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.
Showing posts with label European Union. Show all posts
Showing posts with label European Union. Show all posts
Sunday, February 8, 2009
Thursday, January 29, 2009
Jaap de Hoop Scheffer: "If there is a Russian-Ukrainian dispute on energy security I think NATO allies should pick that up".
Let me not to tell anything about Ukrainian politics today. Everything is going well here in Kiev, the politicians are going on with presidential campaign, claiming each other in all the possible sins. The main topics of discussion: gas contracts (Presidential secretariat has issued a new research, making the conclusion that the papers signed in Moscow are not good for Ukraine and may - and possibly should - be revised), the date of Presidential election (December 2008 or January 2009), and a couple of dismissals and appointments - current and prospective. Instead of Ukrainian domestic politics saga, I propose some NATO-reading for today: Transatlantic Leadership For A New Era: Speech by the NATO Secretary General at the Security and Defence Agenda - 26 January 2009. This speech, followed with questions and answers session, really worth to be read. I will give here the words of NATO Secretary General Jaap de Hoop Scheffer, which were concerning directly Ukraine and its geopolitical role in global processes.
"We have seen how the need for reliable energy supply is transforming from a mainly economic question into a central security issue. For many nations, being cut off from energy is a matter of national survival. The recent quarrel between Russia and Ukraine was only the latest reminder of this. This latest crisis showed how a bilateral dispute can have a powerful knock-on effect, both in terms of the heat in houses and a chill in international relations".
"Clearly, no one gets a veto over NATO enlargement. That process is central to our aim of consolidating Europe as an undivided and democratic security space and it is not negotiable. The pace and direction will be of our choosing. But the NATO-Russia relationship is too valuable to be stuck in never-changing arguments. We need a positive agenda, one that befits the importance of both Russia and NATO".
"Considering the political, security and energy issues that run through Central Asia and the Caucasus, I believe we need stepped up focus on those regions as well. I think NATO should consider its role in energy security much more seriously. There is, to my mind, clear added value for the Alliance".
"It is simply not enough to have Heads of State and Government provide NATO with a mandate in energy security, yet to have Allies hesitate to use NATO as a forum for discussion during crises".
"The Bucharest decision was rather clear, or was very clear, I should say, and as I said in my introductory remarks, we will set the pace and we will decide upon the moment. But the moment is performance-based. So I cannot give you a timeframe. It is not around the corner, I would say, as we speak, as far as, of course, Ukraine and Georgia are concerned. We are intensifying our relationship, as you know, through the NATO-Ukraine Commission, the NATO-Georgia Commission, but I do think that enlargement in this sense is not around the corner, but I can't be more specific here in that regard".
"If there is a Russian-Ukrainian dispute on energy security I think NATO allies should pick that up. Not because we have any ambition, or we pretend to play any role. Please, no! There was a Czech presidency which immediately was proactive and involved. That was the European Union involved. Other people were involved. Certainly not NATO. But that does not mean that those subjects are irrelevant for NATO, if you agree with me that NATO is a political military organization".
"I think Russia cannot afford to have a non-dialogue with NATO, and NATO cannot afford to have a non-dialogue with Russia".
"Of course I'm discussing protecting pipelines in times of crisis. I said protecting pipelines is first and foremost a national responsibility. And it should stay like that. NATO is not in the business of protecting pipelines. But when there's a crisis, or if a certain nation asks for assistance, NATO could, I think, be instrumental in protecting pipelines on land".
"NATO is not in the energy business. So if in a situation like we had over the past weeks NATO allies are totally deprived of gas you will not see a NATO Secretary General stepping forward, raise his finger and tell the Europeans or the Russians or the Ukrainians for that matter, listen, guys, you have to stop this. We have other international organizations, other people to do this, and certainly not a NATO Secretary General, the European pres... the European Union presidency, rather, or others.
So we are not in the energy business, but of course when a nation is for a long time deprived of all gas, or all energy, in the North Atlantic Council, and quite rightly so, when a nation raises its finger and says, Secretary General, we would like to discuss the energy situation, should NATO then say no, that's none of our business? I don't think so. Although you'll not see us in the forefront in the energy business because we are not in the energy business. We're in the security business.
And I say again, we usually use the word energy security. And that's our business".
"We have seen how the need for reliable energy supply is transforming from a mainly economic question into a central security issue. For many nations, being cut off from energy is a matter of national survival. The recent quarrel between Russia and Ukraine was only the latest reminder of this. This latest crisis showed how a bilateral dispute can have a powerful knock-on effect, both in terms of the heat in houses and a chill in international relations".
"Clearly, no one gets a veto over NATO enlargement. That process is central to our aim of consolidating Europe as an undivided and democratic security space and it is not negotiable. The pace and direction will be of our choosing. But the NATO-Russia relationship is too valuable to be stuck in never-changing arguments. We need a positive agenda, one that befits the importance of both Russia and NATO".
"Considering the political, security and energy issues that run through Central Asia and the Caucasus, I believe we need stepped up focus on those regions as well. I think NATO should consider its role in energy security much more seriously. There is, to my mind, clear added value for the Alliance".
"It is simply not enough to have Heads of State and Government provide NATO with a mandate in energy security, yet to have Allies hesitate to use NATO as a forum for discussion during crises".
"The Bucharest decision was rather clear, or was very clear, I should say, and as I said in my introductory remarks, we will set the pace and we will decide upon the moment. But the moment is performance-based. So I cannot give you a timeframe. It is not around the corner, I would say, as we speak, as far as, of course, Ukraine and Georgia are concerned. We are intensifying our relationship, as you know, through the NATO-Ukraine Commission, the NATO-Georgia Commission, but I do think that enlargement in this sense is not around the corner, but I can't be more specific here in that regard".
"If there is a Russian-Ukrainian dispute on energy security I think NATO allies should pick that up. Not because we have any ambition, or we pretend to play any role. Please, no! There was a Czech presidency which immediately was proactive and involved. That was the European Union involved. Other people were involved. Certainly not NATO. But that does not mean that those subjects are irrelevant for NATO, if you agree with me that NATO is a political military organization".
"I think Russia cannot afford to have a non-dialogue with NATO, and NATO cannot afford to have a non-dialogue with Russia".
"Of course I'm discussing protecting pipelines in times of crisis. I said protecting pipelines is first and foremost a national responsibility. And it should stay like that. NATO is not in the business of protecting pipelines. But when there's a crisis, or if a certain nation asks for assistance, NATO could, I think, be instrumental in protecting pipelines on land".
"NATO is not in the energy business. So if in a situation like we had over the past weeks NATO allies are totally deprived of gas you will not see a NATO Secretary General stepping forward, raise his finger and tell the Europeans or the Russians or the Ukrainians for that matter, listen, guys, you have to stop this. We have other international organizations, other people to do this, and certainly not a NATO Secretary General, the European pres... the European Union presidency, rather, or others.
So we are not in the energy business, but of course when a nation is for a long time deprived of all gas, or all energy, in the North Atlantic Council, and quite rightly so, when a nation raises its finger and says, Secretary General, we would like to discuss the energy situation, should NATO then say no, that's none of our business? I don't think so. Although you'll not see us in the forefront in the energy business because we are not in the energy business. We're in the security business.
And I say again, we usually use the word energy security. And that's our business".
Tuesday, January 27, 2009
Europe wants action, not talks. While the President of Ukraine was visiting Brussels, he was criticized in Strasbourg.
The Parliamentary Assembly of the Council of Europe adopted the resolution on the state of investigation of a murder of Ukrainian journalist Georgiy Gongadze, mentioned in my previous post. Here is the press release with some highlights: PACE wants action to bring to justice those who ordered murder of Georgiy Gongadze. One more interesting thing about the Council I'd recommend to read is a speech of Terry Davis, the Secretary General of the Council of Europe (January 26, 2009).
The same time the President of Ukraine held talks in Brussels, giving a lot of attention to the issue of gas supply to Europe. Here is the interview of Mr. Yushchenko to the Financial Times, given during the visit. “The myths cranked out by the Russian government or Gazprom are apparently aimed at discrediting Ukraine as a reliable gas transport partner, to get political and commercial control of the Ukrainian gas system,” he said, talking to the FT correspondent.
One of the results of the visit - the scheduling of a high-level conference on March 23 in order to find investments for the modernization of Ukrainian system of gas transit pipelines. Some details of the Brussels talks are given here in the article of the Guardian.
At a joint press conference with Jose Manuel Barroso Viktor Yushchenko said also that the Gongadze case has to be solved as soon as possible. "I hope that using our joint efforts, including those of Interpol, we will find this criminal and finalize this case. This is a priority for me. I promise that Ukraine will devotedly and transparently do all it can to solve this case as soon as possible," he added.
