Tymoshenko and Yushchenko's Loudest Confrontation Yet: Privatization

It used to be that Yushchenko would send uncountable directives over to Tymoshenko and she would blithely ignore most of them and work towards her own purposes while saying she "admires" the president. He would veto what she did, issue a new directive, and the process would start again.

Recently, things have degenerated.

The major sticking point is Tymoshenko's extensive privatization plan, the proceeds from which she intends to use mostly for government remunerations (or handouts) to holders of Soviet bank accounts made worthless in the aftermath of the fall of the Soviet Union. Yushchenko considers this an irresponsible use of the money, and accuses her of privatizing into the hands of her allies--the claim made by pretty much every party against a privatization by one of its opponents.

So, for example, since State Property Fund Chairwoman Valentyna Semenyuk has been one of the main agents blocking Tymoshenko's privatizations, Tymoshenko kicked her out and installed her own chairman, Andriy Portnov. Yushchenko reinstated Semenyuk, cancelled the privatizations, and issued a "yellow card" warning to Tymoshenko's government. The Constitutional Court overturned his decision, and Tymoshenko told Portnov to ignore it. Along a parallel track, the privatization of, for example the Odesa Pre-Port Plant has been ordered, suspended, ordered again, and again suspended. The Eurasia Daily Monitor has a summary of all the tit-for-tat.

In retaliation, it seems, BYT lined up with the Party of Regions and Tymoshenko said she supports a vote to decrease the President's power in favor of the Parliament (and she's been taking on a number of advisors from the defunct and unmourned SDPU(o) of Viktor Medvedchuk, though this may not be a retaliatory gesture as much as a tactical one). However, when Yushchenko saw that he lacked the support of the Constitutional Court and the Parliament, he backed down. His statement is a classic one of a politician accidentally saying the truth:

Let us not put to question which organization [of power] we need, but focus on the task of achieving, through dialogue, through the work of public commission, through public referendum, a system of counterweights which would ensure serene future for us and our children.

Exactly. Now why have you been wasting your time on this issue practically since you got into office?

Not that Tymoshenko or Yanukovych are any less to blame. The last link goes to an article in Dzerkalo Tizhnya: it's wordy, but overall a great article. The line that pretty much sums everything up:

Each of the three top Ukrainian political players more or less realize the need of the reforms, but all explain their slackness by the following logic: “Now preparations for the decisive battle are going on. What is of critical importance now is to garner as much resources and voter support as possible. It is imperative that sufficient financial, media and electoral reserves be built up. I will begin attending to the country’s salvation and development once I take the country’s top office for a long enough period”. The result is that Tymoshenko and Yushchenko are competing in populism, while Yanukovych, in the absence of State resource, is busy with NATO and language-related issues. This provides an explanation as to why we keep making the same mistake, which is because we make no headway. A country cannot move ahead unless and until the main state and public challenges are correctly identified and begun to be dealt with. Purely personal and corporate interests of policy makers cannot provide enough progress to drive us away from the same old mistake.

Speaking of wasting their time on political games while gas and inflation crises loom...

The Kyiv Mayoral Election vs. Macroeconomics

Taras Kuzio, writing in the Eurasia Daily Monitor, thinks BYT's candidate in the Kyiv mayoral election, Turchynov, will be able to get past Klitchko and Chernovetsky, citing corruption charges against both of the latter. I still fail to see how Turchynov is going avoid similar charges sufficiently to overcome the huge gap in public support between himself and the main contenders--particularly since there will be no runoff. Not that we should want Chernovetsky to win (which recent polls think he might, using the same tactics as last year).

This mayoral election is the biggest distraction from the two main problems for Ukraine, both of which are economic: inflation and fuel price hikes. 

