Playing the fool
On December 14, 20 days before "Hour H" – New Year – Gazprom's leadership decided to abandon the supposedly "compromise" gas price for Ukraine for 2006 of $160 per 1 thousand cubic meters and now insists on a "full" transition to "market" prices for Ukraine, which currently stand at $220-230 per 1 thousand cubic meters.
"During the negotiations, gas prices in Europe continued to rise. Today it is obvious that Ukraine has lost time when the price level of 160 dollars per thousand cubic meters of gas could be considered market. Given the dynamics of energy price growth on the world market, regarding Ukraine... the generally accepted price formula will be applied starting from 2006, which depends primarily on market conditions and real market prices for the basket of petroleum products," media quote the threatening phrases of Alexander Medvedev, deputy chairman of the board of Russian Gazprom.
In connection with the statement, there are many questions for Medvedev.
First of all, the methodology for determining the so-called market price in a market where a "market" price cannot exist by definition. After all, the gas market is monopolized, as is the market for transporting this fuel. Therefore there is no free market where a mass of buyers and sellers with free access to the commodity determine its equilibrium price. In Germany (one and the same country), say, industrialists buy consumed gas at 200 euros, while the population – at 500 euros.
What then is the market price of gas? Or another example – on December 14 of this year, at three o'clock in the afternoon, a thousand cubic meters of gas on the New York Stock Exchange (an almost ideal market) costs... 14 dollars 60 cents. Why not take it as a reference point, since we have already undertaken to disregard economic laws?
Secondly, Gazprom recently refused to buy gas from Turkmenistan at again a "market" price of as much as 60 dollars. In other words, Gazprom believes that the market price of gas is less than 60. If we take into account the transport distance, then the order of price for Ukraine, determined by Gazprom's actions rather than words, should be around 80-90 dollars.
Let us emphasize that actions can be considered a far more powerful signal to the market than any statements. Then why this sacrilege with 230 dollars?
Thirdly, no one in commercial negotiations, if it is a matter of negotiations between corporations with a normal reputation, changes their position so abruptly and insolently.
This rather resembles the methods of racketeers of the early 90s, who put their victims on a "meter" – today your debt is 100 dollars, and tomorrow already 200, the day after tomorrow 300. Such a position is not motivated.
After all, it turns out that if Ukraine had agreed to Russia's conditions earlier and allowed it to unilaterally break the contract, Russia would have done the same now – it would have said that in a couple of months prices had risen again, and again it was time to change the gas supply contract toward increasing the cost of fuel.
One can cite many more examples testifying to the artificial radicalism of the Russians' position – for example, the argument about rising oil prices – prices have recently even been falling, but Gazprom's leaders probably don't know about this.
Nevertheless, this is no longer so important. The main thing is clear – Gazprom was given a command to pressure to the maximum, to make proposals as harsh as possible.
The goal of such tactics is not at all to increase Gazprom's revenues at Ukraine's expense. The goal clearly lies beyond the sphere of gas. At least it is bigger than price pressure on Ukraine.
The hidden threat
There are two banal justifications for the Russian gas hysteria. They must at least be taken into account.
The first is, of course, the elections. To show all the tension in relations between formerly brotherly peoples, to blame the Orange authorities for the current discord. To show how much the diplomacy of the opposition – for example, the voyages to Moscow of the white-and-blue Andriy Klyuyev and Viktor Yanukovych – relieve tension, how much the Kremlin listens to these distinguished "walkers" from Little Russia.
Perhaps even to triumphantly renounce gas claims supposedly at the request of some Party of Regions, or to stage some other political theater. However, it is unlikely to be all that simple.
In reality, making yourself an enemy not only to the West but also to the East, which is hyper-dependent on gas, means acquiring more enemies than friends. Such behavior by Russia is "not according to the concepts"of the Donetsk people, because they will be the first to suffer from gas prices.
Therefore, in strategic terms, gas pressure is quite costly in the sense of including its political cost, not to mention possible terrible economic losses. Therefore this variant of Russian motivation is not the hypothesis that answers all questions.
The second motive is the justification for the necessity of building the North European Gas Pipeline (NEGP). The NEGP will run along the bottom of the Baltic Sea from the Vologda region to the coast of Germany, and possibly further.
Let us recall that its capacity is 20 billion cubic meters of gas per year with expansion to 55 billion in the first few years of its operation. For comparison: the Ukrainian gas transportation system (GTS) is capable of pumping about 140 billion cubic meters to Europe, while in reality it is currently underloaded by approximately the amount of the NEGP's capacity, transporting about 110 cubic meters per year.
And not only for this reason does this Russian-German project look dubious from the point of view of economic expediency in the medium term.
