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Dec. 09, 2005
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Vladimir Putin Charged Ukraine
// $4.6 billion of Russian money was found in Ukrainian budget
Yesterday in Novo-Ogarevo Russian President Vladimir Putin, with support from an economic bloc in the government headed by Mikhail Fradkov, made a gas attack on Ukrainian authorities. He issued several sensational statements and repeated many times that this country has enough resources to pay Russia for gas at market rates. Kommersant special correspondent ANDREY KOLESNIKOV tried to pull off the secrecy shroud from the preparation for the meeting and the meeting itself.
There was no indication that something might happen in Novo-Ogarevo on Dec. 8, 2005. Vladimir Putin had scheduled a meeting with the new economic minister of Germany, then a meeting with special presidential envoy for Southern Federal District Dmitry Kozak. There was a meeting for economic problems on the schedule as well. However, after midnight some journalists were called from the presidential press service. The officials with some mystery in their voices told reporters that if they want to perform their job well, they should rush to Novo-Ogarevo first thing in the morning.

In Novo-Ogarevo it was announced that the meeting with Kozak was postponed. In other words, the reporters were called here not for this meeting, but rather for something else.

Finally, I saw several cars pulling up to the doors of the presidential residence. Andrey Illarionov, presidential adviser, was one of the first to walk in. He looked like he was full of secrets and strangely smiling in the same time. Then, it was the turn of Alexei Kudrin, finance minister; Arkady Dvorkovich, head of Expert Department of Presidential Administration; Viktor Khristenko, minister of industry and energy… Even from far away I noticed something in the eyes of these officials – some suspiciously joyful shining. I have never seen the members of government so excited about something.

In the beginning of the meeting, the president gave word to the Russian Prime Minister Mikhail Fradkov. He reported about his contacts in Brussels (he returned just last night) with officials from European Commission.

“We looked into the nearest prospective with optimism,” Fradkov said with a feeling. After that his face started to look concerned.

“We discussed the natural gas issues,” Fradkov said, and in that point I started to understand why we were called in here.

There was nothing happening in internal politics which would make worth while to wake up a journalist in the middle of the night. The gas was the reason. Natural gas is worth being waken up for in all kind of hours and worth waking everybody else. The gas is our real value, our national idea, which we actively export all over the world. Russia is ready to pay the devil the market price for the spreading this idea.

“We also touched some political issues,” Fradkov continued. “Our European colleagues are watching very carefully for our negotiations with Ukrainian partners. I would say, they watch these negotiations pretty close.”

In that point, every word started to look very meaningful.

“Europeans are looking for more and more arguments to see these negotiations finished successfully… I hope our Ukrainian friends will feel in the nearest time the attention of European colleagues to this issue,” Fradkov said.

After Fradkov, who brought some tension in the atmosphere, the word was given to Viktor Khristenko. He was talking about volumes of transit of Russian gas through Ukraine (112 billion cubic meters), with which he didn’t have a problem. Russia, according to Khristenko, is ready to provide these volumes.

“There is a question, which wasn’t resolved,” Khristenko started to hint. “Gasprom proposed to switch to financial formulas for the payment that would provide guaranties to both sides. Right now, the settlement of these problems goes with some difficulty.”

Usually, people speak this way when they try to say that there is nothing impossible. However, Khristenko said that an agreement was not reached. That was it. The ground was ready for Putin to start the gas attack.

The president announced that Ukrainian society can and must know the issue (although, he didn’t say anything about Russian society. I guess Russian society does not have such ambitions for already a long time.). Then, Putin explained the issue.

“The problem is simple,” Putin warned, so no reporters would write a couple extra paragraphs on the subject. “The payment formulas were not born yesterday, and not the day before yesterday, when the snow fell. It was developed in March of this year (I guess, when snow melted –A.K.). And our Ukrainian colleagues supported these proposals and they were also in some measures its initiators.”

The president was talking about the issue with a passion. He was burning like a gas torch.

“Ukraine’s own gas production is 18 billion cubic meters. This is completely covering the needs of regular Ukrainian consumers of gas –the citizens, who use natural gas in their houses and apartments. Our Ukrainian colleagues can set any kind of prices they desire for this gas. This is their sovereign right, if they think that they can solve all the social issues this way. Why not?” Putin asked.

He meant that the cost of this gas is not too high for Ukrainian citizens.