While Tymoshenko was certainly overstating things when she said her government was getting the highest appreciation in the world and holding inflation policy unchanged will be enough, it is true that she was praised by the WTO.
The IMF was more moderate in its praise. In this report it did not actively argue against her privatization plan, but it definitely suggested holding back at least some of the money thus earned to promote a more balanced budget (meaning less going to Tymoshenko's handouts). Another one of its main points is that the hryvnia should be allowed to float against the dollar (meaning appreciate, in the current economic climate). According to the Ukrainian Journal, the NBU seems interested and Tymoshenko has reigned in her criticism of the bank on at least this issue. The WTO and IMF both make the situation with inflation seem less dire than Dzerkalo Tizhnya seems to think it is, but DzT bases more of its assessment on an expected massive fuel price hike from Russia (something I also think is imminent, and the IMF notes as a potentially major problem).

Two More Good Items 

One alternative to politics-watching is this entry on Ukrainiana about Chernobyl. It includes Taras's own story from living (six years old) in Kyiv at the time. It also is heavily laden with YouTube videos related to the event.

Another wonderful and unrelated article by John Marone at Eurasia Home praises the introduction of national standardized university examinations. One step forward for transparency, one step backward for corruption.

BYuT and NUNS fight over city politics, the nation gets closer to crisis

February and part of March were the Party of Region's chance to waste everyone's time blocking parliament with their NATO Circus of Obstructionism. The end of March seems to have been burnt up looking for the next issue for politicians to focus on. Now it's April and they've finally found something to keep themselves from addressing any of the multiple looming disasters—the Kyiv Mayoral Election.

NUNS is the less popular party, but is pushing for the vastly more popular candidate in this election: Klitchko. BYuT's candidate is Turchynov, who has about 6% popularity to Klitchko's 31%. That means that if Tymoshenko wants him to win she'll have to spend massive amounts of time and political capital to do so. So far she doesn't seem to have been deterred at seeing what PoR earned for its anti-NATO efforts on a national level—a ten percent drop in popularity and repeated local election losses to Bloc Yulia Tymoshenko.

Certainly Baloha and his new gang (a breakaway from NUNS) haven't acted constructively and won't do so in the future. But NUNS bleeds votes every election because of their pettiness and unprofessionalism. It's BYuT, which is stronger and more politically savvy that will need to compromise here, because there are much bigger national problems her Cabinet needs to be addressing.

Inflation

Thank's to IIU's blogging, readers here already know that inflation is a big problem that's getting worse. Years without reform, worldwide price increases for foodstuffs, government-on-government increases in unsupported payouts to voters (the most recent being Tymoshenko's payments on Soviet accounts) have all resulted in 26% inflation this March.

As with other issues, NUNS and BYuT are working at cross-purposes. Tymoshenko's payouts went through, but the privatizations she proposed to use to generate the money to pay for them were vetoed by Yushchenko. She's tried to get rid of a longstanding land auction ban which she also thinks could improve economic growth (I do, too) and has again been vetoed by Yushchenko. I would be less apt to think Yushchenko was simply playing spoiler if I saw any indication that he has a better plan instead of his usual vague generalities.

Tymoshenko has said the government going to stop inflation in five to six months. To do this will take actual reforms, though, and that means working with NUNS. That may not be possible under any circumstances, but fighting over the Kyiv mayor is the one way to ensure defeat.

Gas Price Hikes

RosUkrEnergo is still hanging on in Ukraine-Russia gas deals despite Tymoshenko's opposition. She is claiming a victory anyway by saying that the deals will happen on Russian soil so it is technically "out of the Ukrainian market", but it looks from this angle like she's trying to save face after failing to eliminate it.

Though Russia has been able to keep its intermediary (and its active push to keep RosUkrEnergo throughout the negotiations last month confirms that it is, indeed, Russia's preferred intermediary), this won't stop Ukraine's gas prices from increasing significantly in the next few months. The ultimate driving force will be simple, rational self-interest: why sell at under $200 per m³ to Ukraine when Europe will soon be paying over $300 per m³ to Europe?

The price rise has already been foreshadowed: a month ago Russia increased the price it pays Central Asia for gas. This was not out of generosity: it was a revision to preempt hard bargaining by Central Asia, or (much worse for Russia) actual progress on alternative gas routes to Europe that don't include it (one of them is Tymoshenko's White Stream project, lauded by The Economist, which would be a great use of her considerable political skills if she weren't too busy in Kyiv). Russia's price increase is likely to be passed on to Europe in the near future, and Ukraine should not expect to be far behind.

