Gas Dispute between Russia and Ukraine: in Expectation of the “Hot Phase”

By Oleg Gorbunov

Moscow and Kiev can’t agree on changes of the “blue fuel” supply contracts into this country and gas transit to Europe. Russia suggested Ukraine to enter the Customs Union and lease or sell its gas transporting system in exchange on price reduction. Ukraine doesn’t agree and tries to attract the European Union on its side. Ukrainian political analysts helped us to deal with the cobwebs of the established situation, having answered the questions: which are the chances for mutually beneficial conflict resolution between Russia and Ukraine on revision of the contracts in force for supply and transit of gas? Is Ukraine able to apply to the Stockholm court? Which are the consequences for the kind of step for Ukraine and gas supply to Europe?

Vasilij Stoyakin, Director of the Center for Political Marketing (Kiev): The chances for mutually beneficial resolution of the dispute between Russia and Ukraine are equal to zero – the parties are too involved into exaggeration of tension.

But the problem, to a greater extent, is not about it, but about that the there is an extremely narrow circle of variants of solutions which could be considered mutually beneficial. In the essence this is only the variant of entering of Ukraine into the Customs Union. However, it also looks ambiguously at the background of the intentions of Russian authorities to increase internal gas prices to market ones (I won’t criticize this decision – we should hope, that Russian authorities analyzed social-economic and foreign political result of this step and considered it as acceptable). Thus, even with the entering into the Customs Union Ukraine receives only temporary discount, and further gas prices growth can be compensated by the increase of production. And maybe the growth energy carrier prices and production growth combine badly with each other. In general from strategic point of view the suggestions of Russia look not convincing enough. The fact that the course of Ukrainian authorities to Eurointegration is less convincing, doesn’t excuse the absence of clear suggestion of Russia...

The variant of granting of transit possibilities to Gazprom is just not topical: within the context of trial over Timoshenko there would be no insane to undertake the responsibility for this solution.

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In general, the weak party (Ukraine) has painted itself into a dead corner, and the strong party (Russia) hasn’t taken care to assure the ways for retreat (and the case is even not about “saving of face”, it’s just that the way out of the situation is urgent!)

In this situation Russia has chances to lose. The most obvious scenario for Ukraine: to get the deal to the “hot gas war” (under the scenario of 2006 and 2009), to represent Russia as an “aggressor”, and then… to refuse to put up with it. Ukrainian GTS is granted to the property of the Consortium of European gas companies, which holds talks on gas supplies. Ukraine buys its gas from the Consortium.

Certainly, this variant is not advantageous for Ukraine and is a defeat. However, it is a real way out from the established disastrous situation. Russia would not benefit from this variant also, but yet it does nothing to avoid it.

Ukraine can apply to the Stockholm court, but it won’t. The conclusions of all experts are absolutely clear: the court shall demand from Ukraine the accomplishment of the terms of contracts of 2009 in all senses. Any other court decision would mean not only derogation of the authority of this body (in case with Russia politically engaged and contradicting decisions of the European institutions are more like a norm), but also the EU announcement of war with Russia. In theory, Europe can undertake this step (although there is no such intention observed from Franco-German coalition, at the moment the leading one in the EU), but not for the sake of current Ukrainian authorities. Provided Timoshenko were the President, the kind of scenario would be possible.

Dmitry Gubin, spin doctor (Kharkov): The both parties at the moment have trapped themselves into the impossibility of compromise. Russia demonstratively claims for someone else’s property, and Ukrainian government considers Russian suggestions as the attempt of raiding capture and change of the owner. A breakthrough within the relations can occur only when Russian leaders shall expressly reveal respect towards the owner and immunity of any legal property. I think that it won’t result in Stockholm arbitrage as well as in EVIDENT revision of gas contracts. Probably, they’ll manage to find compromise on reduction of the scopes of purchases and another discount. But this shall happen in December, when the issue of elections shall not be of priority of Russia.
Translated by EuroDialogueXXI from politcom.ru