ACTION UKRAINE REPORT - AUR
An International Newsletter, The Latest, Up-To-Date
In-Depth Ukrainian News, Analysis and Commentary
Ukrainian History, Culture, Arts, Business, Religion, Economics,
Sports, Government, and Politics, in Ukraine and Around the World
IN HONOR OF THE INAUGURATION OF THE
44th PRESIDENT OF THE UNITED STATES
BARACK OBAMA
AND IN CELEBRATION OF THE ENDURING
FRIENDSHIP BETWEEN THE PEOPLE OF THE
UNITED STATES AND UKRAINE
ACTION UKRAINE REPORT - AUR - Number 925
Mr. Morgan Williams, Publisher and Editor, SigmaBleyzer
WASHINGTON, D.C., WEDNESDAY, JANUARY 21, 2009
INDEX OF ARTICLES ------
Clicking on the title of any article takes you directly to the article.
Return to Index by clicking on Return to Index at the end of each article
1. VICTOR YUSHCHENKO CONGRATULATES BARACK OBAMA ON
ASSUMING THE OFFICE OF THE PRESIDENT OF THE UNITED STATES
Office of the President of Ukraine, Kyiv, Ukraine, Tuesday, January 20, 2009
2. UKRAINIAN PRESIDENT CALLS FOR OBAMA TO SUPPORT NATO BID
Agence France-Presse (AFP), Kiev, Ukraine, Tuesday January 20th, 2009
3. EUROPEAN EXPECTATIONS PEAK AS OBAMA TAKES OFFICE
Commentary by Valentina Pop, Euobserver, Brussels, Belgium, Tue, Jan 20, 2009
4. EU: OBAMA INAUGURATION CREATES NEW OPPORTUNITIES FOR
ENHANCING TRANSATLANTIC TIES
Xinhau, Brussels, Belgium, Tuesday, January 20, 2009
5. EU CALLS ON OBAMA TO DEEPEN TRANSATLANTIC TIES
Agence France-Presse (AFP), Brussels, Belgium, Tuesday, Jan 20, 2009
6. "STRANGE COINCIDENCE"
Gaza, Russian-Ukraine gas dispute designed to precede Obama taking office
Editorial: By Gabor Horvath, Nepszabadsag website, in Hungarian, Budapest
BBC Monitoring Service, UK, in English, Monday, January 19, 2009
7. OBAMA ENTERS THE GREAT GAME
The two crises that cannot be avoided are Afghanistan and Russia.
Commentary & Analysis, by George Friedman, Stratfor, Austin, TX, Mon, Jan 19, 2009
8. PUTIN, RUSSIA AND THE UKRAINE
The only lesson of history ... is that it doesn't seem to teach us anything.
Analysis & Commentary: By Yuri Maltsev, Professor of Economics
Carthage College in Kenosha, Wisconsin
John Birch Society, Appelton, WI, Tuesday, January 20, 2009
9. ANALYSTS: OBAMA HAS NO ROOM FOR ERROR WITH RUSSIA
The Associated Press, Moscow, Russia, Monday, January 20, 2009
10. STARTING FRESH WITH OBAMA
Commentary by Mikhail Margelov, The Moscow Times
Moscow, Russia, Tuesday, January 20, 2009
11. MANY RUSSIANS BELIEVE OBAMA WILL WARM MOSCOW-WASHINGTON RELATIONS
Posted by Alexsei Kuznetzov, World Watch, CBS News, Tuesday, January 21, 2009
12. RUSSIAN FOREIGN MINISTER HOPES OBAMA WILL BRING CHANGE TO RUSSIA-US TIES
American ABM facilities in Eastern Europe and artificial expansion of NATO into Ukraine and Georgia
Rossiya TV, Moscow, Russia, in Russian 1700 gmt 17 Jan 09
BBC Monitoring, UK, in English, Saturday, January 17, 2009
13. PRESIDENT OBAMA - SYMBOLIC OF CHANGE RUSSIANS CAN'T
OR WON'T EMULATE, SAYS MOSCOW ANALYST
Window on Eurasia, by Paul Goble, Vienna, Tuesday, January 20, 2009
14. GEORGIAN LEADER MAY COME UNDER OBAMA SCRUTINY
Analysis: by Matt Robinson, Reuters, Tuesday, January 20, 2009
15. ANALYSIS: UKRAINE MAY BE BIGGER LOSER IN GAS WAR
Analysis: by Douglas Birch, AP Writer, Moscow, Russia, Monday, January 19, 2009
16. GAS DEAL SIGNED WITH RUSSIA, GAS SUPPLIES TO RESUME TO EUROPE
BYuT Inform Newsletter, Kyiv, Ukraine, Tuesday, 20 January, 2009
17. UKRAINE: INTERMEDIARIES REMOVED FROM NEW GAS DEAL
BYuT Inform Newsletter, Kyiv, Ukraine, Tuesday, 20 January, 2009
18. THE 18-DAY GAS WAR - WHY WAS IT FOUGHT? WHO WON?
Putin’s miscalculations leave Russia as the loser in the 18-day “gas war”
Analysis & Commentary: By Roman Kupchinsky, Eurasia Daily Monitor, Vol 6, Issue 12
Jamestown Foundation, Washington, D.C., Tuesday, January 20, 2009
19. MOSCOW AND KIEV REBUKED OVER GAS STAND-OFF
Barroso says he had never witnessed such "really incredible" behaviour before
By Joshua Chaffin in Brussels, Isabel Gorst in Moscow and Roman Olearchyk in Kiev
Financial Times, London, UK, Wednesday, January 21 2009
20. REVERSING THE DECLINE: AN AGENDA FOR U.S.-RUSSIAN RELATIONS IN 2009
By Steven Pifer, Brookings Policy Paper Number 10
The Brookings Institution, Washington, D.C., January, 2009 .
21. UKRAINE ECONOMIC CONCERNS GROW
Editorial, Financial Times, London, UK, Wed, January 21 2009
22. PUTIN EMERGES FROM GAS WARS WITH YUSHCHENKO SIDELINED
By Alex Nicholson, Bloomberg, Moscow, Russia, Tuesday, January 20, 2009
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1. VICTOR YUSHCHENKO CONGRATULATES BARACK OBAMA ON
ASSUMING THE OFFICE OF THE PRESIDENT OF THE UNITED STATES
Office of the President of Ukraine, Kyiv, Ukraine, Tuesday, January 20, 2009
Dear Mr. President,
On the day of your inauguration, it gives me great pleasure to congratulate you on behalf of the Ukrainian nation and from me personally on assuming the office of the President of the United States.
We are greatly impressed by the large scale of objectives set in your election agenda and by the clarity of vision you have of how to achieve them. I sincerely wish you every success in your important state mission. I am looking forward to close and fruitful cooperation with your administration in the spirit of strategic partnership and friendship that exists between our nations.
Being fully aware of the complexity of the tasks facing the United States as the leader in resolving mankind’s most acute global problems, overcoming the world financial crisis and dealing with security challenges, I would like to assure you that Ukraine is ready to continue to take an active part in these efforts jointly with our American friends.
We are proud of the progress made in the relations between Ukraine and the USA since our country gained independence. As a result, a firm foundation has been laid in the past 17 years with regard to Ukraine-American relations. The Ukraine-United States Charter on strategic partnership signed in 2008 has become an indicator of the growing positive dynamics of our relations. I am convinced that the Charter reflects the spirit of friendship and mutual understanding between Ukraine and the US as well as the key priorities for cooperation between our countries. It will serve as a reliable beacon for cooperation between our countries in he future.
Given the abovementioned, I would like to propose to raise the status of the current basic mechanism for coordinating our cooperation, the Ukraine-US Interagency Coordinating Group, by bringing it up to the level of both countries’ chief executives. Such an approach will adequately reflect both the already attained level of our cooperation and the importance of our mutual tasks.
We highly value the degree of support given by the United States to our strategic aim of becoming a full-fledged NATO member. We hope the fruitful cooperation toward this goal will be preserved under your new presidential administration, notably, in supporting the political signal we saw at the Bucharest summit about the prospects for Ukraine to enter the NATO as well as the decision by NATO foreign ministers at the December meeting on raising cooperation with Ukraine to a new format towards Ukraine’s full-fledged participation in the alliance.
I was deeply moved by your personal attention to commemorating the memory of the 1932-1933 Famine (Holodomor) in Ukraine. I believe our future cooperation in this area will help the world realize the true nature and dimensions of this tragedy of Ukrainians and spread the words of truth about this gruesome page in Ukrainian history.
I would like to offer to you my invitation to visit Ukraine in a time most suitable for you. I am sure such a visit will give a new powerful impetus to the development of the strategic partnership between Ukraine and the United States.
Victor YUSHCHENKO
NOTE: Unofficial translation by the U.S.-Ukraine Business Council (USUBC), Washington, D.C., www.usubc.org.
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2. UKRAINIAN PRESIDENT CALLS FOR OBAMA TO SUPPORT NATO BID
Agence France-Presse (AFP), Kiev, Ukraine, Tuesday January 20th, 2009
KIEV - Ukrainian President Viktor Yushchenko Tuesday called for incoming U.S. president Barack Obama to continue support for his ex-Soviet nation's bid to join the North Atlantic Treaty organization.
"In Ukraine, we appreciate the support of the United States on Ukraine's strategic course to join NATO," Yushchenko said in a statement ahead of Obama's inauguration Tuesday. "We hope that fruitful cooperation will continue with your administration, in this area in particular."
Yushchenko also invited Obama to visit Ukraine "as soon as it is convenient" and offered the congratulations of the Ukrainian people on his inauguration.
"I have the great pleasure, on behalf of the Ukrainian people and myself, to congratulate you on taking up your post," he said.
Russia has been deeply angered by Ukraine's efforts to join NATO, its old Cold War foe. Tensions with the alliance are also high over another potential candidate, Georgia, with which Russia fought a short war in August. The U.S. strongly backed the efforts of both Ukraine and Georgia to join NATO under the administration of outgoing U.S. President George W. Bush.
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3. EUROPEAN EXPECTATIONS PEAK AS OBAMA TAKES OFFICE
Commentary by Valentina Pop, EUObserver, Brussels, Belgium, Tue, Jan 20, 2009
BRUSSELS - With millions of Europeans set to watch the inauguration of president-elect Barack Obama on Tuesday evening (20 January), expectations for America's first black president and his message of "hope" and "change" could hardly be higher.
