Ukraine News Update:WSJ,EDM,RFE/RL,AP
November 24, 2008
Among the past century’s horrors, the Great Famine in Ukraine manages to stand out. First, for the scale of the mass starvation inflicted by Stalin on millions of people in Europe’s agricultural breadbasket. Second, for how little the world knows about this genocide. A now-free Ukraine wants to change that and just marked the 75th anniversary of the 1932-33 “terror famine,” or Holodomor.
Starting in the late 1920s, Stalin set out to collectivize and hobble the Soviet peasantry. His aim was to crush “the peasantry of the U.S.S.R. as a whole, and the Ukrainian nation,” wrote Robert Conquest in his groundbreaking book, “The Harvest of Sorrow.” An estimated 14.5 million people starved to death in Ukraine, Russia and Belarus when farmland was collectivized and harvests requisitioned. The submission of Ukraine to Moscow helped prolong the Soviet Union’s life for another 60 years.
The Stalinist regime and its ideological soulmates denied the famine at the time and later. Walter Duranty, the New York Times’s longtime Moscow correspondent, was Stalin’s chief apologist, sending false dispatches from Ukraine; he won a Pulitzer Prize. The left-leaning academy condemned Mr. Conquest and the late James Mace, the leading researcher of the famine, when their work appeared in the 1980s. The Berlin Wall’s collapse shamed some of the denialists. “I want to express my deepest appreciation to all who refused to be silent,” President Viktor Yushchenko said Friday.
The exception is the current Russian leadership. Ahead of the official commemoration this past weekend, President Dmitry Medvedev accused Ukraine of seeking to achieve “opportunistic political goals” based on “manipulations and distortions, falsification of facts about the number of dead.” As in Stalin’s day, Ukraine’s independent identity and nationhood stands in the way of a resurgent Russian imperium. By remembering the Holodomor, Ukrainians say — Never again.
Eurasia Daily Monitor
November 24, 2008
A New Ukrainian Russian Gas Confrontation
Just when the outlook for normalization in the Ukrainian-Russian gas relationship appeared on the horizon, Russian President Dmitry Medvedev and Gazprom head Alexei Miller have upset the gas cart.
On November 20 Kommersant Daily reported that Medvedev and Miller threatened to charge Ukraine $400 per 1,000 cubic meters for gas beginning in January 2009 if Naftohaz Ukrainy, the Ukrainian state-owned energy company, did not repay an alleged $2.4 billion debt to Gazprom.
Two days later, Gazprom spokesman Sergey Kuprianov, appearing on the Russian television program “Vesti,” warned that Gazprom might be forced to cut off gas supplies to Ukraine beginning on January 1, 2009; “As you perfectly well understand, we cannot supply gas without a contract,” he said.
The day after Medvedev’s announcement, Ukrainian President Viktor Yushchenko demanded that Prime Minister Yulia Tymoshenko’s government pay this debt within five days. Yushchenko linked the price of gas to the price that Russia pays for its lease for keeping the Black Sea Fleet in Sevastopol. Yushchenko also called for a review of transit fees Gazprom pays to transport Russian gas to Europe via Ukraine and the fees for underground gas storage facilities in Ukraine.
Yushchenko did not miss this opportunity once again to mix domestic politics with the continuing gas-price conflict by accusing his opponent, Prime Minister Yulia Tymoshenko, of responsibility for the debt (although he was the only Ukrainian official to make such an accusation). “You are to take personal blame for this,” Yushchenko angrily stated, adding that the Cabinet of Ministers’ lack of professionalism in gas procurement was leading to the “colonization of the state” (Kommersant, November 22).
Tymoshenko, who was visiting Sweden, responded to Yushchenko’s charges by stating that the alleged sum was not a Ukrainian state debt to Gazprom but was, in fact, owed by the shady Swiss middleman company, RosUkrEnergo (Kommersant, November 22).
In what some interpret as an attack on Yushchenko, Alexei Miller, and Dmitry Medvedev, Tymoshenko added: “I believe that it is necessary to end corruption in the gas sector and not burden the government with other questions. I think that our government will end corruption in the gas sector and will begin to sign direct, transparent contracts” (Kommersant, November 22).
Soon after Tymoshenko’s rebuttal, Naftohaz Ukrainy issued its own statement: “The Company underlines the fact that it has no debt to OAO Gazprom and calls on politicians and experts to stop speculating about this question. Naftohaz’s debt to RosUkrEnergo for gas used in 2008 is $1.267 billion” (Kommersant, November 22).
The Ukrainian weekly Zerkalo Tyzhnia, however, reported on November 22 that sources in Naftohaz said that the company’s debt to RUE was in the order of $2.25 billion, which included late payment penalties of $250 million.
In late 2007 Naftohaz signed a contract for 2008 purchases with RosUkrEnergo and not Gazpromexport, a subsidiary of Gazprom responsible for marketing gas. According to the scheme, Gazpromexport buys gas from Central Asia and resells it to RUE, which sells it to Naftohaz on the Russian-Ukrainian border. RUE, in turn, is obligated to repay Gazpromexport for the gas delivered to Ukraine. The confusion in this opaque scheme stems from the fact that RUE is 50 percent owned by Gazprom. Alexander Medvedev, the deputy head of Gazprom and head of Gazpromexport, is also a member of the RUE coordination committee, so Medvedev in fact winds up selling and buying to and from himself.