The same time the President of Ukraine held talks in Brussels, giving a lot of attention to the issue of gas supply to Europe. Here is the interview of Mr. Yushchenko to the Financial Times, given during the visit. “The myths cranked out by the Russian government or Gazprom are apparently aimed at discrediting Ukraine as a reliable gas transport partner, to get political and commercial control of the Ukrainian gas system,” he said, talking to the FT correspondent.
One of the results of the visit - the scheduling of a high-level conference on March 23 in order to find investments for the modernization of Ukrainian system of gas transit pipelines. Some details of the Brussels talks are given here in the article of the Guardian.
At a joint press conference with Jose Manuel Barroso Viktor Yushchenko said also that the Gongadze case has to be solved as soon as possible. "I hope that using our joint efforts, including those of Interpol, we will find this criminal and finalize this case. This is a priority for me. I promise that Ukraine will devotedly and transparently do all it can to solve this case as soon as possible," he added.
Saturday, January 17, 2009
Transit myth. The raise of the fee for gas transit via Ukrainian pipeline system will not make up the extra-expenses for European level gas prices.
According to the info we’ve got now, the Gas summit in Moscow ends without any significant result – at least in frames of bilateral Gazprom-Naftogaz negotiations on gas supply to Ukraine. Nevertheless Europeans may count on re-establishment of gas flow next week, but Ukraine is not likely to sign any contract today for its own energy needs. Though Vice Prime Minister of Ukraine Oleksandr Turchynov told yesterday that today Mrs. Tymoshenko will achieve the total agreement with her Russian counterpart. At the time I’m writing these words Yulia Tymoshenko and Vladimir Putin are still talking in private somewhere in Russian White House, and my story will not be about them. I would like to say a couple of words to unveil a very popular statement of Ukrainian top politicians, claiming that Ukraine will gain super-profits after switching to European level of gas transit prices. That’s not true.
I wrote about the transit-fee-myth in the Ukrainian Ekonomicheskie izvestia (Economic News) newspaper in 2004 and especially in 2005, when – after Orange revolution – the President of Ukraine Viktor Yushchenko, Prime Minister Yulia Tymoshenko and people from Government started to declare their will to move to the European level of prices for gas from Russia. I guess they hadn’t read my articles or just didn’t care about profits of Ukraine, and the “fruitful” negotiations with Russians ended in ruining of the existed agreement on gas price for Ukraine of $50, established until 2009. The transit fee rose from $1.09 per 1 tcm (thousand cubic meters) for 100 km to $ 1.6 ($1.7 in 2008), but that hadn’t influence the harm for Ukrainian economy. Today Ukrainian officials are actively declaring again that the raise of the transit fee to the European level will be profitable for Ukraine.
Here are some figures. In 2008 Ukraine transported around 120 bcm (billion cubic meters) of Russian gas to Europe. The length of Ukrainian export pipelines is up to 120 km (let’s take the average – 110 km). So, last year (not taking to the account the fact that some amounts of transit money went for old-debts-payments) Ukraine received from Russia approximately $2.057 billion. The same time Ukraine bought 55 bcm of gas from Russia, paying $179.5 per tcm – the check was $9.873 billion.
Ok. Let’s imagine that Ukraine raises the transit fee to the average European level. The President of Russia told it’s $3.4 per 1 tcm for 100 km. As a result Ukraine will receive twice more transit money from Russia – $4.114 billion. But the price of gas will be raised also; it will be from 350 to 450, as I can understand the Russian Gazprom’s mathematics. So, Ukraine will have to pay not around 10, but around 20 billion dollars, gaining 2 billion from transit-fee-raise. If Ukraine agreed for Russian proposal of gas price $250 with transit fee of $1,7, it would have to pay to Russia (literally – RosUkrEnergo) twice less – around $3.85 billion more. I would like to remind here that Ukraine has to pay more every year since it declared the will to move to European level of gas prices during three years.
I wrote about the transit-fee-myth in the Ukrainian Ekonomicheskie izvestia (Economic News) newspaper in 2004 and especially in 2005, when – after Orange revolution – the President of Ukraine Viktor Yushchenko, Prime Minister Yulia Tymoshenko and people from Government started to declare their will to move to the European level of prices for gas from Russia. I guess they hadn’t read my articles or just didn’t care about profits of Ukraine, and the “fruitful” negotiations with Russians ended in ruining of the existed agreement on gas price for Ukraine of $50, established until 2009. The transit fee rose from $1.09 per 1 tcm (thousand cubic meters) for 100 km to $ 1.6 ($1.7 in 2008), but that hadn’t influence the harm for Ukrainian economy. Today Ukrainian officials are actively declaring again that the raise of the transit fee to the European level will be profitable for Ukraine.
Here are some figures. In 2008 Ukraine transported around 120 bcm (billion cubic meters) of Russian gas to Europe. The length of Ukrainian export pipelines is up to 120 km (let’s take the average – 110 km). So, last year (not taking to the account the fact that some amounts of transit money went for old-debts-payments) Ukraine received from Russia approximately $2.057 billion. The same time Ukraine bought 55 bcm of gas from Russia, paying $179.5 per tcm – the check was $9.873 billion.
Ok. Let’s imagine that Ukraine raises the transit fee to the average European level. The President of Russia told it’s $3.4 per 1 tcm for 100 km. As a result Ukraine will receive twice more transit money from Russia – $4.114 billion. But the price of gas will be raised also; it will be from 350 to 450, as I can understand the Russian Gazprom’s mathematics. So, Ukraine will have to pay not around 10, but around 20 billion dollars, gaining 2 billion from transit-fee-raise. If Ukraine agreed for Russian proposal of gas price $250 with transit fee of $1,7, it would have to pay to Russia (literally – RosUkrEnergo) twice less – around $3.85 billion more. I would like to remind here that Ukraine has to pay more every year since it declared the will to move to European level of gas prices during three years.
Sunday, January 11, 2009
High Treason – II. Some conclusions from the Cold War started by Russia-Ukraine gas dispute.
The Gas Cold War 2009 caused by the Russia-Ukraine gas dispute has not finished yet, but we can already make some important conclusions. Sitting in the cold Kiev flat (we’ve got very low pressure in central heating system), I will try to give my point of view as briefly as possible.
Conclusion 1. The indisputable winner of the Gas Cold War 2009 is Russia and Russian Gazprom.
I would not agree with some observers who say that the image of Russia as a reliable gas supplier and the Gazprom as a relevant business partner suffered a lot. Europe and Europeans may think and feel whatever they want, but it is really impossible to replace more than 160 billion of cubic meters of Russian gas with some alternative source of energy. So, Europe will stay dependent on Russian gas supply, whatever the image of Russia will be.
Actually Russian Gazprom has already received a lot of profits from the Cold War:
1. Gas prises. European consumers were predicting the Russian gas average prices for Europe to fall to around $320 per tcm (thousand cubic metres) in 2009 due to the low oil prices level. New Cold War led to rise of the oil demand in Europe as of the alternative energy resource, and this will prevent the significant fall of gas prices.
2. Alternative pipeline projects. Gazprom currently has two new gas pipelines projects: the Nord Stream pipeline, which runs under the Baltic sea from Russian Vyborg to German Greifswald, and the South Stream, which will cross the Black Sea to Bulgaria and then split in the direction of Austria and Greece. Both pipelines will definitely get bigger support of the European companies, as the alternative for “non-adequate” Ukrainian route. (Though Ukrainian route cannot be eliminated as it transports around 80% of Russian gas export to Europe).
3. Punching Ukraine. Undermining the image of Ukraine and its President Viktor Yushchenko was a “pleasant revenge” of Russia and its top-authorities for Orange Revolution, support of Georgia, and Holodomor festivities. After this crisis nobody (except of some ultra-pro-Ukrainian-idealists) in Europe would think seriously about the possibility for Ukraine to join the EU earlier than in 100 years, and nobody in NATO would seriously consider future Ukrainian full membership in the Alliance.
4. Extra money. The crises appeared to become the real opportunity to rise gas prices for Ukraine and to get extra-profits.
Conclusion 2. The Gas Cold War was artificially organized.
Of course, Ukraine could sign the gas supply agreement with Russia before the New Year and prevent the crisis. Gazprom proposed the price of $250 per tcm, which is acceptable for Ukraine and its economy (in case of proper management of the State Oli and Gas Company Naftogaz Ukraine and fair distribution of up to 18 billion cubic meters of gas the Ukraine is producing by itself every year. The price of $250 is logical: last year Ukraine was paying $179,5 per tcm, and there is an agreement that the price will raise gradually to the European level during three years. It is approximately plus $70-80-90 every year, so, Russians should charge $250 or even more, and it was predictable.