We should not be distracted from this issue. Yes, another Russian general has threatened to attack Ukraine militarily (and with "other methods" as well), and responding in a professional manner was important. Yes, Kommersant claims Putin said Ukraine "isn't a real nation" and it will "cease to exist" if it joins NATO (a claim his government has not refuted). Ukrainian politicians should remember this when dealing with Russia (Hey, Yanukovych, you've been shouting a lot about Ukrainian national sovereignty at anti-NATO rallies—refresh my memory, when did any NATO ally threaten that as much as Putin just did?). Nevertheless, the real motive force in the gas sphere will be the $100 per m³ price differential. Either Russia will take payment in cash, or in ownership of Ukrainian energy assets, but it won't sit for long without payment.

I don't know when the hike will come. Gazprom may not know, and maybe not even the Russian government. But since the Russian government doesn't like NATO and doesn't think Tymoshenko is going to give it anything in exchange for the discount pricing, the hike will certainly come this year. If Russia is looking to improve its chances of getting paid, it may hike them this summer or wait until inflation is more under control, so it doesn't catch Ukraine when it is more desperate. If it wants to shake Ukraine up more it may load on the hike about the same time that inflation problems come to a head.

Not Even Together Enough To Host A Soccer Match

Inadequate preparation for Euro 2012 should be a big issue. There is $25 billion more investment that needs to be made, Ukraine's reputation is on the line—this should be a cause for major concern. But, because the government has gotten into an inflationary and budgetary mess that dwarfs even this event, all that I'll do is note that it's still a problem. I will add, though, that it particularly unhelpful to see Yushchenko blithely state that everything is going smoothly despite warnings from Ukraine's host partner Poland and the Euro 2012 committee.

Tymoshenko Should Support Klitchko 

Below inflation, gas prices, Euro 2012, somewhere under corruption in public transportation, is the Kyiv mayoral election. And yet, the politicians of an entire nation are occupying themselves with this single city election.

Tymoshenko doesn't need to look very far to know what she should do in this situation: all she needs to do is remember her own decision ahead of the 2004 presidential election.

In 2004 she gave up her own candidacy in order to support Yushchenko, despite her ego and despite the animosity between them that is unlikely to have emerged fully-formed in January of 2005. The reason she did so was that she did not have a real chance at the presidency (her public popularity was in the low teens, I believe), but Yushchenko needed help to overcome his opponent Yanukovych. Divided, their two parties could have both lost a legitimate election to Yanukovych. In doing the right thing, Tymoshenko also earned enough voter support to improve her political rating far beyond anything she had had thusfar.

Tymoshenko should support Klitchko. Like Tymoshenko in 2004, Turchynov in 2008 is little more than a spoiler. This is especially true since the mayoral election, unlike the presidential, is decided without a runoff (though BYuT is trying to change this). If Turchynov and Klitchko fight one another, it is likely that both will lose to to Chornovetsky, whi is still polling above 30% popularity.

In a real, monetary way, Ukrainians cannot afford to watch BYuT and NUNS continue to squabble. If Tymoshenko makes the magnanimous step here, not only will it improve the nation's chances in the upcoming crises, but likely result in voters rewarding her as they did after 2004.

16 miners sustained injuries: "11 got burns, two were wounded, two were poisoned with the gas, and one is undergoing a medical examination." No deaths reported thus far but waiting for results of med. exam and course of treatment results. The explosion took place at "Krasnoarmeiskaya-Zapadnaya coalmine in the Donetsk region in Ukraine at 12.20 on Monday. No fire occurred. 57 miners were working in a close vicinity of the explosion. On the whole, 1560 miners were working in the mine at the time of the explosion. Rescuers continue exploring mineshafts."

