The visit of Ukraine’s Prime Minister Viktor Yanukovych to Moscow on Sept. 22 was sort of a test for concreteness. A few days before in Brussels, the Ukrainian prime minister had mostly talked about such abstract things as integration into European institutions and Ukraine’s readiness to carry out reforms. Now in Moscow he met Prime Minister Mikhail Fradkov of Russia in order to tackle a concrete problem: the price at which Ukraine will be buying Russian gas in the fourth quarter of this year and over the next few years.
“The price of 95 dollars per 1,000 cubic meters until the end of 2006 is firm, since no plans have been made to raise the gas price in 2006. We may extend the negotiated periods to five years, because a stable price is important to us,” Yanukovych told journalists. He says deliveries until the end of this year will finally be negotiated in the next few days, while talks on the 2007 price will be concluded in October.
Although Yanukovych held talks with the Russian president and prime minister, it is still not clear what price Ukraine will be paying for gas until the end of the year. Russia’s Fradkov says that the previously negotiated price can be left intact until the end of December if certain conditions are fulfilled. One of them is the commissioning of a gas transportation consortium.
Kyiv has only one trump card at the talks in Moscow — the gas transportation network and gas reservoirs. Whether this trump card will be used in Ukraine’s favor now depends on the Ukrainian prime minister, who at one time affixed his signature to the document creating a gas transportation consortium with Germany’s participation.
Yanukovych talked about bringing gas prices in line with gas transit tariffs. “The price of gas was separated from the tariff; these are two unrelated contracts. This was Ukraine’s mistake in 2006. We must still come to an agreement and harmonize tariff and price policies,” Interfax quotes Yanukovych as saying.
Yanukovych also announced that Ukraine would pump enough gas into underground reservoirs to ensure the uninterrupted transit of gas to Europe. This is the second meeting for the prime ministers of Ukraine and Russia. They seem to be finding a common language. “This is our second meeting in the past month, which means that we have intensified work to prepare the first session of the interstate commission,” Fradkov said. He added that work is proceeding in an atmosphere conducive to finding decisions that suit both sides.
Should we expect a considerable improvement in Ukrainian-Russian relations after the Ukrainian prime minister’s latest statements in Brussels that Ukraine is not ready to join NATO? Will this moderate Russia’s attitude to the gas issue?
COMMENTARIES
Sergei KARAGANOV, chairman of the Council for Foreign and Defense Policies of the Russian Federation:
“We are all hoping that we will stop all these squabbles that we’ve been having in the past one and a half to two years and restore normal, constructive, and sober relations, which all Russians want, because, to be frank, we are tired of your sudden changes and reversals. Until recently, you looked like a difficult and unreliable partner — not because Ukraine was bad but because it changed its course almost every week. Now we hope that this course will be stable. Nobody will be threatened by the never-ending political upheavals and somersaults in Kyiv.
“Nor will the prospect of NATO’s expansion toward Ukraine, a tragedy for Ukraine and a big problem for Russia, continue to hang over us. In principle, they could create enormous and totally unexpected and incalculable problems, above all for Ukraine, and for Russia, too. These problems can bury our more or less good-neighborly cooperation in spite of all kinds of friction.
“As for gas, no more concessions can be made. We have just given you an opportunity to pump gas into underground reservoirs at a lower price. In principle, we see no reason why we should cut gas prices. But we are not going to resort to any anti-Ukrainian methods. A price hike is inevitable, and it does not matter who your prime minister is, even if it were Fradkov. In any case, the prices will be at the required level. Should a gas transportation consortium be set up, Ukraine will simply take a greater part in the distribution of its profits, that’s all. We will consider the possibility of Ukraine’s participation in the extraction of gas from Russian deposits in a totally different way if we have a sizable block of shares in the transportation of gas, and if we are convinced that this system is reliable. As for the overall prospects for Russian-Ukrainian relations, I hope they will improve, although I must say that in fact they never deteriorated - they were just unstable and unreliable.”
Oleksandr SUSHKO, director, Center for Peace, Conversion and Foreign Policy of Ukraine:
“I don’t see any reason why Russia should soften its position on the gas issue. The gas price is going to rise. I do not think that Yanukovych’s NATO statement is something that can prompt Russia to be charitable toward his government, especially after he said in Brussels that Ukraine is not going to join the customs union of the Single Economic Space. Russia would have appreciated this much more.
“Undoubtedly, the Ukrainian prime minister did a good thing, from the Russian viewpoint, with respect to NATO. But still this is not something for which the Russians are ready to pay. Besides, Yanukovych was expected to make this kind of statement. A gas consortium is no longer high on the Russian agenda, especially on the conditions that the Yanukovych government can offer. It is not at all interesting for the Russians. What interests them most of all is ownership or a sizable share in ownership.
“Meanwhile, they are interested in access to Ukraine’s domestic gas market. They want to reap profits from the sale of Russian gas to major Ukrainian customers. Now the Russians want to gain access not only to customers but also to the privatization of regional energy resources-distributing companies. As for the prospects of Ukrainian-Russian relations while Yanukovych is in office, they will be stable, more intensive, and more productive. There will be more contacts and negotiations, and more projects will be discussed.”