But the gas agreement with Russia was not signed, and the Ukrainian officials who refused to sign the documents were consciously provoking the gas crisis. No agreement – no supplies, even a schoolboy may predict such a situation. Some Naftogaz officials said that the President of Ukraine Viktor Yushchenko prohibited signing of this agreement. It sounds unconvincing, as at that time nobody, including the Prime Minister of Ukraine Yulia Tymoshenko, made any rough statement on this point. It is also very naïve to think that the Gazprom and Naftogaz Ukraine really have communication problems and cannot reach a deal on gas supply to Ukraine. It’s unbelievable even if we take to the account the fact that the Head of Naftogaz Oleg Dubyna is flying in one plane with his Gazprom counterpart Aleksei Miller.
So, the gas crisis was surely staged by Kremlin and by some high authorities in Ukraine. Viktor Yushchenko is not among them, though he didn’t do anything (he could do a lot) to prevent the Gas Cold War. I would also add that the Head of Naftogaz Ukraine Oleg Dubyna was appointed to his position by the Yulia Tymoshenko’s quota, and that he is in very close relations with the Industrial Union of Donbass business group, which has permanent conflict of interests with “gas trade middleman” Dmytro Firtash who controls half of the “RosUkrEnergo” intermediate company.
Conclusion 3. In frames of Ukrainian domestic politics the gas crisis played not in favour of President Yushchenko.
Everyone might notice that the President of Ukraine was trying not to be involved into the gas crisis from the very start. He was mentioned a lot by all the participants of the negotiations (in positive and negative manner), he made some phone calls to his counterparts in Europe and to Russian President Dmitriy Medvedev, but he was avoiding to get inside the negotiations and discussions by himself. Why? It seems that he has a very vulnerable position, when one is talking about the gas supply question. During his Presidency, Mr. Yushchenko has been accused a lot of times in having some profits from the work of the RosUkrEnergo. In particular some people were accusing Mr. Firtash in paying some bills for Kateryna Chumachenko, the wife of the President. These accusations were never proved, but also never dishonoured, though Viktor Yushchenko could for example appeal to courts. If these accusations were true (even semi-true), Viktor Yushchenko is going to lose one of the main sources of his financial support before the Presidential election. By the way, some of the money may be re-transferred in favour of Mrs. Tymoshenko, if we just hypothetically assume that the Itera Company of Igor Makarov may come back to the big gas-supply scene as some people say.
Conclusion 4. The main loser of the Cold War is Ukraine as a country, its economy, and the State oil and gas company Naftogaz Ukraine (but not the current management of this company).
In the geopolitical sense the image of Ukraine as a country (and as a democratic country in particular) has suffered a lot. The New Cold War has demonstrated that Ukraine is totally unpredictable, since the actions of its authorities and state companies are based on the today’s interests of domestic politics, rather than on long-term programmes or interests of the country. Despite of the declarations about the dedication to the democratic ideals and the European course of current leaders of Ukraine, they showed up as a real threat to Europe, European economy and even to the health of the citizens of the European States.
The State Oil and Gas Company Naftogaz Ukraine is close to bankruptcy today. Though I am sure that with normal management this company may easily become a mail financial supplier of Ukrainian budget. (I was trying to make some calculations earlier, and maybe will publish the results here one day, of course, after careful self-proof-reading).
Conclusion 5. The intermediate gas supply company RosUkrEnergo may seem to be a loser, but is not.
The intermediate company RosUkrEnergo also may be considered as a loser in the New Cold War as it will probably be eliminated from Russia-Ukraine gas trade scheme. But I don’t think this statement is true, taking to the account billions dollars of profit RosUkrEnergo had received during the last four years, operating in the sphere of the re-export of gas from Russia to Ukraine and Europe (Hungary, Romania, Poland and Slovakia) and gas trade inside the domestic market of Ukraine. Half owned by Gazprom, RosUkrEnergo was founded as a temporary source of profits, and now it’s just a time for something new. I will not be surprised if Mr. Firtash would be among founders of a new gas trade company who will operate on European – and Ukrainian – markets in coming years.
Conclusion 6. The Europe, still suffering from lack of gas supply, may be considered as a loser also, and the object of manipulation as well.
Conclusion 7. The Cold War is an evidence of a betrayal of the interests of Ukraine by its highest authorities – President, Prime Minister, and Head of State Oil and Gas Company. Their actions and failure to act as well may be called as a high treason with all the consequences it should cause.
Conclusion 1. The indisputable winner of the Gas Cold War 2009 is Russia and Russian Gazprom.
I would not agree with some observers who say that the image of Russia as a reliable gas supplier and the Gazprom as a relevant business partner suffered a lot. Europe and Europeans may think and feel whatever they want, but it is really impossible to replace more than 160 billion of cubic meters of Russian gas with some alternative source of energy. So, Europe will stay dependent on Russian gas supply, whatever the image of Russia will be.
Actually Russian Gazprom has already received a lot of profits from the Cold War:
1. Gas prises. European consumers were predicting the Russian gas average prices for Europe to fall to around $320 per tcm (thousand cubic metres) in 2009 due to the low oil prices level. New Cold War led to rise of the oil demand in Europe as of the alternative energy resource, and this will prevent the significant fall of gas prices.
2. Alternative pipeline projects. Gazprom currently has two new gas pipelines projects: the Nord Stream pipeline, which runs under the Baltic sea from Russian Vyborg to German Greifswald, and the South Stream, which will cross the Black Sea to Bulgaria and then split in the direction of Austria and Greece. Both pipelines will definitely get bigger support of the European companies, as the alternative for “non-adequate” Ukrainian route. (Though Ukrainian route cannot be eliminated as it transports around 80% of Russian gas export to Europe).
3. Punching Ukraine. Undermining the image of Ukraine and its President Viktor Yushchenko was a “pleasant revenge” of Russia and its top-authorities for Orange Revolution, support of Georgia, and Holodomor festivities. After this crisis nobody (except of some ultra-pro-Ukrainian-idealists) in Europe would think seriously about the possibility for Ukraine to join the EU earlier than in 100 years, and nobody in NATO would seriously consider future Ukrainian full membership in the Alliance.
4. Extra money. The crises appeared to become the real opportunity to rise gas prices for Ukraine and to get extra-profits.
Conclusion 2. The Gas Cold War was artificially organized.
Of course, Ukraine could sign the gas supply agreement with Russia before the New Year and prevent the crisis. Gazprom proposed the price of $250 per tcm, which is acceptable for Ukraine and its economy (in case of proper management of the State Oli and Gas Company Naftogaz Ukraine and fair distribution of up to 18 billion cubic meters of gas the Ukraine is producing by itself every year. The price of $250 is logical: last year Ukraine was paying $179,5 per tcm, and there is an agreement that the price will raise gradually to the European level during three years. It is approximately plus $70-80-90 every year, so, Russians should charge $250 or even more, and it was predictable.
But the gas agreement with Russia was not signed, and the Ukrainian officials who refused to sign the documents were consciously provoking the gas crisis. No agreement – no supplies, even a schoolboy may predict such a situation. Some Naftogaz officials said that the President of Ukraine Viktor Yushchenko prohibited signing of this agreement. It sounds unconvincing, as at that time nobody, including the Prime Minister of Ukraine Yulia Tymoshenko, made any rough statement on this point. It is also very naïve to think that the Gazprom and Naftogaz Ukraine really have communication problems and cannot reach a deal on gas supply to Ukraine. It’s unbelievable even if we take to the account the fact that the Head of Naftogaz Oleg Dubyna is flying in one plane with his Gazprom counterpart Aleksei Miller.
So, the gas crisis was surely staged by Kremlin and by some high authorities in Ukraine. Viktor Yushchenko is not among them, though he didn’t do anything (he could do a lot) to prevent the Gas Cold War. I would also add that the Head of Naftogaz Ukraine Oleg Dubyna was appointed to his position by the Yulia Tymoshenko’s quota, and that he is in very close relations with the Industrial Union of Donbass business group, which has permanent conflict of interests with “gas trade middleman” Dmytro Firtash who controls half of the “RosUkrEnergo” intermediate company.
Conclusion 3. In frames of Ukrainian domestic politics the gas crisis played not in favour of President Yushchenko.
Everyone might notice that the President of Ukraine was trying not to be involved into the gas crisis from the very start. He was mentioned a lot by all the participants of the negotiations (in positive and negative manner), he made some phone calls to his counterparts in Europe and to Russian President Dmitriy Medvedev, but he was avoiding to get inside the negotiations and discussions by himself. Why? It seems that he has a very vulnerable position, when one is talking about the gas supply question. During his Presidency, Mr. Yushchenko has been accused a lot of times in having some profits from the work of the RosUkrEnergo. In particular some people were accusing Mr. Firtash in paying some bills for Kateryna Chumachenko, the wife of the President. These accusations were never proved, but also never dishonoured, though Viktor Yushchenko could for example appeal to courts. If these accusations were true (even semi-true), Viktor Yushchenko is going to lose one of the main sources of his financial support before the Presidential election. By the way, some of the money may be re-transferred in favour of Mrs. Tymoshenko, if we just hypothetically assume that the Itera Company of Igor Makarov may come back to the big gas-supply scene as some people say.
