Eur opean Integration: Signs and Money
On May 15 Ukraine observed the Day of Europe. A European township was laid out on Kyiv’s main street. Strolling down this street, one could envy, silently or out loud, the ten new EU members that joined the family of civilized nations on May 1. Meanwhile, on Thursday Deputy Minister of Finance Vasyl Kostytsky began telling about the financial aspect of Ukraine’s integration into Europe with a historical excursus, recalling that way back in the eighth century “European kings tried to unite in defense against the barbarians.” Thus did the Ministry of Finance (until now active in a different direction, namely, establishing a common economic space of four CIS countries) choose to show its more European colors. It turned out that no other than Mykola Azarov, First Vice-Premier and Minister of Finance, is also in charge of Ukraine’s European integration.
Apparently, this and many other circumstances (strategy, all kinds of programs, and even the Ukraine — EU Action Plan) lets the Ministry of Finance draw an overall conclusion: Ukraine has laid a “sufficient institutional basis that will allow taking the necessary organizational measures aimed at European integration.” The trouble is the Europeans turn a blind eye to this basis.
The Ukrainian financier was in no doubt that the admittedly large Ukrainian budgetary funds intended for European integration are being utilized quite effectively. Kostytsky claims a total UAH 622 million has been spent, including UAH 323 million last year. This year’s budget provides for more than UAH 638 million. European integration-related measures embrace all economic sectors and meet other target-oriented governmental programs. Rightly mentioning the establishment of international transportation corridors as one of these, this country’s deputy chief financier forgot, for some reason, about a no less important project — commissioning the Odesa — Brody oil pipeline, a true litmus test of Ukraine’s European integration in the past few years.
These days, a 50,000-ton tanker is being loaded with light Caspian oil at Illichevsk’s oil sea terminal to take this cargo to Poland’s Gdansk via the Bosporus and Dardanelles Straits around Europe, with two more vessels of this type to follow.
This means Caspian oil is already in demand in Europe, being transported there precisely across Ukraine by railway. But why take this long and dangerous journey through the frequently congested Turkish straits? Why not use the absolutely serviceable Odesa — Brody pipeline?
The Day’s experts put this down to, first of all, the uncertain stance of Ukraine itself and the overt sabotage of governmental decisions by the pro-Russian lobby in the corridors of power. This sabotage has been duly assessed in European circles. On May 12-13, Moscow hosted negotiations on signing an intergovernmental agreement on transit of oil across Ukraine. Last Friday Ukrainian Premier Viktor Yanukovych flew to Moscow to discuss, among other things, this agreement.
Meanwhile, the previous talks, where the Ukrainian delegation was led by Deputy Minister for Fuel and Energy, Bohdan Kliuk, yielded no results: the negotiating parties failed to sign a protocol.
Tellingly, the Russian side openly announced its negative attitude toward the Odesa — Brody project (“runs counter to the Russian Federation’s energy strategy”). The Russians put forward (and recorded in the drawn-up, but not signed, protocol) such arguments as a glut of oil on the European market, “attempts to replace Russian oil on the traditional markets with higher-quality Caspian oil,” and Russia’s intention to build the bypass Kiyikey — Ibrikhaba or Burgos — Alexandropoulis oil pipelines. Besides, the draft protocol says that the supply of Caspian oil will force the Russian side to increase the quality of its own oil if market competitiveness is to be maintained.
So the Russian side no longer even tries to hide the true motives of its proposals that the Odesa — Brody pipeline be used in a reverse mode: these intentions were clear from the very beginning to both Europe and Ukraine (except for the Ukrainian advocates of the reverse mode, who are still wielding political clout). An unexpected statement was made by Natik Aliyev, president of the Azerbaijan State Oil Company. In his words, Azerbaijan does not intend to join this project. Yet, Ukrainian experts claim that the top executive meant not so much the transit of Caspian oil as participation in extending the pipeline across the Polish territory, for which Azeris are really cash-strapped. As to Mr. Aliyev’s hints about the “political will” for implementing the Odesa — Brody project, experts think it is an attempt to gain an additional edge in the negotiating process. Baku knows only too well that Ukraine does have things to offer. As was reported before, in late February Ukraine’s Prime Minister Viktor Yanukovych said after talks with his Azerbaijani counterpart Artur Rasizade that Ukraine and Azerbaijan had reached a clear understanding to cooperate in utilizing the Odesa — Brody oil pipeline and extending the latter as far as Plock.
As matters stand today, it is Vice-Premier Andriy Kliuyev who seems to be one of the most active “Europeans” in Ukraine. He claims the Odesa — Brody pipeline would have long been pumping oil if he had the right to sign the relevant documents. Although technical problems of the Odesa-Brody oil transit have been solved and banking guarantees have been received to purchase anticorrosion oil, the commissioning of the pipeline is being delayed due to failure of the Ukrtransnafta management to sign the required contracts, Mr. Kliuyev told a press conference last Thursday.
Who — the Ukrainian government or the so-called supporters of the Russian Federation’s energy strategy — will get the upper hand in Ukraine still remains an open question.
