Moscow Times
January 10, 2006
Editorial
Ukraine Deal Answers Only One Question
Channel One television produced a stunning piece of political theater on Jan. 4, the day the deal was signed on the delivery of natural gas to Ukraine.
President Vladimir Putin was shown being briefed at his Novo-Ogaryovo residence by Gazprom head Alexei Miller and Industry and Energy Minister Viktor Khristenko. None of the three men could have been described as looking well rested or terribly happy, which was understandable given the pounding they had come under after so proudly cutting the flow of gas on Jan. 1 to Ukraine and, as it turned out, to much of Europe.
But in front of the cameras they spoke only of success. The words "European prices" and "European principles" served as a sort of refrain.
Putin said it was important that Russia's price for its gas was "recognized as just." More important, though, was that Russia's relations with Ukraine had taken on a new quality. "They are transparent, market-based relations between partners," he said.
For Western Europe, the deal created "absolutely new and stable conditions" for the delivery of Russian gas, Putin said.
The news in Ukraine sounded quite different. "Russia agreed to our conditions because we had right on our side," Naftogaz Ukrainy head Alexei Ivchenko said, according to the Ukrainskaya Pravda web site.
The Western press took the middle ground. As The Washington Post put it, "Russia and Ukraine struck a face-saving and complex deal that allowed both sides to say they secured the price they wanted for natural gas."
But whatever the deal was, it was not "transparent" and it did not create "stable conditions" for the delivery of Russian gas.
Under the deal, all gas delivered to Ukraine, and some of the gas delivered to Europe, will be handled by Rosukrenergo, a Swiss-registered trading company with a dubious reputation that is half-owned by Gazprom. The other half is held by Raiffeisen Bank on behalf of a group of investors whose identities have not been disclosed.
Rosukrenergo, which for the past year handled the sale of Turkmen gas to Ukraine, has been accused of having ties to organized crime. True or not, and the company denies the allegations, its nontransparent structure makes it difficult to determine who is profiting from the sales of billions of dollars' worth of gas.
Also, it appears that the price that Ukraine will pay for natural gas has been set only for the next six months, not for five years as originally billed. What happens when July 1 rolls around?
The deal raises many questions. The only one that it seems to answer is that Europe can no longer count on Russia as a reliable energy supplier.