"The Russian president spoke about Georgia calmly, but lost his temper on the issue of Ukraine, said a source on the delegation of a NATO member state. Putin told his American colleague that Ukraine was not a proper state but an Eastern European territory, a substantial part of which had been presented to it by Russia. The source said Putin had openly hinted that if Ukraine were admitted to NATO, it would cease to exist as a state. In other words, he threatened to start the procedure for the secession of the Crimea and Ukraine's eastern regions." (RIA Novosti commenting on a story in Kommersant)(Newsru)

And over at Kremlin Inc, Hans reports on the story also in russian press that industrial espionage has been afoot in dealings between Ukraine and Gazprom.   

(деза - deza - abbreviated form of the word meaning disinformation)

In danger of techincal default and Cabinet Ministers postponed financial plan until next week. According to an adviser (orig. link to story) to the head of Naftohaz, Naftohaz does have the money to pay for the gas and only owes 2 months to RosUkrEnergo (not to RU and not to Gazprom.) He stated that Naftohaz can't pay for the gas because RosUkrEnergo has not given over financial documents and that this 'sabotage' is supported by Moscow.

Nothing Ukraine seems to be doing recently has warranted praise from its eastern neighbor. Not diversification in its suppliers of nuclear fuel (RIA Novosti, PA Tribune Review), nor honoring 1932-33 famine victims (Guardian, UNIAN, Observer) and most certainly not its Nato aspirations. (UNIAN, UNIAN)

But most distressing for me, is the silence regarding gas negotiations. Is "no news, good news"??? "Naftogaz Ukrainy and Gazprom plan to resume their gas talks in Moscow on April 3. “Our delegation will leave for Moscow tomorrow for further talks,” Naftogaz Ukrainy chief spokesman Valentin Zemlyansky said on Wednesday. He said Naftogaz Ukrainy Board Chairman Oleg Dubina was having consultations with the government to specify the Ukrainian delegation’s position. It was reported earlier that the next round of talks between the two companies had been held in Moscow on March 31 and April 1, but no details were disclosed." (Itar Tass)

And oh yeah, Naftohaz is bankrupt.  (not morally, silly... financially ;)

"Led by CEO Oleg Dubina, the negotiators of Naftogaz headed for Moscow in an effort to amend the 2008 gas agreement that had been inked already ... Ukraine presses for adding a few crucial amendments to the document that was signed March 13. The amendments specify new pattens for the gas supplies to Ukraine. Ukrainian cabinet insists on crossing out Swiss trader RosUkrEnergo from supplies. RosUkrEnergo has the monopolistic standing in gas exports to Ukraine and Gazprom holds 50 percent in it. Moreover, Ukraine insists on crossing out “no less than” word combination from the item of the agreement related to allowing Gazprom’s subsidiary or affiliated company to directly sell gas to Ukrainian clients. In today’s wording, the agreement sanctons such firm of Gazprom to independently sell no less than 7.5 billion cu meters of gas in Ukraine this year." (UNIAN) (Kommersant) Also might hear from Gazprom whether Ukraine owes $2 bil or $900 mil. 

Will see how talks unfold esp. as "Russian's Energy Policy Remains Firmly Under Putin's Control" (which also provides a good recap of the results and implications of the most recent negotiations between Ukraine and Gazprom.) 

And in regards to Naftohaz's finances: "Ukrainian Prime Minister Yulia Tymoshenko said on Friday the government would safeguard the finances of state energy firm Naftogaz, in debt to Russia's Gazprom and risking default on a $500 million Eurobond." (Reuters) And they way they plan on doing so is by " will seek another bondholders' waiver to avoid a technical default on its $500 million eurobond ... The company is expected to begin contacting its foreign creditors soon to secure an extension of two months for the publication of its 2006 financial results -- due on Monday after an earlier bondholder waiver was obtained in February. "They won't be able to publish the financials today and will need another two to three weeks to get the auditor sign-offs," a source familiar with the situation said. The firm went into technical default on the 8.125 percent Eurobond due 2009 after failing to provide audited 2006 financial results and has missed several deadlines to do so. It has managed each time to obtain an extension from its creditors, averting a default that analysts say could cost the company a combined $2.5 billion." (Reuters)

"The government will provide tax breaks to Naftogaz Ukrayiny, the state-owned shipper of Russian natural gas to Europe that has been facing financial challenges, First Deputy Prime Minister Oleksandr Turchynov said Monday." (Ukrainian Journal)

Back in the news again, this time for using Hitler rather than Stalin, on its billboards UNIAN, Metro, Utlak, RIA Novosti.

