Experts: Ukraine And Russia Have Soiled Their Reputations In Gas Dispute

WASHINGTON, D.C. -- Even though it is still difficult to predict the exact price of the Russian-Ukrainian gas deal, one result is already known: Both countries have damaged their reputations, according to experts who spoke in Washington, D.C., with a video connection to Moscow.

Prince Vladimir, who converted the Kyivan Rus empire to Christianity in 988, may be dismayed at the way the medieval empire's modern-day successor states, Ukraine and Russia, squabbling.

“I do not understand how this can be a Ukrainian-Russian conflict; this is a conflict between very shady businessmen… This is a shady deal and there’s no reason for any state to accept it. We have to understand that [Russia] Gazprom is effectively an economic crime syndicate,” said Anders Aslund, an expert from the Peterson Institute for International Economics at the Carnegie Endowment for International Peace in Washington, D.C., on Dec. 30. The reports on Gazprom say “wonderful profits but no cash flow – this is how Gazprom functions,” according to Aslund.

As for Ukraine, “RosUkrEnergo might be paying as much as half of Ukrainian politics,” the expert believes.

Aslund also highlighted “an amazing tolerance of the European Union countries of these shady organized-crime deals.” There have been many issues in terms of reliability of Gazprom as a supplier for Europe. On the Ukrainian side, other issues exist “about whether Ukraine is a reliable transit country,” according to James Collins, the former U.S. ambassador to Russia.

While negotiations are in process, Gazprom is actively blaming Ukraine by using the website created about this conflict by Gazprom:, which struck many as provocative and politically motivated, considering that Ukraine is an important client. “If you open a website against one of your main customers, you cannot be perceived as a commercial organization,” Aslund stated.

The annual conflict between Gazprom and Ukraine has become “a rather regular New Year’s event,” Collins said. However, the situation changed from what it was three years ago. Ukraine cannot expect foreign governments and media to see Russia’s actions as an attempt to stifle the Orange Revolution and “lenient treatment” will not be given, according to Dmitriy Trenin, director of Carnegie Moscow Center.

Ukrainian leaders are spending most of their time attacking each other. Ukrainian politicians are on the payroll of shady businesses. This is the bottom line, according to briefing participants.

The Europeans have warned Ukrainians this time that the nation has “no right to disrupt … they had to meet their obligations as well to allow gas to flow,” according to Martha Olcott of the Carnegie program. She also emphasized that European media have been “trying to keep a low profile to this issue for as long as possible,” an indication that EU support for Ukraine won’t be so forthcoming in this dispute.

But Trenin said that Russia will also suffer as a result of the cutoff. The Western public will react negatively, just as a new U.S. administration comes to power on Jan. 20.

The gas case is more complicated this year because Gazprom’s production fell by 10.6 percent in November 2008 from the year before. One reason is that Central Europeans are trying to avoid Gazprom whenever possible, Aslund said. In addition, Gazprom has lowered prices to Kremlin-friendly Belarus. “Gazprom is strapped for cash,” Trenin said. “They want every dollar they can lay their hands on.”

Russia has no reason to give Ukraine a price break after Ukrainian President Victor Yushchenko tried to actively pull the country towards the NATO military alliance and after his fervent support for Georgia in the five-day August war with Russia.

“There is a feeling in Russia that Russia … owes Ukraine nothing and has every right to pursue this really tough policy… on the other hand … you can get the feeling that they’re not enjoying it very much,” Trenin said, describing the position of Kremlin leaders.

However, rather than a commercial dispute, Aslund said the main objective of the Kremlin is to “destabilize Ukrainian politics, to show how bad democracy is in this part of the world so that it shouldn’t be tried in Russia.”

But both could lose at this game.

The Ukraine-Russia gas dispute makes both nations seem unreliable in the world’s eyes. “People in Europe will, in fact, look much more concertedly at alternatives to the singular dependence on the current system that has been very controversial,” Collins, the former U.S. ambassador to Moscow, concluded.

Source: Kyiv Post


WesleyPresley said…
It is easy to understand Russia's distaste for a conflict with the Ukraine. The Russians know the Americans are putting the Ukrainians up to these antics. The Russians just want to do business and make money. The Americans have been looking for war, and for their oil and gas companies to rule the world. How better to do that than use the chump Ukrainians as an attack dog.
Lowell said…
This comment has been removed by the author.
Lowell said…
Now, that comment is total bull pucky!! Everybody is just trying to survive. There is, however, gross mismanagement on all sides. As an earlier entry said, the pipelines were designed and installed by the Russians during the Soviet era. I doubt that Ukraine has had the funds to modify the lines since then so that flow could be controlled. And, since they installed those lines, Russian should completely understand the capability (or incapability) of Ukraine to control that flow of gas. There is no doubt in my mind that Russian chose to phase in the gas deliveries so that they could take advantage of the weaknesses in the system to make Ukraine look as though they were not living up to their responsibilities. And, the rest of the world seems to be believing the bulls**t propaganda.