Russia-Ukraine Gas Watchmen

KIEV, Ukraine -- Although Ukrainian Prime Minister Yulia Tymoshenko brokered a deal with Russian Prime Minister Vladimir Putin in January to end a dragging dispute, which left millions of Europeans without gas in the middle of winter, she may have only delayed the inevitable.

Ukrainian Prime Minister Yulia Tymoshenko

Because of the price increase and terms of the contract, Kiev is likely at some stage to default on its obligations and Ukraine and Europe may be faced with Russia turning the gas off again.

A reprise of the January dispute was averted when Ukraine barely made its payment by March 7, but it is only a matter of when the dispute flares up again.

It appears that Moscow does not want a repeat stand-off. Putin said on March 12 that his country would not punish Ukraine for purchasing less natural gas this year than agreed in January. For now.

Ukrainian President Viktor Yushchenko is accusing Tymoshenko of signing an agreement that was not advantageous to Ukraine and would damage the country by providing the means for Russia to influence what goes on in Ukraine.

Tymoshenko was in effect in no hurry to resolve the January crisis and only at the last minute stepped in, appearing as the country’s saviour.

According to one scenario, Tymoshenko agreed with Putin to create a situation which would in effect create problems in Ukraine and this would allow Russia to come in and either buy up or receive access to the Ukrainian gas transportation system, to gas storage and eventually to some Ukrainian key industrial assets on an advantageous level.

For some time, Russian natural gas monopoly Gazpromhas tried to gain access to Ukraine’s transportation system but to no avail.

As a result of the agreement, Tymoshenko may have resolved a personal debt dispute with the Russians going back to the 1990s.

Tymoshenko will also probably continue to receive Russia’s support during the election campaign for presidency next year.

The internal conflict in Ukraine at the moment is about one thing and one thing only: who becomes president in 2010.

And history has shown Tymoshenko would make friends with whomever she needs to make friends with.

Initially, she made friends with the EU and the US when she felt that friendship would allow her to become president.

When the Bush administration lost power and the EU was shown to be powerless over the Russia-Ukraine gas negotiations, she shifted her allegiance to Moscow.

The Tymoshenko-Putin deal also locked out RosUkrEnergo, a controversial business entity that acted as a gas intermediary between Russia and Ukraine.

A 50-50 venture between Gazprom and Ukrainian business, the Ukrainian face behind RosUkrEnergo is Dmitry Firtash.

For some time Firtash and Tymoshenko have not exactly been close friends.

Working in the 90s as head of one of then largest gas trading companies, Tymoshenko knows the business well.

She has made a lot of money out of this business and she’s likely to continue to make to money out of this joint business.

However, with Firtash and Gazprom having a joint venture, this was impossible, so she wanted to get RosUkrEnergo out of the picture.

This is a process reminiscent of Russia under then-president Putin and Mikhail Khodorkovsky from YUKOS. Only Tymoshenko lacks Putin’s determination (and KGB training) and Firtash has connections in high places.

Firtash, Yushchenko and Valeriy Khoroshkovskyi, a billionaire media magnate, Yushchenko appointed rec en tly as deputy director of the Security Service of Ukraine (SBU) have refused to make it easy for the prime minister.

Tymoshenko has accused Yushchenko of benefiting personally from RosUkrEnergo. I met Khoroshkovskyi in Kiev in 2003 when he was Ukraine’s promising Economics and European Integration Minister.

All three men are connected by their support of a free-market economy and Ukraine’s path to Europe, but their ties may go much deeper than that.

It’s possible that Firtash has business connections with Khoroshkovskyi and is also close to Yushchenko himself, although the president has denied any impropriety about the relationship.

It’s all Ukrainian politics!

Source: New Europe


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