The visit of Yevhen Marchuk, Secretary of the National Security and Defense Council of Ukraine (RNBOU), to Brussels, which ended on November 9, focused on perhaps the most burning issues Ukraine faces today, our state’s energy security and the development of its cooperation with the North Atlantic institutions and Russia. Mr. Marchuk is convinced that we should not reconsider the political decision to close Chornobyl Nuclear Power Plant (CNPP) but we should take into account all the likely consequences of this step, that Ukraine’s Western partners are in no hurry to meet their obligations, that the Ukrainian gas transport system should by all means be privatized with the participation of not only Russia but also of the leading Western companies, with Ukraine legally retaining the controlling shares. The RNBOU secretary told The Day all this in a great detail.
“First of all, you visited energy companies in Brussels. Could you tell us about the results of these visits?”
“Ukraine is member of and has ratified the European Energy Charter. We are waiting for Russia to ratify it, which we think will enable us to set the rules of the game on the energy market. It was also important to hear the way the European Energy Charter secretariat interpret what we call the pipeline bypassing Ukraine because this is quite a sensitive matter for our country. As to Westinghouse, it will participate in the completion of two reactors at the Rivne and Khmelnytsky power stations. This company has submitted some proposals, which we think are quite interesting and can be considered additionally with a view of expanding its involvement in the project. They cooperate very effectively with Khartron, a Kharkiv facility, in the field of nuclear power plant control and monitoring systems.”
“The next question is in the context of Romano Prodi’s visit to Kyiv. European Commission representatives said on the eve of the visit they were concerned about statements of some Verkhovna Rada deputies that if Ukraine did not receive funds to compensate for fossil fuel purchases, parliament would revise its attitude toward Chornobyl NPP closure. Could this chill the relations between Ukraine and the European Union?”
“The political decision on the Chornobyl NPP closure has been made and is now being actively prepared for fulfillment. This requires tremendous effort both on our part and of other memorandum signatories, To be objective, I will say that Ukraine, acting consistently and meeting all its obligations with respect to Chornobyl, is now facing a dilemma: our domestic energy problems and insufficient generation of electric power show that we may face a serious crisis, especially when the CNPP, which produces 1000 megawatts, is decommissioned. Unfortunately, our partners have not yet kept almost all promises they made, including the one about a loan for purchasing fossil fuel to compensate for CNPP capacity. Now the issue of this loan is being linked to our cooperation with the IMF. The situation with our debt to the US Ex-Im Bank is also contributing to this problem. So our political elite and public naturally ask a question: will this end up like the Bushehr project? Ukraine will then look cheated. As far as I know, a certain part of this loan has supposedly been prepared for Ukraine. But I want to reiterate that the political decision about Chornobyl closure is not going to be reconsidered.”
“What is your attitude to some media criticism that you are now defending the interests of the Russian Gazprom and supporting the idea that the latter partially or fully privatize the gas pipeline running through Ukraine?”
“I have always supported privatization of the gas transport system. Let it be a concession. Let us see if there will be many wishing to take part in the gas transport concession. Beyond any doubt, it is Ukraine that should pull the control lever.”
“Could you be more specific: will a 51% stake belong to Ukraine?”
“Ukraine will own 50% + 1 share. There can be an option whereby even 30% will have a blocking power if in Ukraine’s hands. But this is a different subject. What should be mandatory in this privatization is the presence of at least three participants: Ukraine, Russia, and the West. I am indeed convinced that the Russians should take part in this privatization project. Now I see that we will have to beg Russia to take part in this project because our gas transport system really costs billions of dollars. But it will cost peanuts if loaded by 10-15 percent, with gas coming chiefly from Russia. Recently, an almost $600 million debt has suddenly sprung up like a jack in the box, for the gas Ukraine allegedly siphoned-off without sanction from the gas transport system. I will tell you in more concrete and detailed terms what these indebted 600-700 million, a disgrace for Ukraine, are: this is the natural gas that circulated at unregulated prices or simply outside any contracts. Our structures must take the blame for having unsigned contracts almost throughout the year 2000. But there are some grounds to believe that certain Russian structures were uninterested and did their best to keep the debt useful for some structures on both sides. Thus Secretary of the Russian Security Council Sergei Ivanov and I agreed to clarify the situation from both sides. This is even written in the presidential energy decree. The point is both sides are losing here. First of all, privatization should be carried out under absolute transparency. Secondly, the conditions will be created on the basis of a bill now awaiting a very intense parliamentary debate. And every interested person will be able to know the legal coverage of this privatization. And, thirdly, the state will always have a home mechanism sufficiently powerful to put anybody in his place. Indeed, one has to be very attentive and create such conditions that the main mechanisms to control the situation will always remain in Ukraine.”
“The next item on your program was visiting the NATO headquarters. What was the purpose and results of this?”
“It was a routine visit aimed at planning further cooperation and assuring our partners and colleagues that changes in the Foreign Ministry leadership, revitalization and normalization of our relations with Russia in no way indicate a shift of accents in Ukraine’s foreign policy. Almost everybody — the NATO secretary-general and military committee chairman, the Supreme Allied Commander Europe, and others — agreed with me and accepted our reasoning. Normalization of relations with Russia is necessary. Ukrainian-Russian relations have accumulated a lot of problems, mostly of an economic and energy nature. All this added to tension in Ukraine. The two presidents’ Sochi agreements contributed, to a large extent, to normalizing the situation in debt payments, gas supplies, mutual settlement mechanisms, monetary payments for the transit of Russian gas, etc.
“It is wrong to say that normalizing relations with Russia means changing the vector, for we at the same time actively cooperate with NATO and the European Union. On the other hand, we also told the Russians that our breakthrough in the cooperation with NATO is not anti-Russian. It does not mean shifting accents to the detriment of Russia. We are interested that Russia also move toward the European structures at a fast enough pace. The main thing is to defuse the current economic tension between Ukraine and Russia, in order to clear the way for Ukraine’s more effective integration in Europe.”
“Some media bandy the version that you have become virtually the key figure which could cause a government crisis in Ukraine. They mean the conclusions made by the commission you head, which checked government performance in the energy sector. Would you comment on this?”
“First, the conclusions were made by a commission comprising representatives of the government, parliament, auditing chamber, and many other bodies. The commission’s final sitting lasted for several hours. The items, which caused some disputes or controversy, were deleted from the document. Nobody could force anybody to sign it. Thus reports that somebody was only shown separate paragraphs is pure speculation. Everybody had the full text. They all carefully read each page from beginning to end, everything was thoroughly discussed. Secondly, regarding the alleged criticism of the government as such, we did not criticize the government as a whole. The point was altogether different: the main purpose of setting up this commission was to get true information. Ukraine was caught once, when it was accused of supposedly misappropriating IMF loans. Then we had to defend ourselves with retrospective effect and return the money. We begin the large scale privatization of regional power companies with generating facilities to follow. The last thing we need is to be accused of doctored statistics regarding the processes and mechanisms of payments and mutual settlements in the energy sector. Of course, criticism does not please one, but they could have been reacted to it in a professional way. Unfortunately, all this was put on the political plane. I think all this will soon disappear.
“As recently as two days ago, we had to urgently look for UAH 200 million to make payments to a foreign company which could otherwise discontinue its deliveries of natural gas. This is hardly a thing to make one overjoyed, but one can’t think here according to the logic of somebody beat someone. This is the vocabulary of election technologies, not of routine work. One had better think of how to put settlements with gas suppliers on a regular basis instead of forcing the managers of convalescing enterprises again to buy electricity in a futures deal subject to a 20% discount, as was the case recently.”
