Sunday, March 30, 2008

NATO will do nothing?

"It seems to me that during the Bucharest summit Ukraine will not receive an invitation on the action plan to obtain NATO membership. Why? Because Ukrainian politicians are not convinced that Ukraine really wants to be a member of NATO; but if there is agreement between Ukrainian political forces , I think that an invitation on the action plan may take place next year during the NATO summit in Washington." - Marcin Wojcechowski - "Gazeta Wyborcza" journalist [Poland] in BBC Ukrainian Service interview.

This from an excellent piece of analysis in the respected 'Oxford Analytica': "While Croatia, Macedonia and Albania can expect to receive invitations next week to join NATO, this is less likely for Russia's neighbours Georgia and Ukraine.

Washington has been actively promoting Ukrainian and Georgian membership ahead of the summit, arguing that this would safeguard democracy in these countries and that they would make contributions to collective defence.

The United States might also hope that Ukraine and Georgia would offer diplomatic support to its initiatives, allow greater flexibility for US troop deployments and even clandestine operations.

West Europeans are much less enthusiastic, fearing that the countries' inclusion would further alienate and antagonise Russia. They also doubt that these two countries can make a significant contribution to collective defence and security: Ukraine's and Georgia's unresolved conflicts with neighbouring countries would risk making NATO a party in these conflicts rather than an outside mediator.

Finally, West Europeans believe that enlargement would undermine efforts to improve NATO's military effectiveness. Since a membership invitation for Ukraine and Georgia at this week's summit would only increase internal and external threats to NATO cohesion, it is unlikely to be offered..."

Many years ago, when I was learning to drive, if an uncertain situation was developing on the road in front of us, or if a police car was behind us, my driving instructor would shout in my ear, "Do nothing!"

Saturday, March 29, 2008

This is what I think

Well worth watching: Yulia Tymoshenko quizzed for the best part of one hour by some of Ukraine's top journalists on a 27th March "Ya tak dumayu" TV program.

Friday, March 28, 2008

No free lunches

On 18th March in the Supreme Rada [VR] 246 deputies of 441 registerd voted in favour of extraordinary elections mayoral and city council for Kyiv.

That fact that 26 Communist Party of Ukraine deputies supported the motion caused raising of eyebrows because the CPU had been allies of the PoR opposition - without these 26 votes, the orange parties' proposals on early election in Kyiv would have ended in failure.

An article in 'Obozrevatel' entitled: "How the Communists helped in the ousting of [Kyiv mayor] Chernovetsky" provides a possible explanation why the Communists voted as they did.

It so happens that one of CPU's main sponsors is Russian oligarch Konstantin Ivanovich Grigorishin, who already possesses significant large-scale Ukrainian assets and enterprises. He would very much like to supplement these with other Ukrainian assets which could soon become available, e.g. a controlling block of shares of "Turboatom", oblenergos, [regional power generators] "Ukrrechflot" [inland waterways fleet], and "Zarya-Mashproyekt".

"Zarya-Mashproyekt", which one of the largest manufacturers of gas-turbine equipment used in ships, military vessels, gas-pumping stations etc. in the former Soviet Union became the focus of attention on 18th March.

Grigorishin, had already increased his involvement with other companies linked to "Zarya-Mashproyekt" but although its privatisation had been frequently considered, it had been rejected on account of its strategic importance to the country. Two years ago president Yushchenko's vetoed attempts to sell it off, but for Grigorishin, control of the enterprise would tie in very well with his current assets.

Before any possible sale can take place, changes in status of enterprise will have to be made by a legislative act in the VR - in 2005 alleged bribe-taking by BYuT officials in this matter was investigated.

In February this year President Yushchenko, in a TV interview, hinted that BYuT were buying votes in the VR with preferential oblenerho privatisations, and later in the month some observers suspected a possible informal BYuT/CPU alliance was cobbled together with this in mind.

Obozrevatel, by no means an anti-ByuT newspaper, concludes: We have on one side, the authorities who are prepared to pay for acceptance of convenient political decisions with strategic enterprises currently not subject to privatization; and on the other side the secretive Communist Party of Ukraine, which now votes in the interests of the representatives of large, particularly foreign business.

One thing is for sure, there are no free lunches in Ukrainian politics.

Tuesday, March 25, 2008

Tymoshenko's 100 days

Prime minister Yulia Tymoshenko has completed 100 days in office, a period, according to 'Gazeta po Kiyevski' characterized by conflicts with the President and his secretariat.

Here are some loosely translated portions:

Pre-election promises by Tymoshenko to return saver's deposits lost in the Soviet-era Sberbank were called crude populism by the supporters of the President, and the President hinted as much himself. But when he saw how much the premier's rating improved as a result of this action, the President tried to claim the credit for himself.
There were even attempts to replace the chairman of the State Oshchadbank of Ukraine, Anatoliy Huley, by one of the president's men but Tymoshenko fought off the attack, and Huley stayed. After realizing that he could not control the process of repayment of deposits, Yushchenko began to pressurize the premier into making the repayments as quickly as possible, but then criticised her, declaring it would all lead to higher inflation.

Privatization wars

The KabMin had hoped that increased social payments would be funded by the sale of remaining large state enterprises such as "UkrTelekom", and several Oblenergo's [regional power generators]. The 2008 budget envisaged receipts of 12 billion hrn. from privatizations that would be used to reimburse depositors of the Soviet Sberbank. But Bank Street [where the president's secretariat is located] did not allow the head of the state property fund, Valentina Semenyuk who was the main enemy of Tymoshenko's privatization initiatives, to be removed from her post, And Yushchenko continues to speak of the impermissibility of the sale of strategic enterprises. Until now the privatization of enterprises planned to be sold this year, has not even yet begun. This it plays to the hand to opponents and it can seriously affect the plans of the government.

