November 27, 2014

Russian Gas Instead of Reorientation of the Ukrainian Economy

Bohdan Sokolovskyi

Is the war not a force majeure?

Ukraine has agreed to pay the Russian Federation, that is the aggressor, 3.1 billion US dollars by the end of this year, and thus to cover the debts for gas. Payment of the “debt” is explained by the necessity to cover the debt by all means as we have been receiving gas from Russia. It turns out that gas relations between Ukraine and the Russian Federation are considered separately from other processes taking place between the countries. The Kremlin is undoubtedly happy with this.

Interestingly, it somehow seems not important that the gas imports contract had been signed when there was no Russian aggression in Ukraine, that is, in a totally different environment — peaceful. While the debt is being paid during the war! Although the contract itself stipulates that in case of force majeure, the terms are to be revised. Here it would be logical to suspend our cooperation with the aggressor and not to transfer to him the money for the debt. Russia did stop the supply of gas! And our suspension can be fully explained by the force majeure situation in the country.


Immediate “inventory” of all relations between Ukraine and Russia.

It is strange that our representatives at negotiators did not even remind the representatives of the Russian Federation of the need for a complete “inventory” of the Ukrainian-Russian relations during the whole period of their existence in order to clarify who owes whom and how much to pay and so on, and so forth (for some reason the author of these lines is inclined to believe that the debt figures would have been different. And it is not known who will be the debtor — Ukraine or the RF?). However, even if the debt remains ours, we still should absolutely categorically not transfer money to the aggressor country. And if the Russian Federation owes Ukraine? Will anybody believe that Moscow will pay us in full? Definitely — no, never! It turns out that we can only return the debt. And we won't have to choose in what form. Therefore, in all circumstances, to develop in the future any cooperation, we must first conduct an inventory.


“Payment by a L/C” — one of the solutions to the gas issue.

To demonstrate that Ukraine is a responsible payer, we can use the so-called “letter of credit” payment. The buyer transfers funds to the neutral bank, trusted by both sides, for example, a Swiss one, and the bank at a certain time transfers the funds to the seller after the fulfillment of the buyer conditions. This option should be offered to Moscow, at least, in order to show ourselves to good advantage in the eyes of the world.

Of course, to realize this scheme, an appropriate tripartite agreement should be signed. And the condition on our part can be only one — immediate cessation of the aggression, which provides for the withdrawal of all troops, weapons, leaving the territory, recognition of damages and so on. Obviously, all this will require highly professional negotiations at the international level. It is safe to assume that the Russian Federation is a very inconvenient negotiator and does not want to sign any agreements. In this context, one can appeal to other countries, in particular, to the guarantors of the Budapest Memorandum. And, first of all to the USA, to the UK as a member of the EU. These countries are able to put pressure on the Russian Federation, in particular by means of sanctions.


Information work abroad.

It is clear that any mechanisms can be realized only if the country's leaders will be receiving information not only from our security services. Informing should be the matter, first and foremost, of Ukrainians. And, they should inform both, the authorities and the society. In democratic states, as you know, public opinion largely determines the position of the government. Perhaps, in some European countries, after the effective information campaign, they at last will stop talking about the civil war and will realize that Ukraine is suffering from external aggression.

Probably, the European Commissioner for Energy would have taken Ukraine's side in the gas negotiations with Russia if he had been better informed about Ukraine, including the fact that Moscow in 1992 stole from Ukrainian citizens about 140 billion US dollars through the Sberbank (Savings Bank) of the USSR. But today the situation is different, in favor of Moscow, in particular because the Russian Federation has long led and leads its favorable propaganda abroad, not sparing funds for it. Representatives of the Russian Federation also strongly contribute to the management of their business and so on. And we have always been losing — we are good at “being proud of our independence and sincerity” but continue to stick to the worst Soviet traditions abroad, without paying attention to local conditions. Clearly, the time has come to change something, and to change in the interests of the Ukrainian state.


Money for Russian gas should have been used for reforming of the Ukrainian economy.

Even a cursory analysis of the gas problem shows that in any case we should not have agreed now to pay the aggressor gas debts in the amount of 3.1 billion US dollars, or nearly 800 million US dollars before. And “Naftogaz of Ukraine” in this chain is just one of the Ukrainian institutions involved in the financing of the Russian aggression in Ukraine. It is no secret that the company does not have such a sum of money at the moment. It is up to its ears in debts. So it is the matter of the money of the Ukrainian state. Even if we manage to pay debts now with the help of the IMF's loans, undoubtedly will come the time when the Ukrainian people will be paying back for those loans.

In a word, it turns out that Ukrainians themselves are financing the destruction of their compatriots. And no one can guarantee that the funds for the payment of the debt to the Russians will not be used to purchase weapons, missiles, tanks, and so on, and will not be used for fighting and killing. And who in the world then will want to understand us? Why should the democratic world suffer losses due to sanctions against Russia, if we are financing the aggression? Who will then agree to help us?


Investments into reforms.

It will be better if these billions for gas are used to finance the start of systemic reforms of the Ukrainian economy. This is the process that should have been started in the early days of our independence. Long ago, back in 1992, projects of such reforms were developed by a group of patriots led by the People's Deputy I. R. Yuhnovskyi. They were supported, in particular, by V. Chornovil and S. Khmara, L. Lukyanenko. They meant to technologically reorient the obsolete economy of the Ukrainian SSR into the economy of the independent Ukraine.

4 billion US dollars is enough to change the speciality almost half a million people with compensation (scholarships) for the jobs lost during the 0.5-2 years (depending on the complexity of this process) in the amount of the average salary. And this is at least 15 % of all working in the industry. Despite the fact that already “yesterday” we definitely need to give a new function about 33 % of those employed in the industry. And at the same time should be created conditions for significant investments into creation and development of new, modern, high-tech industries — like in many other countries.

Only then, they will want to understand us, particularly in the West, where there is money and people can count them. This way we can assert our image of the reformer-state, confirming it by concrete actions, not just by loud statements and plans for the future. Only then, we can hope that Ukraine Western countries and international organizations will help Ukraine, with money included. As it is, we have chosen the easiest option — we have just got rid of the money and “mothballed” the situation. And then, as the saying goes, it all will somehow sort itself out. I am not sure it will!