Hugging to Death. The gas consortium of Ukraine, Russia, and Europe will not solve a problem of EU energy security, but undermine Ukrainian interests.

There is at least one clear conclusion from the “Cold war” of January 2009: to avoid a future gas supply crisis, Europe needs a common energy security policy. I would suggest to read a blog-post of Charles Tannock, Member of the European Parliament for London, and an article of Andrew Wilson, a senior policy fellow at the European Council on Foreign Relations, published in the Wall Street Journal, for extra thoughts and information on this point.

I agree that the unified energy supply scheme is a very positive thing for Europe. But what worries me is that the new European energy security concept is moving step-by-step against the national interests of Ukraine – not without help of Russia and powerful trans-national corporations. In a widely proposed system of co-operation, which foresees a foundation of gas consortium with the participation of the EU, Ukraine and Russia, all the parties are winning some benefits, except Ukraine, which is supposed to lose control over its gas pipelines’ system for decades (or for ever, depending on ‘flexibility’ of Ukrainian officials).

To my point of view, the first step to the formation of the united system of European Energy Security should be a very straight price talk. Europe cannot be united in the gas supply questions, until it doesn’t have a common formula of price for gas and its transportation. Without such an agreement all the other steps would be inefficient.

I liked very much a recent speech of the Prime Minister of Ukraine Yulia Tymoshenko at the Munich Security Conference on Saturday, 7 February 2009. “The price of the gas transit has not been formed in unified way. The question is: Why?” she said. “If we find such common approaches, we will be able to eliminate a political component from the system of pricing and supplies of gas to all the European countries.”

But why indeed the EU, not talking about the European continent as a whole, hadn’t manage to form the unified gas price and transit approach for all the time of its existence? The question is not rhetoric, and the answer is simple: the formation of the common Energy Supply (or Security, if you want) System for Europe is disadvantageous for the main European energy corporations. It is not a secret that the oil and gas trade business is very profitable, inter alia, by its shadow or semi-shadow schemes, which would be impossible to realise, if all the business were totally transparent and understandable even for members of the European Commission or the European Parliament. So, the establishment of a really clear system of gas trade in Europe looks like a miracle at the moment.

What next? The international investment conference on the modernisation of Ukrainian gas transit system is going to take place on 23 March in Brussels, according to the mutual arrangement of the President of Ukraine Viktor Yushchenko and the President of the European Commission Jose Manuel Barroso of 27 January 2009. The talk-work on the preparation of public opinion has already started. Vladimir Chizhov, Russia's ambassador to the European Union, said to journalists on 4 February 2009 that “the fact that the Ukrainian pipeline network was neglected ever since the collapse of the Soviet Union is recognised by everybody... The fact that its technical status is not up to standard is recognised by everybody. The fact that money supposed to be spent on maintenance from transit fees was spent on something else is recognised by everybody”. Only the last question may be considered as a full truth.

The potential members of the future Consortium are: Gazprom, Naftogaz Ukraine, and directly involved European companies – like E.ON Ruhrgas AG, GDF Suez SA., Gaz de France, BASF SE's Wingas, and Eni SpA. Russians, Ukrainians and Europeans would own the one third of the company each. People from GDF Suez, E.ON Ruhrgas AG and Eni SpA have already had the consortium-related meeting with the Prime Minister of Russia Vladimir Putin in Berlin on 16 January 2009.

Ukraine is supposed to give (rent) to the consortium its gas pipelines system, Russian Gazprom – gas fields, European companies – money. Some Western analysts say that Ukrainian government could sell a stake in Ukraine’s gas transit system to a new consortium. I don’t think it’s a good idea for Ukraine and its future.

Yes, Ukraine needs money for the gas transit system upgrade, but it may find money by itself (it will be not difficult to take a credit for a good-written & well-thought project), going on with receiving the full profits from the transit of the Russian gas to Europe. Ukraine is going to receive from Russia from $2 billion in 2009 to $4 billion per year, starting from 2010.

As for the European Union there is no economic difference at all, whether there is the Russia-Ukraine-EU consortium or not. Russia may find a purpose to switch off gas anyway, and the possible consortium-profits will be collected in hands of managers of the multinationals. And what is good for Ruhrgas, Shell or Gaz de France is not automatically good for Germany, Netherlands, or France. Don’t even mention the interests of tax-payers: the companies, which may directly operate with Ukrainian gas pipeline system, would be for sure an affiliated structures of famous brands, registered in offshore zones.

The establishment of the European common energy security system is not a question of today. It is even not a question of tomorrow. But the Europe has to start preparations for the day after tomorrow right now, working out all the papers needed, and communicating with partners – especially hard talks are supposed to be with Russia. Moreover, I may bet that the talks would finish with nothing. The real goal of Russia, Gazprom, and European energy corporations in Consortium-project are extra profits they may have, fooling Ukraine around. The sorting out the system of the gas supply to Europe looks like not profitable for them at all. The common sense had never beaten the business strategy. It’s a rule for today. What will be the day after tomorrow or later (I mean in long-term period)? Nobody knows, but the little strokes fell great oaks.

An old ghost is back. Ukrainian politicians re-started to talk about the early parliamentary election in April or May 2009.

The Prime Minister of Ukraine Yulia Tymoshenko has reported to the Parliament of Ukraine on the state of Ukrainian economy today. Now she’s answering the questions of the MPs. After that the project of law named “On the responsibility of the Cabinet of Ministers of Ukraine” may be put to vote. The author of the document, the leader of the opposition Party of Regions (PR) Viktor Yanukovych proposes to dismiss Prime Minister.

The idea of the Yulia Tymoshenko’s dismissal is most likely going to fail. The next vote of non-confidence, according to the Ukrainian law, may be performed only in six month – in September 2009. But at time of the presidential campaign the dismissal of Mrs. Tymoshenko will play in favour of her ambitions. That’s why more and more Ukrainian politicians have started to talk again about the forthcoming dismissal (or self-dismissal) of the Parliament.

The Block of Yulia Tymoshenko was insisting on reporting in Parliament as soon as possible – for the Party of Regions of Viktor Yanukovych not to have time to find (buy) enough votes to dismiss Prime Minister. But the Regions didn’t permit Mrs. Tymoshenko to give a speech in Verkhovna Rada on Tuesday, 3 February: after the “short meeting” of Viktor Yanukovych with the President of Ukraine Viktor Yushchenko, MPs from the Party of Regions blocked the tribune of the Parliament.

It was almost impossible for the Party of Regions to find enough votes against Prime Minister during Tuesday and Wednesday. The Block of Lytvyn will surely not support them: the Speaker of Parliament, member of the coalition with the Block of Yulia Tymoshenko, doesn’t want to lose his post. Regions may convince the faction of Communist party, but they will not have enough of votes anyway. Yulia Tymoshenko may be dismissed only if the members of pro-president part of the Our Ukraine – People’s Self-Defence block vote against her. It would mean that the President of Ukraine Viktor Yushchenko decided to play together with the Party of Regions openly, working not for his rating before the presidential election, but against the rating of Mrs. Tymoshenko.

Meanwhile, the Deputy Head of the Party of Regions’ parliamentary faction Oleksandr Efremov told to journalists that it is possible that the MPs from his party may give up their credentials, and this action, according to law, will lead to the self-dismissal of the Parliament and early election. The leader of the non-parliamentary Socialist party, ex-Speaker Oleksandr Moroz also said that the President would probably call for early parliamentary election in April or May 2009 to dismiss the Government of Yulia Tymoshenko.