Since coming to power, Yulia Tymoshenko has been determined to cut RUE out of the Central Asian gas supply chain and sign normal long-term, take or pay contracts directly with Gazprom. At her meeting with Vladimir Putin in October, an agreement was signed that held out the prospect for such a normalization of economic relations. The key passage of the agreement reads: “The Parties acknowledge that the efficiency of the transition to direct relations in gas shipment depends on the settlement of the debt to Gazprom OJSC for natural gas supplied to Ukrainian consumers” (Ukrayinska Pravda, October 4).
It appears that Gazprom and the Kremlin, along with the Ukrainian “gas lobby,” which is reputed to be close to both Viktor Yanukovych, the leader of the pro-Russian Party of Regions, and to Viktor Yushchenko, want to prevent RUE’s removal and avoid long-term contracts, hence the Russian claim that the Ukrainian debt is to Gazprom and not RUE so until it is settled, RUE will remain the middleman.
Tymoshenko is also aware that Yushchenko’s threat to increase prices for underground gas storage in Ukraine would have a disastrous impact, not only on Gazprom and RUE, but above all on Naftohaz Ukrainy. The current price for storing gas in Ukraine is $6.68 for 1,000 cubic meters. In Germany the cost is $82.50. Two-thirds of the gas stored in these underground caverns, however, belongs to Naftohaz. If the Ukrainian government were to raise its storage tariff to half the German level, the financial impact on the state-owned company would be crushing.
As January 2009 rapidly approaches, Gazprom’s European customers will be closely monitoring developments on the Ukrainian-Russian gas front. The January 2006 cutoff of gas to Ukraine, in which RUE played a critical role, had a greater impact on European customers than on Ukraine. The possibility of having a highly suspect scheme, allegedly linked to organized crime, maintain such a powerful hold on gas supplies to Europe should be of concern to European leaders.
—Roman Kupchinsky
Radio Free Europe/Radio Liberty
November 25, 2008
Ukraine, Gazprom, Gas, (And The Usual Debts And Threats)
Like clockwork, when the frosts and first snows arrive in Ukraine, Gazprom starts talking about Ukraine’s gas debts. The debts become veiled threats, then the veil slowly comes off and the Russians turn the gas off. As they once did in 2006, terrifying Europe more so than Ukrainians, who somehow always manage to find ways of keeping warm.
As always, the debt is in the billions. Gazprom says it is $2.4 billion. Naftohaz, the Ukrainian state gas company, claims the debt is much smaller, $1.3 billion, and furthermore the money is not owed directly to Gazprom but to the notoriously secretive intermediary company RosUkrEnergo, 50 percent of which is owned directly by Gazprom.
Ukrainian President Viktor Yushchenko promptly turned to his Prime Minister Yulia Tymoshenko and instructed her to clear up the gas issue within five days. She, no less promptly, dispatched a delegation for talks to Moscow.
Ukrainian-Russian gas relations are opaque and deeply mysterious. No one seems to know what kind of contracts are drawn up, for how long a period, and under what terms. The only certainty in these relations is the regularity of payment and debt conflicts.
The “Kommersant Ukrayina” newspaper writes that during recent gas talks between Gazprom and Naftohaz, the Russian side suggested that Ukraine waive its gas-transit fees across its territory for the next 14 months in lieu of the existing debt.
Now, Russia is threatening to take Ukraine to court over this latest “debt.” Tymoshenko is hoping for a one-or two-month extension on the payment. She’s also reassured her fellow Ukrainians that no one would go cold this winter. Currently, Ukraine has a record 17.5 billion cubic meters of gas in its repositories. That’s a lot of gas.
Gas prices are historically indexed to the price of oil. Oil has fallen from $150 a barrel in July to well below $50. Gas prices, however, have not budged.
Gazprom boss Aleksei Miller even forecasts that gas prices will hit record highs within the next three years. He did, however, pledge that in the first half of 2009, gas prices will decrease. Maybe that will bring down Ukraine’s debt next year. Because you can certainly count on there being a debt.
– Irene Chalupa
(Note: Make sure to read the following article in its entirety, not just the headline, which can leave the impression that a final gas debt deal has been struck. It hasn’t)
AP
Gazprom Reaches Gas Debt Deal with Ukraine
November 25, 2008
Moscow – Ukraine’s state gas company Naftogaz agreed Tuesday to pay part of its debt to Russian gas monopoly Gazprom by the end of the month, both companies said.
Naftogaz agreed to pay for September gas supplies and part of the debt for the October shipments by Monday, the companies said.
But Gazprom said it is sticking to its decision not to sign a contract for future gas supplies until Ukraine pays off its entire $2.4 billion debt for September, October and November shipments.
Talks on future supplies will resume after the partial payment is made, Gazprom said.
Ukrainian officials rushed to Moscow earlier this week after Gazprom warned that it could cut off gas supplies to Ukraine on Jan. 1 unless a new contract was signed.
Uncertainty regarding Russian gas supplies to Ukraine raises concern in European countries that receive gas from Russia via pipelines that cross Ukraine. A similar conflict led to drops in gas supplies in Europe in January 2006.
Ukrainian officials have said that the debt actually amounts to $1.3 billion for supplies received in September and October.
But Gazprom spokesman Sergei Kupriyanov said in televised comments on Tuesday that the two companies agree on the amount of the debt. “We truly have a common opinion regarding who owes whom - and how much,” he said. Naftogaz spokesman Valentyn Zemlyansky, however, denied that the two countries agreed on how much was owed. “The figure of the debt has not been established,” he told The Associated Press in Kiev.
