economics is also
in the equation. Gazprom this year will pay Ukraine some $2.3 billion
euros in transit fees ($1.70 per 1,000 cubic meters per 100 kilometers).
That pricing structure was part of a deal Russia and Ukraine reached in
January to help end their recent gas dispute. Now it's at risk.

Russian Internet newspaper gazeta.ru reported on March 24 that if
Ukraine's pipeline system comes under the ownership of EU companies, the
transit fee will rise to the average European fee -- $3 per 1,000 cubic
meters per 100 kilometers. According to gazeta.ru, "then [Gazprom] would
need to pay some $3.9 billion per year" in transit fees. 

The same report cited Gazprom estimates that the modernization of
Ukraine's pipeline network would cost some $16 billion -- far more than
what Ukraine is due to receive from the EU and European financial
institutions.

When she signed the deal with the EU in Brussels, Prime Minister
Tymoshenko indicated that Ukraine would retain ownership of its pipeline
system.

"Our joint declaration states clearly that in accordance with Ukrainian
law, Ukraine's gas transit system is and will remain state property,"
Tymoshenko said. 

'Transfer Of Control'?

Some in the EU, and of course in Russia, believe that is not the case --
and that the EU will want some control over the Ukrainian system to
ensure Russian gas reaches its destination in the EU. 

Gazeta.ru suggested that the EU-Ukraine agreement "implies a transfer of
control over the export part of the Ukrainian pipeline system to a new
operator, most likely one of the big European companies." 

There is also speculation that Russia's negative reaction to the
EU-Ukraine deal is also intended to hinder improving ties between the EU
and Ukraine. 

At the same time, Russia is signaling interest in improving ties with
the EU enough to realize two alternative gas pipeline projects that
avoid Ukrainian territory -- Nord Stream under the Baltic Sea and South
Stream under the Black Sea.

Nord Stream is due to start operations in 2011 and has EU support,
particularly from Germany. When completed, Nord Stream will be capable
of exporting about half the amount of Russian gas that now transits
Ukraine.

The EU, while seemingly securing a victory in the Ukrainian pipeline
battle, is now set to wade deeper into the treacherous waters of
Ukrainian politics. 

Tymoshenko and President Viktor Yushchenko were both at the signing
ceremony in Brussels, but each has worked to marginalize the other in
recent months. 

Trying to retain some distance from that domestic power struggle is
likely to prove challenging to the EU and any EU-based firms that take
on the task of upgrading, and possibly managing, Ukraine's export
pipeline system. 

Eurasia Daily Monitor

March 25, 2009

The Strange Ties between Semion Mogilevich and Vladimir Putin

On March 23, 2009 the Moscow City Court ruled that Semion Mogilevich,
also known as Sergiy Shneider, will remain in prison until May 23 while
investigators continue to examine his case. (Kommersant Daily, March
24). This is the third extension of his detention the court has ordered
since Mogilevich was arrested on January 23, 2008 and charged with
abetting in a tax evasion scheme. What makes this case highly sensitive
is that Mogilevich has been suspected of having close links to Russian
Prime Minister Vladimir Putin and the opaque gas trade between Gazprom
and Ukraine and RosUkrEnergo.

Mogilevich is a former Ukrainian citizen, now residing in a prison cell
in Moscow. He is wanted by the FBI on major fraud charges for his role
in what is known as the "YBM Magnex Scam." Numerous police sources claim
that he is one of the leaders of the Russian mafia, a charge he denied
in an interview with the BBC in 1999 when he was still at liberty living
in an exclusive neighborhood in Moscow (BBC, June 12, 1999).

Mogilevich is alleged to be a secret billionaire linked to Vladimir
Putin and is reputed to be a hidden business partner of Dmytro Firtash,
the 50 percent owner of RosUkrEnergo, the Swiss-based gas trader, 50
percent owned by Gazprom. Firtash has consistently denied any criminal
links to Mogilevich, yet he admits knowing him (Vedomosti, 27 June,
2006). Mogilevich has also been described by Leonid Derkach, the former
head of the Ukrainian security service, the SBU, as a close friend of
Vladimir Putin's during a conversation with former Ukrainian president
Leonid Kuchma.