But Mr Obama's "honeymoon" with Europe will not last very long, pundits and MEPs predict, as divergences on Iran, Afghanistan, Russia and even Guantanamo are set to overshadow initial euphoria. Climate change is more likely to become a binding topic between Brussels and Washington, however.
"Expectations for Obama are ludicrously high and I'm sure he realises this," British Conservative MEP Syed Kamall told EUobserver. "He will need to play to an American audience, so the honeymoon in Europe will end once the interests of the US and the EU do not coincide," he added.
Europeans were likely to be reluctant to back Mr Obama's calls for more troops and burden-sharing in Afghanistan, Mr Kamall said. The war in Afghanistan began in October 2001, following the attacks of 11 September, and has 21 EU member states participating, but with low public support due to its prolonged duration and casualties.
A similar view was expressed by Charles Grant, director of the Centre for European Reform, a London-based think-tank. "Europe will miss the opportunity to have co-leadership on several issues," he argued, citing Afghanistan, Iran and Russia as potential disagreements between Europe and the US.
"I'm a bit pessimistic about Europe's ability to rise to the challenge of being a useful partner to Mr Obama," he said.
"On Russia, the Europeans are not really able to produce a unified policy. In the case of Afghanistan, they are not prepared to send troops to the dangerous places. On Iran, they are not prepared to take tougher sanctions as part of the stick-and-carrot package by which Mr Obama would hope to persuade Iran to dismantle its nuclear programme," Mr Grant explained.
Even on Guantanamo - the legally-blurry prison Europe has been calling on Washington to close - Mr Obama might face difficulties, since only a few EU countries so far expressed their willingness to take former inmates, "making it much harder for the US to close it," Mr Grant argued.
Yet he agreed that climate change was "the one issue where the EU does lead in world affairs," offering the chance for Europe and America to design new global standards and set a good example for emerging powers such as China and India.
"There's no way to get China and India on board unless Europe and the US are taking credible measures themselves. That's going to be the start," he said.
The Obama presidency will also be an alarm call for internal EU politics, Danish socialist MEP and potential future European Commission head Poul Nyrop Rasmussen wrote in a comment for this website.
"There can be no more hiding behind George W. Bush as an excuse for failure. Europe has an opportunity with Barack Obama. But can a conservative-run European Union seize it?"
EASTERN EUROPEAN HOPES
Meanwhile, in the Czech Republic, the country currently chairing the EU presidency, expectations from the incoming US administration focus on the post-Soviet states.
"Together with the Obama administration, the new member states - although we are not so new anymore, since we joined five years ago - will work on relations with EU's Eastern neighbours, Belarus, Ukraine, Moldova," Petr Greger, director of the Europlatform, a Prague-based think tank, told this website.
Support for these countries did not mean enlargement of NATO and the EU, but more co-operation with the eastern neighbours, he said. Yet he pointed out that Ukraine had a "much closer" relationship with the EU than, for instance, Belarus and that both Washington and Brussels should work on deepening the relationship.
From a Russian perspective, Bush-era support for potential NATO expansion to countries such as Ukraine and Georgia damaged trans-Atlantic relations, Mikhail Margelov, chairman of the foreign affairs committee of the Russian parliament's upper chamber wrote in the Moscow Times.
"Moscow is concerned that the Obama administration will continue to support requests from Georgia and Ukraine to join NATO. In a broader sense, there are disagreements between Russia and the United States on policies in the former Soviet republics and in Europe," he said.
The Russian politician quoted German foreign minister and "possible future chancellor" Frank-Walter Steinmeier as having written a letter to Mr Obama "suggesting that the United States consider President Dmitry Medvedev's proposal for a European security pact covering the territory stretching from Vancouver to Vladivostok."
Mr Obama so far has not expressed any clear views on the idea of such a security pact, which was also supported by French President Nicolas Sarkozy while chairing the EU presidency last year.
LINK: http://euobserver.com/?aid=27436
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4. EU: OBAMA INAUGURATION CREATES NEW OPPORTUNITIES
FOR ENHANCING TRANSATLANTIC TIES
Xinhau, Brussels, Belgium, Tuesday, January 20, 2009
BRUSSELS - The European Union (EU)'s Czech presidency issued a statement Tuesday to warmly welcome the inauguration of Barack Obama as the new president of the United States, saying that his inauguration "creates new encouraging perspectives and opportunities" for further promoting the transatlantic relations.
"This event has generated great interest and optimism not only in the United States, but also in Europe, as it creates new encouraging perspectives and opportunities for further promoting the Euro-Atlantic community of interests and values," said the statement.
The statement said the EU is looking forward to cooperating closely with the new U.S. administration to steadily enhance the transatlantic partnership.
"As recent history has clearly shown us, acting together represents one of the best ways to respond to the needs and hopes of peoples on both sides of the Atlantic," said the statement. "We wish the new president the best of luck and success in tackling the many remarkable challenges that now lie ahead of him."
Earlier Tuesday, European Commission President Jose Manuel Barroso issued a similar statement urging Obama to strengthen EU-U.S. bilateral ties.
"As President Obama begins his historic mandate, I call on Europe and the United States of America to deepen further their transatlantic ties and join efforts to engage others in addressing the great challenges of our time," he said. ?
LINK: http://news.xinhuanet.com/english/2009-01/21/content_10692759.htm
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U.S.-Ukraine Business Council (USUBC): http://www.usubc.org
Promoting U.S.-Ukraine business relations & investment since 1995.
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5. EU CALLS ON OBAMA TO DEEPEN TRANSATLANTIC TIES
Agence France-Presse (AFP), Brussels, Belgium, Tuesday, Jan 20, 2009
BRUSSELS- European Commission Jose Manuel Barroso on Tuesday called on US president-elect Barack Obama and European leaders to deepen their transatlantic ties at a time of 'great challenges'.
'The United States and the European Union should acknowledge their interdependence and the need for openness, while working closely together to shape multilateral responses to global challenges, from the financial and economic crises to peace and security, including in the Middle East, development challenges, and of course the defining struggle of our generation: to stop and reverse climate change,' Barroso said in a statement marking Obama's inauguration.
Relations between the EU and the United States reached a low under George W Bush, whose administration frustrated many European leaders by declaring war on Iraq and by refusing to cooperate in the fight against global warming.
Barroso said he looked forward to working with Obama 'to promote a politics of global engagement that will support international institutions reformed to address effectively our global responsibilities, from climate change to development aid, trade, democracy and human rights, and sound financial systems.' Barroso's comments were echoed by European Parliament President Hans-Gert Poettering.
'With the arrival of this new US Administration, we can relaunch transatlantic relations and put them on a new and dynamic footing. We have a unique chance to open a new chapter and engage in new thinking. Our aim is to forge a strong EU-US partnership based on equality,' Poettering said.
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6. "STRANGE COINCIDENCE"
Gaza, Russian-Ukraine gas dispute designed to precede Obama taking office
Editorial: By Gabor Horvath, Nepszabadsag website, in Hungarian, Budapest
BBC Monitoring Service, UK, in English, Monday, January 19, 2009
Well, this is the reason it does matter who wins the US presidential election. Barely two days before Barack Obama's inauguration, both international conflicts that have been dominating the headlines of the world press since the end of 2008 seem to be getting settled, as if by a magic touch. It is hard to believe that this coincidence is by chance, just like the fact that efforts have been made so that issues that have been dragging on for years should come to a head precisely before 20 January.
It was denied both in Israel and the United States that permission had been requested or granted for the military manoeuvres in the Gaza Strip. But this would not have been necessary, anyway. It is perfectly clear that, since his election as president, George W. Bush has agreed practically with everything Israel has done alluding to its interests.
Since the beginning of November, namely the victory of the Democrats and the serious defeat of the US right, the main question has been whether Israel would launch a military action against the strategic enemy Iran or the incomparably weaker enemy Hamas which lies much closer.
For now, [Israeli Prime Minister] Ehud Olmert has desisted from the former - based on the reasoning of either his own generals or the United States, but most probably owing to the combined effects of warnings coming from both directions.
If the US voters had put John McCain into the White House, the Gaza attack would not have had to be started so urgently, after all, the military situation in itself did not justify this. During the campaign Obama has been reiterating and he still maintains that Israel can continue to rely on the support of the United States, but in the Middle East the view is that this is unlikely to be the same, almost unconditional support as in the past eight years.
The change of power in the United States must also have had a similarly big effect on the Russian-Ukrainian gas dispute. This might seem surprising if we only think about the fact that the United States has no interest in the Eurasian gas market, neither as a seller, nor as a buyer. However, Washington has been so active in this issue in the past two years that it has been obvious that it has found its own strategic interests to be endangered.
From the USA's point of view, rather than the price of the energy for European (including Hungarian) consumers, the central issue has been whether it would be possible to drive Russia further back, tie Ukraine to the West for good, loosen the threads linking Central Asia to Moscow, and have the European Union pay the bill for the whole transaction.
The question of who had written the scenario arose already in connection with the summer [2008] Georgian adventure because few people had presumed about [Georgian President] Mikhail Saakashvilli that his own recklessness had lured the Russian bear out of its cave.
The same question now: did Kiev receive any encouragement to spark off the conflict, was it purely its own decision to accumulate gas for several months, facilitating its clash with Gazprom, and who had known in advance what was to happen in Europe. (And why did they not give any warning about it so that countries less far-sighted than Hungary, for example Slovakia, Bulgaria, or Croatia, could also prepare for the gas shortage?)
In terms of the result, it does not matter whether the Bush government wanted to "settle" these problems in its last weeks, or others thought that the chances of a positive final outcome from their point of view were better while the Republican administration was still in place.
In addition to many other things, the outside world also expects the US president taking office tomorrow to quell the hotheadedness of others, rather than kindling it. If no other way than through his own example.
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7. OBAMA ENTERS THE GREAT GAME
The two crises that cannot be avoided are Afghanistan and Russia.
Commentary & Analysis, by George Friedman, Stratfor, Austin, TX, Mon, Jan 19, 2009
U.S. President-elect Barack Obama will be sworn in on Tuesday as president of the United States. Candidate Obama said much about what he would do as president; now we will see what President Obama actually does. The most important issue Obama will face will be the economy, something he did not anticipate through most of his campaign.
The first hundred days of his presidency thus will revolve around getting a stimulus package passed. But Obama also is now in the great game of global competition — and in that game, presidents rarely get to set the agenda.
