aw, nuts

No goals for Ukraine in the World Cup game. 3-0, win to Italy. And RoU continued to block the podium on the Orange coalition vote. No word on what's going to happen until next week.

I know, the Oranges could bring back all the footballers to set up a screen to get the deputies through and get out some of their disappointment at the same time.

Oh, well. At least it's Fourth of July weekend for all us America-bound folks. Have a good one, everyone. Let's hope there's good news when we get back. 

 because with gas/electric prices headed way up, it's going to be a cold winter

The price of natural gas is already up 25%, and, as the Kyiv Post reports, it's set to rise another 85% in July. The government wants Naftogaz to cut UAH 4.8bn off its UAH 53bn in spending, and Naftogaz has responded by asking for a billion hryvnya subsidy. Electricity prices are set to go up an addition 25% (on top of 25% already implemented), along with train tickets and phone rates.

As many commentators have said, the higher prices are necessary to spur industry to perform long-overdue capital improvements. But in the meantime, it's going to be quite difficult for Ukrainians to keep the lights on the the apartments warm this winter, and tickets to Crimea this summer aren't coming cheap.

The Shape of the Natural Gas Agreement To Come

In the middle of this, the current natural gas deal with Russia (never a great one) is going to get renegotiated or replaced. This isn't official yet, but it would be hard to find a major participant in the current deal who thinks otherwise.

Tymoshenko has objected strongly to the deal from the start. Therefore, it should come as no surprise that she's already started sizing it up for replacement. When she becomes PM today (barring a major collapse, see next section) she is likely to start pushing for immediate revision.

Meanwhile, Putin and the Russian government are also looking amenable to changes. The current deal has them providing gas to Ukraine at $95/1000cu m. This is not the direct price, but a product of playing with numbers in which Russia charges Ukraine a high (even by Western European standards) price of $230 but mixes in Turkmen gas at a nominal $50. Neither of the two combinatory prices is tenable, but the final price was a good deal for Ukraine, at first glance. Unfortunately, it later came out that the prices were only set through July, anyway.

That means that things were already highly questionable even before a new factor emerged: Turkmenistan is about to raise the rates it charges Russia. This will throw all the economic calculations in the current deal up in the air. Understandably, the Russian government is going to want to revise upward. Putin expressed interest in a new deal back when Turkmenistan was just mulling over the idea of raising rates. Now that it's official, he's pushing harder.

In fact, the only people nowadays who like the deal are the deputies in the Party of Regions. Listen to Yanukovych:

“This is an attempt to instigate anti-Russian mood in Ukraine and is an attempt by the government to cover up its incompetence,” Yanukovych said in an interview with Izvestia, a Russian daily, published Wednesday. “If the government moves to revise the agreement without any reason, tomorrow the entire Ukraine would rise against this [government].” [Ukrainian Journal]

And here I thought they were opposed to the deal. I mean they've only been denouncing it for months; they've only called (with Tymoshenko) for the Cabinet to be impeached because of it.

Talk about Janus-faced politicking. On the upside, this means PoR deputies must be pretty sure they're not going to be able to stop the new Orange coalition. Back when they had a chance at being in the Cabinet, they pretended to be incensed about the old deal in the expectation that they might need to sign off on a new one. Now, safe in the policy-making impotence of opposition, they've scuttled away from the fallout zone as fast as they can. I can hear the sanctimonious speeches about suffering Ukrainians already.

Whatever happens during negotiations, it is likely:

1. the new deal will substantially increase the price of gas to Ukraine, perhaps as high as $180/1000cu m
   
2. During negotiations, Russia is likely to make lower offers, which will be contingent upon Ukraine surrendering an unacceptable amount of control over its pipelines. It may actually manage to gain some control in the process.
   
3. this will be the end of RosUkrEnergo, the shady intermediary, thank goodness
4. drag on for quite some time

Unfortunately, I'm still not expecting the deal to get Ukraine and Turkmenistan working directly with one another, as might help both. As the spat drags on, it may even result in the same deadlock as last winter, with Russia "shutting off the tap" and Ukrainians skimming from European oil while Europe tries to figure out whom to blame. Meanwhile, PoR will be trying to convince Ukrainians that everything would have stayed just like it is now under their leadership.