Firstly, the cost of building the NEGP is already considerable – up to 5-6 billion dollars. In perspective, it will only grow.
Secondly, its economic prospects are not entirely clear – after all, without powerful gas storage facilities, this project may not succeed. Such storage facilities are possessed only by the Ukrainian GTS, and in the north they still need to be built. How much this will cost is unknown, but the order of figures could reach hundreds of millions of dollars.
Finally, the NEGP has many more political problems that will inevitably result in additional costs for pipeline construction.
Therefore there is a quite obvious version: behind the Russians' hyperactivity on the Ukrainian gas issue stands precisely the desire to show the necessity of an alternative route to Europe, which is the NEGP. Here any non-constructive position and prices as high as possible will be useful, since they show what can really be done with the damned Ukrainians if the NEGP is built.
For now, Naftogaz Ukrainy's monopoly on fuel transportation to Europe does not allow all the desires of the broad Russian soul to be realized.
This version has a right to life. However, the Russians in their media for some reason do not push the topic of the NEGP's necessity as a means of influence on Ukraine too powerfully. Moreover, the NEGP will be built under any circumstances, so it hardly makes sense for Gazprom to strain itself so much and "moisten" Ukraine.
In reality, the key to understanding the extreme harshness in the Russian position lies precisely in the signs of its desperation. Russia can fight for Ukraine so fiercely only when it knows that without starting this battle, it will lose its neighbor-ally forever. And here it is hardly about Ukraine becoming independent on its own.
The Russians fear this less, because then they would still be able to negotiate with Ukrainian leaders. In reality, they feel that Ukraine is increasingly under the influence of the geopolitical enemies of the German-Russian alliance – the USA.
Russia knows that after the elections, both gas and military agreements with Russia will with high probability be denounced – but already by Ukraine. Gazprom will be restricted in access to the markets of Eastern and Southern Europe – oil and gas corporations with Norwegian-American capital will be in charge there.
Russia's military bases in Crimea will at minimum be neutralized by the presence of NATO troops. Russian oil corporations will be squeezed out of Ukraine – there is already progress with the project of building a powerful oil refinery in Brody by American investors.
The Odesa-Brody project itself, in a strange way, practically without effort by the Ukrainian authorities, began to advance. There are already some necessary agreements with the countries of the Caspian region and Eastern Europe – Azerbaijan and Slovakia.
The presence of Russia's geopolitical enemies in Ukraine is nevertheless still barely noticeable, the growth of their influence is currently not so striking. However, it is precisely Russia's reaction, whose special services know far more than the average Ukrainian, that may testify to the fact that not only the northern neighbor, but also the Ukrainian people once again have authorities that behind their backs and without their consent secretly determine the country's course.
That is, the problem is not in the course itself, but in two unpleasant moments: the secrecy of decision-making, as well as reliance on foreign, and therefore alien forces. This directly contradicts the task of the new authorities – to give more influence in their country to the people who inhabit it.
Lidiya Skurativska, for UP
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Has war been declared?
How do wars begin?
With the fact that international agreements are unilaterally broken – not necessarily de jure, one can also de facto.
Then the aggressor, using its advantage in certain forces and resources, carries out active actions against the opponent, achieving the desired results.
What do we have under this regard in Ukrainian-Russian gas relations?
Between NJSC Naftogaz Ukrainy and Gazprom, a contract on the volumes and conditions of transit of Russian natural gas through the territory of Ukraine for the period from 2003 to 2013 dated June 21, 2002, nominally operates. Amendment No. 4 to the contract dated August 9, 2004, for the period from 2005 to 2009 establishes:
a) a fixed rate of payment for the transit of Russian gas in the amount of 1.09375 dollars per 1 thousand cubic meters of gas per 100 km of distance, which is not subject to change by the parties;
b) a fixed price for Russian natural gas provided by OJSC Gazprom to ensure the gas balance of Ukraine through payment by NJSC Naftogaz Ukrainy for services provided for transit, in the amount of 50 dollars per 1 thousand cubic meters, which is not subject to change by the parties.
At that time, Ukraine and Russia agreed on the conditions for transit through the territory of Ukraine to Europe of 112 billion cubic meters of Russian gas in 2005. As payment for transit, Russia undertook to supply 23 billion cubic meters of gas at a price of 50 dollars per 1 thousand cubic meters, and to pay the rest of the transit payment in money.
This is de jure.
But de facto the Russian side demands a revision of the system of gas agreements with the aim of increasing the price for the gas indicated in point b). As well as for all other gas that Ukraine receives from Russia. In reality, in total, it is about approximately 50 billion cubic meters out of the 75 billion that the Ukrainian side consumes annually.
