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

Belarusian scenario and statehood

The “401st, relatively honest, way” to gain control over the Ukrainian gas-transport system
18 August, 2011 - 00:00

On the banks of Bocharov stream, at the Russian presi t’s resi ce Bocharov Ruchei, people are diligently working on the way to draw Ukraine into the Customs Union “via a pipeline.” For this aim they have baked quite a nice-looking cake, at least in the opinion of the court “confectioners.” That is signing a new gas agreement between Gazprom and completely exhausted by the crisis and, thus, unusually compliant, Belarus, which is an issue of active debate in Moscow.

Russian Presi t Dmitry Medvedev stated: “Currently there are important factors that will influence the content of the agreement: the emergence of the Customs Union [Russia, Belarus, and Kazakhstan. – Author], our economies have become immensely closer, and this fact should be taken into account, and secondly, the purchase of the remaining 50 percent of Beltransgaz [Belarusian gas monopoly. – Ed.]” Medvedev went on, “This will create somewhat new conditions of the presence of Russia’s Gazprom on the Belarusian market. I think this should be taken into account while preparing the agreement. Please, start to cooperate with the Belarusian partners. Hopefully, you will succeed in preparing a proper agreement for our cooperation.”

The same day Russia’s Prime Minister Vladimir Putin was also actively discussing the Belarusian topic. Based on the results of the meeting with his Belarusian counterpart Mikhail Myasnikovich, he stated, “Russia has decided to apply an integration reduction factor to the gas price formula for Belarus starting 2012.” “The size of the discount will be i tified as a result of talks at the level of economic entities,” he explained, adding that the process of negotiating the price will be “synchronized with the acquisition of 50 percent of Beltransgaz by Gazprom.”

One should give credit for the sense of humor shown by the head of the Belarusian government during the meeting, which was, in fact, a gas capitulation. He thanked Putin for such a “present” [actually, the present totals the worth of Beltransgaz’s 50 percent. – Author] and expressed hope that the reduction factor will be below 1 [which will decrease the final price. – Ed.]

Thus, Russia has almost solved the Belarusian question. Taking the pipeline of the allied state under its control, it is ultimately drawing Belarus into its orbit, depriving the country of a real argument in support of indepen ce.

As is known, success gives wings and encourages further actions. And Gazprom’s head Aleksey Miller has immediately decided to repeat the Belarusian model with Ukraine. Having met with Medvedev and Ukraine’s Minister of Energy and Coal Industry Yurii Boiko, he told a press conference that “in Gazprom’s opinion, the cooperation with Ukraine in the gas sphere could be developed according to the model we are working out with our Belarusian friends.”

Meanwhile, at the meeting the Ukrainian minister offered the proposals concerning development of gas-transport cooperation between Russia and Ukraine, which deal, according to Gazprom’s head, not only with the “cooperation in gas-transport sphere, but in other directions as well.” What these proposals are and to what extent they are following the Belarusian example remains unknown. However, the Russian side might have decided to shelve them for long, preferring Ukraine to fully repeat the bitter experience of Belarus. “We will study these proposals and assess them, and will send a reply to our Ukrainian friends,” Gazprom’s head said. It might be not without a reason that Boiko has refrained from commenting on the issue to the press. The words “Ukrainian friends” uttered by Miller under current circumstances were not just grating upon the ears, but also made him look like a smiling boa, winding around one’s neck.

Typically, on the same day a Russian-language website featured an article of the head of the Institute of Energy Policy, former deputy minister of energy of Russia Vladimir Milov under the title “An unheard-of storm in Russian-Ukrainian relations is approaching.” The author writes, “Viktor Yanukovych considers that Russia should sell gas to him at a lower price, because he is a pro-Russian presi t and has surrendered to Russia in many issues. Russian authorities have logic of their own: if Yanukovych is pro-Russian, he should remain so completely and pay Russia as much money for the gas as Moscow wants.” Milov goes on, the stalemate situation is exacerbated by the fact that Russia has offered a clear condition in return of a lower gas price, which is merging of Gazprom and Naftohaz [and Ukraine’s entry into the Customs Union. – Author.] The expert defines this stand as a “401st relatively honest way of taking control over the Ukrainian gas-transport system.”

Milov recalls that when he was a state official 10 years ago, he wondered at the “maniacal desire of Putin and Co. to take control over the Ukrainian gas-transport system.” “Now our leadership must have decided to stake everything on this question. Blackmailing Ukrainians with gas may lead to a new full-scale gas confrontation, followed by closing the European transit and other pretty things we have witnessed before. The situation is getting more complicated because the subject of debate is a matter of principle: gas prices will play a crucial role for the prospects of Ukrainian economy that is slowly reviving, whereas for Putin and Gazprom taking control over the Ukrainian gas-transport system must be of paramount importance.”

Milov is no lobbyist of Ukrainian interests. In his criticism against Putin he proves that Russia does not need to acquire control over the Ukrainian pipelines. In particular, his arguments refer to the Russian experience of investing into the gas-transport system of neighboring Belarus, which he considers unsuccessful. Milov thinks that the Belarusian power is practically forcing Gazprom to pay additional tax for owing Beltransgaz through “payments to the Innovation Fund of Belarusian Ministry of Energy.” Besides, in 2010, as reports indicate, Gazprom increased the reserve for devaluation of Beltransgaz assets from 17 to 62 billion rubles (assessing its investments in this company as 54 billion, and the entire company – 69 billion Russian rubles). Milov concludes that, thus, Gazprom practically admitted that investments into Beltransgaz are extremely unprofitable.

The former deputy minister of energy does not understand why Russia needs to control Ukrainian gas-transport system, for in all these years the tariffs for gas transit via Ukraine have been much lower, compared to European ones. “Roughly speaking, putting aside the husks and folklore, we can only dream about a transit partner like Ukraine. Risks of suspending gas transit? But all the cases when the valve was practically closed, we ourselves initiated this by our own actions.” “Unsanctioned siphoning of gas?” the expert recalls the old accusations addressing our country and replies, “This is an invented problem Russia has worked up for years with a political aim.”

The expert warns the Russian leadership, “Even if Yanukovych dares to bring a draft law that would approve merging of Naftohaz and Gazprom to the Verkhovna Rada, he will immediately be attacked even by loyal political forces, and his ratings which are already extremely low, will drop completely, and a new splash of anti-Russian moods will be stirred up in Ukraine.”

Returning to the gas price structure, Milov notes that “now the many-year Gazprom ‘long-term formulae’ are falling apart at the seams: there are harsh debates on reconsideration of the price formulae (in order to reduce the prices) are underway between Gazprom and its biggest clients like E.ON and Gaz de France, and may end up in a court. Life itself is compelling Gazprom to be more flexible in terms of pricing policy. It should be said that Ukrainians were given the highest prices possible, and Yulia Tymoshenko has been brought to trial because of this. Just as West Europeans, Ukrainians will inevitably demand us to reconsider the prices, and we should prepare for this.”

On August 16 Ukraine’s Prime Minister Mykola Azarov stated that he ruled out the development of Ukraine’s energy sector according to Belarusian scenario: “Ukraine is paving its own way.”

By Vitalii KNIAZHANSKY, The Day