The major challenge he faces is not Gaza; the Israeli-Palestinian dispute is not one any U.S. president intervenes in unless he wants to experience pain. As we have explained, that is an intractable conflict to which there is no real solution. Certainly, Obama will fight being drawn into mediating the Israeli-Palestinian conflict during his first hundred days in office.
He undoubtedly will send the obligatory Middle East envoy, who will spend time with all the parties, make suitable speeches and extract meaningless concessions from all sides. This envoy will establish some sort of process to which everyone will cynically commit, knowing it will go nowhere. Such a mission is not involvement — it is the alternative to involvement, and the reason presidents appoint Middle East envoys. Obama can avoid the Gaza crisis, and he will do so.
OBAMA'S TWO UNAVOIDABLE CRISES
The two crises that cannot be avoided are Afghanistan and Russia.
[1] First, the situation in Afghanistan is tenuous for a number of reasons, and it is not a crisis that Obama can avoid decisions on. Obama has said publicly that he will decrease his commitments in Iraq and increase them in Afghanistan. He thus will have more troops fighting in Afghanistan.
[2] The second crisis emerged from a decision by Russia to cut off natural gas to Ukraine, and the resulting decline in natural gas deliveries to Europe. This one obviously does not affect the United States directly, but even after flows are restored, it affects the Europeans greatly.
Obama therefore comes into office with three interlocking issues: Afghanistan, Russia and Europe. In one sense, this is a single issue — and it is not one that will wait.
Obama clearly intends to follow Gen. David Petraeus’ lead in Afghanistan. The intention is to increase the number of troops in Afghanistan, thereby intensifying pressure on the Taliban and opening the door for negotiations with the militant group or one of its factions. Ultimately, this would see the inclusion of the Taliban or Taliban elements in a coalition government. Petraeus pursued this strategy in Iraq with Sunni insurgents, and it is the likely strategy in Afghanistan.
But the situation in Afghanistan has been complicated by the situation in Pakistan. Roughly three-quarters of U.S. and NATO supplies bound for Afghanistan are delivered to the Pakistani port of Karachi and trucked over the border to Afghanistan. Most fuel used by Western forces in Afghanistan is refined in Pakistan and delivered via the same route.
There are two crossing points, one near Afghanistan’s Kandahar province at Chaman, Pakistan, and the other through the Khyber Pass. The Taliban have attacked Western supply depots and convoys, and Pakistan itself closed the routes for several days, citing government operations against radical Islamist forces.
Meanwhile, the situation in Pakistan has been complicated by tensions with India. The Indians have said that the individuals who carried out the Nov. 26 Mumbai attack were Pakistanis supported by elements in the Pakistani government. After Mumbai, India made demands of the Pakistanis.
While the situation appears to have calmed, the future of Indo-Pakistani relations remains far from clear; anything from a change of policy in New Delhi to new terrorist attacks could see the situation escalate. The Pakistanis have made it clear that a heightened threat from India requires them to shift troops away from the Afghan border and toward the east; a small number of troops already has been shifted.
Apart from the direct impact this kind of Pakistani troop withdrawal would have on cross-border operations by the Taliban, such a move also would dramatically increase the vulnerability of NATO supply lines through Pakistan. Some supplies could be shipped in by aircraft, but the vast bulk of supplies — petroleum, ammunition, etc. — must come in via surface transit, either by truck, rail or ship. Western operations in Afghanistan simply cannot be supplied from the air alone.
A cutoff of the supply lines across Pakistan would thus leave U.S. troops in Afghanistan in crisis. Because Washington can’t predict or control the future actions of Pakistan, of India or of terrorists, the United States must find an alternative to the routes through Pakistan.
When we look at a map, the two routes through Pakistan from Karachi are clearly the most logical to use. If those were closed — or even meaningfully degraded — the only other viable routes would be through the former Soviet Union.
One route, along which a light load of fuel is currently transported, crosses the Caspian Sea. Fuel refined in Azerbaijan is ferried across the Caspian to Turkmenistan (where a small amount of fuel is also refined), then shipped across Turkmenistan directly to Afghanistan and through a small spit of land in Uzbekistan.
This route could be expanded to reach either the Black Sea through Georgia or the Mediterranean through Georgia and Turkey (though the additional use of Turkey would require a rail gauge switch). It is also not clear that transports native to the Caspian have sufficient capacity for this.
Another route sidesteps the issues of both transport across the Caspian and the sensitivity of Georgia by crossing Russian territory above the Caspian. Kazakhstan, Uzbekistan (and likely at least a small corner of Turkmenistan) would connect the route to Afghanistan. There are options of connecting to the Black Sea or transiting to Europe through either Ukraine or Belarus.
Iran could provide a potential alternative, but relations between Tehran and Washington would have to improve dramatically before such discussions could even begin — and time is short.
Many of the details still need to be worked out. But they are largely variations on the two main themes of either crossing the Caspian or transiting Russian territory above it.
Though the first route is already partially established for fuel, it is not clear how much additional capacity exists. To complicate matters further, Turkmen acquiescence is unlikely without Russian authorization, and Armenia remains strongly loyal to Moscow as well.
While the current Georgian government might leap at the chance, the issue is obviously an extremely sensitive one for Moscow. (And with Russian forces positioned in Armenia and the Georgian breakaway regions of Abkhazia and South Ossetia, Moscow has troops looming over both sides of the vulnerable route across Georgia.) The second option would require crossing Russian territory itself, with a number of options — from connecting to the Black Sea to transiting either Ukraine or Belarus to Europe, or connecting to the Baltic states.
Both routes involve countries of importance to Russia where Moscow has influence, regardless of whether those countries are friendly to it. This would give Russia ample opportunity to scuttle any such supply line at multiple points for reasons wholly unrelated to Afghanistan.
If the West were to opt for the first route, the Russians almost certainly would pressure Azerbaijan and Turkmenistan not to cooperate, and Turkey would find itself in a position it doesn’t want to be in — namely, caught between the United States and Russia. The diplomatic complexities of developing these routes not only involve the individual countries included, they also inevitably lead to the question of U.S.-Russian relations.
Even without crossing Russia, both of these two main options require Russian cooperation. The United States must develop the option of an alternative supply route to Pakistan, and in doing so, it must define its relationship with Russia. Seeking to work without Russian approval of a route crossing its “near abroad” will represent a challenge to Russia. But getting Russian approval will require a U.S. accommodation with the country.
THE RUSSIAN NATURAL GAS CONNECTION
One of Obama’s core arguments against the Bush administration was that it acted unilaterally rather than with allies. Specifically, Obama meant that the Bush administration alienated the Europeans, therefore failing to build a sustainable coalition for the war.
By this logic, it follows that one of Obama’s first steps should be to reach out to Europe to help influence or pressure the Russians, given that NATO has troops in Afghanistan and Obama has said he intends to ask the Europeans for more help there.
The problem with this is that the Europeans are passing through a serious crisis with Russia, and that Germany in particular is involved in trying to manage that crisis. This problem relates to natural gas. Ukraine is dependent on Russia for about two-thirds of the natural gas it uses. The Russians traditionally have provided natural gas at a deep discount to former Soviet republics, primarily those countries Russia sees as allies, such as Belarus or Armenia.
Ukraine had received discounted natural gas, too, until the 2004 Orange Revolution, when a pro-Western government came to power in Kiev. At that point, the Russians began demanding full payment. Given the subsequent rises in global energy prices, that left Ukraine in a terrible situation — which of course is exactly where Moscow wanted it.
The Russians cut off natural gas to Ukraine for a short period in January 2006, and for three weeks in 2009. Apart from leaving Ukraine desperate, the cutoff immediately affected the rest of Europe, because the natural gas that goes to Europe flows through Ukraine. This put the rest of Europe in a dangerous position, particularly in the face of bitterly cold weather in 2008-2009.
The Russians achieved several goals with this.
[1] First, they pressured Ukraine directly.
[2] Second, they forced many European states to deal with Moscow directly rather than through the European Union. Third, they created a situation in which [3] European countries had to choose between supporting Ukraine and heating their own homes.
And last, they drew Berlin in particular — since Germany is the most dependent of the major European states on Russian natural gas — into the position of working with the Russians to get Ukraine to agree to their terms. (Russian Prime Minister Vladimir Putin visited Germany last week to discuss this directly with German Chancellor Angela Merkel.)
The Germans already have made clear their opposition to expanding NATO to Ukraine and Georgia. Given their dependency on the Russians, the Germans are not going to be supporting the United States if Washington decides to challenge Russia over the supply route issue. In fact, the Germans — and many of the Europeans — are in no position to challenge Russia on anything, least of all on Afghanistan. Overall, the Europeans see themselves as having limited interests in the Afghan war, and many already are planning to reduce or withdraw troops for budgetary reasons.
It is therefore very difficult to see Obama recruiting the Europeans in any useful manner for a confrontation with Russia over access for American supplies to Afghanistan. Yet this is an issue he will have to address immediately.
THE PRICE OF RUSSIAN COOPERATION
The Russians are prepared to help the Americans, however — and it is clear what they will want in return.
At minimum, Moscow will want a declaration that Washington will not press for the expansion of NATO to Georgia or Ukraine, or for the deployment of military forces in non-NATO states on the Russian periphery — specifically, Ukraine and Georgia. At this point, such a declaration would be symbolic, since Germany and other European countries would block expansion anyway.
The Russians might also demand some sort of guarantee that NATO and the United States not place any large military formations or build any major military facilities in the former Soviet republics (now NATO member states) of Estonia, Latvia and Lithuania. (A small rotating squadron of NATO fighters already patrols the skies over the Baltic states.)
Given that there were intense anti-government riots in Latvia and Lithuania last week, the stability of these countries is in question. The Russians would certainly want to topple the pro-Western Baltic governments. And anything approaching a formal agreement between Russia and the United States on the matter could quickly destabilize the Baltics, in addition to very much weakening the NATO alliance.
Another demand the Russians probably will make — because they have in the past — is that the United States guarantee eventual withdrawal from any bases in Central Asia in return for Russian support for using those bases for the current Afghan campaign. (At present, the United States runs air logistics operations out of Manas Air Base in Kyrgyzstan.) The Russians do not want to see Central Asia become a U.S. sphere of influence as the result of an American military presence.
Other demands might relate to the proposed U.S. ballistic missile defense installations in the Czech Republic and Poland.
We expect the Russians to make variations on all these demands in exchange for cooperation in creating a supply line to Afghanistan. Simply put, the Russians will demand that the United States acknowledge a Russian sphere of influence in the former Soviet Union. The Americans will not want to concede this — or at least will want to make it implicit rather than explicit.
