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It no longer makes sense for Ukraine to steal Russian gas or turn down the tap, as agreements on the price of gas for its internal needs have been reached and all the possible discounts have been taken. Yulia Tymoshenko, who spent most of the weekend in Moscow, finally plucked up enough courage to make a concrete decision. She discussed the prices with Prime Minister Vladimir Putin and ways to avoid a repeat of the crisis with President Dmitry Medvedev. If everything happens as announced after the talks, transit to Europe should resume very soon, as soon as oral agreements are transformed into official documents. It has been promised that all the paperwork will be finished by Monday. A mere "trifle" remains: the Ukrainian President must recognize that the Ukrainian Prime Minister has the authority to pass the decisions that would rescue everyone, a "trifle" that seemed incredible even to those who were negotiating with Tymoshenko.
* * *
Only the deep night knows how they came to terms...
Prime Minister Vladimir Putin went at the "gas crisis" with a hammer and tongs last Friday. On Sunday night it came to a conclusion. Putin managed to get less than three hours to himself in almost two days; in the remaining forty hours, Izvestia's correspondent was tracking his every move.
Putin's two-day trip to Berlin and Dresden had been planned well in advance and promised to be pleasant. However, Yulia Tymoshenko intervened to "spoil" everything. Shortly before Putin flew to Berlin she indicated that she would be ready to come to Moscow on Saturday afternoon. It was announced that Putin would adjust his schedule in Germany in order to meet her.
... Specialists in dental implants gathered for their congress at Berlin's Ritz Carlton hotel were sipping draft beer and looking at the dental plates and pins displayed in show windows. Their jaws dropped when they saw Putin climbing up the stairs towards them. The Prime Minister ducked into a small side door where the heads of Gazprom's main European partners - ENI, Gaz de France, and Ruhrgas -- were waiting for him.
"They want us to feed 140 million cubic metres of gas into the export pipeline," Putin said, explaining the Ukrainian wishes. "And they demand an extra 21 million cubic metres a day for their pumps... In a letter that we have received they suggest that we transfer all that property - estimated at about $730 million in the first quarter of 2009 - to the Ukrainian gas company, which promises to pay back later, though they don't say on what terms and when exactly they will pay back. We propose to spread the risks. To create something like a consortium: invest the necessary money and deliver the gas to Ukraine to ensure the transit of Russian natural gas to the European consumers."
He said this despite the fact that technical gas is, in principle, the problem of the carrier. Ukraine showed due concern for the matter by removing it from the pipeline and using it for its own needs.
"This is not about the consortium," snapped German Chancellor Angela Merkel at a press conference. "This is about a preparatory phase from which supplies to Western Europe could be resumed..."
Add a spate of statements from Kiev to the effect that the relations between Naftogaz and Gazprom should be without middlemen and it becomes clear that Putin's Berlin operation aimed at "implanting" an international consortium into Russian-Ukrainian gas relations, thus saddling Europe with part of the risks of gas cooperation with Ukraine, did not go over well. It was a trap too obvious both for the Ukrainians and the Europeans.
"You can write what you like"
From Berlin Putin headed for his beloved Dresden, where he quickly changed into a dinner jacket and bowtie and went to Dresden's famous State Opera to receive the Order of Saxon Gratitude. Later in the evening he was seen at the plush Kempinsky Hotel. He had swapped his bowtie for an ordinary tie and went to meet the chief editors of the main German media.
"What are the prospects for the solution of the gas problem?" the Germans asked Putin right off the bat. "I am generally an optimist. If you ask me how I see the prospect, I see that eventually we will all have to come to an agreement..."
"After a long argument they told us they would not buy at $250, and yet $250 did not include the right of export." Putin was gradually working himself up, writing down each new number on a sheet of paper and displaying it to the Germans present. "We told them, OK, let it be $250 with re-export rights. You can have it your way, damn it," Putin exclaimed. "They refused again. What are we to do?"
"And still perhaps you will see a way to meet the Ukrainian demands before we are left out in the cold?" the Germans kept pressing him.
