Gas dispute with Ukraine


MOSCOW. (Igor Tomberg for RIA Novosti.) Russian-Ukrainian relations are not getting any better with the approaching New Year, when the bilateral contracts on gas deliveries and transit will run out.

While accusing Moscow of political decision-making on the gas problem, Kiev is also sticking to political arguments. It is enough to mention its threat to oust the Russian Black Sea Fleet from Sevastopol, or a new spur of the conflict on December 22, when Ukrainian Foreign Minister Boris Tarasyuk bluntly charged Moscow with gas blackmail and even hinted that Ukraine might leave an "inefficient" Commonwealth. Instead of the CIS, Ukraine will concentrate on cooperation with the EU, NATO, and the U.S., he said.

Under the circumstances, Ukrainian Prime Minister Yury Yekhanurov immediately discussed the gas issue with EU and U.S. ambassadors. He conspicuously forgot to invite the Russian envoy. Reluctant to pay for its "independence," Kiev is going all-out to scare Europe with a shutdown of the gas pipeline in 2006, which amounts to political blackmail. But the Western countries do not want to take the discussion above the ambassadorial level. The EU and U.S. leaders have unanimously said no to the idea of interfering in the gas dispute.

It looks like what Ukrainian President Viktor Yushchenko said recently, and with good reason, that gas confrontations might go into politics. It is Ukraine that is making the conflict a political issue. This is only natural because it does not and cannot have any strong arguments in a price dispute. Indeed, why should Russia sell 1,000 cubic meters of gas to Ukraine for $50, when in Europe its price is $230? Kiev may well raise the price for Russian gas transit, in which case it will have to pay more for Central Asian gas transit via Russia.

In theory, Ukraine may stop buying Russian gas altogether, but it has problems with Turkmen gas as well. On December 22, Ukrainian Fuel and Energy Minister Ivan Plachkov failed to persuade Turkmen President Saparmurat Niyazov to sell Ukraine another eight billion cubic meters of gas, which Turkmenistan is contractually committed to deliver to Russia. It seems that Turkmenistan simply does not have any extra gas for Ukraine.

Moscow is making sound economic proposals to the accompaniment of this political hysteria. They are not limited to prices. Moscow is making it clear that concessions are possible if Kiev hands over gas mains to the gas transit consortium with Russian participation. During the talks at the prime minister level this week, Russia suggested signing an agreement on gas transit for 2006. As for the volume and cost of gas supplies to Ukrainian consumers, this question could be resolved gradually if the Ukrainian parliament passes bills on the transfer of gas mains to the consortium by way of concession. Gazprom is also ready to compromise, but it would like to know what it will get in exchange.

Kiev should view the situation in geopolitical perspective. The launch of the Blue Stream and the start of construction of the North European Gas Pipeline deprive Ukraine of its status as a transit country. Kiev cannot go on stealing gas without affecting the interests of the EU, into which Ukraine wants to integrate. Sooner or later it will have to consider the Russian consortium proposal.

At the same time, Kiev may deteriorate the situation if it continues being adamant on this issue. World Bank experts have calculated that if oil prices remain high and if gas prices go up twice, the growth of Ukraine's GDP will slow by 3%-4% in the next two years. (In 2005 its economic growth rates decreased four times.)

The gas transit consortium is a major issue for Russia. It is not surprising that Gazprom is prepared to meet its partners halfway if they let it co-own their gas and energy infrastructures. Russia offers gas to Armenia or Belarus, for example, for much less than to Ukraine or Moldova.

Ukrainian gas transit is a serious local problem. On a broader scale, it is clear that Russia is openly talking about its rights, interests and ambitions. At a session of the Security Council on December 22, President Vladimir Putin said that Russia should claim world leadership in the energy sector in a mid-term perspective, and is going to play this role at the upcoming G8 summit.

Putin said that Russia expects to be a full-fledged participant in international institutions, such as G8, WTO and OECD (Organization for Economic Cooperation and Development), but reserves for itself the right to uphold its positions in foreign energy markets. Moreover, Russia is going to insist on fair prices on the resources, in which it is the world's leader (primarily hydrocarbons). With this aim in mind, it is acquiring or building assets, be it transport infrastructures or industrial facilities.

"We are obliged to leave to our descendants a legacy of world energy leadership, which would protect them from conflicts and counterproductive energy battles," said Putin. Now that all world politics is moving toward the problem of resources for development, this position is an application for leadership in the drive for stability in a completely new, energy-driven world.

Igor Tomberg, PhD in Economics, is a leading researcher at the Institute of International Economic and Political Studies, Russian Academy of Sciences.

The opinions expressed in this article are those of the author and may not necessarily represent those of RIA Novosti.

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