"Gas friend" of Putin

Premier Tymoshenko tactically outplayed the President at the "gas front". The February Yushchenko-Putin agreement allegedly solved the problems of the Ukrainian gas debt, and was supposed to show that Ukrainians, and particularly Viktor Yushchenko, could come to an agreement with Moscow on cheap gas. Tymoshenko was clearly instructed to carry out the President's orders, but, by using tactical maneouvres, riding through a hail of criticism for breaking agreements, and surviving a brief gas blockade by the Kremlin, a stable price and formal elimination of mediators from the market was achieved. However, the agreement signed with Gazprom still leaves unanswered questions.


It seemed for a while that after the formation of coalition Tymoshenko's pre-election pledge to replace Kyiv's mayor Leonid Chernovetskiy was forgotten, but in March Tymoshenko succeeded in forcing through a motion in the VR on early elections for Kyiv mayor and city council. Again Yushchenko mishandled the situation - first Bank Street publicly protected mayor Chernovetskiy, then they agreed to Chernovetskiy's sacking in exchange for BYuT's support of presidential law about the KabMin, which restores some of the President's powers. Now presidential strategists hope the extraordinary mayoral elections in Kyiv will not return a Tymoshenko loyalist.


Since the middle of 2007 the President's secretariat has begun to prepare the ground for adopting a new version of the Constitution, further intensifying the authority of the President. Tymoshenko remained silent for quite a long time, providing Yushchenko with a hope of her loyalty. But in March, when she was in Brussels, Tymoshenko categorically stated there will no presidential form of administration in Ukraine, clearly indicating that BYuT will not vote for the presidential version of the fundamental law.

After being appointed premier, Tymoshenko occupied a rather defensive position, avoiding conflicts, and accepting public rebukes and humiliations from Yushchenko, but already in February she began to publicly disagree with the President, and, in the final analysis, she outplayed the president almost on all fronts in her first 100 days in office.

However, the presidential camp has sufficient possibilities to regain lost ground. There could be a blocking of budget, or a blocking of the adoption of the program of government entitled "Ukrainian breakthrough". Or maybe there will be a failure to agree on a united "orange" candidate for the capital's mayor.

p.s. BYuT won another victory today when the Central Election Commission permitted the registration of new BYuT deputies to the Kyiv city council, replacing those who switched their support to mayor Leonid Chernovetskiy - so from now on he can no longer command a majority,

Ukraine's constitutional court are to decide by Wednesday whether the CEC's actions are constitutional. New mayoral elections are to be held soon in any case, but if things go Tymoshenko's way on Wednesday, there is speculation thay BYuT may ask these be postponed.

p.p.s. In a FT interview, Dmitry Medvedev, Russia’s incoming president, has warned that granting Nato membership to the former Soviet republics of Ukraine and Georgia could threaten European security.

Friday, March 21, 2008

Tyhypko Returns

The former head of Viktor Yanukovych's O.R. election campaign has been appointed as an adviser to prime minister Yulia Tymoshenko.

Two days ago the Cabinet of Ministers' Council of Investors selected Serhiy Tyhypko as their co-chairman. He has also served as the head of Ukraine's National Bank and is one of Ukraine's richest businessmen. It was Yulia Tymoshenko, co-chairman of the Council, who proposed him. After three years of absence then, Tyhypko is returning - to work "under the wing" of BYuT.

'ProUa' describes his return thus:

Ukrainian politics increasingly resembles a group of unscrupulousness interbreeding individuals. But as the number of individuals in Ukrainian politics is small, and no new blood is forthcoming, the arrival of an old half-forgotten 'hero' can refresh the picture and inspire some of electorate. Experienced politicians like Tymoshenko understand this, and for Tyhypko, the Council of Investors is a useful stepping stone in his return to public politics.

Apart from being Yanukovych's former election campaign manager, Tyhypko was also one of the founders of the pro-Kuchma parliamentary majority. He worked actively in the Kuchma regime and was considered a creature Viktor Pinchuk. In 2001 he even crossed swords with Tymoshenko in the energy sphere, so in theory he would not seem to be an obvious ally for Yulia T.

However, Tyhypko was known as a compromiser and never personally participated in corporate wars, preferring to resolution conflicts by alternate means.

Tyhypko was number two in Leonid Kuchma's structure of authority. At the beginning of the new century he nearly became prime minister, but he lost out to Anatoliy Kinakh, even though he was regarded as a better candidate. Then, in the "Za Yedu" bloc, he gave up the top spot in favour of Volodymyr Lytvyn.

Tyhypko was always a young and promising understudy, or first reserve. He has always ably hidden his political ambitions and never entered into the open competition with stronger players. But this could be simultaneously a strength and weakness.

Many speculate over what would have happened had Leonid Kuchma nominated Tyhypko as his presidential successor rather than Viktor Yanukovych - this had been a serious possibility at the time. Perhaps all that would have been required was for Tyhypko and Pinchuk's group to appear more determined - and who knows, he may have become president. But he finished up heading Yanukovych's presidential campaign, the failure of which cost Tyhypko three years in the political widerness.

Tymoshenko well knows the qualities Sergiy Tyhypko possesses from their days together in Dnipropetrovsk. For this very reason she has decided to seek out his services. The reason is simple: today, as a politician Sergiy Tyhypko does not present any danger to her. At the same time, it is an excellent opportunity for him to restore his own personal image, and his appointment helps raise the government's and Tymoshenko's rating.
Tyhypko is an experienced and capable political figure. Being back on the political stage will feel good.

Tuesday, March 18, 2008

Tymoshenko's clever manoeuvring wins the day..