But the Russians will want this explicit, because an explicit guarantee will create a crisis of confidence over U.S. guarantees in the countries that emerged from the Soviet Union, serving as a lever to draw these countries into the Russian orbit. U.S. acquiescence on the point potentially would have ripple effects in the rest of Europe, too.
Therefore, regardless of the global financial crisis, Obama has an immediate problem on his hands in Afghanistan. He has troops fighting there, and they must be supplied. The Pakistani supply line is no longer a sure thing. The only other options either directly challenge Russia (and ineffectively at that) or require Russian help.
Russia’s price will be high, particularly because Washington’s European allies will not back a challenge to Russia in Georgia, and all options require Russian cooperation anyway. Obama’s plan to recruit the Europeans on behalf of American initiatives won’t work in this case. Obama does not want to start his administration with making a massive concession to Russia, but he cannot afford to leave U.S. forces in Afghanistan without supplies.
He can hope that nothing happens in Pakistan, but that is up to the Taliban and other Islamist groups more than anyone else — and betting on their goodwill is not a good idea.
Whatever Obama is planning to do, he will have to deal with this problem fast, before Afghanistan becomes a crisis. And there are no good solutions. But unlike with the Israelis and Palestinians, Obama can’t solve this by sending a special envoy who appears to be doing something. He will have to make a very tough decision. Between the economy and this crisis, we will find out what kind of president Obama is.
And we will find out very soon
LINK: http://www.stratfor.com/weekly/20090119_obama_enters_great_game
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8. PUTIN, RUSSIA AND THE UKRAINE
The only lesson of history ... is that it doesn't seem to teach us anything.
Analysis & Commentary: By Yuri Maltsev, Professor of Economics
Carthage College in Kenosha, Wisconsin
John Birch Society, Appleton, WI, Tuesday, January 20, 2009
In the eyes of Russian dictator Vladimir Putin, the Ukraine is not an independent nation.
During a private meeting with President Bush at the NATO summit in Bucharest in April of 2008, Putin said that the “Ukraine is not even a nation! What is Ukraine? Part of her territory is Eastern Europe, and part, a considerable part, was given by us!”
The fate of Ukraine and Georgia was sealed by Germany and France at the Bucharest meeting of NATO in April of 2008. Merkel and Sarkozy blocked their
applications to be included in the NATO Membership Action Plan (MAP), sending Putin the message that the West is eager to repeat the Munich accord of 1938 for the sake of good relations with him.
Putin picked Georgia as the first victim, placing the Georgian regions of Abkhazia and Southern Ossetia under his protectorate — with the silent approval of the West.
Now Putin uses the phony Ukrainian “threat” to gas supplies as a pretext to initiate a process of incorporation of the Russian-speaking regions of eastern Ukraine and Crimea into Russia, possibly by force. With the help of European politicians, he has prepared public opinion in the West to sell out the Ukrainians by way of Georgia’s betrayal.
I am not going to discuss the technicalities of the Russian sabotage of gas supplies to Eastern and Western Europe – it was a trivial KGB job. Gazprom
CEO Alexei Miller is an alumnus of the same KGB as Putin and most other members of his government; the only exemption is Putin’s press secretary
“president” Medvedev whose life expectancy can drop drastically with the new “constitutional” arrangements stamped by Putin’s “parliament” a.k.a Duma,
providing Medvedev’s successor (make a wild guess who that would be!) with powers unknown to the czars.
President Putin, a son and grandson of Stalin's admirers (his grandfather was one of Stalin's cooks), whose professional life revolved around the infamous KGB where he was a career spy, has definitely made the restoration of Russia’s superpower status a priority, as he has stated on several occasions.
Under President Putin’s leadership, any hopes for freedom and prosperity in Russia are being betrayed as he has effectively wiped out all voices of
dissent, and established authoritarian rule in all spheres. He has raised toasts to Stalin, and in his Statement to the Federal Council he referred to the collapse of the USSR “as the greatest geopolitical catastrophe of the century.”
Putin is a typical problem profiteer – he thrives on problems whether real, imaginary, or fabricated. His attacks on the West and its allies in Eastern
Europe provide him with an excuse to crack down on the freedom of speech, unleash unprecedented campaigns of racism and xenophobia, intimidate his
political opponents, and increase the power of the state, as well as his own.
Putin has taken advantage of the Western preoccupation with the war on terror, Iraq, and Afghanistan to distract world public opinion from the
burning issue of freedom in Russia.
Putin declared the West "colonialist" for its criticism of his autocracy. For Putin and his power structure based on the infamous KGB/FSB, it is more
important to keep the monopoly on power rather than to improve relations with the West. When NATO and the EU opened their membership to former Soviet satellites, Moscow's ruling elite was scared that Russians would follow the path of the “colored revolutions” in Georgia and Ukraine. Thus, an ongoing intimidation campaign by the Kremlin controlled media opinion against Georgians, Ukrainians, Baltic nations, and Poles.
Russian foreign policy remains anti-Western and anti-American. Putin sold advanced missiles to Syria, provides weapons to Hamas and Hezbollah, and
military aircraft to Sudan, Myanmar, and Venezuela, while continuing to fuel the nuclear ambitions of Iran and North Korea. Russian experts are servicing
the largest Russian-built Bushehr nuclear reactor in Iran.
Russian policy in the Middle East is based on weapons supplies and have spurred terrorism and armed conflicts. The amount and intensity of hatred by
the Russian ruling elite toward individualism associated with the West is comparable only to that of the Islamic fundamentalists. Thus, it is not
surprising to learn that Russian espionage activities in Western Europe and the United States tripled under Putin.
Economic disaster facing Russia today is due to the absence of free, open and transparent markets, rather than falling oil prices which Putin & Co. are trying to jack up by heightening international tension. Return of government control over mass media and information is fundamentally at odds with the transparency that efficient markets require. Political and economic freedoms are two sides of one coin — you cannot have one without the other.
It is clear that President Bush's efforts at personal diplomacy with Putin have not produced any visible results and have only been followed by further
cynical curtailment of human rights in Russia and the policy of open thuggery and intimidation in the post-Soviet space.
How willing will be President Obama to deal effectively with Putin’s threat to Ukraine, Baltic States, and Poland, and his mischief in the Middle East and almost everywhere else?
NOTE: Yuri Maltsev is professor of economics at Carthage College in Kenosha, Wisconsin. Before coming to the United States, Dr. Maltsev was a member of a senior team of Soviet economists that worked on President Gorbachev's reforms package of perestroika. Professor Maltsev has taught at the Luigi Bocconi University in Milan, Italy, Moscow State University, Russia, Lithuania International University in Klaipeda and Baltic Management Institute in Vilnius, Lithuania, University of Caen in Cherbourg, France and University of San Diego, California. He is on the advisory boards of Foundation for Economic Education in New York; Heartland Institute in Chicago; and the Quarterly Journal of Austrian Economics.
LINK: http://www.jbs.org/index.php/jbs-news-feed/4395
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9. ANALYSTS: OBAMA HAS NO ROOM FOR ERROR WITH RUSSIA
The Associated Press, Moscow, Russia, Monday, January 20, 2009
MOSCOW: President-elect Barack Obama's fresh approach to foreign affairs is welcome, Russian analysts say, but if he installs a missile defense system in Central Europe and pushes NATO's eastward expansion, he will still face the threat of a new Cold War.
Analysts here agree that the Democrat could kick-start relations between Moscow and Washington, currently at their worst since the Cold War.
They also warned there are numerous trap doors for the incoming U.S. leader, and that Obama has little room for error when it comes to dealing with Russia.
Russia's Prime Minister Vladimir Putin on a recent trip to Germany called Obama "sincere and open," but said the new U.S. president would be judged by his deeds rather than his words. "It is my deep belief that the most bitter disappointments usually result from excessive expectations," Putin said.
Unlike much of the rest of the world, the Russian public has not been caught up in the enthusiasm for Obama. Many political experts, in fact, see him as the lesser of two evils compared to Sen. John McCain, Obama's Republican rival in the election. McCain is a blunt critic of the Kremlin, and Moscow would have viewed his election as a catastrophe.
Sergei Markov, a political expert and a lawmaker with Putin's United Russia party, said Obama's policy on building ties with the post-Soviet nations — in particular NATO membership for Ukraine and Georgia — would be the yardstick for bilateral relations.
"Firstly, the Americans have to reject the crazy idea that all countries have the right to be surrounded by friendly nations except Russia, which has to be surrounded by enemy states controlled by Washington," Markov said.
During Putin's eight years as president, Russia has sought to use its energy riches to expand its political and military influence far beyond its borders, trying to reclaim some of the power Moscow had in the Soviet era. Today, President Dmitry Medvedev has pledged to follow the trail blazed by his predecessor and mentor.
Moscow has resumed regular strategic bomber patrols, sent warships into the Caribbean and sought to boost ties with U.S. foes, including Venezuela. Last summer, Russia waged a war with Georgia, after Georgian troops tried to reclaim control of the breakaway province of South Ossetia.
There is no room for NATO, in Moscow's view, in Russia's backyard.
To Moscow's delight, Obama has been noncommittal on enlarging NATO and deploying elements of a missile systems in Poland and the Czech Republic.
Analysts said Russia would greet Obama's decision to slow or scuttle these projects as a strategic victory.
Mikhail Vinogradov, president of the St. Petersburg Politics foundation, predicted Obama may be persuaded to confront Russia over such divisive issues as control of the energy-rich continental shelves under the Arctic Ocean. The United Nations has asked countries willing to claim the seabed to submit their claims by May 13.
Sergei Rogov, Director of the USA and Canada Institute, praised Obama's cabinet and predicted a new era of compromise. "There will be attempts to find common ground with Russia ... unlike with the Bush administration," Rogov said. But, he warned, "if agreement is not reached, we could see a new Cold War."
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10. STARTING FRESH WITH OBAMA
Commentary by Mikhail Margelov, The Moscow Times
Moscow, Russia, Tuesday, January 20, 2009
MOSCOW- President-elect Barack Obama has formed his team of advisers, but it would be difficult to call them "friends of Russia." This reflects in part the cool relations Washington and Moscow have had for nearly eight years.
No wonder the Kremlin is taking a close look at statements made by members of the new administration to discern whether Washington will support many of the same positions adopted by former U.S. President George W. Bush or if he will finally make changes to U.S. foreign policy that the whole world has long awaited.
