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Where there is no law, but every man does what is right in his own eyes, there is the least of real liberty
Henry M. Robert

Rules against appetite

Is Ukraine again to end up in Moscow’s “brotherly” bear hug?
20 October, 2011 - 00:00

The first half of October 18 brought no important news neither from Donetsk, were Russia’s Dmitry Medvedev arrived to meet Ukraine’s Viktor Yanukovych, nor from Saint Petersburg, where Prime Minister Mykola Azarov was taking part in the CIS summit, with negotiations with Russia’s Prime Minister Vladimir Putin scheduled October 19. Meanwhile, early on October 18 cleared out much of the gas and European integration policy of Ukraine which, as one of the renowned domestic experts defined it, is between Scylla and Charybdis.

The most significant statement was made by Pia Hansen, spokeswoman for the European Commission. “We took a decision to postpone this visit [President Viktor Yanukovych’s. – Author] to a more suitable moment in our bilateral relations,” said she. “The circumstances we mean are necessary for Ukraine to make progress in such spheres as the rule of law and independent judiciary. These are key principles for the European Union and relations within the Eastern Partnership,” explained Maya Kociancic, representative for the European Commission.

The response of the president of Ukraine to these statements was quite undisturbed: “If Europe or Ukraine, for some reason or another, are not ready for this [signing of the Agreement], it means that the decision can be taken later.” On the same day, at a briefing with Medvedev Yanukovych said, “We will always be meeting the European Union and the representatives of the European Commission as partners when it is necessary.” He also emphasized that both Ukraine and the EU continued the association negotiations and some progress was expected in the nearest future.

Thus, Ukraine is facing the Shakespearean problem “to be or not to be” in Europe again. Is it related to the price for Russian gas, which is now being discussed in Donetsk and Petersburg? Ukrainian experts believe this to be a rhetoric question. This opinion was corroborated by Yanukovych himself, who said in his interview to Bloomberg Agency (which was published on President’s website) that “should the government’s negotiations to bring down the import gas price fail, Ukraine will raise the price of natural gas for the population next month in order to get an international loan.” “All we want is to have an average European price for imported gas,” added the president.

But is Yanukovych really prepared to raise the price for Ukrainians, or is this statement just a possible trick to exert pressure on his Russian vis-a-vis? This is probably another rhetoric question, because the domestic gas price for the population under the current circumstances is also the price of power in this country. Yulia Tymoshenko was well aware of it when she would not opt for this solution, and thus virtually refused to take the next tranches of the IMF loan. However, she lost the election. Maybe, Yanukovych decided to learn from her mistakes and remove the electorally important gas from the hub of all state policy? In this case, it looks that his mantra “be with Europe” is sort of confirmed in this way.

Yet the final conclusion can be made only after at least some news leaks concerning the head to head talks between the two presidents in Donetsk, because the EU’s decision to indefinitely postpone the previously agreed visit of Ukraine’s president can effectively throw Ukraine into Moscow’s “brotherly” bear hug.

The public expert council under the Ukrainian part of the EU–Ukraine committee on cooperation has considered the scenarios for Ukraine, which may unfold depending on the results of the current talks. The title of the document is no mere coincidence either: “Ukraine’s Gas Market: The European Rules against Russian Appetite.”

The Belarusian scenario (Gazprom first getting in charge of Naftogaz Ukrainy, with an eventual merger) is believed to be promising only in theory, in short-term perspective at that, but the forecast changes to ne-gative in mid-term perspective already. The experts believe that the prerequisites for the long-term development of Ukraine’s gas market in the interests of domestic consumers builds foundations for playing by the European rules, which will block the way for oligarchic monopolism.

Mykhailo Honchar, director of energy programs at the NOMOS Center, is convinced that the current round of gas talks in Donetsk and Petersburg will bring no results, despite the announced promises. He explains that this will go on until a consensus is reached between the regimes of the two countries (whose interests are with all probability concentrated in the Swiss canton of Zug), on the one hand, and between Ukraine’s and Russia’s oligarchs wrangling over about Ukrainian gas and other assets, on the other. He also notes that rigid and costly European rules would still benefit all parties to the argument. The proceeds might somewhat shrink, according to Honchar, but stability will grow, and this is what everyone is interested in.

By Vitalii KNIAZHANSKY, The Day
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