Tymoshenko scored another political success in the VR today by driving through early Kyiv mayoral elections.

246 deputies supported the motion; these were 155 from BYuT, 59 [out of 72] from NUNS, 6 Lytvynites, and most significantly, 26 Communists. No PoR deputies supported the motion.

Tymoshenko had threatened her party would not participate in any VR business unless their NUNS coalition partners supported them in seeking early mayoral elections in Kyiv, and hinted darkly that BYuT deputies would even block the work of parliament, if necessary. The fact that Tymoshenko resorted to veiled threats and ultimatums, indicates that she was fed up with having to make concessions to the President.

A deal was struck, and in return for NUNS' support on the Kyiv mayoral issue, BYuT supported a Presidential bill "On the Cabinet of Ministers", which restores some of the powers that had been ceded by the presidency in the last few years.

Almost a year and a half ago BYuT and PoR had voted together to reduce presidential powers, but today BYuT did a 'U-turn' and supported restoration of these powers.

Presidential secretariat head Viktor Baloha's loyalists in NUNS did not support the motion for the early mayoral elections, but surprisingly, the Communists did. Without their support the vote would have failed.

There are rumours that a deal between Yulia Tymoshenko and Communist Party of Ukraine sponsor, Russian businessman Konstantin Grigorishin, had been arranged. This was the ace up her sleeve.

Although today can be considered a further victory for Tymoshenko, the new KabMin laws make her more susceptible to the whims of the president, who can now demand her sacking if he so wishes.

However, Yushchenko recently declared that the current coalition composition will work for a long period. This week the coalition pledged to approve the Tymoshenko cabinet's program, so after this, the question of her sacking will recede somewhat. But the fight over who will be the orange candidate for Kyiv's mayor will now begin..

p.s. Mykola Tomenko, the head of a temporary VR commission investigating current Kyiv mayor Chernovetskiy's allegedly corrupt activities, today stated in the VR that the current Prosecutor General's office is compromised, having accepted bribes in the form of land and apartments from Chernovetskiy. Tomenko, who is generally regarded as a 'clean', declared that because the P-G's office has been "bought off" it is unlikely to press charges against Chernovetskiy.

Tymoshenko playing high risk politics game

PM Yulia Tymoshenko is continuing her political blitzkrieg in a high risk drive to topple the disgraceful Leonid Chernovetskiy. His presence in the mayor's office of Ukraine's capital is an embarassment that would not be tolerated in any normal European democracy.

I've loosely paraphrased portions of an article in 'Korrespondent' below:

The question of early mayoral elections in Kyiv may precipitate a parliamentary crisis in Ukraine.

According to BYuT VR deputy Mikhaylo Pozhivanov, if NUNS does not support a decision to stage re-elections in Kyiv, BYuT will no longer consider themselves obliged to vote for policies that were included in the BYuT/NUNS coalition agreement, but were not part of BYuT's pre-election program.

Tomorrow [Tuesday] BYuT will insist that Leonid Chernovetskiy's resignation from the post of the mayor of Kyiv is the first point on the agenda, says Pozhivanov.

According to the "nardep", this is a litmus test. If the NUNS fraction does not support BYuT in the course of voting, this will be considered as non fulfillment of coalition obligations by NUNS.

"It removes from BYuT all responsibility on voting for subsequent legislative acts and those items not in the program BYuT", noted Pozhivanov. In such a case one can talk of the beginning of the real crisis in the parliament.

Presidential secretariat head Viktor Baloha has stated that the intentions of BYuT will have extremely serious consequences for the political situation in the country. Party of Regions consider them additional proof of the fact that the Orange Coalition is guided not by law and constitution, but by political expediency.

VR chairman Arseniy Yatsenyuk severely criticized the BYuT fraction for its statements about the possible non participation in the Parliamentary sitting scheduled for 18th March, but did not exclude the possibility that...tomorrow parliament could examine the question of re-elections in Kyiv.

A good explanation in 'Ukrainska Pravda' here why BYuT are insisting this man goes, even though the letter of current constitutional law is not being adhered to by them in their attempt to get rid of him.

LEvko wonders, is it worth risking so much for this ****bag.

Monday, March 17, 2008

BYuT: in office or in opposition?

The BYuT parliamentary fraction has threatened not to attend the 18th March VR session unless a motion on pre-term Kyiv mayoral elections is first on the agenda for that day's business.

Tymoshenko's official website quotes her as saying: "In one of the articles of the coalition agreement there is a clear statement on early elections for Kyiv. So either approval for early elections will be the first item at the VR sitting, or we will not participate in the work of the VR."

She says she is convinced Yushchenko will support her initiative on these early elections, but, in her opinion the suspension of Kyiv's mayor, Leonid Chernovetsky for 15 days by Yushchenko, was: "[Merely] stalling the moment of destiny, and will not solve the problems which have accumulated in Kyiv."

Tymoshenko has achieved much in her second, short, hyperactive stint as PM, but boycotting parliament when your party is in office is a pretty dumb thing to do. PoR 'mouthpiece' Hanna Herman immediately accused BYuT of running scared because they cannot raise sufficient votes to pass any resolutions.

But looks as if there has been a rethink. 'Segodnya' quotes Tymoshenko as saying, "We will use civilized methods to ensure the VR does not consider even one question until a proposed resolution on early elections on the Kyiv mayor and Kyiv council is passed," adding that she has excluded the possibility of BYuT deputies blocking the VR speaker's podium.

p.s. Not sure who was more limp, the interviewer or interviewee Yanukovych in a bumbling interview on channel 5

p.p.s. From today's "Sunday Times": A Ukrainian steel group has taken a significant step towards what is likely to be one of the biggest floats in London this year.