Nobody in Russia is expecting that our relationship with Washington will improve overnight. Obama's team has more pressing issues to deal with in other parts of the world such as Afghanistan, Iraq and Iran. After an unsuccessful attempt to keep the United States as the unchallenged leader of a unipolar world, Washington will need the support of allies and partners more than ever.
U.S. Secretary of State Hillary Clinton expressed this idea during her Senate confirmation hearing on Jan. 13: "America cannot solve the most pressing problems [in international affairs] on our own, and the world cannot solve them without America."
Russia's direct participation is required to solve many of these global problems, particularly in Eurasia, where the interests of both countries coincide. Clinton's words suggest that the United States will rely on its partners and accept the fact that the world is now multipolar.
If Washington can accept these fundamental positions, it will open up many new opportunities to improve U.S.-Russia relations. Under Putin, Russia has returned as a major global power, but it understands that it needs allies and partners as much as the United States does to maintain that leadership status.
As a key element of Russia's foreign policy, Moscow must play a leading role in such strategic issues as the nonproliferation of weapons of mass destruction, the regulation of missile defense, reforms to the global financial system and the fight against terrorism.
The new U.S. administration is ready to cooperate with Russia in these areas first. Clinton's statement inspires hope that Moscow and Washington will find common ground regarding Iran; there is talk of U.S. readiness to hold direct talks with that country.
Certainly, the United States will not renounce its role as a global leader, and it will continue to "stand up strongly for American values," as Clinton stated in the Senate hearing. It is generally thought that a Democratic administration puts more stress on these "American values," such as human rights, when it formulates its foreign policy, whereas Republican administrations tend to be guided more by realpolitik principles.
Over the past eight years, there was no shortage of areas over which Russia and the Bush administration sharply disagreed. The most divisive issues were U.S. plans to deploy elements of a missile-defense system in Poland and the Czech Republic, the expansion of NATO membership for Ukraine and Georgia and Iran's nuclear program. Moscow hopes that the new president will reconsider his position on missile defense in Central Europe. If he does, Russia will most likely not deploy Iskander missiles in Kaliningrad.
Moscow is concerned that the Obama administration will continue to support requests from Georgia and Ukraine to join NATO. In a broader sense, there are disagreements between Russia and the United States on policies in the former Soviet republics and in Europe. Russia is far from alone in opposing Washington's foreign policy.
Last week, German Foreign Minister — and possibly future chancellor — Frank-Walter Steinmeier wrote a letter to Obama suggesting that the United States consider President Dmitry Medvedev's proposal for a European security pact covering the territory stretching from Vancouver to Vladivostok. Moscow is ready to cooperate with Washington on all issues of mutual concern, including the prevention of nuclear terrorism and the fight against narcotics trafficking.
Foreign Minister Sergei Lavrov has said many times that Russia and the United States should develop a unified agenda. That was also reflected in the strategic framework declaration signed in Sochi by then-Presidents Bush and Vladimir Putin, in which the two countries agreed that such cooperation should be built upon the principles of equality, honest dialogue and friendly relations.
Now more than ever, Washington and Moscow need more dialogue on a whole range of issues. I believe that these negotiations should take place on all levels, both governmental and nongovernmental. As the head of the Russian side of the Federation Council-U.S. Senate working group, I am ready to discuss how to increase cooperation between our two countries.
I have great hopes for this group, since talks are conducted in a more candid manner than between official diplomats. That is why I am certain that U.S.-Russia relations will improve, starting with the very first meeting between U.S. senators and members of the Federation Council under the new Obama presidency.
NOTE: Mikhail Margelov is chairman of the International Affairs Committee in the Federation Council.
LINK: http://www.themoscowtimes.com/article/1016/42/373689.htm
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Promoting U.S.-Ukraine business & investment relations since 1995.
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11. MANY RUSSIANS BELIEVE OBAMA WILL WARM MOSCOW-WASHINGTON RELATIONS
Posted by Alexsei Kuznetzov, World Watch, CBS News, Tuesday, January 21, 2009
NEW YORK - "America is a beautiful country – very picturesque – but it has been unlucky with its leaders lately," said a man dressed as Ded Moroz (a Russian Santa Claus) interviewed by CBS News in downtown Moscow. "It has been run by the wrong people."
Today may really be the day of the big change – with Barack Obama taking office in the White House. Lots of Russians believe that under President Obama, U.S.-Russia relations which have reached their post-Cold War low should pick up.
"After Barack Obama becomes president, he should establish better contacts and improve ties with Russia," says Maxim, a young boy from the Russian city of Yaroslavl, carrying a McDonald's paper bag shortly before visiting Red Square. "Maybe he should come to Russia and do some sightseeing – so that he would fall in love with my country."
"I would advise President Obama to telephone our President Medvedev and arrange a meeting between them," adds Vitaly, also from Yaroslavl. "Once that meeting is held, the two could do something together to change the world for the better."
Indeed, it seems that truth does come out of the mouths of babes – Russian officials have recently been talking most favorably of the future of the bilateral relations, significantly toning down their anti-American rhetoric which has for years been Moscow's trademark in foreign relations.
Last November, President Medvedev made no mention at all of Mr. Obama's victory when giving his State of the Nation address the day after the U.S. elections, claiming he "forgot." The Russian President seems to be showing considerably more interest in the inauguration.
"Naturally, we have been following this event very carefully," President Medvedev said, adding that he wanted "U.S.-Russia relations to develop intensely and constructively in all areas."
This view was echoed by Russia's Foreign Minister Sergei Lavrov who confirmed Moscow's readiness for a thaw in the bilateral relations. "Like many other countries, we want to actively work together with the new U.S. administration," Mr. Lavrov said. "We are open to equal dialogue. And we are hopeful that the advantages of this cooperation will outweigh any desire to play a political game to again deter Russia."
In a rare demonstration of amiability towards Washington, the Kremlin ordered activists of a pro-government youth movement Mestniye (Locals) to welcome Obama's inauguration.
On Tuesday, January 20, about 50 members of the youth group rallied in front of the U.S. Embassy to congratulate President Obama and to caution the new U.S. president against repeating his predecessor's mistakes.
"We hope this man, unique in many ways, will take a more sober look at Russia – a country that has regained the status of a great power," Mestniye leader Sergei Fadeyev is quoted by Interfax news agency as saying. "We also hope that that he would give up the policy of double standards and treat Russia as an equal partner."
Treating Russia as an equal partner appears to be the key factor in improving U.S.-Russian relations. After the defeat in the Cold War and the collapse of the Soviet Union there is a deep-running feeling shared by many Russians that their country has not been treated fairly by the West and particularly by the United States.
Among the main irritants is the continuing NATO eastward enlargement which Moscow sees as a direct threat to its national security. U.S. resolve to offer a fast-track NATO membership to Ukraine and Georgia and to install missile defense components in Poland and the Czech Republic has dramatically raised tensions between Washington and Moscow.
"It is easy to understand why so many Russians feel gravely embittered and insulted," Anatoly Utkin, a leading analyst at the Moscow-based U.S.A. and Canada Institute explained to CBS News in an interview. "Over the past 20 years, this country has made so many unjustified geopolitical concessions to the US, getting nothing in return from the West besides humiliation. Russia simply has nothing else left to cede."
And this is the reason why Russia, unlike some other countries, has not seen a tide of Obamamania. In the eyes of ordinary Russians, the White House is still associated with the previous U.S. administration and its policies. People here are waiting for a signal from Mr. Obama that a new chapter in U.S.-Russia relations has begun.
"Obama has not done or even said anything good about Russia. Russia is a country where words are important," explains Anatoly Utkin. "It would have made a difference, if Obama had, for instance, mentioned Dostoyevsky or said anything about the mysterious Russian soul." Instead, "Obama has been repeating the word 'change' as his main mantra – but it remains to be seen in which direction that change is going to be," Utkin said.
Almost a decade ago, Russia's most powerful man - Vladimir Putin - managed to charm George W. Bush who looked Putin in the eye and "got a sense of his soul." Today, Putin sounds charmed with the new U.S. President: "Mr. Obama appears to be a sincere and open person. Surely, this is appealing."
But as an experienced former KGB officer, Putin tempered his optimism about Barack Obama. "Exclusive expectations usually produce the worst disappointment," Putin said. "Let's wait and see what happens in practice."
LINK: http://www.cbsnews.com/blogs/2009/01/20/world/worldwatch/entry4740269.shtml#ccmm
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12. RUSSIAN FOREIGN MINISTER LAVROV HOPES OBAMA
WILL BRING CHANGE TO RUSSIA-US TIES
American ABM facilities in Eastern Europe and artificial
expansion of NATO into Ukraine and Georgia
Rossiya TV, Moscow, Russia, in Russian 1700 gmt 17 Jan 09
BBC Monitoring, UK, in English, Saturday, January 17, 2009
MOSCOW - Russian Foreign Minister Sergey Lavrov gave an interview to Rossiya TV's "Vesti" news on 17 January, in which he said Hillary Clinton as US secretary of state would be a "significant resource" for American foreign policy, and called on the new Obama administration to undertake "thorough analysis" of issues such as American ABM facilities in Eastern Europe and the expansion of NATO.
The interviewer began by asking Lavrov whether he was acquainted with Hillary Clinton. "We met at several receptions when she was first lady and I was working in New York as representative to the UN," Lavrov said. However, Lavrov said he could give an assessment of her as a diplomat before he had started working with her. "I do not doubt that she will be a significant resource for American foreign policy, given the experience and abilities of Hillary Clinton," he said.
Asked to comment on prospects for improvement in Russia-US relations, Lavrov said: "A lot will depend on the Obama administration, and on the position taken by the personnel of the current administration. As I have already said, Obama stood for election with a slogan about the need for change.
We hope that this will concern the area of foreign policy, especially relations with the Russian Federation, because that interests us more than certain other things. You understand, there is no need to think up changes particularly. It simply needs to be ensured that words and deeds are not different things."
He continued: "I hope that the Obama administration will carry out a very thorough analysis of this project [the plan for American ABM facilities in Easter Europe]. If there is no third [ABM] positioning area, then there will be no Iskander [missiles] in Kaliningrad Region - the president has said so and the defence minister has confirmed it, and we have said it repeatedly.
"I also hope that there will be a thorough analysis of all the other projects which create the most serious problems for European security. I have in mind, above all, the artificial expansion of NATO into Ukraine and Georgia, against the will of the Ukrainian people and in conditions where the regime of [Georgian President Mikheil] Saakashvili has proven its aggression."