The questions surrounding the Putin-Mogilevich relationship - if indeed
there is one - are not simply theoretical; the answers touch on the
nature of power in the Kremlin; how it functions and which players serve
its purposes. Part of the answer can be found in the Kuchma-Derkach
dialogue held in Kuchma's office on February 8, 2000. According to a
recording of the conversation made by a member of Kuchma's security
detail, Mykola Melnychenko:

Kuchma: "Have you found Mogilevich?"

Derkach: "I found him."

Kuchma: "So, are you two working now?"

Derkach: "We're working. We have another meeting tomorrow. He arrives
incognito.

Later in the discussion Derkach revealed a few details about Mogilevich.

Derkach: "He's on good terms with Putin. He and Putin have been in
contact since Putin was still in Leningrad."

Kuchma: "I hope we won't have any problems because of this."

Derkach: "They have their own affairs" (The transcript appears in the
forthcoming book by J.V. Koshiw, The Politics of Kuchma - the
Melnychenko Recordings August 1999 to September 2000).

A second key to the puzzle lies in the alleged relationship between
Firtash and Mogilevich in the Eural Trans Gas and RosUkrEnergo,
companies involved in the strategically important transit of natural gas
from Central Asia to Ukraine which worked closely with Gazprom, the
Russian state-owned gas company apparently controlled by Putin.

In December 2005, a confidential Austrian police report noted that:

In August 2005 the FBI gave their Austrian counterparts a confidential
report on frauds committed by the SMO (Semion Mogilevich Organization)
in connection with gas deliveries from Turkmenistan to the Ukraine and
the illegal kickback payments to [a] member of the organization...
According to the FBI the actual control of ETG and RUE is held by Ivan
Fursin and Oleg Palchikov. Hungarian police reported about an April 2005
meeting in Vienna between Ivan Fursin, Oleg Palchikov and Dmitri Firtash
The FBI described Ivan Fursin, Oleg Palchikov and Dmitri Firtash as
senior members of the SMO (Austrian Federal Criminal Investigation
Agency Report on the Semion Mogilevich Criminal Organization, December
1, 2005).

Another document linking Mogilevich to Andras Knopf, the executive
director of Eural Trans Gas, the Hungarian gas intermediary company
created by Firtash to act as the middleman in the transit of Turkmen gas
to Ukraine, is a letter allegedly written by MVD Major-General Alexander
Mordovets on November 14, 1998 to the former first Deputy Head of the
Department for the Struggle Against Organized Crime of the Russian
Ministry of Internal Affairs, in which Mordovets described the close
criminal relationship between Knopf and Mogilevich. However, on
September 16, 2004, six years after this letter surfaced, Mordovets
suddenly recanted. In an affidavit sent to Mark J. MacDougall, a lawyer
working for the law firm Akin Gump in Washington, DC., Mordovets claimed
that he never wrote this letter implying that it was a forgery.

Mogilevich was arrested in late January 2008 on charges of abetting a
tax evasion scheme by Vladimir Nekrasov, the owner of "Arbat Prestige,"
a chain of Russian cosmetic stores and has remained in jail while the
investigation continues to this day. The Russian police insisted that
they had been unable to find and arrest Mogilevich in Moscow earlier -
yet his photograph, attending services in a Moscow Synagogue appeared on
the front page of Izvestia on December 7, 2004.

The official Kremlin version of Mogilevich's role in tax evasion is
difficult to believe and it could well turn out to be that Mogilevich
was arrested as part of a cover up operation by the Kremlin designed to
distance Putin from Firtash and Mogilevich. Putin has remained silent on
his links to Firtash and Mogilevich and this might prove to be an
opportune moment for western intelligence agencies to shed some light on
this murky and far reaching affair.

--Roman Kupchinsky

 

 

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