Conclusion 4. The main loser of the Cold War is Ukraine as a country, its economy, and the State oil and gas company Naftogaz Ukraine (but not the current management of this company).
In the geopolitical sense the image of Ukraine as a country (and as a democratic country in particular) has suffered a lot. The New Cold War has demonstrated that Ukraine is totally unpredictable, since the actions of its authorities and state companies are based on the today’s interests of domestic politics, rather than on long-term programmes or interests of the country. Despite of the declarations about the dedication to the democratic ideals and the European course of current leaders of Ukraine, they showed up as a real threat to Europe, European economy and even to the health of the citizens of the European States.
The State Oil and Gas Company Naftogaz Ukraine is close to bankruptcy today. Though I am sure that with normal management this company may easily become a mail financial supplier of Ukrainian budget. (I was trying to make some calculations earlier, and maybe will publish the results here one day, of course, after careful self-proof-reading).
Conclusion 5. The intermediate gas supply company RosUkrEnergo may seem to be a loser, but is not.
The intermediate company RosUkrEnergo also may be considered as a loser in the New Cold War as it will probably be eliminated from Russia-Ukraine gas trade scheme. But I don’t think this statement is true, taking to the account billions dollars of profit RosUkrEnergo had received during the last four years, operating in the sphere of the re-export of gas from Russia to Ukraine and Europe (Hungary, Romania, Poland and Slovakia) and gas trade inside the domestic market of Ukraine. Half owned by Gazprom, RosUkrEnergo was founded as a temporary source of profits, and now it’s just a time for something new. I will not be surprised if Mr. Firtash would be among founders of a new gas trade company who will operate on European – and Ukrainian – markets in coming years.
Conclusion 6. The Europe, still suffering from lack of gas supply, may be considered as a loser also, and the object of manipulation as well.
Conclusion 7. The Cold War is an evidence of a betrayal of the interests of Ukraine by its highest authorities – President, Prime Minister, and Head of State Oil and Gas Company. Their actions and failure to act as well may be called as a high treason with all the consequences it should cause.
Monday, January 5, 2009
The High Treason. Non-settled gas dispute with the Russian Gazprom is leading Ukraine to energy bankruptcy and deep economy problems.
On 1 of December Russian Gazprom cut off gas supply to Ukraine. This news was among the top-3 in the entire world media during the New Year holidays. I think it would be first if there was no war in sector Gaza. The reasons of Gazprom’s actions are totally legitimate: unpaid debt for gas supply to Ukraine in 2008 and non-existence of a supply contract for 2009. Such a confusing situation seems to be not a terrible negligence of Ukrainian authorities, but a carefully planned scheme. The goal is to take the case to state of total mess, and then to re-divide the scheme of control of profits from gas supply to Ukraine. As a side effect, the State oil and gas company Naftogaz Ukraine may go bankrupt and Ukraine may lose control of its huge gas transportation system in favour of Russia or some Russia-leaded consortium.
These actions of Ukrainian officials can definitely be qualified as a high treason. But nobody will be charged for that.
There is no need to remind here the very details of the debt-dispute Russia and Ukraine had in late December 2008 – the media explained it very good. Talking in general, the Naftogaz Ukraine failed to pay off a debt for gas shipped from Russia in 2008: it paid $1.52 billion just one day before the New Year, but Gazprom claimed the total debt was $2.1 billion (including $450 million of penalties for the late payment for November and December gas shipments).
Current situation differs from the gas problems of early 2006. Now Ukraine has significant amounts of gas saved in storages: about 17 billion cubic metres (bcm) is owned by Naftogaz Ukraine, and the intermediary RosUkrEnergo (I’ll talk about this company later) has extra 11 bcm. That’s why there is no evidence of harm for Ukraine caused by the gas cut-off. Yet. But the gas battle with Gazprom will definitely influence the crisis-hit Ukrainian economy, pushing it down. World economy crisis reduced the industrial energy consumption in Ukraine almost by a quarter, and the main problems may be laid on shoulders of Ukrainian citizens. Higher gas prices will lead to rise of a gas fees for the households, which are heavily subsidising by the state.
The problem is that a dramatic raise of gas prise was not planned in the budget of Ukraine for 2009, approved by Parliament and signed by President before the New Year holidays. Moreover, a gas-supply part of the budget had been highly criticised even before problems with Gazprom went too far. The Deputy Head of the Secretariat of the President of Ukraine Oleksandr Shlapak said on 29 December that the 1.6 billion hryvnias, the budget assigned for Naftogaz Ukraine to keep low gas prises on the internal market, is not enough at all. “If we even manage to keep a gas price at $179.5 per 1,000 cubic meters (tcm) during the talks with our Russian partners, and the Ukrainian hryvnia’s rate to dollar stay at 7.5, there will be a need to compensate for Naftogaz Ukraine up to 9.2 billion hryvnias. Feel the difference”, he informed.
This means that in 2009 somebody will go bankrupt: either Naftogas, or Ukrainian citizens, or even Ukrainian state.
The gas price for Ukraine is really a painful question for years. In 2008 Naftogaz Ukraine had to pay $179.5 per tcm for gas from Russia, which is almost 3 times less than EU countries were paying. Due to the agreement to switch to market prices “step by step”, Gazprom offered the price rise to $250 per tcm for 2009. But it was already too high for Ukraine: it was going to pay not more than $201 per tcm (according to budget plans of the Government). As a result, Ukrainian officials didn’t sign even temporary agreement and left the country without contracted gas supply at all. Can somebody imagine such a thing to happen on a state level in any other European country?
It’s obvious that something is standing behind this artificially made conflict. It seems that the real source of Ukrainian gas problems, which may easily ruin the country’s economy, is a fight for the profits from gas transit and supply to Ukraine. As for this moment the only party of gas-supply scheme didn’t lose a cent from this situation is the RosUkrEnergo, the gas-trading intermediary between Russia and Ukraine. This company is making profit “buying” huge amounts of Russian gas on Ukrainian border and re-selling it to Ukraine (working also indirectly on Ukrainian domestic market) and some Eastern European countries (like Hungary and Romania). So, everyone who is in charge of RosUkrEnergo has guaranteed billions of profit. As for today, Russian Gazprom owns 50% of RosUkrEnergo, another half is under control of the commercial structures of Ukrainian-born businessman Dmytro Firtash. By the way, he also is linked with Ukrainian Nadra bank, which was accused by Yulia Tymoshenko in fraud with hryvnia rate in December (here is a link to my post about this matter).
That’s all I have time to write today. To be continued…
These actions of Ukrainian officials can definitely be qualified as a high treason. But nobody will be charged for that.
There is no need to remind here the very details of the debt-dispute Russia and Ukraine had in late December 2008 – the media explained it very good. Talking in general, the Naftogaz Ukraine failed to pay off a debt for gas shipped from Russia in 2008: it paid $1.52 billion just one day before the New Year, but Gazprom claimed the total debt was $2.1 billion (including $450 million of penalties for the late payment for November and December gas shipments).
Current situation differs from the gas problems of early 2006. Now Ukraine has significant amounts of gas saved in storages: about 17 billion cubic metres (bcm) is owned by Naftogaz Ukraine, and the intermediary RosUkrEnergo (I’ll talk about this company later) has extra 11 bcm. That’s why there is no evidence of harm for Ukraine caused by the gas cut-off. Yet. But the gas battle with Gazprom will definitely influence the crisis-hit Ukrainian economy, pushing it down. World economy crisis reduced the industrial energy consumption in Ukraine almost by a quarter, and the main problems may be laid on shoulders of Ukrainian citizens. Higher gas prices will lead to rise of a gas fees for the households, which are heavily subsidising by the state.
The problem is that a dramatic raise of gas prise was not planned in the budget of Ukraine for 2009, approved by Parliament and signed by President before the New Year holidays. Moreover, a gas-supply part of the budget had been highly criticised even before problems with Gazprom went too far. The Deputy Head of the Secretariat of the President of Ukraine Oleksandr Shlapak said on 29 December that the 1.6 billion hryvnias, the budget assigned for Naftogaz Ukraine to keep low gas prises on the internal market, is not enough at all. “If we even manage to keep a gas price at $179.5 per 1,000 cubic meters (tcm) during the talks with our Russian partners, and the Ukrainian hryvnia’s rate to dollar stay at 7.5, there will be a need to compensate for Naftogaz Ukraine up to 9.2 billion hryvnias. Feel the difference”, he informed.