Interpipe, which makes steel pipes and railway wheels, has appointed two nonexecutive directors and recruited banks for the listing, which should raise about $1 billion (£495m) and value the group at between $4 billion and $5 billion.

..Ukraine is also emerging as a happy hunting ground for the City.

At a conference organised by investment bank Credit Suisse this week, delegates heard that as many as 60 Ukrainian groups could seek UK listings."

Friday, March 14, 2008

MAP fraying?

"With only three weeks remaining for necessary damage repair prior to the NATO summit, the German government has perhaps irreparably damaged the Membership Action Plan (MAP) goals of Ukraine and Georgia. Chancellor Angela Merkel has turned down those two countries’ MAP candidacies, thereby following the lead of her number two in the government, Minister of Foreign Affairs Frank-Walter Steinmeier.... [From EDM]

"NATO has not yet decided whether to allow the former Soviet republics of Ukraine and Georgia to join the military alliance, its Secretary General Jaap de Hoop Scheffer was quoted on Wednesday as saying.

Asked when NATO plans to offer Ukraine and Georgia a Membership Action Plan, the first step to membership, Scheffer said: "We are debating on this issue."

"Remarks on this from the Moscow side have happened often. We treat our Russian partners seriously ... We must engage them in the discussion," he told the [Polish] daily 'Gazeta Wyborcza'.

And an article in 'Segodnya' : "President Yushchenko in Brussels announced that President George Bush will visit Ukraine on 1st April - [April fool's day, or "Day of Laughter" as it is called in Ukraine, ho,ho..]...

According to Yushchenko, a topic of discussion will be Ukraine's NATO Membership Action Plan.

The leading countries of West Europe (France and Germany) have already publicly expressed themselves against the inclusion of Ukraine to MAP [?] (the reasons being the majority of Ukrainians do not approve integration in NATO; and also the Europeans allegedly do not want to 'fall out' with Russia). However, USA continues to insist on Ukraine's membership, and is using all means to convince its Euro-allies to agree. The visit of Bush to Kyiv can be regarded as a powerful "preliminary artillery bombardment" prior to the Bucharest summit..."

LEvko thinks the European's attitude to Ukraine's MAP could provide a handy exit route for Ukraine's waverers..

Wednesday, March 12, 2008

Wrecking Ukraine's farming potential

This from today's London "Times":

Bread basket that is left to grow weeds

They could feed the world or at least a good part of it. Millions of hectares of valuable farmland are lying fallow in Eastern Europe and the former Soviet Union but tariffs and protectionism are keeping these countries from bringing more food to the table.

Since the collapse of communism, some 23 million hectares of prime cropland, an area almost as large as the United Kingdom, is growing weeds. With the world wheat price up 118 per cent in a year, you might have expected a scramble to plough the black soil of Russia and Ukraine but there are problems. Both countries have erected export barriers to secure domestic food supplies and stem price inflation.

In London this week, the European Bank for Reconstruction and Development joined forces with the UN's Food and Agriculture Organisation and a host of agribusiness companies to call for less protection and more investment....

Politically inspired barriers to trade are a blight on the world. The market clamours for more cereals, yet Ukraine, once touted as Europe's bread basket, is missing an opportunity to exploit its advantage. Huge investments in farm machinery and infrastructure are needed to put the former Soviet republic into export mode but there is a catch.

You cannot buy farmland in Ukraine, a law passed in 2001 prohibits its transfer to anyone, foreigner or Ukrainian - a bizarre and misguided attempt to protect the nation's rural heritage is wrecking the country's farming potential....

LEvko thinks if Ukrainian politicians don't "get their finger out" now and start looking to the future, they never will..

No more cheap gas

This small but maybe highly significant snippet from today's 'Donbass' newspaper:

Asia raises price of gas

Yesterday a meeting took place in Moscow between Gazprom CEO Aleksei Miller, the President of "KazMunayGaz", Uzakbay Karabalin, CEO of "UzbekNeftegaz", Nurmukhammad Akhmedov, and chairman of "Turkmengaz", Yagshigel'dy Kakayev.

During the meeting the leaders of the gas companies of Kazakhstan, Uzbekistan and Turkmenistan declared that: "on the basis of the interests of [our] national economies, and taking into account international obligations regarding the guarantee of reliable and uninterrupted deliveries of fuel, from 2009 the sale of natural gas will be realized at European prices".

Bad news for Ukraine who imports most of its gas from central Asia. Looks like soon they are going to have to pay 'top whack'*.

*The maximum price or rate. {Informal - British}

Tuesday, March 11, 2008

Ukrainians think neutrality is better than NATO

Couple of interesting O.P.'s from today's "Segodnya"

The majority of Ukrainians - 75,1%, approve of neutral status for Ukraine; 9,8% are against, 15,2% had difficulty answering.

62,3% of respondents are in favor of conducting a referendum on the entry of Ukraine into NATO, 24,9% against such a referendum, 12,8% had difficulty answering.

The O.P. indicated that overall, 56% of Ukraine's citizens would be against the entrance of Ukraine in NATO, 21,6% for the enty into the alliance, 8,3% would not participate in any referendum on this question.

Another O.P. in the Akhmetov-controlled 'Segodnya' reveals that Tymosenko's ratings are improving.

If elections were to take place on 2nd March, according to the O.P. 36,4% of those polled would vote for BYuT, 28,8% for Party of Regions, 8,7% for NUNS, 6,5% for the Communists, 5% for Lytvyn's block, 10,3% against all.

If presidential elections were to take place next Sunday, 26,8% expressed a readiness to vote in favour Tymoshenko, 20,3% for Viktor Yanukovych, 9,9% Viktor Yushchenko, 3,8% for Volodymyr Lytvyn, and 3,6% for Petro Symonenko.

