fbpx

A Weakened Ukraine Negotiates with Moscow

There are reports in the Financial Times and Wall Street Journal about the Ukraine’s discussions with Russia on energy supply deals being hampered because of the country’s defense of Georgia’s sovereignty following the invasion in August. This is interesting because we are told over and over by the company’s executives that Gazprom’s decisions are purely commercially motivated and aimed toward profit maximization – not the fulfillment of the Kremlin’s political goals. If that’s the case, then it should be entirely irrelevant what the position of any government is which happens to be a Gazprom customer. Nevertheless, I imagine the Russians are feeling a good deal of impunity in their energy squeeze on the Ukraine now that Angela Merkel has spoken out against NATO MAP status. Bad timing from the Germans… From the FT:

“Unfortunately, rather than occurring on the backdrop of improved relations, our meeting comes amid difficult conditions,” Mr Putin said at his residence outside Moscow. With Ms Tymoshenko at his side, Mr Putin referred to the “indecisiveness of decision-making” in Kiev which, he added, was “itself due to the internal political situation”. (…)

Responding to Mr Putin’s sharp words, Ms Tymoshenko stressed that her country would overcome, “step-by-step”, its domestic political challenges and improve ties with Moscow.Ms Tymoshenko’s negotiations in Moscow were aimed at agreeing a multi-year accord for natural gas exports to Ukraine. But the actual price it will pay for the energy – previous haggling over which has caused interruptions to European gas supplies – is to be left for later this year. While a final agreement could double the price Kiev currently pays, Ms Tymoshenko has called for a gradual increase.

From the Wall Street Journal:

Moscow has been just as determined in opposing efforts by Ukrainian President Viktor Yushchenko to lead his country into NATO. Since the Georgia conflict, Mr. Yushchenko’s pro-Western coalition with his political rival Prime Minister Tymoshenko has disintegrated, damping hopes of NATO accession.Ms. Tymoshenko has taken a much softer line toward Moscow than Mr. Yushchenko and has declined to criticize Russian actions. In Moscow Thursday, she secured a deal with Mr. Putin on natural gas supplies to Ukraine.While details were unclear, Ms. Tymoshenko said the two sides had agreed to set a three-year transition for Russia to raise the price at which it sells gas to Ukraine to world-market levels, according to news agency reports. Ukraine now pays less than half the global market price for gas.Nevertheless, tensions persist between Kiev and Moscow. Mr. Putin on Thursday again accused Ukrainian personnel of manning guns that shot down Russian aircraft during the war in Georgia.