According to 'Segodnya', President Yushchenko has proposed declaring a moratorium on political quarrels and forgetting about the presidential elections until 1st July.
The declaration was made during a meeting with prime minister Tymoshenko, VR chairman Volodymyr Lytvyn and opposition representative and PoR old-timer Mykola Azarov.
Yushchenko also suggested forgoing all attempts to disturb the population further by means of rash statements in the mass media .
"All you will be Presidents in your time. But please forget about the elections until the 1st of July. There's no need to rush. I am convinced, victory will be achieved by the person who should win. The main thing is that Ukraine does not lose," said Yushchenko.
The sudden change of tack by the president, who has conducted a vicious campaign of criticism against the Tymoshenko government for many months, may have been the product of Thursday's encounter between Yushchenko and the ambassadors of the G7 countries, IMF representatives, and World Bank officials who, according to "Delo" presented the Ukrainian head of our state with an ultimatum: either make peace with Tymoshenko and, together with the Cabinet of Ministers, begin to satisfy IMF requirements, or the major states will change their "model of collaboration" with Ukraine, and leave the country short of the desperately needed $16.5Bn IMF credits.
"Delo" claims western governments are perturbed fact that Ukraine could become [dangerously] financially dependent on Russia. Indeed Moscow, in contrast to the IMF, could provide credit support without excessive conditions.
So was the Russian loans affair just a clever double-bluff to ease IMF's opening of their wallets?
As for the 'moratorium' - the toys will be flying around the sand pit within just a few days again, no doubt.
p.s. 'Oboz' is reporting that National Security and Defence Council secretary, Raisa Bohatyryova, has been sacked by the president, but no ukaz has yet appeared on the presidential website. [see previous posting on FN]
The sacking, according to 'Oboz' was supposedly linked to her reluctance to take part in a 'power scenario'.
Friday, February 27, 2009
Thursday, February 26, 2009
President takes heavy flak
Yesterday, in a TV appearance, former president Leonid Kravchuk called upon president Yushchenko, in no uncertain terms, to resign in a 'humane scenario'. More on this in English, here:
The president's response, on his official site, here
Some in PoR are goading BYuT into collecting signatures in parliament to start impeachment proceedings against the president, even though Kravchuk himself is against such a move. First vice-speaker of parliament Oleksandr Lavrynovych admits VR deputies could undertake such proceedings before any fresh presidential elections take place next winter.
And there are stories circulating [e.g. in 'Segodnya'] that National Security and Defence Council Secretary, formerly one of PoR's most senior leaders, Raisa Bohatyryova, may soon be sacked from her job.
She has, apparently, not been active enough in 'fighting Tymoshenko', and could be replaced by Valeriy Khoroshkovsky, who is rumoured to be close to our old friend Dmytro Firtash..
'Segodnya' [owned by Rinat Akhmetov] claims the Bohatyryova is 'traditionally' considered to have good connections with Donetsk business circles, whilst Firtash is the PM's enemy #1. And relations between YuVT and these business circles have 'warmed' recently.
p.s. Today's 'Segodnya' reports that 23% of Ukrainians wish to see their country and Russia unite to form one state, whilst only 14% of Russians have analagous feelings...interesting..
The president's response, on his official site, here
Some in PoR are goading BYuT into collecting signatures in parliament to start impeachment proceedings against the president, even though Kravchuk himself is against such a move. First vice-speaker of parliament Oleksandr Lavrynovych admits VR deputies could undertake such proceedings before any fresh presidential elections take place next winter.
And there are stories circulating [e.g. in 'Segodnya'] that National Security and Defence Council Secretary, formerly one of PoR's most senior leaders, Raisa Bohatyryova, may soon be sacked from her job.
She has, apparently, not been active enough in 'fighting Tymoshenko', and could be replaced by Valeriy Khoroshkovsky, who is rumoured to be close to our old friend Dmytro Firtash..
'Segodnya' [owned by Rinat Akhmetov] claims the Bohatyryova is 'traditionally' considered to have good connections with Donetsk business circles, whilst Firtash is the PM's enemy #1. And relations between YuVT and these business circles have 'warmed' recently.
p.s. Today's 'Segodnya' reports that 23% of Ukrainians wish to see their country and Russia unite to form one state, whilst only 14% of Russians have analagous feelings...interesting..
Monday, February 23, 2009
Not all nonsense
By the way, the nonsense I referred to in the Friday post has been from government people who have been quoted here and from some commenters and not from any of the excellent efforts that LEVko has made here. He deserves our gratitude and more credit than he has had and probably less meddling from me.
I don't know of anyone who has done a better job of keeping us all informed on the Ukrainian situation than he has.
LEVko, would you email me? I lost all of your contact info. when my harddrive went dead.
I don't know of anyone who has done a better job of keeping us all informed on the Ukrainian situation than he has.
LEVko, would you email me? I lost all of your contact info. when my harddrive went dead.
Friday, February 20, 2009
Some posts removed and other things
We allow just about anything to be posted here including things we don't agree with. And some of what has been posted here in the past in the comments section has been nonsense to my way of thinking. But we post it.
We have been careful to allow everyone to have their say even if they want to remain anonymous to say it. So I will be deleting any comments that refer to anyone by name who wishes to remain anonymous nor w2ill I allow the same to be published when the3y come up for moderation.
By the way, people in our area are not buying what here is called sausage but what is more like bologna. That is what the shop owner down the street is saying. That is almost a staple in the diet here. And they are not ordering things like cakes and the like. So Roshen is not going to be sending much of anything this way.
And one home improvement supply store--not a chain--that was busy before September of last year with cars and trucks going in and out at all times of the day, now sits with the parking lot empty quite a bit. (They were very happy we stopped in and ordered a load of drywall and other things.)
Anecdotal yes, but real nonetheless.
And the leaders bicker.
We tuned into Radio Era the other day and head s session of the Rada. They were taking about some kind of bill to establish some sorts of relations with Morocco and Albania. When one deputy said that this was frivolous in light of what was happening out in the country, he was told, "Your two minutes are up."
I am surprised though at how patient the people still are. Maybe they've seen it all before? Maybe they figure it makes no difference?
We have been careful to allow everyone to have their say even if they want to remain anonymous to say it. So I will be deleting any comments that refer to anyone by name who wishes to remain anonymous nor w2ill I allow the same to be published when the3y come up for moderation.
By the way, people in our area are not buying what here is called sausage but what is more like bologna. That is what the shop owner down the street is saying. That is almost a staple in the diet here. And they are not ordering things like cakes and the like. So Roshen is not going to be sending much of anything this way.
And one home improvement supply store--not a chain--that was busy before September of last year with cars and trucks going in and out at all times of the day, now sits with the parking lot empty quite a bit. (They were very happy we stopped in and ordered a load of drywall and other things.)
Anecdotal yes, but real nonetheless.
And the leaders bicker.
We tuned into Radio Era the other day and head s session of the Rada. They were taking about some kind of bill to establish some sorts of relations with Morocco and Albania. When one deputy said that this was frivolous in light of what was happening out in the country, he was told, "Your two minutes are up."
