Gas Crisis Cooling Down?

p7.jpgWinter is upon us, and the last couple of days have seen rumors rumbling about the possibility of another gas interruption – due to payment problems at Ukraine’s end.  It is alleged that Ukrainian Prime Minister Yulia Tymoshenko alerted Vladimir Putin to the fact that President Viktor Yushchenko was impeding ‘the normal partnership between the Central Bank, which had the gold reserves at disposal, and the government’, thus jeopardizing payment.

The good news for those in Europe looking forward to a toasty winter is that analysts are suggesting that this talk is more hot air fueled by political rivalry between Viktor Yushchenko and Yulia Tymoshenko (who will race each other ,along with Victor Yanukovych, to the post of President in January) than the rhetoric of a veritable potential pipeline freeze.

Jason Forbes on Reuters comments on why the situation is unlikely to escalate:

A new gas war with Ukraine would be highly damaging for Russia economically. The last dispute is estimated to have cost Gazprom (GAZP.MM), the state-controlled group, $1.5 billion in lost revenues, not to mention the damage to its reputation and the loss of market share that resulted.  Russia also has a strong political incentive to go easy on Ukraine. With Yushchenko almost certain to be replaced by a more pro-Moscow politician, the Kremlin has every reason to be satisfied with the way things are going. A renewed gas war on the eve of the election would just complicate matters.

And this is in from RFE/RL:

Volodymyr Fesenko of Kyiv’s Penta center for political studies says he’s optimistic that [a crisis] won’t happen. “I believe the majority of politicians in Ukraine and Russia aren’t interested in another such crisis,” he says.


The latest wrangling comes ahead of the country’s presidential election in January. Tymoshenko is running against Yushchenko, her former Orange Revolution ally.

Once the subject of an arrest warrant in Russia, Tymoshenko has been forging closer ties with Moscow as her relationship with Yushchenko has deteriorated. Some believe Putin supports her candidacy against his bitter foe Yushchenko.

But Fesenko says Putin’s criticism of Yushchenko probablyisn’t meant to influence the election. He says Russia’s hard-line primeminister is interested chiefly in ensuring Kyiv comes up with the moneyto pay Moscow — and in blackening Ukraine’s image in the West.

“If Ukraine is seen as a weak link in the supply of gas,” he says,”Putin may be hinting that Europe should back [projects to develop]alternative routes.”

Vladimir Pribylovsky of Moscow’s Panorama political research groupagrees. He says while Putin has trouble containing his intense dislikefor Yushchenko, targeting him now makes little sense because Yushchenkoalready has “no chance” of winning January’s election.

“Of course the Kremlin would like to influence the situation inUkraine,” he says, “but it hasn’t yet figured out what it actuallywants from Kyiv.”

Pribylovsky says the Kremlin hasn’t decided whether to back Tymoshenkoor Russia’s traditional ally, Victor Yanukovych, leader of thepro-Moscow opposition Party of Regions.