Ukraine PM Has Goodwill

KIEV, Ukraine -- Yulia Tymoshenko, the newly appointed prime minister of Ukraine, has pledged that her pro-western governing coalition will seek to "harmonise" relations with Moscow.

Dmitri Medvedev, the presidential favourite backed by Vladimir Putin.

Many observers expected the charismatic 47-year old, who was appointed last week, to shake up bilateral relations between Kiev and Moscow. Relations between the countries have been strained since the Orange Revolution of 2004.

The trigger, many thought, would be her plans to cut intermediaries out of the multi-billion-dollar natural gas trade between Ukraine, Russia and central Asian suppliers.

However, in a Financial Times interview, Ms Tymoshenko expressed confidence that the Kremlin was ready to adopt a more transparent gas supply arrangement with Kiev, whose vast pipeline system pumps the majority of Russian supplies to Europe.

As proof, she pointed to public comments made on the issue in recent months by Dmitri Medvedev, the presidential favourite backed by Vladimir Putin, Russia's outgoing president.

"The leading presidential candidate in Russia, Mr Medvedev, publicly said that the Russian side is not set on any shadowy intermediaries. He said that they are ready to do away with these intermediaries," she said.

At stake is the position of Swiss-registered company RosUkrEnergo, which controls the supply of central Asian gas to Ukraine and significant sales to European markets. The company is owned equally by Russian gas group Gazprom and two Ukrainian businessmen, Dmytro Firtash and Ivan Fursin.

Ms Tymoshenko has called for direct gas supply agreements between Gazprom and Ukraine's state energy group, Naftogaz. US officials have backed her in criticising the role of intermediaries such as RosUkrEnergo, insisting they pose an energy security risk to Ukraine and Europe, which is itself dependent on Russia for more than a quarter of its gas needs.

While reasserting her resolve on the issue, Ms Tymoshenko pledged to seek pragmatic talks with Moscow to avoid a repeat of the 2006 gas price stand-off that disturbed supplies to Europe.

"I have not returned as premier to strain relations with Russia - this is not my intention. I will strive to establish a relationship of equal partnership," she said.

Ms Tymoshenko regained her position as the premier after a strong showing in snap elections held in September. A previous 2005 stint as prime minister was cut short after a falling out with Viktor Yushchenko, whose presidential candidacy she backed during the 2004 elections.

The premier said her new governing coalition would strive to seek compromise with a strong opposition to consign to the past years of paralysis that have plagued Kiev's politics.

She said her priorities would be to fight corruption and to adopt concrete reforms that would bring Kiev closer to its long-term goals of joining the European Union and the Nato military alliance.

Ms Tymoshenko's cabinet is working ahead of the new year to address an array of pressing problems. Topping the list is sky-high inflation, expected to finish the year at more than 15 per cent.

Ms Tymoshenko is rushing to pass a budget for 2008 before the end of the year as well as attempting to prevent a technical default on Eurobonds issued to investors by Naftogaz.

"It is very difficult to bring in a completely new government just a week before the new year, evermore so considering that so many problems have piled up. We will probably break the Guinness World Records by adopting a new budget within several days," she said.

Ms Tymoshenko was quick to assign the blame for the problems her cabinet will face on the previous governing coalition led by Viktor Yanukovich.

She said she aimed to have the budget passed this week as well as the swift adoption of state guarantees on debt obligations in order to reassure increasingly edgy investors with debt interests in Naftogaz.

However, with her coalition controlling only a hairline majority in parliament, the opposition, led by Mr Yanukovich, is a formidable force that could complicate such plans.

Source: Financial Times


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