"Everything I'm talking about is absolutely true. If you don't believe me, talk to those you do believe," said Putin and proceeded for the umpteenth time that day to explain the causes of the conflict and what triggered it. He had talked for about three hours before one of the Germans present asked nonchalantly: "What to do about Russia's image, now tarnished as a result of the gas dispute?"
"What is needed is an objective approach, you see?" Putin reacted angrily. "What is there about our position that is not clear? Do you have doubts about any question? I don't know what you are going to write -- write whatever you like - but I am sure that deep down each of you must understand that our position is absolutely fair."
"When you and Ms Merkel spoke to journalists today, she said it never happens that only one country is to blame; these words reflected the widespread feeling in Europe that part of the blame for the crisis rests with Ukraine but part of it rests with Russia..." another German noted.
That was too much. Putin had been explaining it for three hours. He broke into agitated German explaining something to the Germans around him in German. His interpreter tried to chip in and translate what he was saying into Russian but Putin indicated with a gesture that he didn't need his services and continued in rapid-fire German.
"How many hours of sleep do you get every day?" somebody asked.
"I have three and a half hours left," Putin glanced at his watch. "In general, I sleep six hours...Thank you very much..."
The hijacking of a Prime Minister
Within hours, by noon, Putin was due in Moscow to meet Tymoshenko at the White House. It was past four o'clock when Tymoshenko, clad in a black dress with a zipper running down the length of her back, shook Putin's hand.
The Prime Minister exchanged a couple of words with her and then put himself between her and the members of her delegation and proceeded to explain that "we will now go to a place where we can talk and then we will come back". With Tymoshenko tamely following him, he left the White House.
It was the oddest meeting ever witnessed in terms of protocol: the Ukrainian delegation, including Naftogaz boss Oleg Dubina, was in shock and on the verge of tears. Head of Gazprom Alexei Miller looked equally bewildered as he watched the Ukrainian Prime Minister being "hijacked". As it turned out, the two PMs had gone to the Kremlin expecting to be back in a couple of hours.
They were not back until after nine o'clock. After five more hours of talks, when it was already Sunday, Putin and Tymoshenko approached the TV cameras and said an agreement had been reached: in 2009 Ukraine would receive gas at the European price with a 20% discount, that is at about $360 per 1000 cubic metres ("have it your way, damn it"), while Russia would pay the 2008 price for transit. Russia and Ukraine would fully adopt European prices starting in 2010. For Ukraine the price agreement is not yet transit, but it was the condition that Ukraine had set for resuming gas supplies to Europe.
"The negotiations were difficult, Tymoshenko sighed. We have given instructions to prepare the whole package of documents and do all the paperwork as agreed by Monday. Immediately after all these documents are signed, Russian gas will start flowing to Europe".
On the face of it, the agreements marked Putin's victory over Ukraine, as well as, of course, Tymoshenko's victory over Victor Yushchenko. But that would be true only if there was certainty that Tymoshenko had the mandate to conduct negotiations in Moscow and certainty that the Ukrainian President would go along with these agreements. In other words, if Ukraine were not Ukraine.
Thus, the chances are that Putin will only be able to catch up on his sleep when gas really flows directly to Europe.
* * *
"It would be wrong to speak about concessions"
Dmitry Medvedev holds a gas conference
The international gas summit Dmitry Medvedev suddenly announced on Wednesday had its format changed almost beyond recognition by the time it started on Saturday. First, its name was changed to a "conference of the heads of state and government on securing the supplies of Russian gas to European consumers", but the main question mark had nothing to do with gas. It was simply this: who would attend the conference?
Things were cleared up only when the delegates sat down at the round table. It turned out that only two heads of state were present: the host himself and Armenian President Serzh Sargsyan. Belarus, Kazakhstan, and Turkey had duly sent their delegations to discuss supplies of gas to Europe. Moldovan Prime Minister Zinaida Grechanaya was on her not first visit to Moscow in the last several days, but the Prime Ministers of Bulgaria and Slovakia decided that one visit was enough and stayed at home. This was either in deference to European Union discipline (the EU, being a deeply concerned party, decided that Energy Commissioner Andris Piebalgs, aided by the Czech Minister of Industry and Trade, would do the talking for all the member countries) or simply because they thought it would be more prudent to stay in their own freezing countries.