"“We hope that a strategic long-term agreement on supplying natural gas to Ukraine will be signed as soon as possible and this issue will be solved before autumn,” Yulia Tymoshenko said. As the PM of Ukraine says, regardless of the fact that the gas issue is regulated there are several problems the solving of which should be searched in the further negotiating process between Ukraine and the Russian Federation. According to Yulia Tymoshenko, all the present gas agreements signed with Russian side regulate the supply of natural gas to Ukraine only for 2008." (UNIAN)

And more about the attempted buy out of 50% of RosUkrEnergo. (could turn out to be pr disaster for PM Tymoshenko)

Update: When asked about the buyout deal (time 10:56), PM Tymoshenko stated that she thought Mr. Kolomoyskyy and PrivatBank have lost their business nose and it will be the really biggest unsuccessful investment which they would have made in the past 15 years of working in Ukraine. She thinks that this will be a downfall investment because the company RosUkrEnergo has gotten marks not only from the Ukrainian side but has also received marks from the Russian side and the whole world many years ago, in 2006, all experts who know this matter, said this is corruption, shadow, non-transparency, and that is why putting money into such projects is absolutely [?] matter. Would advise him against it. (Reuters version) And from ukr UNIAN and  UNIAN "As UNIAN reported earlier, Alexander Medvedev, Gazprom`s deputy chief executive, said the group had long-term contracts under international law with Rosukrenergo, the Swiss-based trader, and therefore could not immediately cut it out of the trade. "We are not finished with Rosukrenergo. You see we have a system of long-term contracts with Rosukrenergo in international legislation," he told the Financial Times in an interview. "We are now working very carefully not to be in breach of the contract signed."

Ukraine is in debt for 2 billion USD for gas. PM Tymoshenko and delegation is being sent by the President to Moscow for negotiations. (ukr UNIAN) What will it be like next year when prices are expected to be at least $320?

"Speaking during a visit to Brussels after the announcement, Ukrainian President Viktor Yushchenko welcomed the agreement with Gazprom but noted that parts of the deal still had to be "assessed and accepted."

The president's press office later said Yushchenko had called for a meeting with Ukrainian Prime Minister Yulia Tymoshenko, who has been heavily involved in the gas negotiations with Russia. Under the agreement, Gazprom said Ukraine will meet a Russian demand that gas deliveries so far in 2008 will be paid for. Starting this month, Ukraine will no longer make gas payments via opaque intermediaries criticised by Ukraine's leadership, it added.In clauses that analysts said could prove more controversial for Ukraine, the deal said Gazprom will supply Ukrainian industries directly from April and hinted at price hikes for imports from 2009. ...

In Thursday's statement, Gazprom said Ukraine had agreed to pay for supplies of Russian gas in January and February through RosUkrEnergo, a controversial intermediary owned by Gazprom and two Ukrainian businessmen.

The price for that gas will be 315 dollars per 1,000 cubic metres. Naftogaz explained that there would be no payment as such but that the 1.4 billion cubic metres of gas delivered by Russia in January and February would effectively be worked out through reduced supplies going forward. Gazprom said Ukraine will also pay, via RosUkrEnergo and another subsidiary, UkrGazEnergo, for deliveries of 5.2 billion cubic metres of Central Asian gas that were made in January and February. But from March until the end of 2008, the payments will be made directly by Naftogaz at a price of 179.5 dollars per 1,000 cubic metres, in line with demands made by Yushchenko ahead of the talks, the statement said. ... "We don't think the potential increase in Central Asian gas would have any effect on Gazprom but it would have a very significant, almost devastating, effect on Ukraine if it happens," said Kushnir from Deutsche Bank." (AFP) For a slightly different report of the story check out Bloomberg.