I am surprised though at how patient the people still are. Maybe they've seen it all before? Maybe they figure it makes no difference?
Monday, February 16, 2009
More gloomy predictions
More gloomy news from Europe here
A portion:
"Bank analysts predict that Ukraine is heading for a historic default on its national debt, in a scenario that could complicate EU-Ukraine relations and have an impact on the recent Russia-Ukraine gas transit deal.
"The market is pricing in a probability of sovereign default of almost 90 percent," Commerzbank analyst Ulrich Leuchtmann told EUobserver on Monday (16 February).
A portion:
"Bank analysts predict that Ukraine is heading for a historic default on its national debt, in a scenario that could complicate EU-Ukraine relations and have an impact on the recent Russia-Ukraine gas transit deal.
"The market is pricing in a probability of sovereign default of almost 90 percent," Commerzbank analyst Ulrich Leuchtmann told EUobserver on Monday (16 February).
Gloomy predictions
Failure to save East Europe will lead to worldwide meltdown, according to this analyst
"The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point....If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?"
No doubt president Yushchenko will moan it was all Yulia Tymoshenko's fault..
"The unfolding debt drama in Russia, Ukraine, and the EU states of Eastern Europe has reached acute danger point....If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?"
No doubt president Yushchenko will moan it was all Yulia Tymoshenko's fault..
Thursday, February 12, 2009
Talk of presidential rule..
This [loosely translated portion] from an article in today's 'Segodnya':
Prosecutor-General and State Security Service [SBU] thrown at Tymoshenko
Decision by National Security and Defence Council theoretically opens up path to direct presidential rule
The war between Viktor Yushchenko and Yulia Tymoshenko is gaining momentum. On Wednesday a resolution by the NSDC dated 10th February was announced, [read it here]in which the gas agreements concluded by premiers Tymoshenko and Putin were 'blown to bits'. The agreements were called a threat to the security of the country. The Prosecutor General's office and SBU have been specifically instructed to verify the legality of the actions of the Ukrainian officials (i.e. Tymoshenko) in signing the treaty with Russia.
On Tuesday the head of the parliamentary temporary investigation commission investigating the functioning of the country's gas transport system, Ina Bohoslovskaya, promised to refer the matter to the Prosecutor-General's office, requesting the opening of criminal case against the premier and her removal from office for misuse of her official position during the gas talks with Moscow.
After a decision is made by the NSDC, if the Prosecutor-General's office reveals problems with Tymoshenko, her removal could theoretically take place (Yushchenko wanted to deal with the-then prime minister Viktor Yanukovych during the spring crisis of 2007 in a similar fashion).
What happens next? As we have already written, political scientist Vadim Karasyov, who is close to the presidential secretariat, considers the introduction of direct presidential rule an alternative to the "economic dictatorship of Tymoshenko".
The 'Segodnya' article adds that others are not sure about this. "Yushchenko is not capable of dictatorship, it is not in his character," says Mikhail Chechetov..
Hmmm..
Prosecutor-General and State Security Service [SBU] thrown at Tymoshenko
Decision by National Security and Defence Council theoretically opens up path to direct presidential rule
The war between Viktor Yushchenko and Yulia Tymoshenko is gaining momentum. On Wednesday a resolution by the NSDC dated 10th February was announced, [read it here]in which the gas agreements concluded by premiers Tymoshenko and Putin were 'blown to bits'. The agreements were called a threat to the security of the country. The Prosecutor General's office and SBU have been specifically instructed to verify the legality of the actions of the Ukrainian officials (i.e. Tymoshenko) in signing the treaty with Russia.
On Tuesday the head of the parliamentary temporary investigation commission investigating the functioning of the country's gas transport system, Ina Bohoslovskaya, promised to refer the matter to the Prosecutor-General's office, requesting the opening of criminal case against the premier and her removal from office for misuse of her official position during the gas talks with Moscow.
After a decision is made by the NSDC, if the Prosecutor-General's office reveals problems with Tymoshenko, her removal could theoretically take place (Yushchenko wanted to deal with the-then prime minister Viktor Yanukovych during the spring crisis of 2007 in a similar fashion).
What happens next? As we have already written, political scientist Vadim Karasyov, who is close to the presidential secretariat, considers the introduction of direct presidential rule an alternative to the "economic dictatorship of Tymoshenko".
The 'Segodnya' article adds that others are not sure about this. "Yushchenko is not capable of dictatorship, it is not in his character," says Mikhail Chechetov..
Hmmm..
Wednesday, February 11, 2009
Gas problems in PoR too..
Whilst president Yushchenko and PM Tymoshenko are fighting like cat and dog, Party of Regions are having their problems too, as described in an article in today's big-selling 'Segodya' newspaper, which owned by major PoR sponsor and PoR parliamentary deputy Rinat Akhmetov.
Here are some loosely translated portions:
Leading figures in PoR exchange harsh words
This week the conflict inside PoR between the "RosUkrEnergo group" of Lyovochkin and Boyko on one side, and prominent 'Regionaly' Boris Kolesnikov and Andriy Klyuev on the other, spilled out into the open.
Last week they threw accusations at each other behind closed doors, away from the eyes and ears of the public. But now they have begun to do this quite openly.
The dispute flared up after an angry statement from Lyovochkin, who some ill-wishers want to exclude from the party. He said that "persons who were active in the bribing of deputies and causing the VR's disintegration in 2006-2007, those, contaminated by corruption and extortion in 2007, who 'bought up' deputies from the BYuT-NUNS coalition, used money stolen during this period to purchase houses in Dubai for themselves… These guys are ready to betray and submit the party to BYuT, and give up party principles, in exchange for places in Tymoshenko's KabMin".
Nestor Shufrich, from the other camp, compared Lyovochkin with garbage. He claimed Lyovochkin had hindered Yanukovych's presidential campaign in 2004, when he helped to establish contacts betweenViktor Yushchenko and Leonid Kuchma.
Meanwhile PoR leader Viktor Yanukovych was in Moscow today, where he met the new Russian Orthodox Patriarch Kirill to discuss the forthcoming visit of the Patriarch to Ukraine [and offering prayers for party unity?]
The dispute between these two PoR wings has been rumbling for a while. Unsurprisingly, there is a whiff of gas about it..
Here are some loosely translated portions:
Leading figures in PoR exchange harsh words
This week the conflict inside PoR between the "RosUkrEnergo group" of Lyovochkin and Boyko on one side, and prominent 'Regionaly' Boris Kolesnikov and Andriy Klyuev on the other, spilled out into the open.
Last week they threw accusations at each other behind closed doors, away from the eyes and ears of the public. But now they have begun to do this quite openly.
The dispute flared up after an angry statement from Lyovochkin, who some ill-wishers want to exclude from the party. He said that "persons who were active in the bribing of deputies and causing the VR's disintegration in 2006-2007, those, contaminated by corruption and extortion in 2007, who 'bought up' deputies from the BYuT-NUNS coalition, used money stolen during this period to purchase houses in Dubai for themselves… These guys are ready to betray and submit the party to BYuT, and give up party principles, in exchange for places in Tymoshenko's KabMin".