Despite Tymoshenko's undoubted popularity, speculation is increasing that her hold on the premiership may be tentative - just 15 more NUNS deputies have to be found in order that their party withdraws from the ruling BYuT/NUNs VR coalition. This would enable a grand PoR/NUNS coalition to be formed, and drive BYuT into opposition again. Politicians do take notice of opinion polls. Figures like those above will give those thinking of jumping ship pause for thought.

LEvko considers head of presidential secretariat Viktor Baloha is possibly being set up to take the blame and could be easily discarded if the campaign to shove out Tymoshenko stalls or fails.

'Dzerkalo Tyzhnya' runs a detailed article exposing Baloha's alleged involvement in corrupt land and property deals in his home town of Mukacheve, but Baloha does have serious 'krysha' in the security services [SBU]. Yushchenko's employment of such a doubtful character does him no credit.

Thursday, March 06, 2008

Yushchenko peeved at Tymoshenko's gas success

Late Wednesday night, the following appeared on the Ukrainian Cabinet of Ministers' website:

"Yulia Tymoshenko: NJSC "Naftohaz Ukrainy" and "Gazprom" achieve complete understanding on ending gas tension

As Prime Minister of Ukraine Yulia Tymoshenko said during negotiations between NJSC "Naftohaz Ukrainy" and "Gazprom" complete understanding on ending gas tension had been achieved.

"Gas volumes supplied to Ukraine are completely resumed and I am very glad that Ukraine held out in this very complicated confrontation and has not gone back a step in key issues of the national security. I am confident that now we start a stage of calm and balanced negotiations between "Gazprom" and NJSC "Naftohaz Ukrainy", Yulia Tymoshenko noted.

At the same time, the Head of Government noted that she had signed directives on negotiations which NJSC "Naftohaz Ukrainy" to hold with "Gazprom".

According to the Prime Minister, the directives will be aimed at that NJSC "Naftohaz Ukrainy" conclude a direct contract with "Gazprom-export" public corporation – a company which at 100 percent belongs to "Gazprom" and possesses contracts on Central Asiatic gas supplies from Kazakhstan, Uzbekistan and Turkmenistan.

"Our task is to make NJSC "Naftohaz Ukrainy" receive this gas," the Head of Government stressed.

At that, the Prime Minister stated that the Government proposed "Gazprom" to grant to its daughter enterprises licenses for independent gas sale of 1,25 billion cubic meters per year in Ukraine as compensation for liquidation of "UkrHazEnergo"

The PM also announced that "we intend to achieve understanding and I am sure that beginning March we can conclude all agreements which will be long-term and predictable both by supply volumes and prices and according to monthly balance".
"We should put an end to the tradition of short-term contracts for several months. I consider that long-term contracts – this is what both the Ukrainian and Russian sides need," Yulia Tymoshenko added.

At the same time the Prime Minister told that within nearest days NJSC "Naftohaz Ukrainy" would send its delegation to "Gazprom" for conducting negotiations on final regulation of the gas issue."

Today Tymoshenko wrote a 'don't-worry-pal' letter to president Yushchenko posted on the KabMin website:

"In reply to your letter of 4th March to the Government demanding immediate renewal of negotiations between Naftohaz and the Russian company Gazprom and normalization of relationships in the gas sphere, I am informing you that such negotiations were not stopped even for a day from the beginning of February 2008.

On 5th March, thanks to the efforts of the government, supply of gas to Ukraine was fully restored. This was achieved without withdrawing one step from the national interests of Ukraine."

The letter also included the following, as described by 'AFP'

"Ukraine PM rejects gas supply deal with Russia

KIEV (AFP) — Ukrainian Prime Minister Yulia Tymoshenko on Thursday rejected part of a gas supply deal with Russia, a day after the end of a three-day cut in supplies that raised concerns in Europe.

The deal would "preserve corrupt schemes and abuses, lead to the bankruptcy of (state gas firm) Naftogaz and contradict national interests," Tymoshenko said in an open letter to Ukrainian President Viktor Yushchenko released by the government.

Yushchenko and Russian President Vladimir Putin struck an agreement in Moscow on February 12 intended to end a dispute over Ukraine's unpaid debts for Russian gas and to reorganise the gas supply relationship.

The terms of the deal were never made public but Tymoshenko made it clear that she did not agree with Russian demands, prompting Russian state gas monopoly Gazprom to cut supplies by 50 percent over Monday and Tuesday.

Gazprom restored the supplies on Wednesday but the substance of the dispute did not appear to have been resolved. In a joint statement on Wednesday, Gazprom and Naftogaz said negotiations would continue. Gazprom has demanded that Ukraine settle a debt of 600 million dollars.

"I will fulfil the agreements between the presidents of February 12 as far as the necessity of an urgent normalisation in relations in the gas sphere is concerned," Tymoshenko said in her letter. But, she added: "The cabinet of ministers cannot agree with several terms of these agreements," such as the gas price for 2008, the use of an intermediary company and moves to limit Naftogaz access to Ukraine's domestic market."

Serious observers consider that, again, it was Gazprom who backed down in this particular round of the long-running Russian/Ukrainian gas conflict. E.g. 'Kommersant''s headline was "Gazprom has surrendered to Ukraine", but then: "a truce has been been called in the gas war between Russia and Ukraine."

On 21st February Tymoshenko received what can only be described as a 'public bollocking' from Yushchenko delivered live on TV. Here is a transcript [from Taras's 'Ukrainiana' blog]:

"The accord reached between the two presidents stipulates that a debt of 7.5 billion hryvnias [$1.49 billion], which Ukraine owes for the past four months, should have begun being repaid starting February 14. As of today, of the 7.5 billion hryvnias, through tremendous effort — including my own — some 1.5 billion have been repaid.