"I also hope that Barack Obama, who demonstrates openness to any problems in international life, will not be blinkered by any sluggish approaches," Lavrov concluded.
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13. PRESIDENT OBAMA - SYMBOLIC OF CHANGE RUSSIANS
CAN'T OR WON'T EMULATE, SAYS MOSCOW ANALYST
Window on Eurasia, by Paul Goble, Vienna, Tuesday, January 20, 2009
The inauguration of Barak Obama today as the first African-American president of the United States calls attention to one of the most important if not often commented upon differences between the American and the Russian peoples, according to a leading Moscow analyst.
The Americans, Maksim Strelok argues, welcome change and thus regularly transform themselves so that their country "is not what it was yesterday and that tomorrow it will be better than today," while Russians find it more difficult to escape from the past and thus face a future that may prove even worse than the present (www.vestnikcivitas.ru/ht/ ).
Most Russian commentators predicted that Obama would be defeated either in the primaries or in the general election, and they have tended to view his coming to power either as the result of some kind of backroom conspiracy or as the accidental coming together of a set of circumstances that will never be repeated, Strelok says.
What they have not been prepared to acknowledge, largely because to admit it would be to be forced to recognize Russia's own predicament, is that America has changed dramatically over the past decades and that its ability and willingness to change is one of the most important sources of its strength.
Unlike America which when faced with changes all around became a different country, the Moscow commentator says, most Russians have reacted by seeking to deny the clear evidence that the US has changed because they do not want to give up their old images of America and because they do not want to change their country and themselves.
As America changes and Russia fails to do so, not only will Russians find themselves ever further behind, but they will not only have ever more negative views about the United States but remained trapped in a time warp of expectations that "the dollar will be transformed into worthless paper" and then Russians will be able to triumph.
The United States already has the ability to counter Russian actions in the far and near abroad, Strelok continues, but now in addition to all these "petty" things, the Americans have presented Russia and the Russians with an even more serious challenge, the election of a black president, something many Americans and even more Russians had assumed was impossible.
The change that President Obama represents in his own person and not just in his policies is not only something Americans "can believe in." It is a change, Strelok says, which Russians cannot even approximate. For Russians, today "as was the case yesterday, a year ago and even a century ago," there has been the same kind of power, the same thievery, and the same roads.
And still worse, Strelok argues, unlike the Americans who have now elected to the highest office in the land someone few of them might have voted for a generation ago, Russians have not "demanded [similar changes] from the powers that be," and those in power have not sought to promote that idea.
"The world has changed enormously in the past and it continues to change," Strelok points out, and Americans have responded by being willing to change themselves and hence their country. Many of the changes sweeping the world ultimately will force Russians to change, but such changed will be forced, they will assume a "terrible" form in their country.
That is what happened "at the beginning and at the end of the [20th] century," the Moscow commentator says. "The country couldn't live in its existing form, and through blood and tragedy, it was twice forced to change. Circumstances compelled it to. But each such reordering left terrible scars on the lives of millions."
"Are [Russians] going to wait again until circumstances force us? Will we again play as if we can pursue 'a special path'? Will we give the impression that what is taking place in the world does not concern us?" If so, Russians will experience new tragedies at least a terrible as those they have experienced in the past.
Perhaps, Strelok says, those in power "do not understand that we must change sooner than circumstances force us to." Or alternatively, it may be that "they understand but don't see the value of promoting that." That is what makes Obama's coming to power in the United States so instructive.
He is, the Moscow analyst suggests, "a sign to all countries [including Russia] that it is necessary to change. If you want to flourish and grow rich, it is necessary to change. If you want development, it is necessary to change. [Even] if you want to survive it is necessary to change" and critically to do so before being forced to.
For those who understand this, Strelok concludes, Obama's rise to power is "a good sign, which shows the path leading ahead. But for those who do not understand" and especially for those who do not want to understand, his "truly historical" inauguration is a clear indication that they face even greater problems ahead.
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14. GEORGIAN LEADER MAY COME UNDER OBAMA SCRUTINY
Analysis: by Matt Robinson, Reuters, Tuesday, January 20, 2009
Georgian leader Mikheil Saakashvili is one of the few world leaders who may rue the departure of George W. Bush when he gives way Tuesday to a U.S.
president less likely to champion Tbilisi with such zeal.
Saakashvili is losing his closest Western ally, a little over five years after he was propelled to power in the peaceful "Rose Revolution" and adopted as the poster boy for Bush's declared agenda of spreading freedom around the globe. The relationship was personal.
Bush visited Tbilisi in May 2005 and described Georgia as a "beacon of liberty." Saakashvili named a Tbilisi street after Bush and sent 2,000 soldiers to fight in Iraq.
His image dented by August's brief war with Russia and by criticism of his record on democracy, Saakashvili needs allies. Washington, for its part,
certainly cannot ignore a country that is a major transit territory for European energy supplies.
"Under the (Barack) Obama administration, I don't think they will throw Georgia under the train, but there won't be the same emphasis on using Georgia as a model of transition that they would like to see in other states," said Jeffrey Mankoff of the U.S.-based Council on Foreign Relations.
Critics say Saakashvili has failed to live up to his promise of democracy. He has stifled the media, judiciary and political opposition, and concentrated power on an inner circle largely blamed for taking the country into war with Russia.
Saakashvili, a U.S.-educated lawyer, denies squeezing democratic freedoms. He has unveiled a series of measures which he says will reduce presidential
powers.
The Bush administration has been "unthinking and unblinking" in its support for Saakashvili, and was sorely let down in August when Georgia moved
against pro-Russian separatists in breakaway South Ossetia, said James Nixey, a research fellow on the Russia and Eurasia Program at London's Chatham House.
Critics suggest Bush might have failed to make clear the limits of his indulgence, with disastrous consequences. Georgia's former envoy to Russia told a parliamentary inquiry Saakashvili believed he had U.S. backing for the strike on South Ossetia.
A new administration could bring greater pressure on Saakashvili to follow through with real reform, especially faced with a resurgent opposition that
blames him for the war.
Nixey said a change at the White House could bring "a more nuanced U.S. policy toward Georgia." "Saakashvili has promised to hold himself to a higher standard," he said. "This is his only chance of success. Without that, he hasn't a chance with the new administration."
PRIVILEGED INTERESTS
By sending tanks and troops into Georgia in August, Russia served notice it was ready to defend "privileged interests" in its ex-Soviet backyard, repelling what it sees as a threat from NATO's eastward expansion.
Washington pledged $1 billion in aid and economic help after the war and, much to Moscow's annoyance, sent warships to the Black Sea coast carrying
humanitarian supplies. Moscow in return made much of sending its own naval vessels to take part in exercises not that far from U.S. coastal waters.
The war deepened division within Europe over the wisdom of extending NATO membership to Georgia and Ukraine.
Analysts say the issue will not be a priority for Obama, compared with arms control, Iran and Afghanistan -- all issues on which Washington will court
Russian cooperation. Bush's policy in eastern Europe and the Caucasus had set the U.S. on a collision course with Russia, Mankoff said.
The Bush White House laid the blame for the August war squarely on Moscow. But Obama's comments at the time gave the impression he had "a more nuanced view of what was going on," Mankoff said. "The war this summer was a sharp reminder that you cannot ignore Russia," he said.
Western diplomats concede Georgia's NATO ambitions were dealt a severe blow by Saakashvili's decision to launch an air and ground assault on South
Ossetia -- which threw off Tbilisi's rule in the 1990s -- and by Russia's crushing response.
Georgia has lost what little control it had over South Ossetia and the second breakaway region of Abkhazia, now recognized by Moscow as independent
states. Tens of thousands of Georgian refugees face little prospect of returning home in the foreseeable future, and investor flight has compounded the effects of the global financial crisis.
Several key allies have split with the president, and the resurgent opposition is demanding his resignation. "I can see the departure of the Bush administration changing Georgians' view of Saakashvili," Mankoff said. "With the new administration coming in, his ability to turn to the U.S.
administration for support diminishes." (Editing by Ralph Boulton)
URL: http://www.reuters.com/article/GCA-BarackObama/idUSTRE50J31620090120
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15. ANALYSIS: UKRAINE MAY BE BIGGER LOSER IN GAS WAR
Analysis: by Douglas Birch, AP Writer, Moscow, Russia, Monday, January 19, 2009
MOSCOW - Russian Prime Minister Vladimir Putin's tough tactics seem to have paid off in talks to resume gas shipments through Ukraine to Europe, most importantly by doubling the price Ukraine pays for gas.
Europe, meanwhile, bore the brunt of the suffering during the two-week ordeal with little to show for it. And Ukrainian President Viktor Yushchenko, who already has approval ratings in the single digits, may find himself pushed further into the political wilderness.
Twenty years after the fall of the Berlin Wall, Europe is still dependent on the former Soviet Union for energy and struggling to build stable relations with Moscow.
Putin and Ukrainian Prime Minister Yulia Tymoshenko witnessed the signing of the 10-year contract Monday between Russia's Gazprom and Ukraine's Naftogaz in Moscow, hailing it as the end of the annual squabble over gas prices and transit costs.
But some details remain sketchy. And for Russia, it may be a bittersweet victory: the state-run monopoly Gazprom has lost about $1 billion in revenue from lost gas sales, which it will not recoup, and the agreement won't solve its long-term problems, including a crippling level of debt.
But the broad outline of the deal seemed to favor Russia. According to Putin and Tymoshenko, Ukraine has negotiated a 20 percent discount in 2009 over the prices paid by most European customers for Russian gas which translates, by most estimates, into about $360 per 1,000 cubic meters. That is basically double the $179.50 that Ukraine paid Russia last year and even then it struggled to pay its gas bill.
Ukraine's inefficient factories gobble up energy, and this huge increase in gas prices could drive the country's struggling steel mills, chemical factories, state-run central heating plants and other gas-consuming industries into the ground.
Officials said the gas price will be reviewed quarterly, so Ukraine is likely to get significant price relief later this year as gas prices ebb because of the drop in oil prices. But Ukraine will still pay significantly more than it did in 2008 even as the global recession of 2009 beats down its economy.
"They're definitely going to pay a lot more for gas, and it was a strain for them to pay last year," said Chris Weafer, chief strategist for Uralsib bank of Moscow. And the discount only lasts for a year Putin says Ukraine will pay the full market price starting next Jan. 1. Plus while Ukraine pays more, Russia pays Ukraine exactly the same price it did last year to use their pipelines to ship gas to Europe.
