Who has the key to the "black-box"?

FT reports:

"Progress was made in talks aimed at preventing the latest Russia-Ukraine gas dispute from becoming a full-blown crisis, the European Commission reported on Monday.
Participants at the meeting in Brussels, including the International Monetary Fund and the World Bank, stressed that any financial assistance to help the recession-battered Ukrainian government pay its bills would be contingent on continued reform of its gas sector.

They also lowered their estimates for the amount of support Ukraine would need to fill its own gas needs and serve European customers through the winter. One attendee put the figure as low as $2bn – or less than half of previous estimates.

“I think we have a much better sense coming out of this meeting what sort of figure we are looking at, and that figure is certainly less than $4.2bn,” a Commission spokesperson said.

The threat of an imminent supply cut – warned of earlier this month by José Manuel Barroso, Commission president – may depend on Ukraine’s ability to make good on a roughly $300m payment on July 7 to cover its June gas imports. The government says it has so far collected about $150m to do so.

But the larger question remains whether cash-strapped Ukraine will be able to pay for the stockpiles of Russian gas necessary to fill its own needs and supply European consumers throughout the winter. Europe relies on Russia for about 25 per cent of its gas imports, some 80 per cent of which flow through Ukraine.

As of early June, Ukraine claimed to have nearly 20bn cubic metres in storage, and a maximum capacity of 32bn cubic metres.

Prior to Monday’s meeting, the Commission had estimated the country might require as much as 19.5bn cubic metres of additional gas to last until the end of the year. Russia had pegged the cost at $4.2bn.

But one attendee said the parties had determined yesterday that an additional 8bn -10bn cubic metres would likely suffice – a sum that would cost roughly $2bn.

In addition to uncertainty about the weather, the calculations are being complicated by the economic crisis, which has reduced gas demand and prices across Europe. Officials are also struggling with the opacity of the Russia-Ukraine gas trade, which one likened to “a black-box”.

The Commission has insisted it has neither the means nor the inclination to step in as a lender. Still, it was hoping to use the meeting to establish conditions for any loans, including greater transparency.

Monday’s meeting also included representatives from the European Bank for Reconstruction and Development and the European Investment Bank, as well as executives from western gas companies. Also present were officials from the Ukrainian government and Naftogaz, as well as Alexander Medvedev, the deputy chairman of Russia’s Gazprom."

*When you've got them by the balls..

"Energy fuels new 'Great Game' in Europe"

Link to video tomorrow.

*When you've got them by the balls, their hearts and minds will follow.."

Update: The video is about 22 minutes into this clip.

PoR and BYuT will work together again

The PoR/BYuT party coalition talks having collapsed, their leaders Viktor Yanukovych and Yulia Tymoshenko have instantly declared they will both stand for president in elections taking place in half a year's time.

Most commentators consider both parties entered into negotiations for cynical, self-serving purposes - dividing political power between themselves and shutting out other political opponents.

Despite their failure to come to agreement, it would appear both sides entered their long and difficult negotiations in a serious and committed manner. And it is likely that negotiations between the two biggest Ukrainian political parties will again be rejoined, both on ammending the constitution, and on a common economic crisis resolution program, after the presidential elections, as both agree these are the most critical matters requiring attention.

Most speculations on the parties' secret negotiations had been focussed on constitutional issues, but one of PoR's most senior figures, Boris Kolesnikov, also mentioned economic matters in an interview in 'Segodnya' last Friday.

Here is a portion:

Qu - What the point of moving parliamentary elections 15 months forward from September 2012 to the Spring of 2014?
A - The central objective of this extension [is that] this [would be] the end of the first stage of reforms for overcoming the crisis. In order to restore production volumes and to go further, two and a half years would not be sufficient.

Qu Do you have some concrete reform plan already? For example, the first 10, 50, 100 steps?
A - I would not want to get ahead of myself, but, certainly, such a plan exists or, to be more precise, is near finalisation. Soon the leaders of our parties [PoR and BYuT] will announce it. But certainly, it will be directed toward the creation of favorable conditions for the attraction of investments. Including by means of reductions in taxes. Further - the state's policy must be transparent for investors. The supremacy of the law, guarantees of investments, are necessary.

Qu - Can you tell us the order of actions: what comes first - changing the constitution or forming the coalition?
A There is no point to forming a coalition without [first making] constitutional changes. So first changes to the constitution, acceptance in the first reading, and then formation of a coalition as a mechanism for realising the constitutional changes.

It's over..

PM Tymoshenko has blamed Viktor Yanukovych for walking out on negotiations on formation of the PoR/BYuT coalition. If agreement had been achieved it had been speculated that Yanukovych could have been voted President in parliament, and Tymoshenko's term as PM extended until 2015 when simultaneous parliamentary and presidential elections could have been eventually held.

As I suggested in a previous blog, because of Yanukovych's and PoR's strong ratings, logically there never was that much in it for them - they may probably gain success in subsequent presidential and parliamentary elections in any case.

Tymoshenko would have had much more to gain from a PoR/BYuT deal because her new partners would have had to take their share of responsibility for any further economic failures while she remained PM.

