RUE and the elections

Today's 'Gazeta po Kiyevski' carries an article entitled 'Russian roulette', speculating whether RosUkrEnergo will become a 'political football' in the September 30th elections.

In Spring 2006, during the VR election campaign, the negative image and possible harmful activities of RUE for Ukraine were highlighted exclusively by BYuT and Yuliya Tymoshenko. Her attempts in 2005 to cut out RUE from the gas supply chain cost her the PM's job, and caused a seismic split in the orange ranks.

Now business interests and election technologies are so tightly interwoven that the shady gas intermediary may well become the object of criticism, not only from the orange NU and BYuT, but from the Communists and Sotspartiya too; and even possibly from part of the members of PoR - if this is secretly agreed by the main financial players.

In the opinion of the general public "RosUkrEnergo" is normally associated with "Regionaly". RUE is the monopolistic supplier of Russian and Central-Asian gas to Ukraine since 2006.

The official start of the PR attack on RUE has begun with the head of the SBU Mr. Nalyvaychenko's interview in today's 'Financial Times', in which he promised "that Russia and Ukraine would this summer provide greater clarity about the natural gas trade, in which the controversial RosUkrEnergo company plays a vital role. 'Ukraine and Russia should make this situation more transparent. [We need to show] what the real prices are and what the real financial sources are here, the flowing of money, and risks of dirty money and money laundering. To know the real situation, the real operators, the real deal, is key'."

The SBU head's 'FT' interview was most likely sanctioned by Pres's secretariat, where Nalyvaychenko is considered a hawk. The SBU and Nalyvaychenko personally participated in the discrediting of the Consititutional court judges Stanik and Psenychniy, who were examining the constitutionality of President's Decree on the dismissal of the VR.

But at the most, the presidential side and NU will limit itself to indirect hints of participation of "Regionaly" to the shady schemes of RUE, without the naming of concrete personalities and facts, and all the more - criminal cases from the SBU, since the response would be a wave of compromising material on the people close to the President, and in particular, on the President's brother - Petro Yushchenko. He could be connected with a certain off-shore company "Petrogaz" whose office is located in Dubai. "Petrogaz" is allegedly one of the minority shareholders RUE.

In February 2006 Social Democrat Igor Shurm and Communist Aleksandr Golub' turned to the SBU and the Prosecutor-General's office requesting verification of information that RUE transferred $53 million to Petrogaz , but he matter was 'kicked into the long grass.'

In two and a half years Yushchenko has only on few occasions spoken negatively about RUE, and has not undertaken any concrete actions on its elimination. NU started to agitate against the activities of RUE only after pressure from Yuliya Tymoshenko.

PoR during the election campaign will emphasize two facts: First, because of the mediator RUE and the Yanukovych government's handling of matters, Ukraine has gas from Russia at 130 dollars, instead of the initially proposed to 230, and PoR has no concrete links with RUE. Secondly, Yushchenko and Tymoshenko themselves have their snouts into the trough. Possibly, the Donetski-controlled media will rake up dirt on Petro Yushchenko's role, and Tymoshenko will be linked to attempts to return for the intermediary 'Itera' to the gas market.

The irreconcilable rivals PoR, BYuT, NU, and Socialists are however linked by a common objective - a low price for gas for Ukrainian industrial enterprises, and businessmen from all political camps will co-operate in order to obtain this, i.e. Ihor Kolomoyskiy (of the "Privat" group), who is considered to be one of the sponsors BYuT, Vladimir Boyko (owner of the Mariupol Metallurgical Combine im. Ilyich), SPU financial sponsor, Rinat Akhmetov (chief financier of PoR) and Vitaly Hayduk ( of ISD), a businessman close to the President.

The fact is that the the sister company of RUE "UkrGazEnergo", which exclusively supplies gas to industrial enterprises, recently increased its gas price, after including the cost storage of gas. Since the beginning of June both Boyko and Hayduk refused to buy gas, and turned for fuel to traders of the "Privat" group, who had earlier obtained and stored cheaper fuel with "UkrGazEnergo". The"Privat" reserves will soon be exhausted and Akhmetov himself has been forced to accept an increase in the price from UkrGazEnergo and signed a new agreement. Thus, the largest sponsors of the main political parties are being hit hard and are extremely negatively disposed to RUE. This will naturally be reflected in the rhetoric of party leaders and pre-election slogans.