Russia’s Prime Minister Mikhail Fradkov (left) and his Ukrainian counterpart Viktor Yanukovich have restored strategic partnership between the two countries in exchange for low gas prices.
Photo: Alexander Techinsky
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Ukraine Puts a Price Tag on the Country
// Russian and Ukraine reach a gas agreement
Ukraine will be paying Russia $130 per 1,000 cu. meters of gas in 2007, Russia’s Prime Minister Mikhail Fradkov said in Kiev on Tuesday. The parties did not comment reports that Ukrainian Prime Minister Viktor Yanukovich managed to secure moderate gas prices for his country in exchange for political trade-offs. In any case, successful talks with the Russian premier helped Viktor Yanukovich show his abilities in putting relations with Russia back on track.
While Mikhail Fradkov was meeting Ukraine’s premier Viktor Yanukovich, Russian-Ukrainian talks on gas deliveries in 2007 had ended in Moscow. RosUkrEnergo and Ukrgaz-Energo Ukraina will buy at least 55 billion cu. meters of Central Asian gas at $130 per 1,000 cu. meters. Gas prices for Ukraine are going to be one of the lowest in all former Soviet republics. Moldova, for example, currently buys gas at $160/1,000 cu. meters and Baltic countries buy for up to $200.
Price for Ukraine’s loyalty to Moscow is lofty. Moscow reportedly set a number of political conditions to Kiev in exchange for the gas price of $130. First of all, Moscow pushed for holding a national referendum on Ukraine’s accession to NATO which will apparently put the idea of Ukraine’s bid on the back burner for an indefinite time. Ukraine was also asked to keep the Russian fleet based in Sevastopol till 2017 as a treaty has it and probably prolong the stay. In addition, Ukraine is expected to guarantee mediation with RosUkrEnergo for at least five years. On another note, Kiev should promise that it will keep on importing Turkmen gas exclusively via Russia. Finally, Ukraine should not change rates for Russian gas transit. Indeed, the latest agreement keeps these rates unchanged.
Neither Russia nor Ukraine officially confirms these trade-offs. However, sources of Kommersant in the Ukrainian government said early that only with these conditions talks on October 24 would go through. They were proved to be a success indeed.
Yet, it would be false to think that Ukraine has used the political trade-offs only in exchange for gas prices. Mikhail Fradkov and Viktor Yanukovich also held a session of the committee on economical cooperation between the two countries yesterday. Similar negotiations collapsed last year because of the Ukrainians’ reluctance to agree to terms of Russian gas supplies. This year, the Russian prime minister decided to choose a save option and hold gas and economic cooperation talks in two different places.
As a result, the announcement of a telephone message from Moscow on a gas agreement became the first and main result of the committee’s work. Viktor Yanukovich’s satisfaction can be easily explained. The agreement was signed with the price terms that Ukrainian officials have been calling “the most acceptable for the country”.
Russian energy, food and aviation industries will have to pay for Ukraine’s political trade-offs. Prime ministers of Russia and Ukraine agreed yesterday on resuming imports of Ukrainian power energy to Russia, joint power supplies to Moldova and working together to unite energy systems of the CIS and Baltic countries with Europe’s UCTE. The parties also announced lifting temporary restrictions on meat and dairies supplies from Ukraine to Russia and resumption of farming products transit to Russia via Ukraine. Russia also promised Kiev to resume commercial production of An-124 jets and cooperation in the space industry.
Viktor Yanukovich is likely to gain sizeable political profit from the successful negotiations. He made a good demonstration of his abilities in building constructive relations with Moscow, spoilt by Orange leaders. Opposition, however, will lambaste the agreements anyway, accusing Yanukovich of collusion with Moscow on NATO and WTO accession in exchange for short-term gas agreements which can be reviewed next year.
Pyotr Netreba and Oleg Gavrish from Kiev
All the Article in Russian as of Oct. 25, 2006
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