Nestor Shufrich, from the other camp, compared Lyovochkin with garbage. He claimed Lyovochkin had hindered Yanukovych's presidential campaign in 2004, when he helped to establish contacts betweenViktor Yushchenko and Leonid Kuchma.
Meanwhile PoR leader Viktor Yanukovych was in Moscow today, where he met the new Russian Orthodox Patriarch Kirill to discuss the forthcoming visit of the Patriarch to Ukraine [and offering prayers for party unity?]
The dispute between these two PoR wings has been rumbling for a while. Unsurprisingly, there is a whiff of gas about it..
Monday, February 09, 2009
Tymoshenko in Munich
Listen to PM Yulia Tymoshenko's speech: "NATO, Russia, oil and gas", [in Russian] at the 45th Munich Security Conference yesterday, here
"I would dearly want to see Ukraine as a participant of a European policy of security and defence," she said, adding that the collective system of security and defence suggested by Chancellor Merkel and President Sarkosy, would not be an alternative to NATO, but a "widening of possibilities".
"The European policy of security and defence is an intensification of all processes of integration, and a strengthening of security and defence, and this is why it cannot be considered an alternative [to Ukraine's membership in NATO]", but it would provide a place for countries that cannot, or do not want to join NATO.
She called construction of alternative gas pipelines bypassing Ukraine a "crazy idea," and suggested a unified system for determining the price of gas and its transit, claiming that the recent gas crisis revealed the absence of such a policy.
She intends to make an effort to overcome te recent problems and reconcile Ukraine and Russia.
She had a meeting with US VP Joe Biden, beating president Yushchenko and Russian leaders to a face-to-face conversation with the 'top bananas' of the new US administration. Only she, Merkel and Sarkosy had this 'honour'.
Significantly, she sat in the front row with Biden and Eurocommissioner Javier Solana during the conference. Presidents of other former Soviet republics were seated further back in rows two and three. President Yushchenko was fuming in Kyiv, no doubt.
"I would dearly want to see Ukraine as a participant of a European policy of security and defence," she said, adding that the collective system of security and defence suggested by Chancellor Merkel and President Sarkosy, would not be an alternative to NATO, but a "widening of possibilities".
"The European policy of security and defence is an intensification of all processes of integration, and a strengthening of security and defence, and this is why it cannot be considered an alternative [to Ukraine's membership in NATO]", but it would provide a place for countries that cannot, or do not want to join NATO.
She called construction of alternative gas pipelines bypassing Ukraine a "crazy idea," and suggested a unified system for determining the price of gas and its transit, claiming that the recent gas crisis revealed the absence of such a policy.
She intends to make an effort to overcome te recent problems and reconcile Ukraine and Russia.
She had a meeting with US VP Joe Biden, beating president Yushchenko and Russian leaders to a face-to-face conversation with the 'top bananas' of the new US administration. Only she, Merkel and Sarkosy had this 'honour'.
Significantly, she sat in the front row with Biden and Eurocommissioner Javier Solana during the conference. Presidents of other former Soviet republics were seated further back in rows two and three. President Yushchenko was fuming in Kyiv, no doubt.
Friday, February 06, 2009
Only 10 NUNS deputies support ousting of Tymshenko's government
Only 10 NUNS deputies supported a PoR-sponsored no confidence motion in the Tymoshenko-led government in the Ukrainian parliament today. Amongst the 10 were presidential secretariat head Viktor Baloha's 'Yedyniy Tsentr' group, and Yushchenko's brother Petro.
The numbers are very bad news for the president. The pro-presidential NUNS entered the current parliament with 72 deputies in Autumn 2007. With an ever-receding power base, the chances of a second presidential term for Yushchenko are almost nil.
PoR are to hold a party conference, maybe next month, to decide where they go from here.
Meanwhile Viktor Baloha describes Tymoshenko's progress report delivered before parliament today as having "all the characteristics of a theatrical production with elements of fantasy"; and "of representing the country as a fairytale state where all the good things are performed by a magic fairy".
"Yu.Tymoshenko utilised all of her actor's talents and clever juggling of facts to remove resposibility for personal failings in the economy," added Baloha. [Isn't this what all politicians do?]
The numbers are very bad news for the president. The pro-presidential NUNS entered the current parliament with 72 deputies in Autumn 2007. With an ever-receding power base, the chances of a second presidential term for Yushchenko are almost nil.
PoR are to hold a party conference, maybe next month, to decide where they go from here.
Meanwhile Viktor Baloha describes Tymoshenko's progress report delivered before parliament today as having "all the characteristics of a theatrical production with elements of fantasy"; and "of representing the country as a fairytale state where all the good things are performed by a magic fairy".
"Yu.Tymoshenko utilised all of her actor's talents and clever juggling of facts to remove resposibility for personal failings in the economy," added Baloha. [Isn't this what all politicians do?]
Tuesday, February 03, 2009
Aslund on Russian-Ukrainian gas war
I'm posting this article by Anders Aslund in the 'Moscow Times', in full, in case it goes to 'subscribers-only'
Will the Real Gazprom CEO Please Stand Up
The great Russian-Ukrainian gas war is over, and it is time to assess the outcome. On the surface, the result looks promising. Finally, Russia and Ukraine have concluded a normal long-term gas agreement. Both gas prices and transit tariffs are market-related and based on clear principles without shady intermediaries or arbitrariness. The gas prices will probably average $230 per 1,000 cubic meters in 2009, while investment bankers had expected $250.
Prime Minister Vladimir Putin claimed that Ukraine had an obligation to guarantee transit of Russia's gas since Kiev ratified the Energy Charter Treaty (which Moscow has not ratified). Putin lamented that the "European Union is placing Russia and Ukraine in the same category," but the supplier in this transaction is also obligated to deliver. Vedomosti perhaps put it best: "Gazprom's reliability as a supplier is inseparable from Ukraine's as a transit state."
Corruption and Ukrainian domestic politics were major factors in a conflict in which the prime antagonists were Prime Minister Yulia Tymoshenko and Dmitry Firtash, partial owner of the shady intermediary RosUkrEnergo. Both Tymoshenko and Putin claim that RosUkrEnergo through Ukrainian President Viktor Yushchenko's administration disrupted the gas negotiations on Dec. 31.
Tymoshenko walked away from this conflict with an outstanding victory. RosUkrEnergo has been excluded from the Russian-Ukrainian gas trade, losing profits of at least $1 billion a year. At his news conference on Jan. 8, Putin implausibly denied that he knew Firtash, although both were co-founders of RosUkrEnergo in July 2004. Subsequently, Gazprom sold RosUkrEnergo's debt of $1.7 billion to Naftogaz, allowing Naftogaz to squeeze Firtash out.
"Finally, we eliminated a big political slush fund, which fed several political forces," Tymoshenko said. Firtash has spent lavishly on Ukrainian politics, mainly on former Prime Minister Viktor Yanukovych's Party of the Regions but also on Yushchenko's administration. The elimination of RosUkrEnergo will cleanse Ukrainian politics of gas money. Although Yanukovych has sensibly kept a low profile, his campaign financing will most likely dwindle in the end.