Yushchenko would have been able to raise his profile by accusing Yanukovych and Tymoshenko of cynically fixing the democratic process in the country, turning it into a oligarchy - power being held by a small elite segment of society. [But isn't this largely the case already?]

It was PoR leaders with the shadiest backgrounds, like Boris Kolesnikov and Andriy Kluyev, who were supportive of the 'shyrka'. It would have guaranteed them [and their assets] a quiet future.

Tymoshenko released an emotional statement tonight on the current political situation She denied that election of president in parliament, extension of the authority of parliament, or curtailing the freedom of expression were ever under discussion.

"I will never drop my arms, and will not stop my fight with the crisis. Today I am on my own, one-on-one with this crisis. From the others - irresponsibility and conscious resistance to my work. But even this will not hinder us from winning...
But if the men do not have enough courage, responsiblity, do not have sufficient dignity and honour, then I have enough of these. And because of this, now, to prove that you did not stand on all of the maidans, streets and squares in vain, I declare that I'm going to stand in the presidential elections, and I will be victorious!"

She will be a fearsome opponent..

Will PRyBYuT fly?

A straw poll in 'Segodnya' asks readers:

What can Ukraine expect in the event of a Por/BYuT coalition?

Latest results:

• On the whole, the new coalition will not change anything in the country 32%
• A reduction of democracy and usurpation of authority by the two major parties 24%
• Quick quarreling between the two parties and renewed confrontation between president Yanukovych and PM Tymoshenko 24%
• Stabilisation of the political situation 9%
• More effective emergence of the country from the crisis 7%
  Improved relationships with Russia and a struggle with Ukrainian nationalists 5%
  

Quite a few BYuT deputies are sceptical about the formation of PoR/ByuT.

And 'Regiony' have doubters in their ranks also. Yanukovych and Tymoshenko have a big job on in order to 'make it fly'.

What's in it for Yanik?

At the time of writing PM Yulia Tymoshenko, PoR leader Viktor Yanukovych, and VR speaker Volodymyr Lytvyn are still in talks on the possible formation of a PoR/BYuT broad coalition. No-one really knows what the chances of success are.

But the question has to be asked, what's in it for Yanukovych? He is easily the most popular politician in Ukraine, and his party are well-funded. He would most likely win any scheduled presidential elections early next year, or this year, if president Yushchenko were to call early presidential elections. Parliamentary oppositions always strive to bring down the incumbent government, particularly if it is as 'wobbly', as the current administration is in Ukraine. This could still happen. So why go for coalition?

It's true that the oligarchs and financial-industrial groups that dominate Ukraine's major parties crave the political peace and stability a PoR/BYuT coalition could possibly bring. And none of them is keen to 'stump up' the $1/2Bn required for a presidential election campaign at the height of a global economic crisis.

Events last September proved PoR and BYuT had spent a busy summer recess last year plotting on how to weaken the president's powers. It is clear now that dialogue continued between them until now, and that PoR fancied such a 'shyrka' [the broad coalition now being proposed].

In 2005 Yushchenko dismissed Yulia Tymoshenko from her PM's position a few months after the orange revolution. In 2007 he dismissed a PoR-led VR in a constitutionally most dubious manner, leading to Yanukovych's exit from the PM's office, so both have a common enemy.

And it is possible that 'the new kid on the block', Arseniy Yatseniuk could 'pip' both of them to the presidency in the next presidential elections, so maybe not a bad idea to 'shut him out'.

But none of this IMO is sufficient for Yanukovych to join Tymoshenko in a PoR/BYuT coalition with Tymoshenko remaining PM, even if he were to be elected president in parliament in half a year's time. PoR have no other credible candidate for president apart from Yanukovych.

I believe that Yanukovych is aware that in any future presidential election he, personally, with his shady background would again be placed under the microscope, as during the 2004 campaign. It would be dirty - and no doubt, painful for him. And some of the mud always sticks.

A deal now with BYuT would 'clear the slate', provide absolution of previous sins - he would become a man worthy of the presidency - his criminal background, the theatrical collapse caused by the egg, the sweeties for Putin, proffessorships etc. all transferred to a previous life. He would be able to hold his head up high amongst the ranks of the righteous - his place in history secure. And to be able to present the winning football team with their medals in 2012 - the whole of Europe watching - what a prize!

A fresh start?

Sorry for not posting for a while.

There have been lots of articles and interviews recently speculating about secret meetings between Ukraine's leading politicians attempting to form of a previously-unthinkable PoR-BYuT-Lytvynite grand coalition. Perhaps some tail-enders could join too. By all accounts there is now a distinct possibility that such a coalition could come into being very soon.

One of the main features of such a coalition would be an agreement to change the constitution, enabling the new president [i.e. Yanukovych] to be elected by parliament. Under this arrangement PM Tymoshenko would remain in her current position for several years, and Volodymyr Lytvyn would remain VR speaker.

Sure, the ruling elites are blatantly rigging the democratic system. But if such a grand coalition could improve political stability and help the country get through the current global economic crisis maybe neutral observers whould not be too critical..The years since the Orange Revolution have not been a success, so maybe it's time start afresh..

However, president Yushchenko may be ready to take the radical step of sacrificing himself and 'self-destructing' by resigning his presidency - forcing early presidential elections and scuppering any chance of any PoR-BYuT deal..