The motivation of the Russian side is supposedly purely economic – they say that in Europe in recent years the price of gas has tripled – so let us also switch to market relations, because it is unprofitable for us to sell you gas at such meager prices, we are actually subsidizing it.
In reality, the "economic" arguments are outright bullshit. No one in Russia is subsidizing gas production for Ukraine.
Or maybe in recent years the salaries of gas workers have tripled there? And in general – what share in the cost of Russian gas is the salary of "lower-level" workers? Two or three percent? Or a whole five? It is profitable to sell gas even at a low price (otherwise, how did Gazprom amass its fortune?)
It's just that in the case of Ukraine, it is not about super-profits, but about ordinary profits. And one needs to have a market where to sell. Western Europe with its energy-saving technologies is unlikely to swallow everything that Russia produces.
The fight against poverty and other misfortunes at the expense of foreign currency revenues from the sale of gas and oil to the state reserve fund is not being conducted – otherwise Putin himself, say, would not have gone on at the recent high-level meeting held in Penza on improving medical services for the population about the fact that the problem of providing the provinces with ambulances should be resolved in two to three years.
This problem could have been solved within a month using money from this fund, where there are already about 50 billion dollars. It is likewise bullshit that Gazprom is supposedly not a political but an economic structure. In reality, it is an organization fully subordinate to the "Kremlin Chekists."
So, gentlemen, have you noticed that war has been declared on us? No?
Then let us continue. At a price of 46-47 dollars per 1 thousand cubic meters in 2006, Belarus and Armenia will receive Russian gas. But Georgia, Moldova, and the Baltic countries will receive gas at significantly higher prices. That is, you demonstrate complete and final geopolitical loyalty to the Kremlin – you get an economic handout. You strive to live your own way – pay!
Well, though cynical, it is honest in its own way. If it weren't for one "but": agreements previously signed by the parties that do not allow the possibility of unilateral actions by Russia. Unilateral unlawful actions in relations between states are war. Is there another definition?
And what is interesting: the Russians at the same time name the conditions under which they agree not to violate the agreement. Gazprom Management Committee Chairman Alexey Miller directly named them in an interview with the "Russia Today" TV channel: "As for a compromise, of course, it is possible. It is known to the Ukrainian side – it is the issue of the gas transportation consortium."
In other words, it is about transferring Ukraine's property to the Russian side. Even the most modest estimates of the value of this property (that is, the system of gas transportation communications) exceed the amount of payment for gas over ten years (if Russian demands are accepted) several times over.
But even in such a case, Russia will supply Ukraine with gas at preferential prices only for "some period." That is, as long as it wants, based on existing experience of communication.
In interpersonal relations this is called by the nice word "blackmail." In interstate relations – aggressive actions.
And also on the air of "Echo of Moscow" radio, Gazprom spokesman Sergey Kupriyanov stated: the company will stop gas supplies to Ukraine from the beginning of 2006 if by that time a contract on the conditions of these supplies is not signed. This is despite the fact that legally the specified conditions are defined until 2009 and cannot be changed.
Immediately after this, on the air of the NTV TV channel, Deputy Chairman of the Board of Russian Gazprom Alexander Medvedev states that Ukraine, they say, has lost time for discussing gas prices. He said that at this moment there can be no talk of a price of 160 dollars per thousand cubic meters. According to Medvedev, gas must be supplied at European prices, and this will be about 217-230 dollars per thousand cubic meters.
Are you still not convinced that war has been declared on us?
Then recall Putin's statements that Ukraine earned good money on the privatization of Kryvorizhstal and is capable of paying the "market price" – as in Europe – for supplied gas.
I put the words "market price" in quotation marks not by accident. How can the price of gas at the Ukrainian border equal the price of gas at the German border when the gas must travel another couple of thousand kilometers through the territories of Ukraine and Poland, and one must pay for transit?
And why is there no talk of a "market price" for the transit of Russian gas through Ukrainian territory (the transit price through German territory today is 2.5 dollars per thousand cubic meters per 100 km of distance, through Polish territory – 2 dollars)?
And when Russian politicians talk about the need to "monetize relations" with Ukraine, Georgia, and Moldova, why do they forget that such monetization must be comprehensive, that is, at normal prices the Russian Federation must also pay for military bases, for the transit of goods, and for other services provided to it by these countries?
In other words, talk about a "market price" is also bullshit, a means of masking one's true goals and psychological pressure on the population of states designated as objects of Kremlin aggression.
After all, who is currently sitting in the Kremlin and which team, according to German experts, directly controls over 2/3 of Russian GDP and economic structures? These are the Chekists. Nominally – former, but, as Putin himself said, the oath in their department is given once and for all life.