Yulia Tymoshenko graced - and saved - the company. As she appeared at the Kremlin together with Vladimir Putin, her back almost unnaturally straight, she cut an arresting figure. "The events that have prompted us to gather here are fairly complicated, I would even describe them as extraordinary, and the meeting is urgent," Medvedev said as he looked at the roomful of people only two of whom could have any influence on the course of events.
"Who is to blame and who will compensate the losses is not the main issue," Medvedev began in a conciliatory tone. The main thing is, first, to resolve the conflict and second, to create a mechanism for preventing similar conflicts in the future. He proposed concentrating on the latter issue, saying that "this was the special significance of the meeting" (considering the poor attendance, it was impossible to resolve the substance of the conflict). As Medvedev was speaking, Prime Minister Putin was scribbling down some notes. As it turned out, these were his opening remarks to the part of the conference from which the press was banned.
Two hours later Medvedev came out to meet journalists.
"I am sure we will solve the transit issue shortly", he assured them.
"It would not be very correct" to speak about any concessions to Ukraine, Medvedev said but it has to be understood that in the future, gas prices might be half of what they are today. Asked by journalists if he was sure that Ms Tymoshenko had the necessary powers and whether or not it was possible that Kiev would change its stance the following day, Medvedev replied carefully: "We assume that the Prime Minister has all the necessary mandates ‘ex officio'."
Other participants in the conference were not very forthcoming with their impressions. Czech Minister Martin Riman, however, did not sound pleased: "We had expected the two sides to announce an agreement on the resumption of supplies, but that has not happened."
The main thing is to make sure that it happens at all.
Yekaterina Grogoryeva
* * *
German political scientist Horst Teltschik,: Ukraine accelerates the building of "Northern Stream" pipeline.
Horst Teltschik,, former Chairman of the Munich Security Conference and Chancellor Kohl's foreign policy adviser, discussed in an interview with our Berlin correspondent Alexander Sobina why the gas war had taken the EU by surprise, why Germany was strongly in favour of building the Nord Stream, and how he himself heated his home in Bavaria.
Q: How do you assess the gas war between Moscow and Kiev?
A: The conflict is damaging to both countries. This is not the first time they have tried to settle accounts.
Q: How much of a surprise was this situation for the European states?
A: It was quite a surprise because gas supplies to Europe had never before been suspended for such a long time. Putin had a talk with Tymoshenko in October, and after the talk they announced they had solved the gas issue. Hence, many in Europe were sure that a conflict would be avoided.
Q: Who is to blame for the conflict?
A: It is not for me to judge who is right and who is wrong. The main thing is that a lot of neutral people who have nothing to do with Russian or Ukrainian interests have suffered in Europe. What is important today is not to assign blame but to make solid decisions on gas transit. We are well aware of the problems in Ukraine. The gas situation there is part and parcel of the internal political struggles in Kiev. I have sympathy for Russia because it does not want to make concessions to the Ukrainians and sell them gas below price. Germany pays more than twice that price for the "blue fuel". I consider the Russian approach to be quite acceptable and understandable. All that said, the main issue now is what the final decision will be. In previous years Moscow repeatedly proposed introducing market prices, but the proposals were never put into practice.
Q: This time Russia decided to draw a line under the gas dispute. Do you consider the Russian demands to be legitimate and fair?
A: Yes, they are quite fair. The question is whether or not Ukraine will be able to meet these demands considering the grave economic crisis, and Russia, considering these problems, will be able to find a solution that Ukraine can fulfill
Q: How do you see the role of the EU in this conflict? So far its reaction has been somewhat weak. Could the attitude of Brussels be due to the fact that major European countries - Germany and France - have not been hit hard enough by the halts in gas transit?
A: It's a tricky question. Europe's position is that the dispute is a purely bilateral matter. Neither Ukraine nor Russia is an EU member, and thus Brussels has limited influence over them. The European Union assumed a wait-and-see position, hoping that Moscow and Kiev would settle the dispute by themselves. As soon as it became clear that the dispute was dragging on and its consequences were affecting European states such as Bulgaria, the EU became more active.