Orange Cabinet Vote Today

Despite some of the news reporting, even from Yushchenko himself, the Orange Cabinet is still not a done deal. If it fails in a vote today, there is still the possibility that it will bring down the whole coalition with it. As Foreign Notes explains: 

The Orange coalitionists have confirmed that they will propose Yuliya Tymoshenko for PM, and Petro Poroshenko for parliamentary [VR] speaker. They have decided that voting will take place 'in a packet', i.e. the two positions to be voted for, openly and simultaneously.

...

Voting is supposed to be taking place tomorrow, but PR have been staging a 'sit-in' for the last two days, preventing the VR from functioning. They threaten to remain there until the VR is dissolved, and are demanding that the two posts are voted for separately by means of a secret vote. [So increasing the chances of bribed or otherwise 'nobbled*' orange deputies pressing the 'correct' button? For what other purpose would democratically elected representatives demand a secret vote?]

Kinakh and his party may try to play spoiler by voting against Poroshenko. Foreign Notes also mentions some speculation that RoU will try a massive bribery campaign to disrupt the vote. I suppose that's what this article from Ukrainska Pravda is trying to get at. Frankly I filed it under "WTF: someone please hire a real translator for these people".

Nonetheless, I expect to have at least some good news by tomorrow. If not about the coalition, then at least there's that chance against Italy in the World Cup game, right?

Oh, and the orange coalition finally re-formed

Last week at this time everything was grinding on in failure and inaction. The team leader seemingly incapable of action. The team not playing as a unit. Foreign players were taking advantage of the inaction to press on towards their goal--total domination on the Ukrainian side of the field.

But enough about politics. Ukraine just got a huge football victory, and, as I was previously unaware, this success apparently has the mystical ability to push through other victories. Nice comeback, guys. Good luck against Tunisia. Who knows, if you keep winning and take the cup, maybe Ukraine will be able to sort out the natural gas mess.

Orange Coalition Papers Signed...

Tymoshenko cracks me up. After all those months of wrangling in Parliament, people have questions. Why? In her words: because it will decide "Ukraine's course for many, many years". There's some spin mastery! Thank goodness the wrangling is over, now we've pretty much all decided to set aside our differences and work together in harmony towards a common purpose. Really.

At least it happened. After negotiations collapsed again last week, it is likely that Nasha Ukraine again got in back-room negotiations with the Party of Regions, despite Yushchenko's halfhearted protests to the contrary (pardon me, they were only "consultations" not negotiations). In any case, what else could they have been doing after stalling for three months?

There was the usual opposition-y rhetoric from Tymoshenko, Yanukovych confidence, Socialist goading.

Then, finally, after a lot of wrangling they managed to form up the coalition. Whew. I always said the coalition would eventually be orange, but I started to doubt near the end. I was expecting wrangling, but not ninety days of it.

...Now Can You All Please Get Back To Work?

Chief among the problems that have been burning on as the orange forces were performing their concierto is the looming natural gas crisis, compounded by Naftogaz's fall into debt. No time to wait, guys: get those talks with Turkmenistan moving (not a magic bullet, but might at least provide some leverage). Foreign Notes is posting that Tymoshenko has already taken up this cause.

What else might the new government do? How about, you know, pass a few laws. Or put together a pitch on NATO. I've given my suggestion.

[update: Hey, Leopolis somehow managed to insidiously steal my "get back to work" title line and put it out before me. How devious. Great links on the article, Leo, sorry I didn't double check your blog before putting up this title.]