Gazprom's cost in the gas war was very high. Its direct financial loss was about $2 billion, but its reputation has suffered even more since the gas monopoly has proven itself an unreliable supplier. Its customers will try to reduce their dependence on the state-run gas monopoly, but when Gazprom is the problem new pipelines are of little help.
Before the conflict broke out, Gazprom opened a web site that criticized Ukraine. This suggests that Moscow was gearing up for a fight. Gazprom and Putin pulled no punches in going after Kiev. "The current situation shows a high degree of criminalization of power in Ukraine," Putin said.
During the January 2006 Russia-Ukraine gas conflict, Gazprom's stock price skyrocketed because investors were impressed when the company pushed for higher export prices at a time of rising energy prices. During the latest gas war, however, Gazprom's stocks plummeted as investors objected when the company treating its customers recklessly by demanding unrealistically high prices at a time of sharply falling energy prices.
Meanwhile, European gas consumers suffered considerably, and the European Union looked terribly weak, having failed to learn anything from previous gas wars.
But one European politician stands out as a true leader -- German Chancellor Angela Merkel. During Putin's news conference with Merkel on Jan. 16 in Berlin, Merkel lectured him like a teacher to a schoolboy, placing the responsibility on Moscow, and Putin ate his teacher's humble pie.
Austria, France, Hungary, Germany and Italy have quietly built up gas reserves that could last for three months; they have learned the lesson from 2006. Now, other European countries are likely to build up large reserves and further diversify their energy supplies, although this is very expensive.
Putin has the most complex motivation in all of this. By directly commanding Gazprom and taking over the negotiations, Putin confirmed the old assumption that he is the real CEO of Gazprom. Although Ukraine had paid its gas bills by Dec. 30, Putin ordered the disruption in the gas supply, making him the main culprit.
Gazprom's damaged reputation will likely impair its stock price and debt rating. The conflict was also a disaster for Russia's foreign policy. President Dmitry Medvedev's hastily arranged "gas summit" attracted no heads of state and was the largest snub to Russian diplomacy in recent memory.
Putin has been identified as one of RosUkr-Energo's main beneficiaries, but now he has accepted the fact that this middleman will have to be eliminated from gas transactions. Moreover, he looked panicky when he lost himself in technical details, accusing Ukraine of "theft" of tiny gas volumes, far smaller than customary losses.
In the end, the gas war had to be settled by Russian and Ukrainian prime ministers. The press photos showed a strident Ukrainian prime minister, while Putin looked increasingly frustrated.
So why did Putin instigate the gas war in the first place? My suspicion is that his main purpose was to whip up Russian patriotism against Ukraine and enhance support for the government in a time of economic decline. This was perhaps his only success. According to the state-run pollster VTsIOM, 63 percent of Russians believed that Ukraine was solely responsible for the conflict.
Another suspicion is that Putin hoped to destabilize Ukraine by exploiting its domestic divisions and its severe financial crisis. If this were his goal, he failed. Tymoshenko had little choice except to liquidate RosUkrEnergo since it was an issue of her political survival.
After Putin and Tymoshenko signed the gas peace treaty, Ukraine has eliminated a major source of corruption. Now it should reform its distorted energy sector to improve efficiency and save energy. Ukraine must stop subsidizing its imports of gas, and it should also raise the government's purchasing price for domestically produced gas to stimulate domestic production.
And the EU should get more serious about its own energy security. Whatever Putin's motive was, he is likely to offer more shocks as the situation grows worse for both Russia and Putin in a deepening economic crisis. The EU must realize that it needs a Russia policy no less than it requires an energy policy.
Only two winners are apparent -- Tymoshenko and Merkel. There are many losers: Firtash, European gas consumers, Gazprom, its shareholders, Yushchenko and, last but not least, Putin.
Will the Real Gazprom CEO Please Stand Up
The great Russian-Ukrainian gas war is over, and it is time to assess the outcome. On the surface, the result looks promising. Finally, Russia and Ukraine have concluded a normal long-term gas agreement. Both gas prices and transit tariffs are market-related and based on clear principles without shady intermediaries or arbitrariness. The gas prices will probably average $230 per 1,000 cubic meters in 2009, while investment bankers had expected $250.
Prime Minister Vladimir Putin claimed that Ukraine had an obligation to guarantee transit of Russia's gas since Kiev ratified the Energy Charter Treaty (which Moscow has not ratified). Putin lamented that the "European Union is placing Russia and Ukraine in the same category," but the supplier in this transaction is also obligated to deliver. Vedomosti perhaps put it best: "Gazprom's reliability as a supplier is inseparable from Ukraine's as a transit state."
Corruption and Ukrainian domestic politics were major factors in a conflict in which the prime antagonists were Prime Minister Yulia Tymoshenko and Dmitry Firtash, partial owner of the shady intermediary RosUkrEnergo. Both Tymoshenko and Putin claim that RosUkrEnergo through Ukrainian President Viktor Yushchenko's administration disrupted the gas negotiations on Dec. 31.
Tymoshenko walked away from this conflict with an outstanding victory. RosUkrEnergo has been excluded from the Russian-Ukrainian gas trade, losing profits of at least $1 billion a year. At his news conference on Jan. 8, Putin implausibly denied that he knew Firtash, although both were co-founders of RosUkrEnergo in July 2004. Subsequently, Gazprom sold RosUkrEnergo's debt of $1.7 billion to Naftogaz, allowing Naftogaz to squeeze Firtash out.
"Finally, we eliminated a big political slush fund, which fed several political forces," Tymoshenko said. Firtash has spent lavishly on Ukrainian politics, mainly on former Prime Minister Viktor Yanukovych's Party of the Regions but also on Yushchenko's administration. The elimination of RosUkrEnergo will cleanse Ukrainian politics of gas money. Although Yanukovych has sensibly kept a low profile, his campaign financing will most likely dwindle in the end.
Gazprom's cost in the gas war was very high. Its direct financial loss was about $2 billion, but its reputation has suffered even more since the gas monopoly has proven itself an unreliable supplier. Its customers will try to reduce their dependence on the state-run gas monopoly, but when Gazprom is the problem new pipelines are of little help.
Before the conflict broke out, Gazprom opened a web site that criticized Ukraine. This suggests that Moscow was gearing up for a fight. Gazprom and Putin pulled no punches in going after Kiev. "The current situation shows a high degree of criminalization of power in Ukraine," Putin said.
During the January 2006 Russia-Ukraine gas conflict, Gazprom's stock price skyrocketed because investors were impressed when the company pushed for higher export prices at a time of rising energy prices. During the latest gas war, however, Gazprom's stocks plummeted as investors objected when the company treating its customers recklessly by demanding unrealistically high prices at a time of sharply falling energy prices.
Meanwhile, European gas consumers suffered considerably, and the European Union looked terribly weak, having failed to learn anything from previous gas wars.
