What Azarov and Medvedev did not say in public?

On December 24 a meeting of prime ministers of Ukraine and Russia Mykola Azarov and Dmitry Medvedev took place in Moscow. It was held before the session of the Higher Eurasian Economic Council. The prime ministers had two hours to talk. At least this is how long the meeting lasted, according to the press secretary of Ukrainian prime minister, Vitalii Lukianenko.

The first 15-billion dollars’ loan and mentioning of the need to “resuscitate the lost relations” were on the scanty menu of the two prime ministers’ public conversation, as it was presented for the public. On the whole, according to Lukianenko, the top officials were discussing the development of bilateral cooperation and joint projects. No details were provided.

However, the UNIAN information agency reported with a reference to its own source that Ukrainian prime minister allegedly planned to sign about 60 agreements connected with the Customs Union in Moscow. According to the agency’s source, the documents allegedly mentioned the unification of Ukraine’s customs-fee policy with that of the countries of the Customs Union among other things. However, the Cabinet’s press service immediately refuted the information, calling it “100 percent disinformation.” “Prime Minister of Ukraine Mykola Azarov is not going to sign any documents,” the press service of the government underlined. However, they added that the country will continue to work on renewing a normal trade-economic regime with the CU countries.

According to The Day’s source in the Cabinet, the prime minister’s visit was indeed meant to coordinate with Moscow the agreements which have already been signed. However, in his words, it cannot be excluded that about 10 agreements, which Viktor Yanukovych did not have time to sign on December 17, will be signed in the end. According to the information provided by the source, everything was supposed to be resolved on spot. But it was not officially confirmed before the issue went to press.

However, according to the information of the Russian government press release published before the meeting of Azarov and Medvedev, the following questions were supposed to be discussed: trade and economy, energy, and loan-financial. What concrete things could prime ministers of Ukraine and Russia be discussing and trading? The Day asked this question to Ukrainian and Russian experts.

“IT IS OBVIOUS THAT THERE WON’T BE ANY CONCESSIONS IN THE GAS SPHERE”

Mykhailo HONCHAR, director of Nomos Center energy programs:

“Total surrender, rather than a deepened cooperation could be on agenda during the visit to the Kremlin. And it does not matter what will be the first thing to yield: Turboatom or gas transporting system of Ukraine. It does not matter. The country is now in the channel of the river, and it cannot pull out of it against the current. And the nuances of surrender will depend on what the Kremlin says. Now it is most likely that Moscow is developing mechanisms which once and forever will settle the question of Gazprom property rights for Ukrainian gas transporting system and compensation for the lower gas prices for Ukraine for the Russian monopolist (for Gazprom is not a charity). They are not going to make concessions in the gas sphere and it is apparent. And the reason is as follows. Current gas contract envisages the 450-dollar change of gas price once in a quarter for 1,000 cubic meters. And now the principle of defining the gas price has become more voluntary. The appendix to gas agreement of December 17 does not contain any criteria for gas price formation for Ukraine. The only thing it has is the coefficient which in result influences the end value. So, it will be defined in an absolutely voluntary way. Each quarter this coefficient is calculated to get 268 dollars for 1,000 cubic meters. It means that if Ukraine goes towards Eurasian integration, the price will be 268 dollars in the first, second, third, and fourth quarters. But if Russia decides that Ukraine in some way diverges from this path, the coefficient won’t be typed in the final gas bill and the price will make as much as the contract writes. And it means the high gas price, which is now 406 dollars for our country, will return. This is an open mechanism of binding Ukraine to fulfillment of certain commitments, which according to Russian side were undertaken by the Ukrainian authorities. And it does not matter whether these agreements are oral or written. Will Europe help us to avoid this risk this time? I doubt this. Unfortunately, it won’t intrude on several reasons. First, the gas lobby has won in the EU, which has involved all possible channels of counteraction. Therefore now we can see the strange position taken by the European Commission and voiced by the EU Commissioner Oettinger, saying that the agreements between Ukraine and Russian concerning reduction of gas price are welcomed by the European side. Secondly, the Europeans see that the risk of gas crisis is decreasing in Ukraine. This is the most important thing for the EU. And it is a different question what price we will pay. And Russian side staked on that.”

“COOPERATION WILL ENTAIL CERTAIN DEPENDENCY WILL EMERGE IN CASE OF COOPERATION, BUT IT IS MUTUAL”

Vladimir YEVSEYEV, military expert, senior research fellow at the Institute of World Economy and International Relations at the Russian Academy of Science, head of the Center for Social and Political Studies:

“Several topics may emerge within the framework of Ukrainian-Russian dialogue. There is a serious cooperation in aircraft building: Motor Sich is supplying aircraft engines for the Armed Forces of Russia. This is very important for us, because otherwise Russia will have to urgently create a production of its own. Besides, the term of exploitation of ballistic missiles, which were produced at Dnipropetrovsk Construction Bureau, has been extended till 2018-20. It is impossible to do this without conducting tests by producing enterprises. Another joint project is building of a transporting plane on the base of Antonov State Company. Russia is interested in completing it, in order to raise the mobility of its armed forces and broaden the geography of export of its production. Ukraine on the whole has quite a serious industry potential and it is interesting as well from the viewpoint of anti-aircraft defense (development of anti-missile complexes). At the moment our countries are competing on international markets in the branches I’ve just mentioned, but in case of cooperation we could realize a much greater potential of the military-industry complex, enter foreign markets and win them on a greater scale. But I don’t understand how it could be done under current circumstances. The greatest problem is lack of mutual trust, which impedes cooperation. Can Ukraine and Russia cooperate on equal rights under current circumstances? In separate spheres – yes. This is the cosmic branch (production of missile carriers), aviation (aircraft of different types). Of course, Russia can produce them, but it needs big money for this. Therefore, in my opinion, another version, like cooperation, is more beneficial for Russia and for Ukraine alike. Apparently, in this case the main military-industry complexes will be located on Russian territory, except for Antonov. Therefore cooperation will entail certain dependency, but it will be mutual.”

“MECHANISMS OF ADAPTING UKRAINE TO EURASIAN UNION ARE BEING DISCUSSED”

Volodymyr LANOVY, president of the Market Reform Center, former ministry of economy of Ukraine:

“The process of bringing Ukraine into the Eurasian union was launched on December 17. And it continues. Not all regulation norms which are in effect on the territory of the Customs Union are acceptable for us. Therefore Russians, most likely, are inventing something artificially. For they do not act according to market rules, but are guided by their own administrative considerations. In my opinion, the discussion of mechanisms of adapting Ukraine to the Eurasian Union is underway. The 15-billion dollars’ loan may become a guaranty that Ukraine will not diverge from this way, as far as the Kremlin’s intentions go. It can become one of the levers of serious pressure exerted by different means. Let’s not forget that Russia drafts agreements very scrupulously, and then threatens with sanctions or international trials for their violations. Therefore they will make us sign as many papers as possible, in order to make all governments in the future fulfill them.”

P.S. Meanwhile, the European community does not lose its faith in Ukraine. Polish president Bronislaw Komorowski in a recent interview commented on the latest agreement between Ukraine and Russia in the following way: “Has one thing out of two been chosen? No. The Ukrainian president keeps saying: ‘I do like the Maidan wants. I will take a loan from Russia, but it does not mean that I enter the Customs Union. I want to the EU.’ For the past 22 years Ukraine has been tacking between the East and the West in such a way. I would not say Yanukovych said ‘yes’ to Russian money, because he wants loans, but at the same time he says absolutely ‘no’ to the Customs Union. I think it cannot be interpreted as Ukraine’s forever anchoring in the ‘Russian port.’”