Russia and Ukraine sign a ten-year gas supply contract
Prime Minister Vladimir Putin and his Ukrainian counterpart Yulia Tymoshenko yesterday affixed their signatures to an agreement that paves the way for Russian gas to Europe and introduces European rules of payment for our gas for Ukraine. The long-term contracts for 2009-2019, the result of many hours of one-on-one talks between Putin and Tymoshenko and an expression of their mutual political will, make "gas relations absolutely transparent and predictable", the Russian Prime Minister said. Even so, Izvestia believes, from the start the new accords suggested several questions, as to which no answers are yet in sight, in spite of the much-vaunted "transparency".
The Putin-Tymoshenko agreements were announced on Sunday morning after a grueling hours-long session at the White House. However, knowing the ways of the Ukrainian authorities, it was clear that to agree about agreeing was not enough. First, the agreements had to be signed (although we know that even with signed and effective contracts, Gazprom was not protected against the theft of transit gas or the shut-off of transit altogether). Secondly, there were fears that Ukrainian President Victor Yushchenko, for whom Tymoshenko's successful negotiations were a thorn in his side, would spring some kind of surprise.
Be that as it may, towards midday yesterday it became clear that Yulia was planning to pay another visit to Moscow. It seemed from then on that the signing of agreements as they were hammered out by the two premiers on that Sunday night was inevitable. Then, all of a sudden, when Tymoshenko had already boarded a plane, the news agencies reported some alarming news from Kiev. Yushchenko's representative for international aspects of energy security, Bohdan Sokolovsky, declared that "considering the unique functions of the Ukrainian gas transportation system in ensuring European energy security", Ukraine thinks it is only fair to raise the basic rate for gas transit to the European level. That of course was not what Putin and Tymoshenko had agreed upon earlier, as Tymoshenko had promised that in return for a 20% gas discount for Ukraine , the transit rate would remain at the 2008 level ($1.7 per 1000 cubic metres per 100 km, about half of the transit rate in Europe). In general, the confidence that the signing would be swift and smooth began to wane after Sokolovsky's announcement.
It waned still more because the signing, originally scheduled for 4 p.m., was postponed by two and a half hours, allegedly delayed by Putin-Tymoshenko negotiations. Toward 7 p.m. they finally appeared before journalists, accompanied by Gazprom CEO Alexei Miller and Naftogaz head Oleg Dubina, who had signed the agreement.
"As a result of intense and prolonged negotiations, agreements have been reached on the entire range of issues connected with the supply of natural gas to Ukraine and the transit of Russian natural gas to Europe," Putin announced after making sure that the signatures had been affixed and announcing that Gazprom had been instructed to resume transit along all the pipelines. "I would like to note that this is a long-term contract extending over 10 years, just like the second contract for the transit of Russian natural gas to European consumers, which will also be calculated according to the European formula and have a term of 10 years."
In other words, if everything goes smoothly, the agreement will be in effect until 2019 and, as things stand today, will survive the Russian fleet in Sevastopol.
"I would like to single out the main thing," Vladimir Putin continued. "Russia and Ukraine are adopting the European market price formula as of January 1, 2009; in addition, middleman structures are fully excluded from the scheme of calculations for gas supplies. The whole chain of gas relations should become absolutely transparent and predictable," the Premier concluded.
Predictable and transparent as it may be, Putin did not see it fit to announce the price of gas for Ukraine in the first quarter of this year. Speculations in the press that the price would be $360 per 1000 cubic metres remained mere guesswork even after the documents were signed.
"I appreciate Vladimir Putin and his team for granting Ukraine special terms in 2009, 20% discounts on gas compared with world prices," Ms Tymoshenko, who on that occasion wore a pink jacket with a brooch strongly resembling a gas tap, mumbled. "The transit price remains reasonable and normal for Ukraine because the gas price is below the world level."
This last sentence meant that yesterday's talks had not changed the decisions made on Sunday, meaning that Yushchenko's dream of charging a European transit fee as early as this year had not come true.
"I think this is a truly historical approach: ten years of calm and predictable behaviour in the system of gas supply to Europe and Ukraine," Ms Tymoshenko summed up.
The approach proved to be not so much historical as fantastic.
"For our part we will do everything to support Ukraine," Putin said, casting a glance at Tymoshenko as if to suggest that not only Ukraine, but Ms Tymoshenko herself, would be supported.
Putin and Tymoshenko's brief statements left many questions unanswered. First, neither Putin nor Tymoshenko named the exact price of gas for Ukraine. When she came out to meet Ukrainian journalists after the signing of the documents, Yulia said that the price of gas for Ukraine would be between $230 and $250 per 1000 cubic metres, but it remained unclear whether it referred to the whole year or just the first quarter. Secondly, it is unclear whether Ukraine will compensate Russia for the stolen gas or whether Russia itself will claim the compensation - in other words, whether Gazprom will sue Naftogaz not only for stealing, but also for breach of contract and damage to reputation. Third, it is unclear whether Ukraine will buy any Russian gas this quarter or will make do with what it has stolen recently (as Gazprom claims), and only start its real purchases next month, when gas will be much cheaper.
It is when truly transparent answers to all these questions are given and when Russian gas reaches Europe that it will become clear whether the game was worth the effort.
"For our part we will do everything to support Ukraine."
Alexander Latyshev
WHAT MAKES UP THE GAS PRICE, p.3
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What can Yushchenko do to stop the agreement?
Viktor Yushchenko has almost no chance of abolishing the agreements reached by Yulia Tymoshenko. It is not the President's duty to approve a gas supply contract between business entities.
Theoretically, to annul the Moscow agreements he will have to call the National Security and Defense Council and declare that Russian gas supplies are a threat to security. This, however, is unlikely to happen.
Yushchenko's second chance is to declare Tymoshenko's government to be illegitimate. To do so, he must dissolve the Supreme Rada, which he earlier reconvened for an indefinite term to pass a package of anti-crisis laws. There is no other way for Yushchenko to sack Yulia: Parliament has approved the government's programme for the coming year, which means that Tymoshenko and her cabinet cannot be dismissed during the coming year.
Just as Izvestia predicted all along, the gas issue has enabled the "orange princess" to further undermine the President's position and send his already low approval ratings into a tailspin. As soon as the President raises the issue of sacking the government, Tymoshenko will remind him that the Supreme Rada just recently passed the law On Special Parliamentary Investigating Commissions. The law is necessary to create a commission that would officially prove Yushchenko's crimes and put the question of his early resignation to a vote.
There is much that the Ukrainian President can be held responsible for. The scandal over arms supplies to Georgia alone would suffice. The question of Yushchenko's poisoning in 2004 may also resurface. The people close to the President have already told Izvestia that he was not poisoned, which means that the Ukrainian vote in 2004 was partly falsified.
Analysts are discussing another possible way of getting Yushchenko to resign, one that may suit both the Tymoshenko bloc and the opposition Party of Regions. When the results of the second round of elections were hastily annulled in 2004, the protocols of the local election commissions that handed the victory not to Yushchenko but to Viktor Yanukovich, the leader of the Party of Regions, were not annulled. If these protocols are declared to be valid, Yushchenko may be declared to be an impostor who has illegally held power for four years.
Yanina Sokolovskaya, Kiev