A Couple Side Notes 

1. It looks like Poroshenko's going to be Speaker, since Yekhanurov seems to have dropped out, and NU is going to get the choice. This is to be expected, he's always had a lot of pull in NU to match any push to keep him out of the leadership.
2. Matt Jay, blogging Ukraine over at Publius Pundit, was on top of the coalition news yesterday, and today he added this link, showing "239 mandates, which means that 4 MP’s have already defected [from the Orange coalition - oops, miswrote originally]". Back in March I expected such defections would be theoretically possible to win over, but I'd expected them to be coming the other way. We'll see how people line up on actual votes, though.
   

Still more pleasant to watch than political news

The Spanish football squad recently crushed Ukraine in the World Cup 4-0, tempting the Ottawa Citizen into a pun all the rest of us were too dignified to stoop to (the LA Times pulled up at the last minute). All that remains for the Ukrainian team is to try to get things together for the Saudi Arabia match.

All those Ukraine fans out there can at least salve their wounds with the knowledge that the team was cursed with a plague of frogs (not kidding) and that the judging in the game was farcically biased against them. Every one of my friends who saw the game was convinced of the bias.

Of course, none of them were Spanish...

Anyway, even getting to the World Cup is a big victory, and that's more than I can say about:

The Ever-Delayed Orange Coalition

Things looked to have fallen apart yesterday as the Socialists tried to hold on to the Speaker position even after NSNU finally conceded the PM spot to Tymoshenko. NSNU didn't back down, and everything dissolved into bickering. After that, they called a break again. Ho-hum, same old song in Kyiv.

In general, NSNU's argument was reasonable: that the Speaker position, as next in power after the PM, should go to their party since they finished ahead of the Socialists in the election. Yet NSNU should get no sympathy, because, by the same logic, they should have allowed Tymoshenko to assume the Premiership three months ago. Instead, they held on to an unreasonable and untenable position for as long as possible. They continue to do so.

Fortunately, the Socialists seem at least a little more reasonable than their NSNU counterparts: Moroz has dropped his demand for the Speaker position. Nonetheless, Zvarych says NSNU has been consulting with the Party of Regions. This has prompted  BYT and the Socialists to state their preparedness to go into the opposition. Zerkalo Nedeli is so sick of the delays that they gnashed their teeth through a 4200-word ode to disgust (memorable headline: “Orange Coalition”: No Rudder, No Sail).

Economics and Gas

A broad economic overview as of May 2006 can be had at SigmaBleyzer (generally a bit more optimistic than I). For additional economic forcasting, here is a good Kyiv Post article on the imminent price hikes for natural gas, electricity, railway transportation, and intra-city phone calls.

We're still waiting for the expected natural gas price hike from Russia to come through. The active chairman of Naftogaz is negotiating with the Russians now to try and stop it. Heh - there's a job I wouldn't want. But good luck anyway, fella. In oil news, Shell signed an exploration deal with Ukraine.

If you get a chance, drop by the Book Library. 

June 7 was the deadline day for an "orange" coalition. Everybody met behind closed doors on Tuesday in preparation. They were ready to finally, finally, form a government on Wednesday.

Aaaand... they put off doing anything again.

What's most irritating is that NU's complete unwillingness to bargain in a responsible manner is making their government completely ineffective and that, over this long period of time, is probably going to convince some Ukrainians that their goals are wrong. I hold some hope, because after years of Soviet and Soviet-style doubletalk, Ukrainians are world champions at distinguishing poor implementation from poor goals. Still, it's a dragging waste of a shame, which hits economic development, consumer confidence, and many other things. And the gas issue continues to steadily leak away in the background. But don't worry, no danger in that, according to Russian Gazprom.

Who's most to blame? There's always been speculation that Poroshenko is the lead spoiler. He's certainly getting flak from the Socialists and if he is playing spoiler, I hope he gets more. The rest of NU is trying to take away Tymoshenko's ability to act by requiring consensus for coalition decisionmaking. As if they've proved their ability to do that in forming the coalition.

The Anti-NATO Protests and Russian Weakness Prodding

In the same way a spoiled child will keep pushing buttons when he knows he won't be punished, all the anti-orange folks are getting more and more confident the longer the orange coalition goes on doing nothing. That is why this Vitrenko-led protest in Crimea has grown into this larger issue (with a scuffle in between; also see the Washington Post coverage). Makes me almost glad Bush isn't coming after all. Considering his divisive presence and the authorities' lack of control, his visit might just have aggravated things after all.