But one European politician stands out as a true leader -- German Chancellor Angela Merkel. During Putin's news conference with Merkel on Jan. 16 in Berlin, Merkel lectured him like a teacher to a schoolboy, placing the responsibility on Moscow, and Putin ate his teacher's humble pie.
Austria, France, Hungary, Germany and Italy have quietly built up gas reserves that could last for three months; they have learned the lesson from 2006. Now, other European countries are likely to build up large reserves and further diversify their energy supplies, although this is very expensive.
Putin has the most complex motivation in all of this. By directly commanding Gazprom and taking over the negotiations, Putin confirmed the old assumption that he is the real CEO of Gazprom. Although Ukraine had paid its gas bills by Dec. 30, Putin ordered the disruption in the gas supply, making him the main culprit.
Gazprom's damaged reputation will likely impair its stock price and debt rating. The conflict was also a disaster for Russia's foreign policy. President Dmitry Medvedev's hastily arranged "gas summit" attracted no heads of state and was the largest snub to Russian diplomacy in recent memory.
Putin has been identified as one of RosUkr-Energo's main beneficiaries, but now he has accepted the fact that this middleman will have to be eliminated from gas transactions. Moreover, he looked panicky when he lost himself in technical details, accusing Ukraine of "theft" of tiny gas volumes, far smaller than customary losses.
In the end, the gas war had to be settled by Russian and Ukrainian prime ministers. The press photos showed a strident Ukrainian prime minister, while Putin looked increasingly frustrated.
So why did Putin instigate the gas war in the first place? My suspicion is that his main purpose was to whip up Russian patriotism against Ukraine and enhance support for the government in a time of economic decline. This was perhaps his only success. According to the state-run pollster VTsIOM, 63 percent of Russians believed that Ukraine was solely responsible for the conflict.
Another suspicion is that Putin hoped to destabilize Ukraine by exploiting its domestic divisions and its severe financial crisis. If this were his goal, he failed. Tymoshenko had little choice except to liquidate RosUkrEnergo since it was an issue of her political survival.
After Putin and Tymoshenko signed the gas peace treaty, Ukraine has eliminated a major source of corruption. Now it should reform its distorted energy sector to improve efficiency and save energy. Ukraine must stop subsidizing its imports of gas, and it should also raise the government's purchasing price for domestically produced gas to stimulate domestic production.
And the EU should get more serious about its own energy security. Whatever Putin's motive was, he is likely to offer more shocks as the situation grows worse for both Russia and Putin in a deepening economic crisis. The EU must realize that it needs a Russia policy no less than it requires an energy policy.
Only two winners are apparent -- Tymoshenko and Merkel. There are many losers: Firtash, European gas consumers, Gazprom, its shareholders, Yushchenko and, last but not least, Putin.
Sunday, February 01, 2009
Testosterone-driven president
Read President Yushchenko's latest address to the nation, in English here
Where is this leading to, I wonder?
Last Monday, in the long 'Svoboda Slova' TV programme, PM Tymoshenko expressed fear that Yushchenko is deliberately cranking up the economic crisis in order to establish direct presidential rule...
BTW: "Women tend to be more risk averse when it comes to financial gambles,"... "They tend to trade less and that tends to be a better strategy. With more 'average women' trading, maybe the stock market would look different."
And we wouldn't be in the global mess we're in right now..
Where is this leading to, I wonder?
Last Monday, in the long 'Svoboda Slova' TV programme, PM Tymoshenko expressed fear that Yushchenko is deliberately cranking up the economic crisis in order to establish direct presidential rule...
BTW: "Women tend to be more risk averse when it comes to financial gambles,"... "They tend to trade less and that tends to be a better strategy. With more 'average women' trading, maybe the stock market would look different."
And we wouldn't be in the global mess we're in right now..
Thursday, January 29, 2009
How Putin became victim of Yulia Tymoshenko's political schemes
Below I've loosely translates more portions from the most interesting 'Russian Newsweek' article I mentioned in my previous blog.
In October 2008 Putin accommodated Tymoshenko's demands when they both signed a joint gas memorandum in Moscow. She returned to Kyiv full of success.
A source in the [Russian] Ministry of Foreign Affairs explained to 'Russian Newsweek' that by the end of December last year gas contracts for delivery of Russian gas to Ukraine were all drawn up and ready to go. These were practically the same contracts that were signed on January 19th 2009 to end this winter's gas crisis...
But at the end of December Tymoshenko told Putin during telephone conversation that Yushchenko should have the last word on the new gas deal. Putin had called her on December 30th proposing the same terms agreed in October, i.e. transition to a formula for calculating the price of gas, the mean annual price for 2009 to be $250 per tcm ($235 if gas were to be taken away gas from"Rosukrenergo"), and a preferential transit rate for Russian gas over Ukrainian territory.
Both Tymoshenko and Gazprom now declare that the negotiations were disrupted by RosUkrEnergo, who offered Gazprom a higher price of $285 per tcm, but Gazprom apparently turned this down. This prompted Yushchenko to recall the 'Naftohaz Ukrainy' delegation from Moscow, and Putin, without naming Yushchenko by name, accused the Ukrainian authorities of corruption.
But some 'Russian Newsweek' sources do not support this version of events. They claim that on December 31st it was Tymoshenko herself who broken off the negotiations.
According to their source in the Kremlin, she called Putin and told him that she could not come to Moscow because "Yushchenko would not let her return home, or would arrest her".
Other source familiar with events adds that an infuriated Putin began to break off the negotiations himself. He called head of Gazprom Alexey Miller to tell him that the head 'Naftohaz', Oleh Dubyna, was not mandated by Yushchenko, and until Yushchenko confirmed his mandate no negotiations could take place. On 31st December at 9.30 p.m. Dubyna flew back to Kyiv. "They launched a war against Yushchenko", concluded the Kremlin official.
Ukrainian political adviser Dmytro Vydrin indirectly confirms this. Yushchenko, he says, could not prevent Tymoshenko's visit to Moscow.
Gazprom stopped delivery of gas for Ukraine. Ukraine, in order to provide transit of gas to Europe, began siphoning off 'technical gas' and European consumers immediately started to experience shortages. The Europeans understood that they had to get involved.
At this moment, but before a full termination of gas shipments, Putin ostensibly let prime minister of the Czech Republic, Mirek Topolanek, who is currently president of the European Union, know that he would be able to achieve agreement with Tymoshenko if the European Union applied sufficient pressure on Yushchenko.
Topolanek refused, and the situation became deadlocked. Gas transit was stopped completely, and the chairman of European Commission, Manuel Barroso, started to put the squeeze on Yushchenko. According to some sources, on January 16th, Putin secretly met with Tymoshenko in Dresden, and there they came to an agreement. Within three days all the official contracts had been signed. Tymoshenko again returned to Kyiv a winner, and Yushchenko's political prospects became even dimmer.
In October 2008 Putin accommodated Tymoshenko's demands when they both signed a joint gas memorandum in Moscow. She returned to Kyiv full of success.