And what is the ChK-OGPU-NKVD-MGB-KGB? It is an organization that was created by a totalitarian regime and ensured its power – both on the territory of the USSR and around the world, through the maximum possible control at a given historical moment over politics, mass media, science, and the economy of democratic states. It is an organization that criminally killed far more innocent people than the SS or the Gestapo.
It is a structure that was created at one time to realize the goals of world domination of the Russian totalitarian regime – and could it and its functionaries have fundamentally changed if in Russia (as in Ukraine, by the way) Bolshevik totalitarianism did not receive a proper legal assessment and decommunization did not take place?
It is George Bush, who asks Condoleezza Rice for permission to go to the toilet during a session of the UN General Assembly, who can declare: "I looked into Putin's eyes and felt all the positive qualities of this person." We, however, must know the real price of the "Kremlin Chekists" and their attitude toward democracy.
CPSU historian Volodymyr Lytvyn, of course, can declare that in the current situation all the blame lies with official Kyiv – but have CPSU historians ever assessed any actions in response to Moscow aggression by "Ukrainian bourgeois nationalists" – that is, all those for whom the honor and dignity of Ukraine are not an empty sound – any differently?
Although on the other hand, the blame does lie with Kyiv – with that Kyiv which a year ago came out to the Maidan and did not allow the Kremlin's candidate for president to come to power in Ukraine. We must be aware that the very fact of the Orange Revolution made the current "gas aggression" by the "Kremlin Chekists" inevitable. As well as other actions aimed at changing not only the current authorities – but also the transformation of the entire Ukrainian society in the direction desired by that public.
And this aggression can be ended either by Ukraine's ability to give an adequate response to the actions of the "Kremlin Chekists," or by the complete and final capitulation of Yushchenko's team, or by its removal from power. It is clear that in the second case, cheap gas and other privileges will symbolize the success of the Kremlin's aggressive actions, that is, one can speak of "stopping aggression" very conditionally.
And how Yushchenko's team will lose this power – here, of course, variants are possible.
The first – Russia stops gas supplies and the people, led by you know who, warmed up by the appropriate media, take to the streets and overthrow the hated Orange authorities, not knowing that in Russia during the year gas prices for ordinary citizens will rise by 50%, that is, even joining the Russian Federation will not save anyone's wallets.
The second – Yushchenko capitulates, the nationally proud voter turns away from him, and soon the head of state, deprived of any support, resigns himself.
The third – Yushchenko's team falls apart during the election campaign, the result of which is the complete dominance of the white-and-blue in the Verkhovna Rada and the appearance of a corresponding plenipotentiary prime minister. The list of variants can be continued, but in any case they, in the opinion of the "Kremlin Chekists," are win-win.
Already now, as the voting in parliament on December 14 for the bills needed for Ukraine's accession to the WTO (they were failed in the second reading) testified, Yushchenko's team has lost its majority in the Verkhovna Rada (even with the support of BYuT!)...
Theoretically, it is elementary to put the Kremlin in its place. You won't supply us with gas after the New Year? OK.
We will hold out for the winter on reserves, on our own production, and on liquefied gas bought in the world, but we will not make concessions, even if our production falls. But at the same time, as you call on us, we will "monetize" interstate relations on all vectors.
First of all, we will denounce the agreement on the Black Sea Fleet so that the rent of the base in Sevastopol is also based on world prices – not 97 million dollars, as now, but no less than 2 billion. And for now we will disconnect all communications of the Russian base. Let your ships start their engines and generate electricity themselves for the needs of the base, spending their already not-too-significant resource.
And we will also immediately disconnect the power supply to the radar stations for early warning of a missile attack in Mukachevo and Sevastopol, as a result of which Russia as a world military power ceases to exist. For a long time.
At least for three or four years – until they build something adequate on their territory. And before that, anyone can shoot Moscow with their missiles with impunity. Say, Shamil Basayev, having bought a couple of launch installations somewhere. Or Osama bin Laden. Or Boris Berezovsky.
And how long will Russia hold out like this, in addition having lost the ability to earn money on the transit of energy carriers through Ukraine (after all, why must we service the "Kremlin Chekists" for free)?
But is the Ukrainian authorities capable of doing something decisive?
President Yushchenko has already called for "not politicizing" the conflict. Mr. President, this conflict has been politicized by the very fact of your presidency!
You can, of course, agree to the resuscitation of the gas consortium, but this will not appease the appetites of the "Kremlin Chekists" and will not change their intentions – neither regarding Ukraine, nor regarding You personally, nor regarding all of us, those who do not want to return to the "bright past" and again sing the Stalinist anthem with barely renewed words. Lithuania of 1990-91 withstood under conditions of energy blockade.
But there was a worthy government there.
Serhiy Grabovsky, deputy editor-in-chief of the magazine "Suchasnist"