For more go to Kremlin Inc (which I am happy to say has gone up the Google scale :)  

"A day after Ukraine paid most of its 2007 natural gas debts, Russian gas giant Gazprom accused the country of incurring $600 million debt for gas supplied in January and February. ... But Gazprom insisted that since the beginning of the year, it had been also selling its own, more expensive gas, completing short supplies from Turkmenistan, suggesting Ukraine should pay more as the price of the Russian gas was almost twice as high as the Turkmen gas. ... The Ukrainian government refused to accept the higher price, adding it was impossible to prove that the gas had actually come from Russia, not Turkmenistan. A Ukrainian official said that nobody had ever asked Gazprom to send its own, more expensive gas to Ukraine." (Ukrainian Journal)

And this was before Gazprom's announcement that it was planning on cutting supplies to Ukraine on March 3rd, by 25%. Hans has been one busy bee following up with all the gas news and then he went and tried tracking down information directly from RosUkrEnergo.

From Kremlin Inc --- "[Hans] I was hoping to confirm some of these figures and activities with RosUkrEnergo but was not able to get into contact with their office. Within the last week or two, it has removed the contact information for its Ukraine and Turkmen representatives from its website. I had earlier saved the information (and a google cache has it too).... No one answered the Kyiv phone number so I instead went to the address, which happens to be in the swanky Arena City / Mandarin Plaza complex that is owned by RUE-big wig Dimitry Firtash. I was unable to locate an office for RosUkrEnergo, but was instead directed to the offices for UkrGazEnergo within the same structure. While I was not able to get past security, I may be able to set up a future meeting with a company representative."

Hans you are too cool :) Thanks for all the info. and the updates on your blog. To be honest, I have become so fatigued with the whole thing, I have stopped trying to figure it out (makes my head hurt.) So it is fab to read your entries. Thank you for your blog and keep up the good work.

In the news besides, the potential gas shut off (or partial shut off) to Ukraine by Gazprom, PoR is unwilling at this time end its blockade of Parliament even with a compromise regarding NATO and referendum offered by the Speaker, President Yushchenko's visit to Moscow tomorrow, Ukraine being behind on Euro 2012, Ukrainian schools closed due to the high number of children who have influenza ... The big one for me is pictures of Rudkovsky sitting behind bars.

Former Minister of Transport in PM Yanukovych's government and member of the Socialist Party, Mykola Rudkovsky has been detained by the Secret Services of Ukraine, leading to his arrest. He is known to scandals such as his jaunt to Paris with Miss Ukraine and charges of misspent state funds. (And from Ukrainiana site regarding his involvement in hosting exiled Turkmen leaders.)

"The court decided to choose arrest as preventive punishment since Rudkovskyi did not cooperate with the investigation, violated the written undertaking not to leave town in his living not at the place of registration." (Ukrainian News)

Since being arrested by SBU Rudkovsky has been plagued by illness even being in need of a wheelchair when brought in before the judge. Whether the illness is real of feigned, this formerly robust politician faces charges of not cooperating with authorities regarding investigation into his alleged misdeeds as Minister of Transport and surprising can actually say at this time, "Bandits go to jail." Let's see if others will join him. (Including current Cabinet ministers?)

Aside: Interview in english with Oleh Dubyna CEO of NaftoHaz. While "Board chairman of Ukrhaz-Energo joint venture Ihor Voronin says NJSC Naftohaz Ukrainy cannot purchase gas from Central Asia on direct contracts, bypassing the mediator RosUkrEnergo." (Ukrainian News)

"Gazprom official spokesman Sergey Kupriyanov claimed in the air of “Vesti” television that if Ukraine does not settle the issue of its arrears, the gas supplies to this country will be halted next Monday." (UNIAN) (Story in Reuters Forbes Reuters M&C Focus News Interfax)

Was afraid of this though should make Pres. Yushchenko's visit to Moscow interesting if the gas going to Ukraine is stopped the day before. The question is whether it is Ukraine getting in to WTO ahead of RF? Ukraine's push for NATO MAP? Getting rid of gas intermediary companies? --- what exactly was the cause for this latest uproar? And wonder whether the "debt" will be one or two billion USD?