A source in the [Russian] Ministry of Foreign Affairs explained to 'Russian Newsweek' that by the end of December last year gas contracts for delivery of Russian gas to Ukraine were all drawn up and ready to go. These were practically the same contracts that were signed on January 19th 2009 to end this winter's gas crisis...
But at the end of December Tymoshenko told Putin during telephone conversation that Yushchenko should have the last word on the new gas deal. Putin had called her on December 30th proposing the same terms agreed in October, i.e. transition to a formula for calculating the price of gas, the mean annual price for 2009 to be $250 per tcm ($235 if gas were to be taken away gas from"Rosukrenergo"), and a preferential transit rate for Russian gas over Ukrainian territory.
Both Tymoshenko and Gazprom now declare that the negotiations were disrupted by RosUkrEnergo, who offered Gazprom a higher price of $285 per tcm, but Gazprom apparently turned this down. This prompted Yushchenko to recall the 'Naftohaz Ukrainy' delegation from Moscow, and Putin, without naming Yushchenko by name, accused the Ukrainian authorities of corruption.
But some 'Russian Newsweek' sources do not support this version of events. They claim that on December 31st it was Tymoshenko herself who broken off the negotiations.
According to their source in the Kremlin, she called Putin and told him that she could not come to Moscow because "Yushchenko would not let her return home, or would arrest her".
Other source familiar with events adds that an infuriated Putin began to break off the negotiations himself. He called head of Gazprom Alexey Miller to tell him that the head 'Naftohaz', Oleh Dubyna, was not mandated by Yushchenko, and until Yushchenko confirmed his mandate no negotiations could take place. On 31st December at 9.30 p.m. Dubyna flew back to Kyiv. "They launched a war against Yushchenko", concluded the Kremlin official.
Ukrainian political adviser Dmytro Vydrin indirectly confirms this. Yushchenko, he says, could not prevent Tymoshenko's visit to Moscow.
Gazprom stopped delivery of gas for Ukraine. Ukraine, in order to provide transit of gas to Europe, began siphoning off 'technical gas' and European consumers immediately started to experience shortages. The Europeans understood that they had to get involved.
At this moment, but before a full termination of gas shipments, Putin ostensibly let prime minister of the Czech Republic, Mirek Topolanek, who is currently president of the European Union, know that he would be able to achieve agreement with Tymoshenko if the European Union applied sufficient pressure on Yushchenko.
Topolanek refused, and the situation became deadlocked. Gas transit was stopped completely, and the chairman of European Commission, Manuel Barroso, started to put the squeeze on Yushchenko. According to some sources, on January 16th, Putin secretly met with Tymoshenko in Dresden, and there they came to an agreement. Within three days all the official contracts had been signed. Tymoshenko again returned to Kyiv a winner, and Yushchenko's political prospects became even dimmer.
Tuesday, January 27, 2009
Obama's watch
Most Ukrainian politicians never miss an opportunity to flaunt ultra-expensive, glittering 'pimp watches' on their wrists.
Several years ago, during a parliamentary debate on the financial deficit in the country's education budget, one deputy suggested that everyone present should merely drop their watch into a waste-paper bin by the door when they leave the parliamentary chamber. The money collected from their sale should easily plug the budgetary hole..
They should take a lead from US President Obama, who wears a $300 watch. More here. Looks smart...The guy has class..
p.s. Russian 'Newsweek' have an interesting article entitled: "The queen of the gas pipeline", in their current edition.
They claim that that "the trigger in the gas war at the end of December was pulled by Yulia Tymoshenko", when she failed to fly to Moscow on the 31st of that month to sign fresh contracts. 'Newsweek' claim she 'phoned Putin to tell him, "Yushchenko will not let her return home, or will arrest her." As result it has practically guaranteed her victory in the next presidential election.
Details of gas contracts with Gazprom's European clients, of which there are several tens, are always keep secret. The contracts are all different: some have a discount according to volume, some have other terms, depending on individual agreements. Therefore nobody understood what Putin meant in his speech on January 19th when he said Ukraine would pay a Central European price in 2009, but with a 20% discount.
In Russia and Ukraine observers speculated for a week about what Putin and Tymoshenko agreed, but political pressure in Ukraine is such that contracts, both on delivery and on transit, could not be kept in the dark for long - they were published by many Ukrainian websites [within days]. In these contracts only the dates were written by hand. They were very detailed documents... It is impossible to write such documents even in five hours - the duration of the 19th January Putin-Tymoshenko negotiations...
Putin will be 'leading' Tymoshenko into the Ukrainian presidential chair, "Newsweek" claims. Amongst Yushchenko, Yanukovych and Tymoshenko, Moscow considers her the lesser evil in the trio.
The article provides a 'behind-the-scenes' account of how the gas crisis developed, and claims that on January 16th, Putin secretly met Tymoshenko in Dresden to fix the final deal.
Several years ago, during a parliamentary debate on the financial deficit in the country's education budget, one deputy suggested that everyone present should merely drop their watch into a waste-paper bin by the door when they leave the parliamentary chamber. The money collected from their sale should easily plug the budgetary hole..
They should take a lead from US President Obama, who wears a $300 watch. More here. Looks smart...The guy has class..
p.s. Russian 'Newsweek' have an interesting article entitled: "The queen of the gas pipeline", in their current edition.
They claim that that "the trigger in the gas war at the end of December was pulled by Yulia Tymoshenko", when she failed to fly to Moscow on the 31st of that month to sign fresh contracts. 'Newsweek' claim she 'phoned Putin to tell him, "Yushchenko will not let her return home, or will arrest her." As result it has practically guaranteed her victory in the next presidential election.
Details of gas contracts with Gazprom's European clients, of which there are several tens, are always keep secret. The contracts are all different: some have a discount according to volume, some have other terms, depending on individual agreements. Therefore nobody understood what Putin meant in his speech on January 19th when he said Ukraine would pay a Central European price in 2009, but with a 20% discount.
In Russia and Ukraine observers speculated for a week about what Putin and Tymoshenko agreed, but political pressure in Ukraine is such that contracts, both on delivery and on transit, could not be kept in the dark for long - they were published by many Ukrainian websites [within days]. In these contracts only the dates were written by hand. They were very detailed documents... It is impossible to write such documents even in five hours - the duration of the 19th January Putin-Tymoshenko negotiations...
Putin will be 'leading' Tymoshenko into the Ukrainian presidential chair, "Newsweek" claims. Amongst Yushchenko, Yanukovych and Tymoshenko, Moscow considers her the lesser evil in the trio.
The article provides a 'behind-the-scenes' account of how the gas crisis developed, and claims that on January 16th, Putin secretly met Tymoshenko in Dresden to fix the final deal.
Friday, January 23, 2009
Shape of things to come
These are the first four items on the "Gazeta.ua" website in its news roundup for today:
"Tymoshenko will set up impeachment [proceedings] against Yushchenko"
You can see PM Tymoshenko's confident defence on Channel 5 TV against some powder-puff questioning, of her gas settlement with Russia, and other matters, here.
The Germans are pressing for a quick go-ahead to the Nord Stream gas pipeline project. "The most reliable transit country is the Baltic Sea," said a Wintershall spokesman.
