EU-DIGEST

Russia, Ukraine Appeal to EU in Gas Delivery Dispute - by Stephen Bierman and Daryna Krasnolutska

Russia and Ukraine sought support from the European Union to resolve their deepening dispute over gas supplies on the fifth day of suspension of shipments to the former Soviet state as OAO Gazprom raised its price demands. Gazprom Chief Executive Officer Alexei Miller said the Russian exporter hopes an offer to deliver gas to Ukraine this month at $450 per 1,000 cubic meters, the average price in countries bordering Ukraine, excluding transport costs, would bring Ukraine back to talks. Ukraine says $201 would be fair.

Labels: EU, Gas Supplies, Russia, Ukraine

Is Europe Running Low on Natural Gas? - by Euan Mearns

OECD European gas production looks set to peak in 2008. After that, falling production combined with rising demand will see OECD European gas imports wanting to rise from current 197 BCM per annum to 442 BCM per annum by 2020. Where will this gas come from and how will rising European imports affect N America and the rest of the world?

As of 2006, OECD Europe produced 55% of its own natural gas with the majority of gas imports coming from Russia and Algeria. OECD Europe has three main gas producers - Norway, The UK and The Netherlands. Norwegian gas production is undergoing a major expansion, but this is forecast to halt at 130 BCM per annum next year for political resource conservation reasons. UK and Dutch gas production are in decline, and combined OECD Europe indigenous gas production looks set to peak in 2008.

Labels: EU, Gas Supplies, Gazprom, Russia, Ukraine

Europe Up As Russia Turns Off The Taps - by Javier Espinoza

European stocks made a worthy start to 2009 on Friday as shares climbed higher in the first trading session of the year, even as Russia turned off the gas taps to Ukraine and fresh economic data from the euro zone pointed to contractions in manufacturing.Russian state-run energy firm Gazprom (other-otc: OGZPY - news - people ) halted gas supplies to Ukraine at 10 a.m. on Thursday after talks over payment arrears and gas prices in 2009 broke down on New Year's Eve. Ukrainian President Viktor Yushchenko has said he wants to resume talks with Moscow, and that a compromise with Gazprom was achievable by Jan. 7.

The supply disruption has yet to affect Western Europe, as energy firms in Germany, France and Italy have not yet seen any drop in supply. Analysts say Europe has enough gas stockpiled to manage without Russian gas for several days, though not weeks.

Labels: EU, Russia, Ukraine

Georgia, Ukraine Told They Do Not Meet Standards For NATO Membership - by Liz Fuller

The NATO foreign ministers' decision on December 2 not to offer Membership Action Plans to Georgia and Ukraine should not have surprised anyone. Nor should their reaffirmation of the provision enshrined in the final document of the April 2008 NATO summit in Bucharest that those two countries will at some unspecified future date join the alliance. But the fact remains -- and was stressed by both NATO Secretary-General Jaap de Hoop Scheffer and U.S. Secretary of State Condoleezza Rice -- that both Georgia and Ukraine still fall short of basic NATO standards in terms of both political reform and military readiness.

Note EU-Digest:
There also is absolutely no need to admit Albania and Croatia into NATO. As a matter of fact the EU should also insist for reasons of unity and conformity that those EU nations which already are in NATO should be grouped under a single EU unbrella possibly as proposed by French President Nicolas Sarkozy re: EU Elite Defence Force.

Labels: Albania, Croatia, EU, Georgia, Nato, Ukraine

French minister opposes Georgia, Ukraine entry to NATO

France's minister for European affairs on Wednesday said he was opposed to Georgia and Ukraine entering the NATO military alliance for now because it would not benefit Europe. "I think that it is not the right time for membership for Georgia and Ukraine," Jean-Pierre Jouyet said on the sidelines of a European Parliament session. "It is not in the interests of Europe or its relations with Russia." NATO foreign ministers are in December set to once again examine Georgia and Ukraine's candidacy for membership, strongly denounced by Moscow. While Jouyet said he was expressing his personal opinion, he in fact confirmed a view repeatedly expressed by Paris.

Along with Germany, France has been reluctant to take the two ex-Soviet states into the alliance and draw the wrath of Russia, which has made it clear it would regard such a move as something close to a hostile action by NATO. Note EU-Digest: this is a wise move. Letting these countries in might be of interest to the US government, it certainly is not in the interest of the EU's relationship with Russia.