Also interesting to see whether this threat will get PoR and CPU to stop blockading Verkhovna Rada for its new session scheduled Feb. 12th?

Update: "The European Commission said it is considering calling for an urgent gas coordination group meeting to be held over Gazprom's threat to cut supplies to the Ukraine from next Monday if Kiev does not resolve its debts." (Hemscott)

Update 2: According to information there is a $1.5 billion dollar debt, no there is not, yes there is and Naftohaz states it has not received notice of any planned cut off while report is Gazprom is ready to cut off gas while talks are beginning and talks have already failed to reach a deal. While according to an expert, there is low probability of a gas shut-off and statements about White Stream are what sparked this latest in the gas wars. (Personally not really sure what Gazprom will do if it does not get its $1.5 bil which it most certainly not going to back down from while Naftohaz is very clear that it owes no money.)

"Naftogaz Ukraine vice-president Igor Didenko 'has been informed in detail about Gazprom's position, and the negotiations on this are finished', Gazprom spokesman Sergei Kuprianov said." (AFX article in which Gazprom states that Ukraine is unwilling to resolve gas debt) (imho sounds less like "talks" and more like "one sided demands". So far only Gazprom's side has been making headlines - where are PM Tymoshenko's people?)

speculation on the future of the Ukrainian oil and gas industry

Yuliya Tymoshenko is back and (I find the pun leaping to my typing fingers with the speed of inevitability) she's been cooking with gas. In addition to a whole raft of proposed economic reforms (including the TTI--Tymoshenko Transparency Index--which contains some admirable goals, but is ever-so amusingly self-absorbed) she's been promoting big-time gas and industry changes.

RosUkrEnergo and UkrHazEnergo

The new news is her statement that Yushchenko and the National Security and Defence Council have agreed to eliminate the RosUkrEnergo intermediary from Ukrainian-Russian natural gas trade. If true, this will be a victory for her, as she has long opposed the intermediary (for solid economic reasons, as described in detail in this article, though  the article does get embarrassingly laudatory at times). At another conference on the plans for her visit to Russia (Feb 21-22), Tymoshenko repeated that should be no intermediary. This despite the overall " harmony and understand" theme she was working on to try to put a diplomatic face on things (the Russian government has on occasion attempted to distance itself from RosUkrEnergo, likely because its lack of transparency makes it highly suspicious to the kind of energy investors Russia would like to woo, but has also never showed itself eager to eliminate the company from trade relations; Yushchenko has certainly couched his support for continuing the intermediary in "keep Russia happy" terms).

Moreover, Russia itself seems to be helping her. I thought I was going to be the first to make this connection and bring you some real news instead of bloggy conglomerations, but then I found this article at the Eurasia Heritage Foundation (anyone know something about this source?). The writer, John Marone, also noticed with interest the arrest of Seyon Mogilevich by the Russian government. The Eurasia Daily Monitor article details two prevailing theories on the arrest (that it was done by opponents of Medvedev to show they're still relevant or by Putin to put Mogilevich where he won't be talking to reporters), but Marone was more interested in how Tymoshenko might be able to use the arrest, since Mogilevich happened to be the major Russian participant in that very same RosUkrEnergo scheme.

He reports her statement on the arrest:

“The presence of additional middlemen is a sign of specific corrupt activities. The recent arrests demonstrate that the international community is following events and will not allow the development of any shadow models, including among states bordering the EU. Therefore, my position remains unchanged: all shadowy middlemen will be shut down.”

Nothing surprising there, but her discussions with them at the end of February should be fun to watch.

The White Line 

Simultaneously, she's kick-started discussion of another gas pipeline route, one that would bypass Russia but travel through Ukraine on its way to Europe. This comes at a time when another Russian-bypass pipe project proposed by EU countries themselves (Nabucco) has been foundering. (In an article called Pipedreams published the week before her announcement, Economist described the situation.)