Yesterday, I had a talk with Naftogaz: Why are the payments not forthcoming? Why hasn’t the Ministry of Finance paid Naftogaz a kopiyka in the way of compensations earmarked in the budget? I simply consider this situation to be sabotage. I will prepare a progress report for the Russian side on the payments Ukraine was obliged to make."

Tymoshenko, who tonight in Belgium claimed she was supported by the USA and Europeans in her endeavours, will be feeling vindicated for playing 'hard-ball, but will be well aware that there is much to do in order to get a long-lasting workable deal on gas deliveries for Ukraine.

President Yushchenko has hardly covered himself in glory. Tonight the head of his secretariat, Viktor Baloha, in a peevish statement on the president's website stated "the letter of the head of government misinforms society about the efforts of the president directed to solving the problems of gas delivery to our country." He considers the letter, "a gesture for the public, rather that a business-like document." So the Tymoshenko-Yushchenko feuding continues..

And PoR leader Viktor Yanukovych has been reduced to calling for mass protest against Ukraine's entry into NATO. Observers consider this to be an act of desperation and frustration of being in opposition. It may also be a sign PoR's popularity is slipping amongst the pro-Russian electorate. Without serious financial support to pay protestors, it probably won't come to much.

Some NUNS members have been critical of Tymoshenko's letter to the president too, calling it a breach of the Putin-Yushchenko agreement. So, what future for the BYuT-NUNS coalition, now that parliament is finally back at work?

Gas crisis artificially created, says Ivchenko

Gazprom and NAK Naftogaz Ukrainy have issued a joint statement that their latest gas spat has been resolved, and normal gas supplies to Ukraine have resumed.

A few hours before, former head of Naftohaz Ukrainy, Oleksiy Ivchenko had been interviewed by the BBC Ukrainian service He provided interesting insight into Russian-Ukrainian relations in the gas sphere.
  • Contrary to other reports, he claimed Ukraine has only several days-worth of gas stored in its reservoirs.
  • The absence of an agreed position by the Ukrainian side is an obstacle to solving the problems with Gazprom.
  • The 'debt problem' was created on purpose.
Ivchenko was head of Naftohaz at the time of the last gas crisis, but, he claims at that time there was a comfortable 26Bcm of gas belonging to Ukraine in the country's underground storage facilities. This time he claims there is none. All the gas currently stored there belongs to the middlemen or to Gazprom.

"The main aim of the Russian side, I to gain the gas transport system of Ukraine," says Ivchenko.

When asked if he considers it to be a provocation that Ukraine has [gas] debts, he replies:

"Yes, I consider this a provocation, because in reality there are no debts as such for 2007. The debts have been created artificially between the Ukrainian and Russian side, sadly, with the agreement of both Ukrainian and Russian officials, in order to reveal or to conceal the debts, as appropriate, depending on the results of the [early parliamentary] election."

BBC: "Are you hinting it was those in the Yanukovych government?

Ivchenko: "Yes..because I do not understand the situation, if this wasn't the case, why UkrTransGaz , for example, received 7Bcm of technological gas in 2007 required to pump Russian gas to Europe via Ukraine's gas transport system. For the first time in 2007 the Ministry of Fuel and Energy forced UkrTransGaz to purchase this technological gas not from [its parent company] Naftohaz Ukrainy, but from [middleman] UkrGazEnergo for $140. This, when at a transit rate of $1.6 the price of this technological gas should be $95. In other words, UTG was assuming covering for costs of $95 from the Russian side, but was paying $140 for technological gas. Where was it supposed to find the difference between $140 and $95? From nowhere. In this way, Naftohaz's debts to UGE and RUE were accumulating, as were debts of RUE to Gazprom.

Qu: If the results of the elections had been different and Yanukovych continued to be PM, would have this problem have arisen?

Ivchenko: I think the Russian side would have kept quiet for some time, but the situation would have led to ever-increasing debts. Then an international company, e.g. RUE files a claim against Naftohaz for non payment of debts; Naftohaz is declared bankrupt and Russia receives the gas transport system of Ukraine and its assets abroad on a plate.

Ivchenko suggests that in order to finally sort out the problems in gas relations with Russia, the business has to be conducted within an absolutely transparent market relationship, i.e. proper market price, and proper market transit fees: he suggests $250 per Tcm and $3 per 1000cm/1000 km transit fee.

He also suggests 'portions of the politikum', both Ukrainian and Russian, benefit from the current structure which employs middlemen, hence the difficulty is their elimination.

p.s. 'Kyiv Weekly' provides some historical background [in English] to the Russian/Ukrainian gas difficulties, and explains how the Ukrainian side significantly weakened its own position after the New Year 2006 gas crisis.

It concludes: "Ukraine did not have to introduce any changes in relations between the two sides. Nevertheless, the Ukrainian government ventured on altering the format of mutual relations. On January 3rd [2006] in Moscow separate agreements were signed on the transit of gas through the territory of Ukraine and supplies of gas to Ukraine. It is in this way that the contractual obligations in the conditions of gas supplies to Ukraine and its transit to Europe were violated and the Ukrainian government failed to maintain its edge fixed legally on the international level."

Gas is flowing again to Ukraine, but somehow LEvko does not think this will be the end of the matter.

Wednesday, March 05, 2008

Time on Tymoshenko' side?

