Central Europe Activ

Mr. Medvedev, deputy chairman of Gazprom and director general of Gazprom Export has written an opinion about the gas crisis in the Wall Street Journal Online. I think this is a respectable argument on a respectable forum.

Gazprom is owned by Russia, and Russia, and it can be argued that sometimes it represents non-business interests. However, Ukraine is one of the most corrupted countries, a quasi-bankrupt and quasi-failed state, so caution is required in this argument. I think that Mr. Medvedev’s analogies are very good in the article.

Ukraine claimed that Gazprom had to supply the gas needed to fuel the transmission system itself, the so-called “technical gas,” for free. This is like a taxi driver asking you to pay your fare, and then driving you to the gas station and asking you to pay to fill up his tank.

I think the that the current energy crisis is very serious, and I just want to recall: the EU must find out what it want to do with Ukraine. It looks that Ukraine will not sort itself out and even the Russians are not so keen on doing it. I really disagree with the single-minded view of Mr. Rhein on his blogactiv Energy & Climate blog.

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  1. Ukrainian politics clearly exacerbated this crisis, but blaming it equally with Russia/Gazprom is highly problematic. Russia/Gazprom clearly sought to embarrass Ukraine, a fact best illustrated by the decision to direct a “test shipment” along lines other than the Druzhba pipeline. Had Ukraine accepted that shipment gas almost certainly have gone missing and Putin and Co. would have cried foul, not to allow the gas to flow was embarrassing but demonstrated that Tymoshenko is smarter than Putin and Miller.

    The notion that Russia should, let alone wants to see Ukrainian politics improve is absurd. Of course they want Ukrainian politics to remain mired in backstabbing so they can make the case that Ukraine is on the verge of becoming a corrupt “failed state,” Yet the reality is no other former Soviet State outside the Baltics is as close to developing a coherent party system — though it has a long way to go. Indeed the final gas agreement has taken us a step closer by finally bringing transparency to the gas business in Ukraine. Incidentally, according to Kyiv Post the highly suspect RosUkrEnergo that brokered gas between Gazprom and Naftogaz was backing Yushchenko financially — also according to Ukrainska Pravda at one point during the negotiations it actually offered to pay Gazprom 285 per cubic meter, something which Putin/Miller could easily have dismissed out of hand.

    Ukraine’s problems are not over by any means, but Yushchenko is on the way out and as that happens the Orange Coalition will cease to be a two-headed beast. Tymoshenko is no saint. but far better than Yushchenko she appears to understand that Ukraine has to balance between its struggle to remain sovereignty and its need to engage with Russia.

  2. Hugo Lane, I understand your reasoning, probably your emotions, but I’m afraid that having a party system is not enough to run a country, let alone to make a democracy alive. Although I live in the neighbor and try to pay attention I do not see any leadership in Ukraine. I think this is a place that is not blessed but cursed with sovereignty.

  3. First let me say that it must have been terrible having an energy crisis foist on you and other parts of Central Europe.

    I also don’t deny that the backstabbing that took place in Ukraine unnecessarily prolonged this conflict and made no one look good, but let’s be real, the stability Putin pretends to offer has been bought at great cost, and I will take Ukraine’s mess above that any day, the days of journalist being killed there seems to be over. Yet, the ugliness of Ukrainian politics does not mean there are no responsible leaders, it just shows how entrenched the interests blocking progress are, and how difficult it is to bring about a wholesale reform of society when there is no moral counter force along the lines of Solidarity, which can represent society’s interests and push politicians towards responsibility.

    But rather than look at the especially ugly sausage making of the gas dispute and negotiations, let’s look at the results. There is now a new level in transparency in Ukraine’s energy market, which for the first time will be driven entirely by the market forces as of next year. As a result Ukraine will now be able to act more independently than it ever has before when it was dependent on Russia’s good will. For a brief and cogent explanation of how Tymoshenko’s efforts reflect real responsibility I recommend the following blog.taraskuzio.net/2009/01/22/so-who-has-committed-treason/ Though of Ukrainian heritage, Kuzio is a thoughtful and dispassionate political scientist, who probably has a better grasp on the situation in Ukraine than anyone else in the west.

    Finally, let me conclude by saying that my thoughts are not driven first and foremost by emotions. I am an American historian, whose ancestry can be traced back fairly early in the colonial period. My interest in Ukraine began purely academically when I became interested in the emergence of Polish and Ukrainian nationalism in Galicia during the 19th Century. Of course two years spent in Ukraine, during which I met a charming woman who is now my wife, may affect me some, though she is very much of the pox on all their houses view of Ukrainian politicians be they Yanukovych, Lytvin, Yushchenko, or Tymoshenko. For my part, I’m not a cynic, but I am not predisposed to support Ukraine right or wrong. I don’t even do that with regard to my own country. But mark my words Ukraine is closer to being a bulwark against Putin’s Russia now than it has been since independence.

  4. Dear hugo lane,

    Thank you for your exhaustive and well structured comments. Would you mind if I edited them into a guest post with correct reference to your blog, probably send it to you for pre-approval and post it here as a counter-argument?

    There is one thing that undermines the Ukrainian side of the argument, although it comes from the Russian. There is no natural gas market in Europe. For this reason, charging ‘market’ prices and making the business ‘transparent’ is absurd to me. There are monopolies in the supply side (Gazprom) and for South Central Europe on the Transmission side (Nyeftogaz). It looks to me that the current deal involves sum creative accounting for ‘gross’, ‘net’, ‘supergross’ prices and the EU will pay up for a part of Gazprom’s demands through Ukraine. Anything but transparent.

    (I made the link active in your comment and you’re on my blogroll, too)

  5. I am honored. Sure, you are welcome to edit the post if as you say you send it to me for review.

    As for the transparency issue. Even if there are monopolies buying the gas, as I understand it there is a mechanism setting the price of gas according to a formula using the price of crude. And in Ukraine the lack of transparency allowed RosUkrEnergo to make all sorts of money for a hand full of people. which no body could keep track of.

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