Q: At a meeting with Chancellor Angela Merkel in Berlin on Friday, Prime Minister Putin said that by treating the dispute as strictly a bilateral matter the European leaders were indirectly supporting Ukraine. What do you think about it?
A: If the EU supported Ukraine it would have meant that Kiev was right in this dispute. However, as I have said, I consider the blame game to be irrelevant because finding a long-term solution to the conflict is far more important. The answer may be a three-way approach of the EU, Russia, and Ukraine not only in regards to the issue of gas transit, but to speedy modernization of the Ukrainian gas transportation system by an energy consortium. But that requires Kiev's consent.
Q: The dispute has demonstrated that international law is increasingly powerless in the modern world. Kiev in its time signed and ratified the Energy Charter, which obliged it to ensure uninterrupted gas transit to Europe under any conditions. Other states ignore UN resolutions. Are we witnessing a global crisis of international law?
A: Of course one should seek compliance with international law, but in the case at hand the European Union can only act as a go-between. Europe has no leverage on the decisions made in Kiev and Moscow. If the parties dig in their heels and advance plausible arguments in favour of their positions, which happen to be mutually exclusive, it takes time to examine the rights and wrongs of the case. In my opinion the EU has chosen a more reasonable approach: rather than conducting investigations and probes - it would have taken much more time - it has proposed to work out positions that are acceptable to both parties involved in the conflict.
Q: The gas dispute has rekindled the discussion in Germany on the need to diversify gas supplies and reduce dependence on Russia. Does Europe have alternatives, as some experts claim?
A: There are not all that many gas producers in the world: Norway, Britain, Algeria, Qatar, Iran, and Russia. As for the first two, their production capacity and resources are overstretched. They will not be able to replace Russian supplies in the longer term. Bringing gas from Africa and Qatar is expensive and in many ways inconvenient. The EU, for example, has only few terminals for liquefied natural gas. I don't have to tell you how tense the relations are with Iran. That leaves only Russian supplies. In any case, this is the best option.
Q: Which of the projected gas pipelines - the Nord Stream, the South Stream, Nabucco, or Yamal - is the most important for the EU and Germany?
A: The German Government has always favoured the building of the Nord Stream. The project has a chance of being completed ahead of all the others. Other gas transportation routes are also important for the EU, but their main problem is finding the necessary investments.
Q: However, the Nord Stream meets with opposition in some European countries, notably Sweden and Poland. Why doesn't Germany take advantage of the dispute between Ukraine and Russia to promote that project?
A: That is not so. The other day our Chancellor spoke about the need to build that pipeline. I would not presume to judge the Cabinet's efforts in converting the Poles and the Swedes to its way of thinking; I do not have enough information on that.
Q: Still, Sweden, and especially Poland, are taking a tough stand. Putin has said that if the building of the Nord Stream is blocked, Russia can do without the project by building a gas liquefaction terminal, which would remove any territorial restrictions on fuel supplies. What do you think about it?
A: I know about that remark and I can merely say it was made on an impulse. Even so, I am sure that the Nord Stream will eventually be built. The gas dispute with Ukraine makes it more probable. At the same time it would give an additional impetus to the Nabucco alternative project.
Q: A question to you not as a politician and an expert, but as an ordinary German citizen. How do you heat your home?
A: I heat it with gas, and I think it comes from Russia because Bavaria is in Southern Germany. The pipelines that cross Ukraine lead here. But so far, I have experienced no inconvenience or problems. First, Germany gets its gas not only from Russia and second, it has enough gas stored up against such contingencies.
Q: Can it be said that the Germans are well served by their famous prudence?
A: Not only their prudence, but also their wealth. Bulgaria is a much poorer country that cannot afford to buy a lot of reserves for a rainy day. By the way, it is a pity that a country that has historically always been very friendly with Russia has suffered the most. It is thus very important for Moscow to find an early way out of the crisis.
Alexander Latyshev
