The contemporary complexities of the relationship between Ukraine and Russia are as much influenced by personality as by economics and politics. A key additional factor, however, is that Russia’s leadership, as Quentin Peel of the Financial Times puts it, “do not regard the Ukraine as a serious independent country…”
Russia under Vladimir Putin has successfully sought to establish a role relative to Europe that reproduces in a fashion the political respect it once had as an adversary during the Cold War. Economic leverage assisting in the maintenance of this recently enhanced power position has evolved in part by becoming the reliable supplier of 25% of all the gas needs of Western Europe.
The key word here is “reliable,” and that’s where Ukraine comes in. Most of the gas in the pipeline to Europe currently originates from the former Soviet republics of Kazakhstan, Turkmenistan and Uzbekistan. About a quarter is from Russian fields. All this gas arrives in Western Europe via pipelines transiting Ukraine.
The Ukrainians reportedly consume a little over one third of the gas that is piped through their country. If the Russians halt that flow, the nations west of Ukraine and Ukraine, itself, are in a severe energy predicament.
EARLIER THIS MONTH, Gazprom, the giant Russian gas cartel, still headed by the soon-to-be new Russian president, Dmitry Medvedev, insisted Ukraine had a gas debt of $600 million. The Russians wanted that money as well as signed contracts to supply future deliveries. The implication was that the gas spigot would be turned off if Russian demands weren’t met.
The Ukrainians said threats to cut off any portion of the gas shipment were a violation of the basic principles of international commerce. The Ukrainian weapon was to withhold payment. Europe, which was hit by an earlier pipeline crisis in 2006, could do nothing but wait for the next shoe to drop.
This may all seem a typical commercial squabble until one recalls Quentin Peel’s statement. Russia not only does not regard Ukraine as serious independent country, the Kremlin truly believes Ukraine has illegitimately been ripped from the body Russia.
It’s all right if the government in Kiev wants to pretend it is truly independent, but as far as Moscow is concerned Ukraine owes its existence to Russia in the past, present and future. The fact that the Ukrainian government has made known its desire to join the European Union and NATO more than a little exacerbates the situation.
Enter the person that Toronto’s Globe & Mail referred to as “the most beautiful political leader in the world,” the 47-year-old stunning blond from Dniepropetrovsk, Ukraine’s Prime Minister Yulia Tymoshenko. Holding an advanced university degree in economics, this lady before entering politics headed the major corporation, United Energy System of Ukraine. Forbes magazine named her one of the world’s three most powerful women.
PM Tymoshenko was adamantly against the structure of the agreement as it has stood with Russia. Intermediary companies, in which Gazprom also had a stake, were conveniently placed between the two countries as buyer and seller of the pipeline product. The informal agreement in February between Ukraine’s President Victor Yushchenko and Russia’s Vladimir Putin was quite inadequate as far as Tymoshenko was concerned.
President Yushchenko has his own problems with Ms. Tymoshenko, who has no hesitancy in saying and doing things that annoy Moscow. Ukraine’s president has gone so far as to charge his prime minister with unnecessarily straining relations with Russia at a time when he is trying to construct a working relationship.
IN EARLY MARCH, Gazprom cut in half the gas it was sending through Ukrainian pipelines as a threat of what might happen. PM Tymoshenko held her ground and on Thursday, March 13, an agreement was reached removing the middlemen companies and maintaining the same price for the gas for the rest of the year. In exchange it was agreed that Gazprom would be entitled to a flat 25% of the Ukrainian industrial gas market. The supposed $600 million debt wasn’t mentioned.
Perhaps more important than the financial settlement and contracts for future delivery is the fact that Ukraine had to be treated as “a serious independent country.” This is something that Putin and his newly anointed president, the gas czar, Medvedev, were forced to recognize.
There may be some non-publicized aspects to the new accord, but for the moment it appears that the world’s most gorgeous politician got exactly what she wanted. All this proves that among the big boys in Ukraine and Russia natural gas is a girl’s best friend.