Add to that Ukraine's dependence on the European Union's goodwill for the aid it will need to stave off bankruptcy goodwill it may have squandered during the dispute and the picture looks pretty bleak for Kiev.
Russia's commercial victory, meanwhile, may be worth less than meets the eye. The $360 figure is roughly what Gazprom pays for gas from Central Asia. So while Russia won't lose any money selling Central Asian gas to Ukraine this year, it probably won't earn anything either.
Politically, the deal seems to favor Putin. Dmitry Trenin, director of Moscow's Carnegie Center think tank, said Russian officials have sought to use the dispute to weaken Yushchenko and strengthen his rival, Tymoshenko. Once a harsh critic of Moscow, Tymoshenko has warmed to Putin and the Kremlin in the past year.
One of Moscow's chief aims apparently was to eliminate the Swiss-based energy trader RosUkrEnergo from its role as middleman in the Russia-Ukrainian gas business. Analysts have long questioned why the two countries needed to funnel billions of dollars in gas transactions through RosUkrEnergo and what happens to that money.
Volodymyr Omelchenko of the Razumkov Center of Sociological Studies in Kiev says RosUkrEnergo has helped finance Yushchenko's political campaigns, although Yushchenko denies he is tied to the gas business.
Putin said Monday the new agreement eliminates intermediaries in the Russia-Ukraine gas business, which "must be transparent and predictable."
Trenin said if RosUkrEnergo were eliminated, that could wreck Yushchenko's hopes of holding onto his post.
Yushchenko personally blames Moscow for his mysterious and near-fatal dioxin poisoning in 2004, has campaigned for Ukraine membership in NATO and the EU and remains a bitter foe of the Kremlin.
Weafer said there are fears in Moscow that Europe, in its frustration, could decide to make a long-term, strategic decision to find alternatives to Russian gas. But experts agree that Europe has no choice but to rely on Russia in the near term. And obvious alternatives to Russian energy more coal and nuclear power would require a huge investment and an easing of environmental regulations.
Still, there is plenty of anger in Europe from those who suffered in the dispute. In an effort to assuage those hard feelings, Putin offered his "condolences to everyone who became involuntary hostages of this crisis."
NOTE: Moscow Bureau Chief Douglas Birch has covered Russia since 2001.
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16. GAS DEAL SIGNED WITH RUSSIA, GAS SUPPLIES TO RESUME TO EUROPE
BYuT Inform Newsletter, Kyiv, Ukraine, Tuesday, 20 January, 2009
KYIV - Prime Minister Yulia Tymoshenko and her Russian counterpart Vladimir Putin, were present in Moscow to witness Gazprom and Naftohaz sign a ten year contract that brings an end to the gas dispute. Following signature of the contracts, instructions were given to resume gas flows to Europe.
The basis of the deal, agreed over the weekend, involves Ukraine paying 20 percent less than the European market price for gas in 2009. In return, the existing discounted tariff Gazprom pays for its gas to be transported through Ukraine’s pipeline system to Europe will remain in place until the end of the year. On 1 January 2010, both countries will then pay European market prices for gas supply and transit respectively.
Ms Tymoshenko described the agreement as “historic” and said that Europe would receive supplies “as soon as the gas passes through our pipelines. There won’t be any delay.” She also took time to call José Manuel Barroso, the President of the European Commission, whom she thanked for the EU’s assistance in helping to resolve the dispute.
In 2008, Ukraine paid $179.50 per thousand cubic metres of gas, which is slightly less than half the current market price for European countries. Under the new contract Ukraine is likely to pay less than $250 per thousand cubic metres. A higher rate will be paid in the first quarter but this will decrease as the price of gas catches up with the price of oil. The latter has plummeted from about $147 in July to as low as $35 a barrel today.
Supply contracts for natural gas tend to be lengthier than oil contracts and, typically, gas prices lag behind oil prices by six to seven months. According to Ronald Smith, a strategist at Alfa Bank, by the midsummer Ukraine could be paying as little as $150 per thousand cubic metres.
EU officials welcomed the contract signature, sounding a cautiously optimistic tone. “The proof of the pudding is in the eating and the proof of the gas is in the flowing,” remarked Johannes Laitenberger, a European Commission spokesperson.
The new deal also removes intermediaries from the supply of natural gas to Ukraine; something Prime Minister Tymoshenko has long campaigned for (see article below). The agreement also maintains Ukraine’s sovereignty over its gas transit system, which is a prized national asset that has long been coveted by Gazprom. Ukraine transports about one-fifth of the EU’s gas supplies.
The eventual move to European market prices should benefit both countries. A major benefit for Ukraine is that Russia will no longer be able to use its energy card to exert influence over Kyiv.
“We seek to develop closer energy ties to Europe,” said Hryhoriy Nemyria, Deputy Prime Minister responsible European integration, “energy security, transparency and stability of supply are fundamental tenets underpinning future energy cooperation.”
Securing a deal to end the dispute was a coup for Ms Tymoshenko. “Ukraine’s prime minister has again affirmed her pragmatic approach in terms of dealing with Russia,” said Tim Ash, a senior emerging markets banker for the Royal Bank of Scotland.
NOTE: Questions or comments? Email us at nlysova@beauty.net.ua
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17. UKRAINE: INTERMEDIARIES REMOVED FROM NEW GAS DEAL
BYuT Inform Newsletter, Kyiv, Ukraine, Tuesday, 20 January, 2009
KYIV - The shady intermediary RosUkrEnergo (RUE) has been eliminated from the newly brokered deal to supply natural gas to Ukraine, heralding a new era of transparent contractual relations between Naftohaz and Gazprom.
The seismic shift in the Kremlin’s policy towards RUE is not surprising and comes after years of patient lobbying by Prime Minister Yulia Tymoshenko whilst in the opposition and in
government.
At the height of the gas dispute, when claims and counter claims were being traded thick and fast between Moscow and Kyiv, Russia’s Prime Minister Vladimir Putin lambasted Ukraine’s leaders and RUE. Mr Putin even suggested that some political leaders were profiting from the presence of the Swiss-registered company in supplying gas to Ukraine.
“What (they) are fighting for today is not the gas price, but a chance to keep their middlemen in order to use the dividends obtained for personal ends and personal enrichment and in order to receive financial resources needed for their future political campaigns," said Mr Putin.
On the eve of the gas talks in Moscow, Ms Tymoshenko also made this linkage. She claimed that the terms for a gas deal were agreed on 30 December 2008, “But during the last two days of the year, those political forces within Ukraine that have corruption links to the shadowy middleman, RosUkrEnergo, took the opportunity to ruin the signing of the contract, and sabotage the entire painstakingly constructed process of negotiation.”
DUBIOUS ROLE ACKNOWLEDGED
Russian acknowledgement that RUE had a dubious role in the gas trade indicates a welcome about-turn in Kremlin policy. It is a far cry from February 2007, when, at the Munich Conference, Mr Putin said that he considered President Yushchenko’s signing of the gas deal with RUE was “a responsible, absolutely correct and market-oriented decision.”
Ms Tymoshenko, and the leaders of her eponymous bloc, made it a condition of the talks that the scandal plagued intermediary play no further part in future gas contracts between the two countries.
But some of Ms Tymoshenko’s critics suggested that Ukraine’s premier was only interested in replacing RUE with another intermediary that would benefit her alleged associates. Party of Regions stalwart and Former Minister for Fuel and Energy, Yuriy Boyko, even went as far as saying that this was the real reason why the gas talks ended in stalemate.
“This hardly merits comment,” said a Bloc of Yulia Tymoshenko (BYuT) spokesperson, “Ms Tymoshenko has been consistent over the years and emphatic about the removal of all intermediaries. This latest contract confirms that.”
Mr Boyko’s assertion was even dismissed by those in his own party. ZiK reported that the prominent Party of Regions lawmaker Nestor Shufrych “called Boyko’s statement an irresponsible provocation.”
REMOVAL OF INTERMEDIARIES
Ms Tymoshenko, has for years steadfastly campaigned for the removal of RUE from the supply of natural gas to Ukraine. Having famously described it as a “corrupt cancer,” she has advocated, and has now succeeded in securing, a transparent and direct contractual relationship between Naftohaz and Gazprom.
In July 2006, in the Wall Street Journal, Ms Tymoshenko attacked RUE’s role saying, “Such arrangements diminish investor confidence and heavily burden countries such as Ukraine that are attempting to break away from past corruption and inefficiency.”
CHEQUERED HISTORY
Headquartered in Zug, Switzerland, RUE, which is owned 50:50 by Gazprom and Centragas AG, has had a chequered history. It has been plagued by alleged links to organised crime, an investigation by the US Justice Department, and an opaque ownership structure that hid the identities of its Ukrainian beneficiaries. Its auditor, KPMG International, resigned over concerns that its association with the company could damage its reputation.
After persistent allegations of shady dealing and intense media speculation, the identities of its Ukrainian beneficiaries were finally revealed in April 2006. The story was broken by Izvestia (the Gazprom owned daily newspaper) in what was regarded as a move to halt damaging rumours. The owners proved to be Ukrainian businessman Dmitry Firtash, whose company Group DF owns 90 percent of Centragas AG, and Ivan Fursin a close business associate, who owns the remaining 10 percent.
WELCOME SHIFT BY THE KREMLIN
The shift in Kremlin policy regarding RUE took place long before the gas dispute. Last October, Prime Minister Putin met with Ms Tymoshenko and signed a memorandum that agreed, amongst other things, the removal of intermediaries from future gas contracts. At the time, BYuT hailed this as a huge step in the right direction. More recently, Naftohaz CEO Oleh Dubyna indicated he would prefer to resign if the intermediary stayed.
Writing in the Financial Times (15 January), Diarmid O’Sullivan and Tom Mayne, of the British anti-corruption watchdog Global Witness, called upon the EU to use its regulatory powers to ensure that companies trading in its energy markets operated with full disclosure and transparency.
They wrote: “As Europeans, we need to know who supplies our oil and gas. We need to know who owns the companies and what qualifies them to play the role that they do. We need to know how they price their energy and how much revenue they pay. We need to be assured that they came by their contracts in an open and transparent manner.”
The removal of RUE is an important first step.
BYuT NOTE: Questions or comments? Email us at nlysova@beauty.net.ua.
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18. THE 18-DAY GAS WAR - WHY WAS IT FOUGHT? WHO WON?
