Tuesday, February 14, 2006

Tymoshenko: "Energy Terrorism"

Yulia Tymoshenko's speech to the Royal Institute of International Affairs(Chatham House) in London on February 2 contained the following comments on the Ukraine-Russia gas dispute, and the subsequent RosUkrEnergo gas deal:
The gas dispute between Russia and Ukraine has been a wake-up call for many in Western Europe and Washington, and attracted great attention to the use of energy as a post-Soviet neo-imperialist weapon.

The proposed agreement for the settlement of the argument poses more questions than it answers. Firstly, it ignored the fact that both parties had a valid binding contract until the 1st of January, 2010. The matter could and should have been referred for review to the Stockholm court of arbitration. Secondly, the proposed deal guarantees a price of $95 per 1000 cubic meters of gas only for the first six months of 2006, while at the same time locking Ukraine into an unchangeable gas transit deal for the next five years. Thirdly, the deal places Ukraine's energy interests in the hands of RosUkrEnergo, a shadowy company, with suspected links to international criminals.

During my premiership, my government sought to investigate RosUkrEnergo - to discover who precisely its owners are, how it gained a virtual monopoly on the import of Central Asian gas, and where its profits go. It is perhaps not a surprise that when I left government, that investigation was shelved. I think that in order to find out who exactly benefits from this deal, it is necessary to carry out an investigation where both Ukrainian and international structures participate and that the case is thoroughly examined in a court of law.

For a deeper understanding of the extent of the damage from this gas deal from the 4th January 2006, I want to once more explore in detail the main points of the deal.

- The provision of a monopoly supply of natural gas to Ukraine and the loss of direct international contracts with Russia, Kazakhstan, Turkmenistan and Uzbekistan.
- The entanglement of an opaque structure RosUkrEnergo - in the supply of gas.
- The occupation of the internal market of Ukraine by RosUkrEnergo - in effect we have got a double monopoly.
- The transition fee of Russian gas through Ukrainian territory has been secured for the next five years, at two times below market price.
- Ukraine has surrendered the whole of the gas that it was contracted to receive from Turkmenistan at $75, at a time when it is receiving the exact same gas from RosUkrEnergo at $95. Ukraine has, as a matter of fact, accepted a clear system of shadow kickbacks.
- An agreement to buy Russian gas at $230 per 1000 cubic meter, which at the Ukrainian border is actually a higher price than that paid by Germany or France by some $60. Clearly such prices are fatal, considering the energy consumption in homes and in industry, and the need of 2-3 years to prepare an effective system of energy saving technologies.

Ukraine's conciliatory position in talks with Russia has weakened the position of other countries such as Moldova in their negotiations with Gazprom.

I am certain that this deal is not dictated by the market. This is nothing more than energy terrorism.

The gas deal of 4th January 2006 was the straw that broke the camel's back and it is precisely why we decided to vote for the sacking of Yekhanurov's government. It was not a politically motivated act timed to coincide with the elections but rather a reminder that the Orange Revolution embodied accountability and responsibility to the people.

The vote of no confidence was not a betrayal of the national interests - quite the opposite; it was a restated confirmation of national interests. Ukrainian energy supplies, as well as European energy supplies will never be truly safe, whilst control of the transit of gas remains in the hands of a shadowy company - with unknown owners. What we need is an objective, just and transparent solution to the problem, and I will do my best to achieve this.

The gas crisis also highlighted another pressing problem - the necessity for Ukraine to have professional experts and independent advisers that are not aligned to energy politics or spurious business interests. This will help prevent corruption and damaging monopolies from occurring.

Maybe we need to consider the creation, in conjunction with our European partners, of a common working group which would address the question of energy security and reform of Ukraine's energy sector. This could be an important step towards a common European energy policy.

The problems that have arisen from the gas crisis go beyond energy security, once again triggering the question over Ukraine's role in Europe and the world. Ukraine must decide where it fits into Europe and consider the balance that must be struck between its own expectations of EU accession and its relations with Russia and other post-Soviet block neighbours.

Alongside our own declaration that our future course is to become a full member of the EU, we must also accept that few of even the most fervent supporters of European integration want to help Ukraine quickly become a member.

Yet the gas dispute has proven that our fates are more closely entwined than many previously thought. So the message I would like the Ukrainian people to hear is that you - the west - will play your part as Ukraine redefines its historic ties to Russia, and that when the necessary EU conditions are met, we will be welcomed by the UK and the other member states.


(Via Maidan, where the text of the whole speech - "Where Is Ukraine Going?" - may also be read)
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