November 9, 2014

Thanks to Gas Moscow Will Be Funding Its Aggression against Ukraine at the Expense of Ukrainians

Bohdan Sokolovskyi

Recently, after long negotiations in Brussels, have been signed documents on gas. Some of Ukrainians took this event as a victory. But the writer of these lines does not think so. Let me explain why.

On the Ukrainian side in the talks participated both, a representative of the state of Ukraine and the head of the company “Naftogaz of Ukraine”. From the point of view of the company, the agreements can be regarded as positive, as they unlock its activities in the main direction. From the point of view of the state (and that is what the author means), those agreements and signed documents look like Ukraine's capitulation.

According to the Brussels agreements, the official Kiev has recently paid the Russian Federation 1.45 billion US dollars, as part of the debt for previously imported Russian natural gas. In total, by the end of this year, Ukraine has to pay 3.1 billion US dollars. Thus, both, our state and the company, unfortunately, once again demonstrate to the world that Ukraine has always been guided by international law and may be considered a reliable partner.

So, unfortunately, we are giving the aggressor huge money in the form of payment. We do not claim for the generally accepted, especially in diplomacy, norm of symmetry in the relationship by which fact, in particular, are creating a precedent in the world. Until now it was known that only the Stalinist Soviet Union and Nazi Germany in June 1941, for a certain time had been cooperating at the beginning of the Second World War...

Gas talks came down to actually buying gas for our state from Russia. Because without it we would “not survive” this heating season. Besides, no one has explained to the Ukrainian people, actually, why and who in Ukraine needs more gas? And why it is necessarily to buy exactly the Russian gas, as it is incorporated into the ears of almost all the top officials of Ukraine!?

So, is it worth buying now the aggressor's gas on the cost of deaths and injuries of Ukrainian citizens? In this case, it is easier to do some arithmetical calculations. During the year: we produce more than 20 billion cubic meters, by mid-June from Russia we imported about 12, through the reverse scheme should get another 3-4. So in total, it appears that in 2014 Ukraine will have no less than 37 billion cubic meters of gas. Compared with the previous year (in 2013 Ukraine used 50.2 billion cubic meters of gas, before — even more), we need 12-13 billion in last year's gas consumption volumes. But this year, we used significantly less because: due to the war a number of enterprises does not work, has been introduced saving mode; no clear definition of the issue of gas supply to the population of Donbas, a steady trend of annual consumption reduction, etc. The calculations do not give the clear picture, as we have problems with planning and forecasting. Although back in 1991 through the efforts of V.Lanovoy and V.Chernyak, for Ukraine it was quite thoroughly planned in the program of the People's Movement of Ukraine (Rukh). The NSDC’s decision of 12 September 2014 shows absence of planning, tactics and strategy, as under it only now have to be developed the strategy and tactics of the state's development. It is not surprising that the lack of gas was estimated, in particular, in different numbers — from 4 to 7 billion cubic meters. And recently — 2, 3 or even 1 billion! Of course, the “accuracy” of such calculations (from 1 to 7 billion cubic meters!) confuses even partners of Ukraine, in particular, the EU and the USA. It is not surprising that since June, they kept seeking the answers to the questions: “How much gas do you need?, How much do you have to pay the aggressor for it?, Is there nobody in such a large country to make accurate calculations? Why were you delaying the calculations until now, but did not solve the issue of buying not Russian (for example, Norwegian) gas in advance, when production volumes were being planned — at least in June?”, etc. Taking into consideration such behavior and “accurate” calculations, it was not a surprise when on October 30 in Brussels, the EU representative actually watched the capitulation of the state of Ukraine in the gas sector.

... But back to the gas arithmetic. Of the total amount, maximum 27 billion cubic meters of gas was directly and indirectly consumed by the Ukrainian population. Obviously, this year — substantially less. The remaining 23-25 billion cubic meters were consumed by industry. This year, again because of the aggression of the Russian Federation, it consumes much less.

There were several solutions to this confusing gas issue. Let us concentrate on at least three:

Option 1: Ukraine no longer buys gas from the aggressor; categorically refuses to consider the gas issue separately from other questions, concerning relations with the Russian Federation, in particular, without the facts of Moscow’s having stolen from Ukraine in 1992 of nearly 140 billion US dollars; recognizes and pays no debts; uses 37+9 billion cubic meters of gas, increasing its saving mode. And the 3.1 billion US dollars (that today is nearly 40 billion hryvnias!) spends on retraining of Ukrainian citizens (or their families) employed at obsolete plants, mainly in the Donbas, and organization of activities of reputable investors. Only doing so we can expect to attract major multi-billion investments to Ukraine.

Obviously, this option is aimed at development, system reform and strengthening of the Ukrainian state. In general, this meets the Ukrainian national interests.

Option 2: Ukraine pays gas debts to the Russian Federation by the so-called letter of credit scheme. This is when the buyer (in this case the NAC Naftogaz of Ukraine) immediately after receiving a portion of gas transfers the money to a third party (neutral Bank trusted by Gazprom) with the condition. And the third party pays the seller (in this case Gazprom) after the condition has been fulfilled. Obviously, our main condition would be “to completely withdraw Russian troops and to stop the aggression against Ukraine”. Then neither the RF nor the world can have no claims (e.g., like the German joke: one has to pay for the meat bought from the butcher) because we have carefully pay for the consumed gas. And the fact that Moscow is not receiving the money — is its own fault. Stop the aggression! Of course, here probably is needed a relevant law, upscale negotiations and assistance of the international community, such as the EU and the USA.

This option would have a lot of supporters in the world, in Ukraine and in the Russian Federation.

3rd option: Ukraine agrees to remove the gas issue from the context of all relations with the Russian Federation, silently acknowledges debts for gas (apparently, the debts of the Russian Federation are not mentioned), pays Russia 3.1 billion US dollars of the so-called debt, thanks to which Russia can fund its military operations in Ukraine and thus to finance the aggression and destruction of Ukrainian citizens. At the same time Kiev gets opportunities to buy from the Russian Federation as much gas as money allows, not caring about saving.

This option, of course, is negative for the national interests, suffocating for Ukraine and its leadership.

Unfortunately, it was e the third option that was chosen. The Russians have already calculated that, apart from the paid 3.1 billion US dollars, Ukraine will buy gas worth another almost 2 billion US dollars. All this will be paid through external borrowing (e.g., from IMF and EBRD), and then our people (not the officials!) will pay for this with the help of the budget.