This means that in 2009 somebody will go bankrupt: either Naftogas, or Ukrainian citizens, or even Ukrainian state.
The gas price for Ukraine is really a painful question for years. In 2008 Naftogaz Ukraine had to pay $179.5 per tcm for gas from Russia, which is almost 3 times less than EU countries were paying. Due to the agreement to switch to market prices “step by step”, Gazprom offered the price rise to $250 per tcm for 2009. But it was already too high for Ukraine: it was going to pay not more than $201 per tcm (according to budget plans of the Government). As a result, Ukrainian officials didn’t sign even temporary agreement and left the country without contracted gas supply at all. Can somebody imagine such a thing to happen on a state level in any other European country?
It’s obvious that something is standing behind this artificially made conflict. It seems that the real source of Ukrainian gas problems, which may easily ruin the country’s economy, is a fight for the profits from gas transit and supply to Ukraine. As for this moment the only party of gas-supply scheme didn’t lose a cent from this situation is the RosUkrEnergo, the gas-trading intermediary between Russia and Ukraine. This company is making profit “buying” huge amounts of Russian gas on Ukrainian border and re-selling it to Ukraine (working also indirectly on Ukrainian domestic market) and some Eastern European countries (like Hungary and Romania). So, everyone who is in charge of RosUkrEnergo has guaranteed billions of profit. As for today, Russian Gazprom owns 50% of RosUkrEnergo, another half is under control of the commercial structures of Ukrainian-born businessman Dmytro Firtash. By the way, he also is linked with Ukrainian Nadra bank, which was accused by Yulia Tymoshenko in fraud with hryvnia rate in December (here is a link to my post about this matter).
That’s all I have time to write today. To be continued…
Tuesday, November 25, 2008
Bad association. EU to sign Association Agreement not only with Ukraine, but also with Azerbaijan, Armenia, Georgia, Moldova, and even Belarus
On 3 December the European Commission is going to present its draft communiqué on the Eastern Partnership (EP) policy. The EC is to propose pulling the six post-Soviet neighbours – Ukraine, Azerbaijan, Armenia, Georgia, Moldova, and Belarus – closer to the West, to recognize their “European aspirations” and to create a new “European Economic Area”. This decision ruined the Ukrainian dream to establish “special relationship” with the European Union.
Previously, a mutual consent to call a new enhanced document to be signed by Ukraine and the EU “the Association Agreement” was interpreted in Kiev as a great achievement of Ukrainian diplomacy.
Our top officials are still talking about the Association as an essential step on the way to membership in the European Union. Most of them, including President, Prime minister and Foreign Affairs Minister use even a word combination “Associative membership in the EU” to emphasize the importance of the document. Now they should feel at least uncomfortable for saying that: the Eurocomission proposes to sign Association Agreements not only with its close and democratic neighbour Ukraine, but also with Azerbaijan, Armenia, Moldova, Georgia, and Belarus with its semi-dictator Lukashenko.
So, instead of “special relationship” Ukraine is to receive a marginal status of “Eastern partner” of the European Union. “The conclusion of Association Agreements will be without prejudice to the partners' European aspirations”, the EU is declaring. Even the negotiations on Free Trade Area or free visa regime will be conducted in frames of the Eastern Partnership policy.
The EUObserver’s article with quotations of draft Commission communication on the EP may be read here.
Previously, a mutual consent to call a new enhanced document to be signed by Ukraine and the EU “the Association Agreement” was interpreted in Kiev as a great achievement of Ukrainian diplomacy.
Our top officials are still talking about the Association as an essential step on the way to membership in the European Union. Most of them, including President, Prime minister and Foreign Affairs Minister use even a word combination “Associative membership in the EU” to emphasize the importance of the document. Now they should feel at least uncomfortable for saying that: the Eurocomission proposes to sign Association Agreements not only with its close and democratic neighbour Ukraine, but also with Azerbaijan, Armenia, Moldova, Georgia, and Belarus with its semi-dictator Lukashenko.
So, instead of “special relationship” Ukraine is to receive a marginal status of “Eastern partner” of the European Union. “The conclusion of Association Agreements will be without prejudice to the partners' European aspirations”, the EU is declaring. Even the negotiations on Free Trade Area or free visa regime will be conducted in frames of the Eastern Partnership policy.
The EUObserver’s article with quotations of draft Commission communication on the EP may be read here.
Thursday, October 16, 2008
Ukraine-EU: Signs of crisis
I spent most of the time of my working day yesterday, trying to monitor a visit to Brussels of prime minister of Ukraine Yulia Tymoshenko. My goal was to understand the signals Europe should be sending to Ukraine and its politicians, and then to write about this for one of the Ukrainian magazines. As a result, I wrote nothing. Europeans are tired of Ukraine and its long-lasting political problems and confrontation between politicians – they simply don’t make loud public declarations on “Ukrainian question”. For example, Javier Solana didn't even join Mrs. Tymoshenko on a mini press conference after their 45-minutes meeting.
I didn’t find (and haven’t heard) any statement of any European top-politician on 15 October with a condemnation of early parliamentary election in Ukraine. Also nobody had praised it. Though, on evening news I’ve heard a comment of Mrs. Tymoshenko who said that Javier Solana and other her counterparts in Brussels’ talks called the possibility of early election in Ukraine as a mistake, taking to the account world economic crisis.
Today in the morning I've got the statement of the President of the EPP, WIlfried Martens on tpolitical crisis in Ukraine:
The EPP strongly supports the revival and strengthening of the coalition of democratic pro-European forces in Ukraine. It is essential to have an effective and a stable government in the face of the global financial crisis. Political stability is a key precondition for the successful European integration of Ukraine.
New elections, the third in merely 3 years, will undermine the stability. What Ukraine needs today is NOT new elections, but a responsible leadership and a stable government. Now is the time for unity, not for division. We express our full support for those leaders in Ukraine who are doing everything to stabilize the governmental coalition, those who continue with social market reforms. Political instability and the economic crisis are a direct threat to the Ukrainian people.
I didn’t find (and haven’t heard) any statement of any European top-politician on 15 October with a condemnation of early parliamentary election in Ukraine. Also nobody had praised it. Though, on evening news I’ve heard a comment of Mrs. Tymoshenko who said that Javier Solana and other her counterparts in Brussels’ talks called the possibility of early election in Ukraine as a mistake, taking to the account world economic crisis.
Today in the morning I've got the statement of the President of the EPP, WIlfried Martens on tpolitical crisis in Ukraine:
The EPP strongly supports the revival and strengthening of the coalition of democratic pro-European forces in Ukraine. It is essential to have an effective and a stable government in the face of the global financial crisis. Political stability is a key precondition for the successful European integration of Ukraine.
New elections, the third in merely 3 years, will undermine the stability. What Ukraine needs today is NOT new elections, but a responsible leadership and a stable government. Now is the time for unity, not for division. We express our full support for those leaders in Ukraine who are doing everything to stabilize the governmental coalition, those who continue with social market reforms. Political instability and the economic crisis are a direct threat to the Ukrainian people.
Friday, September 12, 2008
European perspective for Ukraine
To get back to work after summer holidays is usually not easy task. While I was out of intense news-stream, a lot of important things have happened. War in Georgia, declaration of independence of Abkhazia and South Ossetia, almost successful efforts of some forces inside and outside Ukraine to make Kiev a side of a Russia-Georgia conflict… And the same time – the escalation of political crisis in Ukraine, new talks about state interests’ betrayal and early elections, and, to crown all this, the full fiasco of Ukrainian European aspirations during the Paris EU-Ukraine Summit on 9 September.
OK, it was not “the full”, but fiasco. Yes, the EU authorities declared that Ukraine is “European country” with common history, culture… blah blah blah. But that’s all. European Union decided not to include in the new enhanced Association agreement with Kiev the word about a possibility for Ukraine to join European Union in future.
But life is going on. In October the delegation of our MP’s Club “Parliament” is going to participate in the European Colloquy “Representative democracy and participatory democracy”, which is organized by the Association of former members of Parliament of Greece in frames of activities of the European Association of former members of Parliament of member states of the European Union and the Council of Europe. Today – just 3 hours before the deadline – I’ve sent to the European Association secretariat the following amendments to the Athens Declaration:
«Globalizing democracy encourages the European Union to open the door for citizens of all the European countries to participate more fully in democratic decision-making process in Europe, through the direct democracy mechanisms. People living in the candidate countries Turkey and Croatia, potential candidate countries Albania, Bosnia and Herzegovina, Montenegro, and Serbia, or countries which have the European aspirations, like Ukraine, should be more informed about the recent EU developments and allowed to take part in general discussions on European matters. At the same time, the practical standards of the representative and direct democracy in these countries must be provided at the same high democratic level as in the European Union. To favour the development of democracy, stability and prosperity on the whole European continent the EU should continue to support its neighbors in their efforts in realization of political, economic and social reforms, strengthening human rights and the rule of law».
