Cleaning Up Ukraine

LONDON, England -- Ukraine needs to reform its corrupt gas sector and reduce its dependency on Russia. It's in the EU's interest to help.

Russia spread its message in this website and in EU capitals that this was a "commercial" dispute, and that Ukraine was to blame.

The war in South Ossetia in August last year evidently taught Russian leaders the value of PR: however shaky your story, it's worth getting your side out there as loudly and as often as possible.

Well before the dispute began, the Russian side was spreading its message in foreign-language media and in EU capitals that this was a "commercial" dispute, and that Ukraine was to blame. They set up a website to provide "facts" about the dispute. The site also carried English-language media reports that followed their interpretation.

Even if we accept the argument that the spat began as a commercial argument, Moscow's PR efforts, combined with their actions during the crisis, have demonstrated a clear political aim: to discredit Ukraine and its leaders in the eyes of the EU and Ukrainians.

By showing Ukraine as an unreliable transit partner, Russia hoped to push its case for the Nord and South Stream pipelines bypassing the country and to gain some amount of control over Ukraine's pipeline network. In this way it hoped to undermine Ukraine's primary bargaining tool in gas negotiations: its control over gas pipelines.

Two of the main accusations about Ukraine's reliability need questioning. First, Russia accused Ukraine of siphoning gas from transit supplies, the reason originally given for cutting flows. The jury remains out on this, but EU energy commissioner Andris Piebalgs has said he has seen no evidence that Ukraine took gas without permission.

Second, Russia accused Ukraine of not keeping its side of the agreement to resume gas supplies to Europe on 13 January. But not only did the Ukrainian side complain that the gas was sent in such a way that made delivery impossible, this was also confirmed by independent analysts and EU sources.

To deliver the gas would have required supplies to be cut off to the populous areas in the east of the country, leaving the Ukrainian authorities between the devil (an angry EU waiting for deliveries) and the deep blue sea (a backlash from Ukrainians already angry at their handling of the economic crisis).

One of the more ironic accusations from the Russian side was made by Russian prime minister Vladimir Putin on 8 January, when he blamed the crisis on the "high degree of official corruption" in Ukraine and the fact the Ukrainian leaders were fighting for "the possibility to maintain one or other intermediaries so that they can use the proceeds for their personal gain and also get resources for future political campaigns."

The intermediary concerned was RosUkrEnergo, set up by none other than then-Russian president Putin (along with ex-Ukrainian president Leonid Kuchma) – 50% of which is owned by Gazprom.

Gazprom itself has been described by one economist as "effectively an economic crime syndicate"; insiders have spoken of private slush funds and given detailed accounts of the complex nexus of political and business interests at its heart.

Ukrainian prime minister Yulia Tymoshenko has, by and large, been singing from the same hymn sheet in obliquely accusing Ukrainian president Viktor Yushchenko of corruption through RosUkrEnergo.

It suits both her and Putin to try to weaken Yushchenko. Tymoshenko is involved in a long-running political battle with the Ukrainian president, and should win points at home for showing she can do a deal with Russia and removing RosUkrEnergo from the trade; Putin is furious with Yushchenko for his moral support of Georgian president Mikhail Saakashvili during the war with Russia in August last year and clearly wants a more pliant leader in Kiev.

But there has been one clear winner in the gas crisis – Ukraine's pro-Russian opposition leader Viktor Yanukovych. Already benefiting from public dissatisfaction at the authorities' handling of the economic crisis, the man defeated by the Orange Revolution has been able to pose as the only one who could strike a good deal with the Russians and follow Moscow in blaming Ukraine's "Orange" leaders for the problem.

A recent poll put support for Yanukovych in the upcoming presidential elections at 23%, compared with Tymoshenko at 14% and Yushchenko at 5%.

The relative success of Russian PR (compared to previous efforts) has been enhanced by the Ukrainian leaders' propensity to consistently shoot the country in the foot with their infighting and inability to deal with the corruption that cripples the country's gas sector.

But the PR drive failed in its aim to obfuscate the corruption problems on Russia's own side of the gas trade and redefine our image of Gazprom as a purely commercial entity. In fact, by focusing on the Ukrainian side of the problem it has highlighted the country's potential role in a solution.

By giving Ukraine incentives to clean up its gas sector, the EU can put to the test the claims of all three of its top political figures to be pro-European and at the same time reduce Ukraine's dependence on Russia.

Source: Guardian UK