But with both Russia and Ukraine in deep financial doo-doo, European companies may be looking into buying up bits of Ukraine's gas transit system.
"Tymoshenko will set up impeachment [proceedings] against Yushchenko"
"Security Services of Ukraine and the Prosecutor General of Ukraine will go after Tymoshenko. Four questions have been put to the premier."
"Do not to believe the sweet promises of those who betrayed Ukraine, Yushchenko appeals"
"Boyko: Tymoshenko will be held responsible for betrayal" [Yuriy Boyko probably knows more about the darker corners of the Ukraine-Russia-central Asia gas business than any other man because he was closely involved with the creation of the opaque intermediary company RosUkrEnergo]
These four items provide an outline for the nasty political battle to be fought in the months ahead.You can see PM Tymoshenko's confident defence on Channel 5 TV against some powder-puff questioning, of her gas settlement with Russia, and other matters, here.
The Germans are pressing for a quick go-ahead to the Nord Stream gas pipeline project. "The most reliable transit country is the Baltic Sea," said a Wintershall spokesman.
But with both Russia and Ukraine in deep financial doo-doo, European companies may be looking into buying up bits of Ukraine's gas transit system.
Sunday, January 18, 2009
Murky deal
At first sight it looks as if the Russian/Ukrainian gas dispute has been resolved. Ukraine will get a 20% discount on the market price for gas in 2009 [whatever that means ], and transit fees paid to Ukraine for transporting gas westward will remain unchanged. Final signing of documents is to take place on Monday, possibly by Putin and Tymoshenko in person, in Moscow.
Smells 'fishy' to me.
When negotiating with an untrustworthy party every tiny detail has to be settled and agreed before any declarations are made - no "wriggle-room" left. It is not credible such a complex deal could be made in just a few hours, adding to suspicion that the broad outline revealed at the press conference could well differ from the closed deal actually struck.
Have any of the principles of negotiations declared by Yulia Tymoshenko in her Friday statement:
If, as it appears, Ukraine 'lost out' on the deal, Yulia Tymoshenko will blame president Yushchenko for 'poking his nose in' during the last days of last year. The ground for this was prepared in Friday's statement by the PM.
But at least Tymoshenko has gone for a floating price - better when prices are falling, rather that a fixed price deal - better when prices look like going up.
And what's to be done about Gazprom's claim that the Ukrainian side still owes $614 million dollars in late payment charges? Hardly worth mentioning, is it?
Smells 'fishy' to me.
When negotiating with an untrustworthy party every tiny detail has to be settled and agreed before any declarations are made - no "wriggle-room" left. It is not credible such a complex deal could be made in just a few hours, adding to suspicion that the broad outline revealed at the press conference could well differ from the closed deal actually struck.
Have any of the principles of negotiations declared by Yulia Tymoshenko in her Friday statement:
- "no middlemen;
- direct relations between Naftogaz and Gazprom;
- mutually beneficial prices for gas and transit;
- no talks about possible privatization or any other forms of transfer of the Ukrainian gas transportation system",
If, as it appears, Ukraine 'lost out' on the deal, Yulia Tymoshenko will blame president Yushchenko for 'poking his nose in' during the last days of last year. The ground for this was prepared in Friday's statement by the PM.
But at least Tymoshenko has gone for a floating price - better when prices are falling, rather that a fixed price deal - better when prices look like going up.
And what's to be done about Gazprom's claim that the Ukrainian side still owes $614 million dollars in late payment charges? Hardly worth mentioning, is it?
Saturday, January 17, 2009
Gas crisis resolution in sight?
By my calculation European customers have been denied Russian gas for almost 10 days. It was on 7th January that Gazprom shut off the gas valves on the Russian-Ukrainian border.
President Yushchenko's official website states [in English] that today: "President Victor Yushchenko had a phone conversation with European Commissioner for Energy Andris Piebalgs.
Victor Yushchenko informed Andris Piebalgs about the situation with Russian gas transit to Europe.
He stressed that issues of supplies of Russian gas to Ukraine and transit of gas to European customers are connected with each other and should be considered simultaneously.
Andris Piebalgs from his part suggested a temporary mechanism of pumping technological gas into gas transit system of Ukraine by European gas companies." [The last sentence sounds a bit "cockeyed" to me - presidential secretariat's translators - you are rubbish.]
The Ukrainian version of the same posting reads rather differently, and includes the following:
"EU Commissioner Andris Piebalgs proposed a temporary mechanism for providing supplies of gas with the inclusion of European gas companies, who would in their turn, settle the question of supply of technological gas.
The Ukrainian head of state confirmed his readiness to consider in detail the proposals being prepared by European gas companies."
So it looks as if big European utility companies will pay for the transit of their Russian gas over Ukrainian territory - which, by eliminating the 'technological gas' question, weakens Naftohaz Ukrainy's chokehold on the transit system ...
PM Yulia Tymoshenko is off to see Vladimir Putin tomorrow. Her statement, posted on the Ukrainian government portal, in good English, is here. It is worth reading carefully..
President Yushchenko's official website states [in English] that today: "President Victor Yushchenko had a phone conversation with European Commissioner for Energy Andris Piebalgs.
Victor Yushchenko informed Andris Piebalgs about the situation with Russian gas transit to Europe.
He stressed that issues of supplies of Russian gas to Ukraine and transit of gas to European customers are connected with each other and should be considered simultaneously.
Andris Piebalgs from his part suggested a temporary mechanism of pumping technological gas into gas transit system of Ukraine by European gas companies." [The last sentence sounds a bit "cockeyed" to me - presidential secretariat's translators - you are rubbish.]
The Ukrainian version of the same posting reads rather differently, and includes the following:
"EU Commissioner Andris Piebalgs proposed a temporary mechanism for providing supplies of gas with the inclusion of European gas companies, who would in their turn, settle the question of supply of technological gas.
The Ukrainian head of state confirmed his readiness to consider in detail the proposals being prepared by European gas companies."
So it looks as if big European utility companies will pay for the transit of their Russian gas over Ukrainian territory - which, by eliminating the 'technological gas' question, weakens Naftohaz Ukrainy's chokehold on the transit system ...
PM Yulia Tymoshenko is off to see Vladimir Putin tomorrow. Her statement, posted on the Ukrainian government portal, in good English, is here. It is worth reading carefully..
Thursday, January 15, 2009
War of attrition continues
PM Yulia Tymoshenko's explanation why the sample quantity of gas supposedly dispatched into the Ukrainian gas transit system for shipment to Western European customers yesterday was not transferred is posted [in English] by the Z.I.K. newsagency site here
But why couldn't an equivalent amount of gas have been exported from Ukraine's huge storage facilities in the western part of the country as a goodwill gesture?
And by pumping only insignificant test quantities of gas today, Gazprom has showed a callous disregard to the plight of millions of Eastern Europeans who are suffering gas shortages in the middle of winter.
The BBC, in an article entitled "Strategy behind Europe's gas game" describes the gas stand-off between Russia and Ukraine as "a poker game, where the two players bluff and bet against each other," with Europe caught in the middle.