«The Association welcomes the results of the 12th annual EU-Ukraine Summit held in Paris on 9 September 2008 and the considerable progress made in negotiations on the new enhanced Association Agreement between the EU and Ukraine. Meanwhile, the Association regrets that the European Parliament recommendation of 12 July 2007 on a negotiation mandate for a new enhanced agreement which called for «giving Ukraine a clear European perspective» was not taken into the account».
«To support Ukraine's European choice and ongoing democratic reforms on the whole European continent, the European Association of Former Members of Parliament calls the European Council, the European Commission and other high authorities to consider granting to Ukraine a EU membership prospect, recognizing the country's right to join the European Union in the future».
OK, it was not “the full”, but fiasco. Yes, the EU authorities declared that Ukraine is “European country” with common history, culture… blah blah blah. But that’s all. European Union decided not to include in the new enhanced Association agreement with Kiev the word about a possibility for Ukraine to join European Union in future.
But life is going on. In October the delegation of our MP’s Club “Parliament” is going to participate in the European Colloquy “Representative democracy and participatory democracy”, which is organized by the Association of former members of Parliament of Greece in frames of activities of the European Association of former members of Parliament of member states of the European Union and the Council of Europe. Today – just 3 hours before the deadline – I’ve sent to the European Association secretariat the following amendments to the Athens Declaration:
«Globalizing democracy encourages the European Union to open the door for citizens of all the European countries to participate more fully in democratic decision-making process in Europe, through the direct democracy mechanisms. People living in the candidate countries Turkey and Croatia, potential candidate countries Albania, Bosnia and Herzegovina, Montenegro, and Serbia, or countries which have the European aspirations, like Ukraine, should be more informed about the recent EU developments and allowed to take part in general discussions on European matters. At the same time, the practical standards of the representative and direct democracy in these countries must be provided at the same high democratic level as in the European Union. To favour the development of democracy, stability and prosperity on the whole European continent the EU should continue to support its neighbors in their efforts in realization of political, economic and social reforms, strengthening human rights and the rule of law».
«The Association welcomes the results of the 12th annual EU-Ukraine Summit held in Paris on 9 September 2008 and the considerable progress made in negotiations on the new enhanced Association Agreement between the EU and Ukraine. Meanwhile, the Association regrets that the European Parliament recommendation of 12 July 2007 on a negotiation mandate for a new enhanced agreement which called for «giving Ukraine a clear European perspective» was not taken into the account».
«To support Ukraine's European choice and ongoing democratic reforms on the whole European continent, the European Association of Former Members of Parliament calls the European Council, the European Commission and other high authorities to consider granting to Ukraine a EU membership prospect, recognizing the country's right to join the European Union in the future».
Tuesday, July 22, 2008
Terry Davis: Instead of talking about early elections, Ukrainian politicians should concentrate on promises they made
This interview will be published in Ukrainian "Narodny Deputat" (ukr. Member of Parliament) magazine, in Ukrainian language. Terry Davis: Instead of talking about early elections, Ukrainian politicians should concentrate on promises they made
By Tetyana VYSOTSKA
- Mr Secretary General, every time we meet, I ask you for your opinion about the political crisis in Ukraine: last year we were talking about the Ukrainian crisis, as well as the year before. In your opinion, what’s happening in Ukraine now, and what can we, as Ukrainians, do to change the situation for the better?
- I think that sometimes it is a mistake to exaggerate the difficulties. I myself never use the word “crisis” when I’m discussing the political situation in Ukraine. Yes, it is a very difficult political situation, it’s a very complicated political situation, and there are lots of difficulties there. But this is not a crisis in my book. A crisis is something much worse. So, I’m glad that it is not a crisis by my definition. I have seen it suggested by some people that there might be another election…
- Yes, they are talking about next March…
- Well, that is for Ukrainians to decide - whether there should be another election. It’s not my business. But I must say that I find difficult to understand what people think a new election would bring. If there is an election, we must wait for the result…
- But isn’t it too often to have an election every year?
- As I know, in many countries elections took place twice in the course of two years. But there are two reasons why I think this is something to be avoided, if possible. First of all, it distracts attention from the real problems of the country and the real difficulties of the people of Ukraine. Secondly, in every democracy people may say: we don’t want to be voting every year, we elected these people, please, get on and do the job you are elected for. It damages democracy, when people think: the politicians can’t agree, they are just squabbling, fighting among each other, arguing… That actually damages the reputation of politics and democracy. Election is an essential part of democracy, but not every week.
- Is the Council of Europe planning to give some official advice concerning the situation in Ukraine? Are you going to meet with Mr Yushchenko and Ms Tymoshenko again?
- I have visited Ukraine several times during the last two years. I know that some people – people not from Ukraine, but from other countries – think that I should not visit Ukraine too often. They say: you should also visit us. There are several reasons why I take a special interest in Ukraine. It is not only because of the people of Ukraine, for whom I have great respect and affection. I think that Ukraine – like Belarus – has been neglected in the past by people like me from Western Europe. So, I try to compensate that a little bit by giving a lot of attention to Ukraine.
Ukraine is a very big country; it has a lot to offer to the rest of Europe. Also it has a very rich history. I have a lot of sympathy for the people of Ukraine, especially because of that period of 1932-33, which you call Holodomor, when so many people died.
- Ukraine is campaigning now for world recognition of Holodomor.
- It must have been a terrible period. This is not a case of being anti-Russian, it is a historic fact that millions of people did die in Ukraine. If I can just give you another example: I came from the United Kingdom, and our neighbouring country is the Republic of Ireland. In Ireland they still have the memory of the great famine which took place 160 years ago. They still remember it, talk about it. It takes a long time for such events to fade in a memory of the people. In Ukraine this memory is also very live.
That is not to blame people, not a case of who is responsible – this is a very difficult matter to judge history. But I can understand why Ukrainians are still so concerned and so upset about this tragedy.
- That’s why Ukraine asks the Council of Europe and the Parliamentary Assembly to condemn Holodomor as genocide against the Ukrainian nation.- It is a matter for historians to argue, whether it was genocide or not. To me the most important thing is that millions of people died. Personally I pay respect to the people of Ukraine, and I try to encourage Ukrainians of today to build a better future for Ukrainians of tomorrow.
- To do that and to stop – not crisis, but problems – in Ukraine all the main political forces are thinking about a Constitutional reform. But the changes proposed differ from each other completely: from a strong presidential model to a pure parliamentary system. In your opinion, is it the right time for Ukraine to change its Constitution? Which way should we move?
- Of course, this is a matter for Ukraine to decide which system you should adopt. There are advantages and disadvantages in both systems. What I would say, as a friend of Ukraine, is that it would be in the interest of the people of Ukraine for the politicians to settle this issue as quickly as possible.
- Do you think it is possible to find a quick consensus in this situation?
- I think the situation has to be settled. If I were an Ukrainian, I would be more concerned about the school for my children or grandchildren, I’d be more concerned about being able to buy clothes and food for my family, and I’d be more concerned about the house or apartment in which we live. I’d be concerned about the quality of the air we breathe and of the water we drink. These are really important things – it is a standard of living and a quality of life. People are not very interested in whether it is the parliamentary system or the presidential system. What they want is results.
- So, the reform in Ukraine should be done very soon?
- My strong wish is that the politicians of Ukraine should settle this issue in the interest of the people of Ukraine as quickly as possible. And then start discussing, even arguing, about the policies to be followed by the government in terms of schools, hospitals, housing, and the essential things of life. That’s what people want to hear.
- Politicians just have to start to work…
- I think it is very much in the interest of democracy for the debates in Ukraine to move away from a constitution onto the political issues. I don’t know what this policy should be – in a democracy that is for politicians and for the people of Ukraine to decide. Politicians should propose ideas about policy. It’s true that the best way to decide this is an election. But you do not have an election every year...
It’s like a sailing: you have to decide on a course you are going to follow. That does not mean you simply go ahead regardless of the fact that there is an iceberg in front of you. But you should not keep changing course, you should not keep changing a captain of a ship.
- Talking about the captain of the ship, some Ukrainian politicians advise to have an early election not only of the Parliament, but also of the President of Ukraine. Do you think it is a good idea to change everything in one day?
- Well, it’s a matter for Ukraine, not for outsiders. Of course, Ukraine is a very important member of the Council of Europe, but as a Secretary General of the Council of Europe I do not tell Ukrainians what they should do and when they should have an election.