Yulka T. has every chance to win the current "gas war", according to an article in 'Gazeta po Kiyevski':

"Blows from the Kremlin's "gas bludgeon" on Ukraine are intensifying. First, on 3rd March, deliveries of gas decreased by almost 30%. On Tuesday evening Gazprom screwed down the gas valves 25% more, so in two days Ukraine is receiving less than half of normal supplies.

It's clear Moscow is using all means possible to pressurize Tymoshenko in order to retain the infamous gas mediators in the gas supply chain. There has been a co-ordinated information attack in the mass media supported by opposition Party of Regions, who are demanding the resignation of the premier, and also constant criticism by President Viktor Yushchenko, who is urging Tymoshenko's government to return to negotiations and speedily resolve the crisis, even though the President concedes Gazprom are not paying their fees for transit of gas through Ukraine.

However, in the psychological war with Gazprom, time may be on the side of Yulia T. hence the rapid, rather desperate ramping up of pressure by the Russian monopolist.

In Moscow they understand that either they succeed in crushing the Ukrainian premier after several decisive days, or it will be necessary to capitulate and lift the "gas blockade". The last thing they want is to negotiate with Tymoshenko in the imperious corridors the Kremlin.

Russian political scientist Stanislav Belkovskiy reckons Gazprom cannot artificially decrease the deliveries of gas to Ukraine for any great period of time. Gas production is a continuous process, and thus far, gas earmarked for delivery to Ukraine is being pumped into Russian underground depositories - but their capacity is limited. The other alternative is the costly and wasteful flaring off of gas into the atmosphere.

Belkovskiy is convinced the aim of this high-stakes game is to force the resignation of premier Tymoshenko, and to ensure a more compliant person is appointed PM.

Gazprom is hoping that Ukraine will be forced into unsanctioned siphoning off of gas intended for the European consumers, so creating an international scandal for "stealing" Russian gas. As a result, they will kill two birds with one stone. First, they will spoil Ukraine's image as reliable transit country, and secondly, Europe will apply huge pressurize on the intractable prime minister, via diplomatic channels, to settle with Gazprom.

At the moment there are sufficient reserves of gas in Ukraine, possibly even for a month. A source from MinPalEnerho [ministry of fuel and energy], has told 'Gazeta po Kiyevski' that there are sufficient resources to cover for undelivered imported gas. These comprise home-produced gas, and also fuel stored in Ukraine's own underground depositories belonging to structures not connected with the mediators "UkrGazEnergo" and "RosUkrEnergo".

The main thing is that "Naftohaz Ukrainy" are not yet considering yielding to the provocation by siphoning off Russian gas. And they intend to prove to Europe that Gazprom itself has not been paying for the transit of gas for two months now.

But things are not so rosy in Ukraine either. Naftohaz are already finding it necessary to reduce gas supplies to certain cities.

However, the Russian monopolist is daily losing more than $10 million from the decrease of the deliveries of gas to Ukraine. How far will the Kremlin goes in order to tame the obstinate Tymoshenko and get advantageous contracts - time will show."

LEvko considers much depends on how long Naftohaz has been preparing for this showdown, which they must have known was coming as soon as Tymoshenko became premier for a second time. Gazprom's hand would be a bit stronger if they were up-to-date with their payments for transit - after all rates were agreed long ago.

p.s. Tomorrow Tymoshenko will be in Brussels for a couple of days attending a women's conference. She will be meeting Condi Rice, the German minister of foreign affairs, the Finnish president, and the speaker of the Georgian parliament.

Tuesday, March 04, 2008

Gas crisis politics

Today Gazprom reduced gas supplies to Ukraine by 35%, not the 25% they had threatened. Meanwhile a Naftohaz Ukrainy spokesman says Ukraine has sufficient gas to last at least a month.

Gazprom has put forward a new proposed agreement 'on the development of Russian-Ukrainian relations in the gas sphere', and a Naftohaz 'delegatsiya' is to go to Moscow by the end of the week for further negotiations.

A possible direction in which the crisis could be heading is indicated by Tymoshenko's first vice-premier Oleksandr Turchynov's declaration that Gazprom have not been paying transit fees for Russian gas piped westward via Ukrainian territory since December 2007.

This prompted an immediate response from Gazprom spokesman Sergiy Kuprianov, that Gazprom have not paid any transit fees because they had not been invoiced by Naftohaz Ukrainy, even though Gazprom have no problem paying for these services in full, and in a timely manner.

PoR are demanding that parliament debates the current gas crisis, and that the government reports on how they will be defending the country's interests in this situation. PoR may insist a 'no-confidence' motion be proposed in the government, leading to a possible reformation of the government.

Even though relationships between President and PM have gotten even worse lately, some commentators feel that the President is not yet ready to support such a radical step - it would reduce his chances for a second presidential term even more.

However, if the gas crisis deepens, and/or other economic crises flare up too, calculations may alter. [Maybe that's why gas deliveries have been cut back more than had been initially threatened.]

But right now the blockage of parliament may suit the President's purposes.

p.s. Couldn't Naftohaz Ukrainy say, "We ain't talkin' while people are pointing guns at one another's head. We ain't talking to nobody till the gas is turned on. Transit fees were agreed and fixed for the next five years so no money for transit - no gas for Europe..But this would be plain childish, wouldn't it?

p.p.s. Best analysis from any source on this topic from Hans here

Sunday, March 02, 2008

Tymoshenko playing off opponents against each other

Here are some loosely translated portions of an article entitled 'Spring offensive - Tymoshenko-Yanukovych pact', from Saturday's 'Gazeta po Kiyevski':

Prime minister Yulia Tymoshenko had hardly recovered from her recent illness, when she gave a significant press conference. The proposals advanced are so suprising they cannot but attract attention.

Tymoshenko hinted that constitutional reform cannot go in the direction determined by the President, and [in order to prevent this] BYuT is ready to negotiate with the Party of Regions.