The Russian government is smelling weakness, too. To start, they've been giving Ukraine anti-NATO advice. They're holding a hard line on Kerch.

Last month, Russian MPs, spearheaded by Zhirinovsky's faction felt emboldened to call for Russia to annex Crimea. Thrilled to have Vitrenko agitating for him, he came down and found himself barred at the Ukrainian border. And the Russian foreign minister thinks this was terribly, terribly unfriendly. of Ukraine. C'mon, guys, what's a little incitation to revolt and armed conquest between friends?

All I can say to the Russian government is keep up the good work, fellas. You are tempting even Regions of Ukraine to a mild rebuke and a little diplomacy.

In my little metaphor above, Yushchenko is playing the role of the incompetent parent with his powerless support for NATO and toothless rebuke to the protesters. If he and his party had stopped their bickering and helped create a functional government any time in the last three months, this problem would never have happened. If they hadn't wasted October of last year to March of this year doing absolutely nothing to advertise the benefits of NATO, they might even be moving forward with the process by now.

As Zerkalo Nedeli so aptly put (in the best article on the circus so far): "Crimea - Authority Free Zone".

And here I'm wondering: how hard is this PR campaign that the orange government has avoided doing anything yet? I could probably make the case in three minutes. In fact, I will.

Dan's Three-Minute NATO Pitch

NATO is the most skilled partner in the world at training up militaries, especially from the FSU, to professional level. A professional military is, in fact, a requirement of entry into NATO and thus many of the benchmarks and activities along the way to membership involve increasing professionalism.

If Ukraine goes through the membership process and builds this professional military, then no more draft. No more wasted years of their sons' lives serving in crap conditions, with poor rations, under disgruntled superior officers. All the problems that come with forced service will drop off. All the corruption around dodging the draft, and the use of conscript labor on certain tasks will become non-issues.

In theory, Ukraine could try to create a professional military on its own, but why not get assistance from militaries with positive experience? I repeat: this is pre-membership assistance, as a matter of NATO policy. If membership doesn't look good in its own right by the end, then Ukraine can wind down the process. Adopt a "neighborhood policy"; can't get more like an EU member than that.

Why is that so hard to say?

[update: I read this article in the Kyiv Post before making my pitch. Forgot about it, but read it so should have acknowledged it as a source. Sorry this link is coming late]

I'm a little behind on the news, having concentrated on the new OU book library, but the former orange parties have finally managed to agree on something: putting off the final coalition agreement until June 7. For which reason, I think it good of George W to start asking to visit now. With some significant amounts of luck, his arrival might nudge things along in the right direction.

Unfortunately, many papers are pessimistic about the chances of an eventual orange coalition after over two months of ceaseless wrangling. Zerkalo Nedeli zings Yushchenko for his part in frustrating orange voters in this article:

Yushchenko distances himself from the negotiations in order to minimize the risks for his political image. That is why in his speeches, the President says that he does not take part in the formation of the coalition. It is as if the President is saying in advance that it is not his fault if Yekhanurov unites with Yanukovych. The final breakup with Tymoshenko should be ideologically grounded and the major forces have been engaged in that work.

There's still hope for an orange coalition: they have at least agreed on something, one would hope Yushchenko would be helpful now that he's stepped in officially, and, of course reason, suggests an orange coalition is the better choice. Unfortunately, some OU bigwigs would have their interests compromised by this deal, so they may continue to pursue one unreasonable goal with monomaniacal devotion: keep Tymoshenko from becoming PM.

Looks like more waiting until mid-June.

Transdneister - Still Smuggling Away

The NYTimes has a good article on the spotty effectiveness of the new customs rules with Transdneister supposed to help battle corruption (Which I discussed and wrote a follow-up on). Still, a little pressure is still better than none at all.