- The next big problem for today’s Ukraine is its aspiration to become a member of NATO. This trend of Ukrainian foreign policy has already worsened our relationship with Russia. What tone of conversation should Kiev choose in dialogue with Moscow, in order not to spoil our bilateral relations, but to move towards NATO membership?
- You have so well educated and experienced diplomats that I do not think Ukraine needs any lessons in this field. But if I were Ukrainian, I would say to Russians: I ask you to think, why we want to join NATO. Russians should think themselves, why does Ukraine want to join NATO, why does Georgia want to join NATO. And I told that to Russians…
- What did they answer?
- They were surprised because they haven’t thought about that.
- What is your opinion on this issue? Should Ukraine join NATO?
- I am not going to express my opinion about whether Ukraine should join NATO for one very good reason: I know that it is a subject of intense political debates in Ukraine. I never get involved in domestic politics. That’s a matter for Ukrainians to decide.
- Moscow has warned Kiev that if Ukraine joins NATO, or Membership Action Plan (MAP), it will apply some serious sanctions. Will you and the Council of Europe get involved if Russia keeps this promise?
- It depends on what these sanctions are. For example, the price of gas is not a matter for the Council of Europe.
- And if it will be the withdrawal of the Friendship, Cooperation and Partnership Agreement with Ukraine?
- I do not know the terms of the Friendship and Cooperation Agreement. One thing I can say is you cannot force someone to be your friend.
- Lets talk about the issue you know very well – it is the election of the Ukrainian judge of the European Court of Human Rights. Why this process is so long? I know that there is some misunderstanding – or something else – between the President of Ukraine, his Secretariat and the Council of Europe. Can you explain what’s happening and what is the future of this issue?
- You are absolutely right – I agree with you – it just takes for too long to settle this issue. When I visited Kiev last time, I had discussions about it, in particular, with people in the Secretariat of the President. Based on these discussions –they were private discussions – I think there was a lot of misunderstanding. I have done my best to clarify the situation and the rules for the Ukrainian authorities. If there is goodwill on their side, this issue should be settled within the next few weeks.
- I hope so. But what if the problem will not be settled? What next?
- What I’m saying about the political difficulties – not crisis, but difficulties – in Ukraine is that they distract attention. They draw attention away from the real problems of the people of Ukraine. There is an argument from Ukrainian authorities that because there is a political tension, they focus on other issues. But the important issue of the election of the judge should be settled – the quicker, the better for the people of Ukraine.
- It seems to me that the monitoring process concerning Ukraine will not be finished in the near future…
- I will be surprised if the monitoring process is finished in the near future. I would like it to finish, but I do not think it will be finished, until Ukraine has made more progress in keeping its promises. So, I repeat: instead of talking about an early election, instead of talking about when you will have presidential elections, instead of talking about getting your judge elected, it would be a very good thing if the politicians of Ukraine concentrated on the outstanding promises which they made on behalf of Ukraine, when it joined the Council of Europe. Then I would celebrate with the people of Ukraine the end of the monitoring process.
Tuesday, July 8, 2008
Former MP’s to discuss participatory and representative democracy in Europe
In the middle June the delegation of our Ukrainian MP’s Club “Parliament” took part in the sitting of the Bureau of the European Association of former Members of Parliament of the member states of the Council of Europe or the European Union (FP-AP). It was the first FP-AP sitting where Ukraine took part as full member. Ukrainian MP’s Club “Parliament” joined the FP-AP in March 2008, on the sitting of the General Assembly of the Association.
We became the first MP’s Association from post-Soviet country who started to work in the European Association of former Members of Parliament of the member states of the Council of Europe or the European Union.
During the bureau sitting the text of the Athens Declaration was discussed. This declaration, Presented by Mr Jacques Chaumont from France, will be approved at the European Colloquy which takes place on 18 October 2008 in Athens. The document analyses representative and participatory democracy in Europe. Here are a couple of quotations from its provisional draft:
The concept of participatory democracy has developed in recent years as the crisis of representative democracy has become full-blown. The malaise of representative democracy reflects a twofold frustration. First, that of the elected representatives who feel increasingly stripped of their prerogatives owing to the predominance of governments and their experts, and also to transfers of sovereignty in the wake of the European Treaties, the growing influence on the economy of globalised multinationals escaping all control, and the predominant role of the media in conveying the political discourse. The other frustration and not the lesser is that of citizens themselves. They feel that elected representatives have less and less influence which explains the high abstention rates at elections and they no longer accept the confiscation of their power which would result from a lack of any consultation in the interim between elections.
This gap between public opinion and elected representatives is also worrisome at European level as the citizens of the European Union are not sufficiently informed of the positions and votes of MEPs. This situation is worsened by television channels which tend to nationalise problems to the detriment of the European debate. A common information area, the indispensable prelude to the emergence of a genuine European public opinion, is therefore struggling to get established.
In the new context of the multiplication of information and communication channels: media, opinion polls, blogosphere, etc..., the classical representative system can no longer, alone, channel the demands and aspirations of public opinion. A permanent opinion-based democracy is gaining ground, alongside traditional representative democracy and is tending to compete with it supported by the media power. However this opinion-based or even emotion-based democracy does not have the legitimacy conferred by universal suffrage which expresses the general will. The influence of the opinion-based democracy should not be underestimated because, following an overhyped trivial event, legislation may be amended as a matter of urgency.
All these changes must now take account of the Web revolution which is creating a new interactive area where everyone can express themselves all the time and on all topics, which is not without danger for the protection of personal data. The digital revolution, in other words the convergence of data processing, of radio and television, and of telecommunications, and the new notion of collective intelligence pose fearsome problems. However, neither politicians nor economic decision-takers have yet set in place a genuine strategy to assess the consequences of this deep, uncontrolled transformation on democracy and its impact in emerging countries.
If there is a recurrent topic of criticism against the European institutions, it is indeed that of the democratic deficit. European citizens too often feel that decisions are taken in Brussels by anonymous authorities, whence the need in particular to strictly apply the subsidiarity principle so as to clearly establish what is a matter for the Community level and what should be decided nationally or regionally. What is challenged is the absence of a clear image of the Union, the insufficient communication of governments on their European policy and often even the practice they adopt of condemning at the national level the application of Community directives which they themselves supported at the Council of Ministers in Brussels. The very high abstention rate at European elections is therefore no surprise.
Main proposals of the Association of former Members of Parliament of the member states of the Council of Europe or the European Union:
1. Permanent forums be set in place in which would participate citizens, associations, universities with the support of the European Parliament, national parliaments, Associations of former Members of Parliament, and Economic and social councils.
2. The Council of Europe Parliamentary Assembly should organise a major political and ethical debate on the consequences of the digital revolution on the exercise of democracy, in the spirit of its 1995 Symposium on electronic democracy.
3. National parliaments should start to consider together the elaboration of codes of good practice of local participatory democracy guaranteeing in particular the rights of citizens to the broadest and most objective information.
. The debates of the European Union Council of Ministers should be public when they concern a draft piece of legislation as has been the case at the European Parliament since its creation and at a time when the Council is considered as the second Chamber of the European Union.
5. The European Parliament should deepen the idea of implementing the referendum procedure at European Union level.
6. The strengthening of democracy within the Union must be facilitated by extending the powers of the European Parliament as regards the legislative initiative over which the Commission has a monopoly.
7. The Association of former Members of Parliament encourages Ukraine's efforts to intensify its economic, social and cultural relations with other European countries, especially with Poland and Germany, in order to accelerate its development.
We became the first MP’s Association from post-Soviet country who started to work in the European Association of former Members of Parliament of the member states of the Council of Europe or the European Union.
During the bureau sitting the text of the Athens Declaration was discussed. This declaration, Presented by Mr Jacques Chaumont from France, will be approved at the European Colloquy which takes place on 18 October 2008 in Athens. The document analyses representative and participatory democracy in Europe. Here are a couple of quotations from its provisional draft:
The concept of participatory democracy has developed in recent years as the crisis of representative democracy has become full-blown. The malaise of representative democracy reflects a twofold frustration. First, that of the elected representatives who feel increasingly stripped of their prerogatives owing to the predominance of governments and their experts, and also to transfers of sovereignty in the wake of the European Treaties, the growing influence on the economy of globalised multinationals escaping all control, and the predominant role of the media in conveying the political discourse. The other frustration and not the lesser is that of citizens themselves. They feel that elected representatives have less and less influence which explains the high abstention rates at elections and they no longer accept the confiscation of their power which would result from a lack of any consultation in the interim between elections.
This gap between public opinion and elected representatives is also worrisome at European level as the citizens of the European Union are not sufficiently informed of the positions and votes of MEPs. This situation is worsened by television channels which tend to nationalise problems to the detriment of the European debate. A common information area, the indispensable prelude to the emergence of a genuine European public opinion, is therefore struggling to get established.