Tymoshenko proposes determining either to remove from the system of authority the post of the President, or the premiership, i.e. dispose of the current dual power structure. This proposal is about possibly changing the form of administration from a parliamentary-presidential model, not to a presidential model, as Yushchenko wishes, but on the contrary, to a parliamentary model. The leader of BYuT is sure that the proposal on the liquidation of the post of President could be passed through the parliament.

On what is this assumption based? The total votes PoR and BYuT could muster together is more than 300 - i.e sufficient to change the constitution. "The consolidation of political forces in the parliament is possible only for adopting the new constitution with
a purely parliamentary form of administration. The other possible version of the constitution - a presidential form of administration - would not be passed by default in the Ukrainian parliament", said Tymoshenko.

This "possible consolidation" can be perceived as a signal to the leader of 'Regionaly'. If the speculation of political scientists is correct, then the leader of PoR, Yanukovych, was not taken into the account by negotiators either from the president's administration or from 'Regionaly', when there was talk of another consolidation - around Yushchenko.

The association of large financial-industrial groups from both east and south of the country for the advancement Yushchenko's second presidential election bid has been mooted.

These proposals to 'Regionaly' from Tymoshenko are a direct answer to the intrigues of the head of President Yushchenko's secretariat, Viktor Baloha, who is garnering resources for Yushchenko's bid for a second term in office, and is simultaneously organizing pressure on the premier and her government.

Premier Tymoshenko is yet again demonstrating that attempts to drive her into a corner will end in failure. But chances for BYuT and PoR to agree do exist. It is sufficient to recall their 'situational voting' to overcome the presidential veto on the KabMin laws which increased the authority of the government. And both of leaders, Tymoshenko and Yanukovich, have not bad confidence ratings amongst the electorate.

But simultaneously, Tymoshenko's words are a signal to Yushchenko that it is not yet too late to agree, to resuscitate coalition, and to find a compromise to problematic questions. Not in vain did Tymoshenko specify that BYuT will participate in the introduction of changes in constitution on the basis of the consensus between all political forces of the country.

It will be clear very soon if her signals have been received by the President's secretariat.
Tymoshenko stated on Saturday that from 1st March 2008, gas into the Ukraine will be supplied exclusively to State gas company Naftohaz. According to her, during negotiations between the Presidents of Russia and Ukraine (in February 2008) it was agreed that at some time during a period of 3 months beginning 1st January, gas would be received directly by Naftohaz Ukrainy.

The last statements of premier on gas are very bold, especially viewed against the background of criticism from the president's secretariat, and the blackmail by Russian Gazprom, who promise to reduce delivery of gas toUkraine by 25% from 3rd March.
Yulia T has seized the initiative from Yushchenko and has consciously aggravated the crisis. The calculation is simple - her rating is on the rise and her chances against Yanukovych in early elections (presidential or parliamentary) are improved. And why should she give time to Yushchenko to regroup and finally agree a deal with the new Kremlin administration, which is on the verge of being reformed? This is why Tymoshenko "does not exclude" early presidential and parliamentary elections in the event that a new constitution is adopted.

p.s. On Sunday, official spokesman for Gazprom, Sergei Kupiyanov, appearing on a Ukrainian TV channel said that no contracts for supply of gas to Ukraine have been signed yet even though, "All the required documents, particularly agreements were already prepared on 14th February, and send to Naftohaz Ukrainy on the 15th of February...No official reply has been received, these documents have not been signed yet.. A scandal is guaranteed, for sure.."

LEvko thinks if Russia cuts off some of Ukraine's gas supply, as it has promised to do, and the story hits the media again, then Tymoshenko will have succeeded in spoiling newly-elected president Medvedev's big day tomorrow..

Saturday, March 01, 2008

Franchuk's muckheap

'Fokus' magazine has published a 'Top 130 richest Ukrainians' list in its latest edition. Three women are included, but none of the three, sadly, is former president Kuchma's daughter, Olena Franchuk.

By coincidence there are reports that a Ukrainian businesswoman has just bought the world's most expensive home in London for £80m.

A local blogger who provides photos and inside info, thinks there could be something fishy about the price of this muckheap.

The house includes a 'panic room' - could come in useful in the unlikely event of a severe "bout of conscience" attack.

Tomorrow [Saturday] Party of Regions are holding a party congress in the Ice Palace in Severodonetsk. 'Kommentarii' considers there is a possibility it may turn into a meeting of the Viktor Yanukovych wing of the party, which may finally formalize the split in the "Regionaly".

The congress agenda covers five themes: breaches in the right for local and regional self-governance; breaches in the rights of Russophone citizens of Ukraine; falsification and revision in the [evaluation] of Ukraine's history; the non aligned status of the country, proclaimed when the Ukrainian state was established, and its relations with NATO; and the role of the canonical Orthodox church in the life of society.

A Serbian delegation is scheduled to attend.

"Despite clearly expressed hints of separatism and probable angry speeches by participants, the second Severodonetsk congress, in contrast to the first [which took place at the height of the orange revolution], will hardly have serious consequences in the plans to threaten the division of the country," predicts 'Kommentarii'.

"Then Severodonetsk congress has every chance to provide documentary confirmation of the fact of division in the PoR camp...A declaration to "meet with the voters" on 1st March in the Ice palace has been signed by only 120 of 175 PoR VR deputies. They are precisely those "regionaly", which nowadays are oriented toward Yanukovych.

Rinat Akhmetov had intended to attend tomorrow, but will probably give it a miss because he has been taken ill with flu. Maybe he caught it off Yulia Tymoshenko...could be the same nasty diplomatic strain of the disease..