Labels: EU, France, Georgia, Ukraine

NATO-The German Question - by George Friedman

German Chancellor Angela Merkel went to St. Petersburg last week for meetings with Russian President Dmitri Medvedev. The central question on the table was Germany’s position on NATO expansion, particularly with regard to Ukraine and Georgia. Merkel made it clear at a joint press conference that Germany would oppose NATO membership for both of these countries, and that it would even oppose placing the countries on the path to membership. Since NATO operates on the basis of consensus, any member nation can effectively block any candidate from NATO membership.In one sense, Merkel’s reasons for her stance are simple. First, expanding NATO guarantees to Ukraine and Georgia is meaningless. NATO and the United States don’t have the military means to protect Ukraine or Georgia, and incorporating them into the alliance would not increase European security. From a military standpoint, NATO membership for the two former Soviet republics is an empty gesture, while from a political standpoint, Berlin sees it as designed to irritate the Russians for no clear purpose. Next, were NATO prepared to protect Ukraine and Georgia, all NATO countries including Germany would be forced to increase defense expenditures substantially. This is not something that Germany and the rest of NATO want to do.Finally, and perhaps most importantly, Germany spent 1945-1992 being the potential prime battleground of the Cold War. It spent 1992-2008 not being the potential prime battleground. Germany prefers the latter, and it does not intend to be drawn into a new Cold War under any circumstances. This has profound implications for the future of both NATO and U.S.-German relations.

Germany is also heavily dependent on Russian natural gas. If the supply were cut off, Germany’s situation would be desperate — or at least close enough that the distinction would be academic. Russia might decide it could not afford to cut off natural gas exports, but Merkel is dealing with a fundamental German interest, and risking that for Ukrainian or Georgian membership in NATO is not something she is prepared to do.

Labels: Croatia, EU, Germany, Nato, Ukraine, US

Russia - Putin: Ukraine gave military aid to Georgia in war with Russia - by Arthur Bright

Russian Prime Minister Vladimir Putin charged Ukraine with supplying arms and manpower to Georgia during its recent war with Russia, and said if Ukraine's involvement was proven, it would be a "crime." Russian news and information agency RIA Novosti reports that Mr. Putin made the accusation Thursday during a meeting with Ukrainian Prime Minister Yulia Tymoshenko to sign a new contract on Russian natural gas exports to Ukraine.Sevastopol has been home to Russia's Black Sea Fleet since 1783. In 1997, Ukraine agreed to lease the port to the fleet until 2017, when the agreement would be up for renewal. Angered by Russia's actions in Georgia, Ukrainian leaders no longer want to renew the fleet's lease after 2017.But one of Russia's concerns about Ukraine looks to be allayed, at least for the time being. Although Yushchenko has campaigned for Ukraine's membership in NATO, The Wall Street Journal reports German Chancellor Angela Merkel announced Thursday that Germany would not support giving a membership "road map" to Ukraine or to Georgia this year.

Mrs. Merkel's rejection of a NATO track for Georgia and Ukraine, at a news conference with Russian President Dmitry Medvedev in St. Petersburg, would effectively act as a veto. The Western military alliance operates by consensus.

Labels: Putin, Russia, Ukraine

Op-ed: Leonid Kuchma Built a Prosperous Ukraine - Anders Aslund

On August 9, Leonid Kuchma turned 70 years old. For 10 years, from 1994 until 2004, he was the president of Ukraine. He arrived as the savior of his nation, but the Orange Revolution ended his second term. His legacy is rich but multifaceted. The year before he came to power, Ukraine recorded hyperinflation of 10,200 percent. The Soviet-style command economy had ceased to function, and no new economic system had been established. Economic chaos prevailed, and output was in near free fall. Ukraine had no international reserves, only unregulated debts. At the time of Kuchma's election, the CIA issued a National Intelligence Estimate titled, "Ukraine: A Nation at Risk," which postulated that Ukraine might not survive as a state.