In the new context of the multiplication of information and communication channels: media, opinion polls, blogosphere, etc..., the classical representative system can no longer, alone, channel the demands and aspirations of public opinion. A permanent opinion-based democracy is gaining ground, alongside traditional representative democracy and is tending to compete with it supported by the media power. However this opinion-based or even emotion-based democracy does not have the legitimacy conferred by universal suffrage which expresses the general will. The influence of the opinion-based democracy should not be underestimated because, following an overhyped trivial event, legislation may be amended as a matter of urgency.
All these changes must now take account of the Web revolution which is creating a new interactive area where everyone can express themselves all the time and on all topics, which is not without danger for the protection of personal data. The digital revolution, in other words the convergence of data processing, of radio and television, and of telecommunications, and the new notion of collective intelligence pose fearsome problems. However, neither politicians nor economic decision-takers have yet set in place a genuine strategy to assess the consequences of this deep, uncontrolled transformation on democracy and its impact in emerging countries.
If there is a recurrent topic of criticism against the European institutions, it is indeed that of the democratic deficit. European citizens too often feel that decisions are taken in Brussels by anonymous authorities, whence the need in particular to strictly apply the subsidiarity principle so as to clearly establish what is a matter for the Community level and what should be decided nationally or regionally. What is challenged is the absence of a clear image of the Union, the insufficient communication of governments on their European policy and often even the practice they adopt of condemning at the national level the application of Community directives which they themselves supported at the Council of Ministers in Brussels. The very high abstention rate at European elections is therefore no surprise.
Main proposals of the Association of former Members of Parliament of the member states of the Council of Europe or the European Union:
1. Permanent forums be set in place in which would participate citizens, associations, universities with the support of the European Parliament, national parliaments, Associations of former Members of Parliament, and Economic and social councils.
2. The Council of Europe Parliamentary Assembly should organise a major political and ethical debate on the consequences of the digital revolution on the exercise of democracy, in the spirit of its 1995 Symposium on electronic democracy.
3. National parliaments should start to consider together the elaboration of codes of good practice of local participatory democracy guaranteeing in particular the rights of citizens to the broadest and most objective information.
. The debates of the European Union Council of Ministers should be public when they concern a draft piece of legislation as has been the case at the European Parliament since its creation and at a time when the Council is considered as the second Chamber of the European Union.
5. The European Parliament should deepen the idea of implementing the referendum procedure at European Union level.
6. The strengthening of democracy within the Union must be facilitated by extending the powers of the European Parliament as regards the legislative initiative over which the Commission has a monopoly.
7. The Association of former Members of Parliament encourages Ukraine's efforts to intensify its economic, social and cultural relations with other European countries, especially with Poland and Germany, in order to accelerate its development.
Saturday, May 31, 2008
EU enlargement: Chicken or Kiev?
My comment to an article of The Economist called ‘Enlarging the European Union: Chicken or Kiev?’, published on the magazine’s website on 31 May 2008: Every enlargement leads to “devaluation” of the European Union – politically, economically, and structurally. The EU of 27 already has essential problems with internal decision-making process. Euro-Constitution (and now the Lisbon Treaty) ratification saga is a good prove of that.
Further enlargement of the EU is to be carefully considered. If the European Union wants to save itself as a strong supranational organization claiming to be a centre of world power, new mechanisms of enlargement should be presented. The elaboration of these mechanisms will take some time. But an enlargement-delay is not an obstacle for building the all-European free democratic space. It is already successfully building up – by the Council of Europe with its 47 member states, including Turkey, Ukraine, and also Russia, Moldova, Azerbaijan, Armenia, Georgia, to give just a few.
If the EU is not ready for a “big enlargement”, it will be reasonable to strengthen its cooperation with the Council of Europe to work out new effective instruments to build free and democratic Europe of 47 without any dividing lines and prejudices.
P.S. Of course, it would be great if Ukraine become member of the EU immediately. At least, because of a possibility to travel freely inside the Schengen zone for every Ukrainian. But as today both Ukraine and the EU are not ready for that, we have to achieve our goals using available instruments, such an ENP.
Link to the comment and the article:
http://www.economist.com/opinion/displaystory.cfm?story_id=11455117&mode=comment&intent=readBottom
http://www.economist.com/opinion/displaystory.cfm?story_id=11455117&mode=comment&intent=readBottom
Tuesday, May 13, 2008
EU-friends of Ukraine: 16 from 27?
On 12 May a First Interparliamentary Conference called “Parliamentary cooperation between Ukraine and the EU” started in conference-hall of the Parliament of Ukraine (Verkhovna Rada). Members of bilateral Friendship Groups with Ukraine from the Parliaments of all the member states of the European Union – as well as the European Parliament – were invited to Kyiv to participate in this event. But not all the invitees showed up. MP’s from only 16 of 27 EU-countries participated in the Kyiv event.
As I was present on this conference, I can surely say that the launching of such an initiative is really very important both for Ukraine and the EU member states. First of all, it is a unique opportunity to share points of view on problems of the European integration of Ukraine, and also to see the whole picture from the feedback. During the first day of the conference the participants listened to three reports of the Head of the Committee of Verkhovna Rada of Ukraine on European Integration Borys Tarasyuk, ex-Minister of Foreign Affairs of Ukraine Borys Tarasyuk, Vice President of the European Parliament, former Chairman of the Committee for Parliamentary Cooperation EU-Ukraine Marek Siwiec and Chairman of the Committee for Parliamentary Cooperation EU-Ukraine in-charge Adrian Severin.
Shortly speaking, the main result of that day may be listed in four simple points:
1. Ukraine feels offended for the “enlargement” of the European Neighbourhood Policy (ENP), which shifted a status of Ukraine to neighbour, equal to, for example, Morocco (who also participates in the ENP).
2. Ukraine insists on being called not a neighbour, but a part of Europe (as geographically it is at the middle of Europe).
3. Ukraine strongly insists on signing of the Association agreement with the European Union to mark the next significant step in the EU-Ukraine relationships.
4. European Union is not ready to give Ukraine all the mentioned above.
Today will be another interesting day, full of information. But before everything get started I would like to name 16 countries, which delegated their members of parliament to visit Ukraine and to talk about the European future of Ukraine. I don’t know what are the reasons of absence of the representatives of other 10. Maybe the reasons are serious. But the following countries can be surely named as the best friends of Ukraine in Europe. At least, they are the most interested in Ukraine.
16 countries-participants (in alphabetic order):
1. Belgium. 2. Bulgaria. 3. Czech Republic. 4. Cyprus. 5. Estonia. 6. Greece. 7. Finland. 8. Hungary. 9. Ireland. 10. Latvia. 11. Lithuania. 12. Poland. 13. Portugal. 14. Romania. 15. Slovakia. 16. United Kingdom.
As I was present on this conference, I can surely say that the launching of such an initiative is really very important both for Ukraine and the EU member states. First of all, it is a unique opportunity to share points of view on problems of the European integration of Ukraine, and also to see the whole picture from the feedback. During the first day of the conference the participants listened to three reports of the Head of the Committee of Verkhovna Rada of Ukraine on European Integration Borys Tarasyuk, ex-Minister of Foreign Affairs of Ukraine Borys Tarasyuk, Vice President of the European Parliament, former Chairman of the Committee for Parliamentary Cooperation EU-Ukraine Marek Siwiec and Chairman of the Committee for Parliamentary Cooperation EU-Ukraine in-charge Adrian Severin.
Shortly speaking, the main result of that day may be listed in four simple points:
1. Ukraine feels offended for the “enlargement” of the European Neighbourhood Policy (ENP), which shifted a status of Ukraine to neighbour, equal to, for example, Morocco (who also participates in the ENP).
2. Ukraine insists on being called not a neighbour, but a part of Europe (as geographically it is at the middle of Europe).
3. Ukraine strongly insists on signing of the Association agreement with the European Union to mark the next significant step in the EU-Ukraine relationships.
4. European Union is not ready to give Ukraine all the mentioned above.
Today will be another interesting day, full of information. But before everything get started I would like to name 16 countries, which delegated their members of parliament to visit Ukraine and to talk about the European future of Ukraine. I don’t know what are the reasons of absence of the representatives of other 10. Maybe the reasons are serious. But the following countries can be surely named as the best friends of Ukraine in Europe. At least, they are the most interested in Ukraine.
16 countries-participants (in alphabetic order):
1. Belgium. 2. Bulgaria. 3. Czech Republic. 4. Cyprus. 5. Estonia. 6. Greece. 7. Finland. 8. Hungary. 9. Ireland. 10. Latvia. 11. Lithuania. 12. Poland. 13. Portugal. 14. Romania. 15. Slovakia. 16. United Kingdom.
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