Putin’s miscalculations leave Russia as the loser in the 18-day “gas war”
Analysis & Commentary: By Roman Kupchinsky, Eurasia Daily Monitor, Vol 6, Issue 12
Jamestown Foundation, Washington, D.C., Tuesday, January 20, 2009
A preliminary, and possibly premature, report of the 18-day Russian-Ukrainian “Gas War” of January 2009 might read as follows:
This war should never have taken place. The conflict had little to do with “commercial disagreements” between Gazprom and Naftohaz Ukrainy—these were resolved by the “Memorandum of Agreement” signed on October 2, 2008, by Russian Prime Minister Vladimir Putin and his Ukrainian counterpart Yulia Tymoshenko. For unknown reasons this agreement was never allowed to enter into force until January 19, when Putin and Tymoshenko essentially agreed to abide once again by its provisions.
The new contract between Gazprom and Naftohaz Ukrainy is for 10 years; and the price for Russian gas, or more precisely Central Asian gas sold by
Gazprom to Ukraine, will be based on the generally accepted formula used throughout Europe which links the price of gas to the price of diesel fuel
plus transportation costs.
Ukraine will receive a 20 percent discount on this price in 2009 and will pay the full European price in 2010. Russia will continue to pay a discounted price for the transit of gas to Europe until 2010, at which time it will begin paying European gas transit prices (Ukrayinska Pravda, January 18).
The War was instigated by Putin and Russian President Dmitry Medvedev who decided that the time was ripe to discredit Ukraine in the eyes of European
leaders by launching a huge public relations and disinformation campaign to convince the EU that Ukraine was an “unreliable transit country.”
By turning off the gas spigot to Europe on January7 and blaming this on the Ukrainians, Moscow began systematically blackmailing Europe into supporting
Russia’s plans to build the North Stream and South Stream pipelines. This argument became the central theme at press conferences by Putin and Deputy
CEO of Gazprom Alexander Medvedev during the Gas War (see www.gazpromukrainefacts.com, the Gazprom website designed to discredit Ukraine).
One major goal of the Russian leadership during the conflict was to discredit and denigrate the freely elected, pro-Western Ukrainian leadership
and provide a measure of support for the pro-Russian opposition “Party of the Regions.”
The greater gamble was an attempt by Russia to cut off gas supplies to the Eastern and Southern regions of Ukraine by attempting to manipulate the “re-opening of gas supplies to Europe,” using the Potemkin village ploy of opening only one gas entry station to Ukraine.
Had the Ukrainian government agreed to this, it would have been forced to stop supplying gas to the highly industrialized and heavily pro-Russian Eastern and Southern regions of the country, thereby leaving itself open to mass discontent (EDM, January 16).
Putin’s outlandishly abusive statements about the Ukrainian leadership throughout the conflict were not overlooked by the European Union. His
off-the-cuff derogatory remarks calling Yushchenko a “thief” (Kommersant, October 2, 2008) and his liberal use of disinformation did more to bury the
Russian public relations effort than anything else. Putin showed himself to be a vindictive and arrogant leader which forced the EU to unite in its response to the crisis.
The War finally compelled the EU to do what its critics have been urging the organization to do for years—to speak to Moscow with one voice and not allow itself to be outmaneuvered by the Kremlin-Gazprom (“Kremlingaz”) team. In the early stages of the War, the EU made one large mistake—it agreed with Kremlingaz’s version that the dispute was merely “commercial.”
Once Gazprom’s spokesmen took to the microphones in London and Brussels and Putin began his “Ukraineophobic” libel campaign, it became abundantly clear that commerce had little to do with the dispute.
In a last ditch effort, Kremlingaz believed that by calling a summit of gas consuming countries in Moscow on January 18, it could once again impose its
version of events and continue playing the Europeans off one against the other. This time the EU told its members not to attend and that the EU commission would handle all the talks with Kremlingaz.
This stance, along with powerful reprimands of Russian behavior by Angela Merkel and other European leaders made the Russians not only lose face but
realize that their game plan was a losing one. Putin and Medvedev had suffered a major blow. Not only did Kremlingaz lose almost $2 billion in revenue (Vedomosti, January 19), Gazprom’s highly touted reputation as a “reliable supplier” vanished in 18 days.
The War once again showed that the Ukrainian leadership had dismally failed to take any steps to improve the country’s enormous energy inefficiency.
Moreover, its standard backroom deals with Kremlingaz on gas prices were bizarre and opaque.
The Ukrainian leadership had always insisted on buying gas at a set price not linked to the fluctuations of oil prices or to the laws of supply and demand. When Tymoshenko agreed to sign a gas contract based on real prices on January 19, the shock for Ukraine’s oligarchs must have been overwhelming. Their subsidized profiteering had come to an end.
WINNER IN THE WAR WAS ROSUKRENERGO (RUE)
The only winner in the War was RosUkrEnergo (RUE), the Swiss middleman firm created by Putin and former Ukrainian president Leonid Kuchma in 2004. The January 19 contract removed RUE as the intermediary, but this will not lead to its demise. After years of swearing that RUE was absolutely clean, the
Kremlin suddenly began denouncing its own creation as a “corrupt” entity, despite the fact that Gazprom owned 50 percent of the company.
In fact, by early 2008 Gazprom, the 50 percent owner of RUE, knew that Turkmenistan would begin selling its gas at European prices in 2009 and this
would destroy RUE’s profit margin for resale of the gas to its European clients. As a result there was no reason to maintain RUE as a middleman.
In anticipation of this, RUE began buying up lucrative Ukrainian domestic gas distribution companies in 2008. On January 11 RUE co-owner, Dmytro
Firtash, told Vedomosti that RUE controlled 75 percent of Ukraine’s highly lucrative domestic gas distribution network, which would make up for the loss of their sales to the EU. Thus the sun kept shining on RUE and it should be able to thrive for years if the Ukrainian and Russian authorities allow it to.
LINK: http://www.jamestown.org
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19. MOSCOW AND KIEV REBUKED OVER GAS STAND-OFF
Barroso says he had never witnessed such "really incredible" behaviour before
By Joshua Chaffin in Brussels, Isabel Gorst in Moscow and Roman Olearchyk in Kiev
Financial Times, London, UK, Wednesday, January 21, 2009
José Manuel Barroso, president of the European Commission, criticised Russia and Ukraine on Tuesday for their conduct in negotiations to end a two-week
natural gas crisis, saying he had never witnessed such “really incredible” behaviour before.
As Russian gas flows resumed across Europe, Mr Barroso vented his frustration over the ordeal, accusing both countries of failing to live up to their promises as the European Union worked to broker a truce.
“Let me tell you, frankly, I was very disappointed during these discussions about the way the leadership in these two countries negotiated,” Mr Barroso
said. “I will not forget that, and I think European citizens should know that.”
His comments came as Russian gas flowed into Slovakia for the first time in two weeks. Bulgaria, another of the 20 countries hit by the gas shut-off, was expected to be receiving full supplies by Tuesday night.
Mr Barroso’s tone reflected the EU’s frustration at a crisis that laid bare its over-dependence on Russian gas. “We must not allow ourselves to be placed in this position again in the future,” he said.
Alexander Medvedev, the deputy chief executive of Gazprom, the Russian gas company, hit out at the EU for failing to provide adequate support during
the crisis and called for the adoption of international legislation to prevent similar disputes.
Mr Barroso vowed to use the crisis to win approval from member states to dedicate some euro5bn ($6.5bn, £4.6bn) in unspent EU funds to building
energy infrastructure, including grid connections and storage facilities. He also called for speedy implementation of a strategic energy review the
Commission published in November.
Mr Medvedev said “very strict” payment clauses included in the 10-year gas deal signed by Gazprom and Naftogaz, Ukraine’s state gas company, on Monday would prevent the recurrence of disputes.
He said that, under the deal, Ukraine would pay an average price below $250 per 1,000 cubic metres for Russian gas this year, with prices fluctuating
according to a European formula pegged to world oil prices. European gas prices are expected to average $280 per 1,000 cu m this year.
Next year Ukrainian and European gas prices will converge, and Gazprom will increase to market levels the fees it pays for use of Ukrainian pipelines
that carry 80 per cent of its exports to Europe. Mr Medvedev said an agreement had been reached on settlement of Ukraine’s alleged $650m of gas debts, the initial cause of the dispute.
LINK: http://www.ft.com/cms/s/0/18748f5e-e6f6-11dd-8407-0000779fd2ac.html
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20. REVERSING THE DECLINE: AN AGENDA FOR U.S.-RUSSIAN RELATIONS IN 2009
By Steven Pifer, Brookings Policy Paper Number 10
The Brookings Institution, Washington, D.C., January, 2009
Introduction and Summary . . . . . .................... 1
The Decline in U.S.-Russia Relations . . . .. . . 3
What Does Russia Want? . . . . . . . . . . . . . . . . 7
An Agenda for Engaging Russia in 2009 . .. . 11
Implementing the Agenda . . . . . . . . . . . . . . . .21
Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
LINK TO POLICY PAPER: http://www.brookings.edu/papers/2009/01_us_russia_relations_pifer.aspx
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21. UKRAINE ECONOMIC CONCERNS GROW
Editorial, Financial Times, London, UK, Wed, January 21 2009
One of the nations causing most concern among those analysing the emerging market sector is Ukraine, where fears the country could default on its vast amount of debt has risen sharply.
After a two-week dispute with Russia over gas supplies, the cost to insure its bonds against default through credit default swaps has jumped to record highs, according to Markit, the data provider. Fears over the Ukraine economy are also intensifying, in spite of the bail-out by the International Monetary Fund last year.
Analysts point to the precedent of Russia, which received a multi-billion dollar loan from the IMF only three weeks before the country defaulted on its domestic debt in August 1998.
Nigel Rendell, senior emerging markets strategist at RBC Capital Markets, says: "There are a combination of things going wrong in the Ukraine. We cannot assume that the IMF assistance will mean the country will not default."
Ukraine has about $30bn in debt due to be rolled over this year. One of its biggest banks, Prominvest, ran out of money at the end of last year and its currency has depreciated by about 35 per cent since September, adding to debt servicing costs.
Political uncertainty on the domestic front and in its relations with Russia are also making investors extremely nervous.
LINK: http://www.ft.com/cms/s/0/885e265c-e75c-11dd-aef2-0000779fd2ac.html
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22. PUTIN EMERGES FROM GAS WARS WITH YUSHCHENKO SIDELINED
By Alex Nicholson, Bloomberg, Moscow, Russia, Tuesday, January 20, 2009
MOSCOW - