The fall has set in. Will the forecasts – that it will bring Ukraine and Russia, the two closest neighbors and even strategic partners, a new gas trade war – come true? In any case, an informational war, which can be compared to a heavy artillery barrage, is already going on. Russia is “inviting” Ukraine to negotiations almost in the same way as it recently forced Georgia to opt for peace. Last Friday President Dmitry Medvedev of Russia in fact accused Ukraine of refusing to carry out the 2009 gas contracts, although none of our country’s leaders has ever said this.
INSTEAD OF TANKS
“I hope the experience of our close partners and friends in the past few years will teach them that one must not breach the existing agreements even if one does not like them. Our colleagues, partners, the president of Ukraine, and the prime minister of Ukraine are saying: ‘This treaty is unfair, bad, and the devil’s own job, so we will not be carrying it out,’” the Russian president said and literally cried out in a Euronews interview, “Look, this is the giddy limit! I hope our Ukrainian partners and friends will be steadily and strictly abiding by the treaty concluded in 2009.” Medvedev seems to be ready to selectively discuss only those cooperation schemes with Ukraine, which are “advanced and based on Ukraine’s integration and entry into the Customs Union.”
In a word, to draw Ukraine into the undesirable Customs Union, Moscow is using not tanks but, thank God, only natural gas. The price for the latter is so high that it may put Ukraine on a verge of survival. This country’s leadership seems to be aware that the process of negotiations can only be taken out of the deadlock by radical means, such as appealing to the International Arbitration Court, threatening to sharply cut the purchases of gas in Russia and the domestic export-oriented production, or, finally, reorganizing or even disbanding Naftohaz Ukrainy, the entity that signed the unfair gas contracts on behalf of Ukraine.
Yurii Boiko, Minister for Energy and Coal Mining, promises to finish reforming the Naftohaz Ukrainy national joint-stock company before January 1, 2012. Earlier, Ukraine’s Prime Minister Mykola Azarov announced that this company would cease to exist after reorganization. He also noted that this is the reason why the current contracts with Gazprom should be revised.
A VIEW FROM EUROPE
The united Europe is not intervening so far, but it is watching more and more closely because it has not forgotten the frosty January of 2009. The Polish analyst Grzegorz Gromadzki emphasizes that the main target of the Russians in the current gas dispute is to “drag Ukraine into the Customs Union.” At the same time, he is not exactly enthusiastic about Ukraine’s prospects, “The question is how hard Ukraine can pressure Russia to make it cut the price. In my view, it is next to impossible,” the expert says. “Even if the EU offers some legal assistance, this will not affect Gazprom’s stand.” Gromadzki is only pinning hopes on the International Arbitration Court, although he notes that Ukraine will hardly dare to sue Russia (“This would have been a slap in the face of Medvedev and Putin”) and it would be still more difficult to win the suit. Experts at the Warsaw-based Center for Eastern Studies also believe that a new “gas war” is unlikely. In their opinion, “it is doubtful that Ukraine would dare to repudiate the gas contract as long as it can fulfill its provisions, and there are other, still unused, opportunities to resolve the dispute.”
Guenther Oettinger, European Union Commissioner for Energy, says the European Commission might assume the role of an intermediary in this dispute. “We are ready to promote reconciliation between the two parties. But, undoubtedly, we do not want the situation to adversely affect the EU,” he said. According to Oettinger, the EU has not only taken into account the negative experience of the 2009 gas crisis but also taken necessary measures to avoid the likely complications in the supply of gas in wintertime.
THE DEGREE OF MISUNDERSTANDING
Actually, all the sides involved are saying they do not want the 2009 gas crisis to repeat on the eve of the upcoming heating season that is only a month away. Last week the abovementioned Yurii Boiko confirmed to European ambassadors that Ukraine would fulfill under any circumstances its contractual obligations on the transit of Russian gas across its territory.
Let us hope this guarantee will somewhat defuse the fast-growing conflict because it is a sharp contrast to many other utterances that has rung out since early September. Their name is escalation. The Rus-sian side, for example, pretends not to understand the reasoning of Kyiv which demands revising the unfair formula that forms the Gazprom-supplied fuel. Kyiv is contemplating measures to save energy resources, raise energy effectiveness, and diversify gas supply sources, which fits in very well with another well-known formula – “it is up to the drowning man himself to get rescued.” In response, the Kremlin is threatening to abrogate the 2010 Kharkiv Accords which allow Russia’s Black Sea Fleet to stay on in Sevastopol and Ukraine to receive a 100-dollar discount on the price of Russian gas.