The stakes for Ukraine's politicians could not be higher. If Ukrainian consumers, particularly domestic consumers in the Eastern part of the country, begin to experience the serious gas shortages that will inevitably occur after a period of time, these will seriously affect Yulia Tymoshenko's popularity and her chance of becoming president later this year. She and her eponymous party also need financial support from her industrialist backers, which could be lost in a protracted stand-off with Russia.
For president Yushchenko a tough stance in this gas crisis is a desperate [and hopeless] last chance to gain respect amongst some of the electorate.
But Russia has much to lose too if it drags on much longer. Its credibility as a reliable supplier of gas is being eroded day by day to a position from which it may never recover - arguments for diversification of energy supplies are growing ever stronger in the EU.
President Putin has already complained of significant loss of revenue caused by the crisis, and of difficulties caused by reduced output. [See his interview with the German ARD TV, dubbed into English, here]
So, who will be last man standing?
As matter stand now, it is European customers who are suffering the most hardship. It is up to EU leaders to suggest proposals to minimize their plight e.g. by paying Ukraine's transit fees themselves until agreement is met on what Ukraine is to pay Russia for gas. Naftohaz Ukrainy has just proposed that Gazprom provides all the 'technological' gas that is required. A portion of west-bound Russian gas could be retained by Ukraine to cover these fees, removing the 'technological' gas problem.
However the crisis pans out, the gas business will emerge much changed.
Update: Details, on the official Ukrainian government website, of Tymoshenko's latest "constructive" late-night chat with Putin, [in English] here
p.s. It seems that it was head of presidential secretariat Viktor Baloha was staying at the burned out Swiss chalet I mentioned in my previous blog. Hope it didn't spoil his holiday break.. or singe his beard..
But why couldn't an equivalent amount of gas have been exported from Ukraine's huge storage facilities in the western part of the country as a goodwill gesture?
And by pumping only insignificant test quantities of gas today, Gazprom has showed a callous disregard to the plight of millions of Eastern Europeans who are suffering gas shortages in the middle of winter.
The BBC, in an article entitled "Strategy behind Europe's gas game" describes the gas stand-off between Russia and Ukraine as "a poker game, where the two players bluff and bet against each other," with Europe caught in the middle.
The stakes for Ukraine's politicians could not be higher. If Ukrainian consumers, particularly domestic consumers in the Eastern part of the country, begin to experience the serious gas shortages that will inevitably occur after a period of time, these will seriously affect Yulia Tymoshenko's popularity and her chance of becoming president later this year. She and her eponymous party also need financial support from her industrialist backers, which could be lost in a protracted stand-off with Russia.
For president Yushchenko a tough stance in this gas crisis is a desperate [and hopeless] last chance to gain respect amongst some of the electorate.
But Russia has much to lose too if it drags on much longer. Its credibility as a reliable supplier of gas is being eroded day by day to a position from which it may never recover - arguments for diversification of energy supplies are growing ever stronger in the EU.
President Putin has already complained of significant loss of revenue caused by the crisis, and of difficulties caused by reduced output. [See his interview with the German ARD TV, dubbed into English, here]
So, who will be last man standing?
As matter stand now, it is European customers who are suffering the most hardship. It is up to EU leaders to suggest proposals to minimize their plight e.g. by paying Ukraine's transit fees themselves until agreement is met on what Ukraine is to pay Russia for gas. Naftohaz Ukrainy has just proposed that Gazprom provides all the 'technological' gas that is required. A portion of west-bound Russian gas could be retained by Ukraine to cover these fees, removing the 'technological' gas problem.
However the crisis pans out, the gas business will emerge much changed.
Update: Details, on the official Ukrainian government website, of Tymoshenko's latest "constructive" late-night chat with Putin, [in English] here
p.s. It seems that it was head of presidential secretariat Viktor Baloha was staying at the burned out Swiss chalet I mentioned in my previous blog. Hope it didn't spoil his holiday break.. or singe his beard..
Tuesday, January 13, 2009
Another attempt to bump off Yush?
This story from the British 'Independent' - on strange events in Switzerland..
Your blogger suspects leaky gas pipes may have been the cause.
p.s. No gas yet transitting to Europe. Ukrainian side says [technological] gas required to drive compressor stations would have to be taken from domestic Ukrainian consumers, causing hardship - so no deal..
'Naftohaz Ukrainy's explanation in English [?] here
An alternative explanation here
Your blogger suspects leaky gas pipes may have been the cause.
p.s. No gas yet transitting to Europe. Ukrainian side says [technological] gas required to drive compressor stations would have to be taken from domestic Ukrainian consumers, causing hardship - so no deal..
'Naftohaz Ukrainy's explanation in English [?] here
An alternative explanation here
Monday, January 12, 2009
Der Spiegel on gas
'Der Spiegel' today provides an European perspective, with good analysis, on the Russian-Ukrainian gas crisis in an [English language] article: "Europe Fails to Wean Itself off Russian Gas"
They claim a new Russia-Ukraine gas deal fell through over a measly $350 million, but it looks as if gas will start crossing the Russian Ukrainian border again tomorrow morning.
PM Tymoshenko is adamant 'Naftohaz Ukrainy' will not use its own scarce reserves for 'technological' gas required to pump gas westward to gas-starved Europe, particularly as no price has yet been determined for any future deliveries of gas to Ukraine from Russia.
Your blogger considers that as a result, Ukraine will use Europe-bound gas to power the gas transit turbines along its pipelines. Within a few days, shortfalls in deliveries will be experienced in European countries and the entire problem will flare up again.
Ukraine needs about 6.5 Bcu.m. annually of this 'technological gas' to deliver Russian gas to European customers. In previous years this has been paid for on a "pay-as-you-go" basis.
I guess if the Europeans really want their gas then they will have to pay for its transportation through Ukraine while the dispute continues.
More Air Miles for the folks at Gazprom and Naftohaz in the weeks to come then..
p.s EDM has some analysis on Putin's handling of the crisis too.
They claim a new Russia-Ukraine gas deal fell through over a measly $350 million, but it looks as if gas will start crossing the Russian Ukrainian border again tomorrow morning.
PM Tymoshenko is adamant 'Naftohaz Ukrainy' will not use its own scarce reserves for 'technological' gas required to pump gas westward to gas-starved Europe, particularly as no price has yet been determined for any future deliveries of gas to Ukraine from Russia.
Your blogger considers that as a result, Ukraine will use Europe-bound gas to power the gas transit turbines along its pipelines. Within a few days, shortfalls in deliveries will be experienced in European countries and the entire problem will flare up again.
Ukraine needs about 6.5 Bcu.m. annually of this 'technological gas' to deliver Russian gas to European customers. In previous years this has been paid for on a "pay-as-you-go" basis.
I guess if the Europeans really want their gas then they will have to pay for its transportation through Ukraine while the dispute continues.
More Air Miles for the folks at Gazprom and Naftohaz in the weeks to come then..
p.s EDM has some analysis on Putin's handling of the crisis too.
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