Kuchma asked the International Monetary Fund to help him sort out state finances and did what it took to save his country. Without hesitation, he carried out the necessary market economic reforms and privatized most of the economy. By 1996, he had defeated inflation and introduced Ukraine's national currency, the hryvna. In 2000, when Viktor Yushchenko was prime minister, economic growth finally took off. Since then, it has averaged 7.5 percent a year—no mean feat.For the last three years, Ukraine has adopted very little legislation, apart from the legislation needed to enter the World Trade Organization this year. If Yushchenko does not change his policies, his term will have been one in which no government could accomplish anything. Naturally, this leaves a black mark on the Orange Revolution. Since Tymoshenko became prime minister, Yushchenko has vetoed nearly all her decisions, notably all decisions on privatization. Inflation rose to 31 percent in May because the Central Bank insists on an inadequate exchange rate policy with a dollar peg and therefore maintains high, negative real interest rates. Whatever you say about Kuchma, he was a man who could make decisions and get things done. His second term, from 1999 to 2004, was Ukraine's most productive in terms of both legislation and economic growth. He managed to rule Ukraine, which is a difficult art. Whatever happened under his rule, he created a functioning democracy. One reflection of Ukraine's democratic strength is that both Kuchma and his predecessor, Leonid Kravchuk, remain public personalities. Kuchma's 70th birthday is an opportunity to celebrate his contributions. Few people have done so much for their country.

Labels: Leonid Kuchma, Ukraine

Ukraine - Rising sex tourism unwelcome

Eight skimpily clad female college students held placards reading “Ukraine is Not a Bordello” in many languages on Kyiv’s Independence Square on July 30. They were protesting the advent of increasingly more sex tourists coming to the country.“Ukraine has a competitive advantage, simply put, our women are the best in the world,” said Vasyl Myroshnychenko, a partner at CFC, a strategic communications, government relations and investment consulting firm. “What Ukraine needs to do [to improve its image tainted by corruption, sex tourism and other problems] is to conduct a positive image campaign with systemic, consistent and coordinated support from the top.”

Labels: Sex tourism, Ukraine

Labels: Ukraine

Bush Coming to Sochi With Hat in Hand - by Peter Lavell

U.S. President George W. Bush will meet President Vladimir Putin for the last time in Sochi this weekend. The agenda is full of contentious issues -- Kosovo, anti-missile defense, NATO expansion and the state of Russian-U.S. relations. As the presidents bid their farewells, it is worth reflecting on the relationship. Bush's last meeting with Putin was unscheduled. Does Bush have some unfinished business? There is good reason to believe that he does, particularly since the two presidents plan to get together on the sidelines at this week's NATO summit in Romania. Bush wants a last one-on-one visit with Putin, and it is clear he wants to talk about -- or talk up -- U.S.-Russia relations.

There could be two reasons for this meeting. Bush has only a matter of weeks to make some kind of broad strategic deal with Putin before Putin steps down in favor of President-elect Dmitry Medvedev. Such a deal could quite possibly be the single foreign policy success of Bush's presidency.

Labels: Bush, Ukraine

Pro-Russia enemies of Nato give Bush a mixed reception in Ukraine- Tony Halpin

About 3,000 Communist and Socialist party supporters rallied in Independence Square, the scene of the pro-Western Orange Revolution in the capital, carrying Soviet-era flags and banners that read “Ukraine against Nato” and “Nato is worse than the Gestapo”, while an effigy of Mr Bush was set on fire. Mr Bush arrives for his first visit to Kiev, before tomorrow's opening of the Nato summit in Romania, determined to show his support for Ukraine's ambition to join the alliance despite strong opposition from Russia.

Labels: Bush, Ukraine

EU launches free trade talks with Ukraine

The European Union (EU) has launched free trade talks with Ukraine, the European Commission said on Monday. The talks, formally launched by EU Trade Commissioner Peter Mandelson and Ukrainian President Viktor Yushenko in Kiev, followed the finalization of Ukraine's accession to the World Trade Organization (WTO) earlier this month, which was a prerequisite for the free trade negotiations. "It's a sign of the EU's commitment to Ukraine that the ink is hardly dry on its WTO accession agreement and we are here in Kiev to build on that membership with a new stage in our economic relations," said Mandelson. Mandelson said the free trade talks would not only boost trade and investment between the EU and Ukraine, but also integrate Ukraine into the global economy and deepen partnership between Kiev and Brussels.

Labels: EU, Ukraine

Successful Start to Ukraine's New Government - by Anders Aslund

After Ukraine's extraordinary parliamentary elections on Sept. 30, it took no less than 2 1/2 months to form a government, and it was confirmed by the slightest of parliamentary margins. The new coalition government headed by Yulia Tymoshenko, however, has started ambitiously and auspiciously. The Ukrainian economy is in good shape with a growth rate of 7.3 percent last year. The stock market surged by no less than 120 percent last year, and it has barely fallen during the January turmoil. The new government's biggest achievement is to make Ukraine ready to join the World Trade Organization at a February 5 meeting of the WTO General Council. One month after the parliament ratifies the accession, Ukraine will become a full-fledged member of the WTO. This could boost the country's growth by one percentage point a year.

Labels: EU, Ukraine

Reflections on the Ukrainian Parliamentary Election:by Anders Aslund

The parliamentary elections on September 30, 2007 cemented Ukraine’s democracy. They were arguably freer and fairer than any other Ukrainian election. Participation remained high at 64 percent. As in all Central-East European countries, the dominant topic of the election was corruption. As corruption always is blamed on the incumbent government, virtually all Central-East European governments have lost elections, and the most effective critic of corruption has won, in this case Yuliya Tymoshenko. Because of such an election outcome, something is usually done to reduce corruption. Ukraine fits the democratic mold, and the electoral weight of critique of corruption should not be underestimated also in the future. It should lead to the fruitful instability that is most characteristic of the successful Baltic countries, where an average government lasts one year. The voting pattern has changed substantially, from region to class. All parties lost relatively in their strongholds and gained votes in enemy land. The Regions lost most votes in Donetsk, Kharkiv, and Luhansk but won throughout Western and Central Ukraine. Our Ukraine lost in West Ukraine (Ivano-Frankivsk, Lviv and Rovno) but acquired new votes in Kharkiv and Chernigiv.

Labels: Europe, Ukraine

Ukraine's president declares support for pro-Western Orange coalition, its choice for PM

Ukraine's President Viktor Yushchenko on Wednesday declared his support for a pro-Western Orange Revolution coalition in parliament and its choice for prime minister. The statement was Yushchenko's firmest declaration of support for the two parties and meant that Orange Revolution heroine Yulia Tymoshenko was all but assured the prime minister's job. Final official results from the Sept. 30 parliamentary elections released Monday confirmed that Yushchenko's and Tymoshenko's parties won a majority in parliament, giving them the right to form a Cabinet.

Together, the parties won 228 seats in the 450-member legislature, two clear of a majority. The rival party led by Prime Minister Viktor Yanukovych won more votes than any other, but it was only enough for 175 seats.

Labels: EU, Ukraine

Russia denies politics involved in Ukraine gas debt issue

Russian First Deputy Prime Minister Dmitry Medvedev denied in a television program on Sunday that there were any politics involved in the current issue of the Ukrainian payment arrears for Russian natural gas. "This problem will be solved when Russia gets the money," Medvedev, who also heads the board of directors of Russian natural gas monopoly Gazprom, told Russia's First Channel. "So we are continuing negotiations. Currently there are certain guidelines on how the Ukrainian side, our Ukrainian partners, are trying to shut off this debt problem. Next week there will be more [talks]," Medvedev said.

The gas price for Ukraine will be based on market factors, "as is done for all our partners," the deputy premier said. "It is a purely a matter of negotiation, an economic matter."

Labels: Gas Supplies, Russia, Ukraine

Ukraine Looks to Canada for Nuclear Energy Help - by Lee Berthiaume

Ukraine is actively searching for alternative energy supplies to avoid another energy crisis, and Canadian nuclear technology and expertise could play a big role, the country's foreign minister said Monday. On Jan. 1, 2006, Russia cut natural gas to Ukraine, through which a quarter of Europe's gas is supplied–just over a year after the 'Orange Revolution' that saw pro-Western president Viktor Yushchenko take power.

While Russia said the dispute was over gas prices and Ukraine's refusal to pay, critics alleged the move was intended to keep it from leaning too far west.

Labels: Canada, Ukraine

Moscow No Match for Kiev-by Fyodor Lukyanov

For Russians the current political imbroglio in Kiev was similar to the struggle for power that took place in Moscow in September and October 1993. On the outside, the two episodes look almost identical. In both cases, the heads of state lost patience with endless opposition from the parliament and opted to call for new elections.

But a focus on these impressive similarities is misleading. The current situation in Kiev differs fundamentally from the earlier events in Moscow.

The first difference is that Russia had just experienced a critical socio-economic crisis, so the struggle for power in Moscow played out amid a mix of potentially explosive political forces. Despite numerous problems, today's Ukraine is a developing state. The second is that there were almost no systemic avenues in place in the Russian system in 1993 by which different political groupings could pursue their interests.The current collision of political forces in Kiev is but the latest in a series of showdowns to determine the direction the country will take.

Labels: Political, Russia, Ukraine