At the same time, not all the schemes, which Kyiv has come up with lately to exert pressure on Russia, may be called successful. Was there a need to frighten somebody with the reduced purchases of Russian gas, when it is common knowledge that the current contract uses the “take or pay” principle and calls for stiff fines? Also unclear is the intention to export nationally-produced gas which, as is known, is being exclusively consumed by households. Ukrainian experts believe that in this case individuals will get three times as high a price, and the state will have, at best, a zero option. “There is no economics in this project,” independent energy expert Valentyn Zemlisansky says. There is very good economics but complete absence of common sense in Boiko’s idea to buy out all the gas from Gazprom and then sell to Europe on our own. The intention is, of course, good but who will sell it? Also very questionable looks the intention to reform even disband Naftohaz Ukrainy and form, instead, several independent companies, without appointing a legal successor that will be a new party to the gas contract. The Ukrainian leadership thinks this may force Russia to repudiate the current contracts and begin negotiations from scratch. But Europe is not exactly in rapture over this scheme. They are convinced there can be no deal without a successor. Incidentally, Tanya Bayer, First Secretary at the German Embassy in Ukraine, has also expressed this opinion at a roundtable debate.
A NEW TUZLA?
It is hardly a case of stupidity or shortsightedness. Both Russian and Ukrainian leaderships do not seem to be thinking of gas prices only. The acute pre-conflict situation is being used, first of all, for political purposes. The Russian governing duo, which has finally made short work of the opposition but has not yet decided who will be at the helm in the next six years, is mainly concerned about its rating when it is making an insatiable enemy out of Ukraine. Another goal of the duo is to project to Europe the image of Ukraine as an unreliable and unpredictable gas transit agent and, as a result, to get the go-ahead and the money for building the South Stream which is of no practical need for either Russia or Europe.
The Ukrainian leadership is fa-cing a far more difficult problem. The goal is not only to win in the next parliamentary elections but also rally this country by giving it the national idea. To do so, they should, on the one hand, neutralize the implacable opposition that has sullied itself by playing giveaway gas games with Russia, and, on the other, enlist the support of “constructive” political opponents who cannot but back the quite radical gas-supply ideas, still taking a national democratic foothold. Figuratively speaking, the scheme is as follows: Ukraine needs a new Tuzla – the idea around which the west and the east, the government and the opposition will rally together, as they have done before. And this process seems to be gradually moving on. For example, Yurii Kostenko, leader of the Ukrainian People’s Party, member of the Ver-khovna Rada Committee for the Fuel and Energy Complex, believes that “a broad-based discussion of the Stockholm court trial, with participation of European auditors, would be of all-European importance and could thus rule out the signing of any unfair gas contracts in the future.”
HOW TO SAVE FACE
The oncoming winter will not allow the leaderships of both states to think of politics alone. Europe will not allow this, either. Therefore, the gas problem will in any case have to be tackled, which will involve ma-king deals. The impression is that among the host of seemingly controversial proposals there are some quite sound and promising ones.
Energy expert Bohdan Sokolovsky says: “If the Russian side supported Ukraine’s suggestion that the old contracts be canceled and new, fair, ones signed, this would be in a spirit of partnership. But the two countries’ parliaments should remember that denouncing the Kharkiv Accords should be the natural consequence of the abrogation of the 2009 gas contracts. This would be the best way out of the current situation in Ukraine.”
Another energy expert, Oleksandr Narbut, is of a slightly different opinion. He told The Day that the most realistic way out for the two countries would be dropping the unfair contracts in favor of the still valid Russian-Ukrainian intergovernmental agreements on gas matters. For, in his view, these international documents enjoy higher status than the contracts signed in 2009 by Naftohaz and Gazprom as economic entities.
Yet it is only President Viktor Yanukovych who has suggested in very simple and easy-to-grasp terms a way out of the current deadlock in which both Ukraine and Russia have found themselves. This way out allows both countries to stop gas conflicts for good and save face before European consumers. According to the president, Ukraine could accept the gas price for Germany minus the cost of gas transit from Russia to that country. It is very simple and fair. The Internet has immediately posted a call addressed, above all, to the opposition: “Yanukovych does not need to be loved, he needs to be supported.” It is not ruled out that this slogan was coined by Party of the Regions gurus. But, in the current conditions, it is not only topical – it clearly serves the national interests of Ukraine.
