Yulia Tymoshenko will threaten Europe from Tokyo and Yushchenko from Moscow.
After returning from Brussels, where the modernisation of the Ukrainian gas transportation system (GTS) will be discussed on March 23, Yulia Tymoshenko will go to Moscow on March 27 for talks with Vladimir Putin. The meeting will be part of the session of the sub-commission on trade and economic cooperation.
The visit is seen as a stage in the preparations for a meeting of presidents Yushchenko and Medvedev, who are co-chairmen of the interstate cooperation commission. Ukrainian experts, however, believe that the summit is impossible because Moscow categorically rejects Yushchenko's foreign policy. By contrast, Yulia Tymoshenko may achieve some of her own political goals during her meeting with her powerful Russian counterpart, the experts believe.
Ms Tymoshenko recently said that the main topic of her visit would be cooperation in aircraft building. She explained that her Government had an order book that would enable it to sign contracts for the delivery of planes in March and April. To fulfill the contracts, the Ukrainian enterprises would need cooperation with the Russian ones. Nothing concrete on the issue is known yet, as details are expected to be unveiled after the Putin-Tymoshenko meeting.
The intriguing part is that aircraft building is only one of the ten areas of strategic cooperation that the Ukrainian and Russian Prime Ministers agreed upon last April. However, all the projects are on hold because the political crisis in Ukraine has complicated the implementation of Ukrainian-Russian projects. The people around Viktor Yushchenko have repeatedly accused Yulia Tymoshenko of acting in the interests of Russia and of betraying the national interests. "Things have gone so far that Yushchenko is almost a persona non grata in Moscow," political scientist Mikhail Pogrebinsky claims. In the expert's opinion, against this political backdrop Yulia Tymoshenko has become the only Ukrainian representative capable of solving economic issues with the Russian side, which in turn strengthens her position in the forthcoming presidential race. The settlement of the gas crisis in January was Yulia Tymoshenko's latest major success in this field.
The gas topic is still a sore spot in interstate relations, all Ukrainian politicians and experts believe. They think that Mr Putin and Ms Tymoshenko will discuss gas while leaving it to experts to discuss cooperation in aircraft building and current trade and economic problems.
Both the leaders of Gazprom and Vladimir Putin repeatedly stressed that if the Ukrainian side delayed payments for gas consumed even by a single day, supplies would be made conditional on prepayment, in accordance with the agreements signed in January. In February Ukraine's Naftogaz remitted the payment two hours before the deadline expired. However, the Ukrainian national company faces a crisis because of payment defaults in the domestic market. The Ukrainian media reported recently that Naftogaz owes about $4 billion to its creditors, including seven foreign banks. The $5 billion credit that the Ukrainian Government has requested from the Russian Finance Ministry will be used to purchase Russian gas, acting Ukrainian Finance Minister Igor Umansky told journalists. Because Moscow has yet to make a decision on the issue of the loan, it may be one of the top topics on the agenda of the Tymoshenko-Putin talks, analysts believe.
However, President Yushchenko's supporters fear that Russia will attach political strings to the loan issue, one of which could be Russia's participation in modernizing the Ukrainian gas transportation system. Indeed, President Medvedev has said that Russia could take part in that international project, and as late as February Yushchenko did not deny that it was a possibility. Now, however, the President's team believes only European structures should be allowed to modernize the Ukrainian GTS because they would not claim the right to manage it.
The terms on which the Ukrainian Government intends to borrow $4.6 billion for the overhaul of its trunk gas pipelines will become known on Monday. Government sources, however, claim that the Europeans contemplating that investment project also want extra guarantees in the form of access to managing the GTS. A Ukrainian Government official claims that Kiev can withstand possible pressure on the part of European companies: "The Economics Ministry recently signed a memorandum with the Japanese corporation Sumitomo on a possible loan for the modernization of our GTS without any strings attached. We expect that in between the Brussels conference and the Moscow visit Yulia Tymoshenko will visit Tokyo to possibly sign loan agreements." The Ukrainian Foreign Ministry yesterday confirmed that all of the abovementioned foreign visits by the Prime Minister are being prepared.
Ukrainian politicians admit that Kiev cannot afford to bargain with Russia as it does with its Western partners, if only because Gazprom's lawsuits against Naftogaz charging that the respondent "was taking off transit gas and was in breach of its legal obligations on the transit of natural gas via Ukrainian territory to Europe" have not been recalled. If the Stockholm Arbitration Court upholds the charges, the Ukrainian company will face bankruptcy, the Ukrainian officials note.
Experts add that there is one more element in the Russian-Ukrainian gas relations that needs to be reconciled between Ms Tymoshenko and Mr Putin personally. This is the issue of 11 billion cubic meters of gas that the middleman company RosUkrEnergo pumped into Ukrainian gas storage facilities. The Ukrainian Government claims that Gazprom as a co-owner of RosUkrEnergo and a company to which the latter has not fully paid for the gas supplied, has assigned said amount of gas to Naftogaz. However, an attempt to customs-clear about half of that gas for the Ukrainian company led to the Ukrainian Security Service launching an investigation. The Security Service believes that gas was taken from the private company illegally. President Yushchenko's team sides with the investigation.
The conflict at present has merely been frozen: RosUkrEnergo has filed two lawsuits against Naftogaz with the International Arbitration Court. "While Mr Yushchenko is on the side of RosUkrEnergo, Mr Putin sides with Ms Tymoshenko," a source close to the Ukrainian Government claims. It says that the Gazprom representative has recalled his signature from the RosUkrEnergo lawsuit, thus rendering the document invalid. Shortly after Tymoshenko's visit to Moscow, the Audit Chambers of Ukraine and Russia are due to present a joint report on their investigation of RosUkrEnergo's activities commissioned by the Prime Ministers. "The report may contain some political sensations that would boost Yulia Tymoshenko's approval rating," our source hinted.
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