How seriously should we take this? To put things bluntly: this sounds a lot like another Odesa-Brody pipeline and we don't hear much about that these days. Before Tymoshenko's White Line, it was the big pipeline project that was going to get Central Asian oil to Europe without Russia. As the linked RFE-RL article points out, though, Ukraine failed to find the oil to pump under Kuchma, and it's been pumping Russian oil the opposite way since 2004. While there is a prospective extension of that pipeline to Plock, there are still a lot of questions. To create another line to meet whatever unknown demand is left over with as-yet unknown supply does not seem particularly promising.

Nevertheless, even having the option on the table is a bargaining chip. And a reasonable argument can be made that a major reason for the failure of Odesa-Brody was a lack of government will to push it through and risk Russian retaliation (in forms such as raising the then-bargain natural gas rates), a lack Tymoshenko has never felt.

So throwing this idea sounds like fun to me, though I can't see why she called it the White Line and not something more like, say, TymoTunnel.

WTO and, Why Not?, the EU

Ukraine finished WTO bilateral negotiations this January (this was not a Tymoshenko thing; rather it was a steady if obscenely slow process pushed along by the last four government formations). Should the WTO officially welcome in Ukraine at its Feb 5 meeting, as Yushchenko has predicted, there will definitely need to be further reform and efforts to harmonize standards (referred to by the Ukrainian agriculture minister and indirectly by Yushchenko in his call for Tymoshenko to oversee the transition process for the grain sector). Nevertheless, Russian Finance Minister Alexei Kudrin makes his government look rather spiteful and self-absorbed for saying Ukraine (after fourteen years of negotiation; the first ten of which were a wash) has recklessly rushed in "on unfavorable terms just to get in ahead of Russia."

However long we've been waiting for this move, that Ukraine will be getting into the WTO soon is a reason for a little bit of celebrating. Tymoshenko did so by proposing that the EU join Ukraine in a free trade zone and share joint visas with it.

The strategy reminds me of an old Calvin and Hobbes comic I once read:

"Mom, can I set fire to my bed mattress?"
"No, Calvin."
"Can I ride my tricycle on the roof?"
"No, Calvin."
"Then can I have a cookie?"
"No, Calvin."
"She's on to me." 

Who knows, maybe the EU reps will be squishier than Mrs., uh... Mrs. Calvin's Mom. (Then can we have an EU *action plan*?...)

Miners were evacuated from a Donetsk coal mine. The fate of one miner is still as of yet unknown. At around 8:45 this morning at the mine, there was a fire at the coal mine. While at another coal mine this time in Luhansk there was also a fire this morning from which miners were also evacuated. (The reports do not list the number that need medical attention for smoke inhalation.)

Okay, full day's session of NSDC devoted to resolving Naftohaz. Fantastic and about time. Yipee. So the upshot is there are no debts but there are unmade agreeements between Naftohaz and UkrHazEnergo, and the goal is to make Naftohaz stable. PM Tymoshenko is to be directed to decrease tax loading on Naftohaz. (I am truly starting to get annoyed at Channel 5's reporting. Sigh. It may be the 'death of an era'.)

Esp. as compared to report from 1+1  The National Security and Defense Council charged the Cabinet to take measures to correct the financial state of Naftohaz and save it from bankruptcy. The marathon session of NSDC lasted 7 hours.

Explosion at coal mine in Donetsk region. Cause currently unknown. Six prisoners injured with four listed in grave condition in the hospital with serious injuries. Those injuried were prisoners of correctional facilities and not regular mine workers.

What were they doing working in a coal mine - was this part of their sentence? is this even legal? isn't this a vioaltion of human rights?

Really excellent coverage to the twists and turns in gas affairs done by LEvko at Foreign Notes and Hans at Kremlin Inc.

I leave it up to the experts as there is an "informational war" going on (esp. on the Net) and lots of unconfirmed rumors are flying about from (imho) 'questionnable' sources in regards to companies whose activities make them seem more like 'cash cows' and personal 'piggy banks'. My only concern is that Ukraine may soon be yet again be presented with a debt from Gazprom for hundreds of millions or billions. Will see.