“It has nothing to do with a supply of Russian gas,” the president of Russia continued. “However, we talk about some branches of the Ukrainian economy, which need to be supported. In a normal economy, such problems are resolved in a transparent way through a budgetary process – so, the society is aware who and how much gets from the state… We should be closer to reality too.”

Putin decided to talk about the reality in details. However, at first, he told colleagues about conditions of Ukrainian economy. The pace of the economy has dropped, of course, (after “Orange Revolutions”), but it still comparable with the Russian one. (Maybe, in another time this statement would not be made, but right now Putin could not pass the opportunity).

“Besides, the Ukrainian budget received significant financial resources from privatization, credits from Western financial institution for energy projects. We are talking about billions of dollars!” the president of Russia exclaimed.

This was obviously not the case when it is wrong to count other people’s money. At least, it looked like Putin was getting certain pleasure out of it.

“It is enough this money to buy necessary volumes of natural gas in Russia for market prices,” and Putin went to concrete numbers. He was saying that staring from next year European colleagues will start getting Russian natural gas for $225 per 1,000 cubic meters, and the price that Ukrainians pay today is $50. He was taking in consideration that Ukraine has shorter transportation route, but still, it turned out that the unjustified difference was not less than $180 per 1,000 cubic meters.

He vengefully reminded that starting from 2005 Russia switched to the payment formulas for taxes for natural gas and gas condensate of destination country.

“Considering current prices for these energy sources the straight transfer of money from the Russian budget to the Ukrainian will cost about one billion US dollars. I am saying “direct transfer,” because there is no mutual flow of similar products coming to Russia from Ukraine,” the Russian president complaint.

“This is a heavy burden for theRussian budget… It would not hold two riders in one saddle,” Putin concluded.

For a second, it looked like he wanted to finish, but then he remembered one more argument that can strike the imagination of regular gas consumers – this time in Russia.

“Moreover, the consumers in Ukraine are getting gas today for much lower price than Russian citizens pay in their own country! And we still have about 25 million citizens, who live below the poverty line…” Putin said.

Even this number became useful. In other situations the head of state would not be revealing such sensitive number of poor. However, for the sacred cause he even sounded this number.

And it was all done – all the necessary words were spoken.

There was only one question remaining –why? Maybe, to tell the truth to Ukrainian citizens? But, that does not necessary mean that they will learn about this information. They will find out about it only if they really want to – they would have to read Kremlin Web site or a Russian morning papers online. However, I doubt that they would have a burning desire to do so.

Most likely, it would be members of Russian government who would want to see a speech of the president on TV or to read it in newspaper. It would be the same members of the government who participated in the meeting in Novo-Ogarevo. It is like to read the sport page in a newspaper when you already know that your team won with an awesome score.

And a vast majority of Ukrainian citizens most likely would learn about Putin’s speech from their TV and radio commentators. And the commentators would not make wait for long. Again, there is a questions-why then? I think I have found the answer when I was trying to learn caused such relentless attack. There was no particular urgency to do so the day before. The negotiations peacefully came to the grounding halt. There was a suggestion to form one more commission on the ministerial level. It looked like everything cooled off – everyone has released the steam. And suddenly, there is such charge.

I started to bug with this question one high-ranking member of Presidential Administration. And he started with anger to talk about an interview of First Deputy Minister of Fuel and Energy of Ukraine, CEO of Naftogas of Ukraine Alexei Ivchenko. This interview appeared in the Russian information field in the previous evening. “The compromise is only possible with respect of Ukrainian national interests and within energy security frame for our state,” Ivchenko said in the interview. “The compromise will be found. If another country would want to change the conditions, it will initiate them. If these changes will happen – they will be only in Ukrainian interests. Everything else is unacceptable. If somebody wishes to raise the tension around this issue – it is all in vain.”

Besides, he said that there is no official proposal from Moscow to gradually raise the price for gas (He is right. There was no such proposal. However, there was a proposal to increase the price right away – at once. –A. K.).

“We offering to stick to earlier signed agreements,” the head of Naftogas of Ukraine said. “It will be a happy end for Ukraine.”

It looks like, these last words, according to high ranking Kremlin source, became a last drop that overfilled the cup of long patience of Russian president.

In this war of nerves, it was not Ivchenko who lost the nerve.

Andrey Kolesnikov

All the Article in Russian as of Dec. 09, 2005

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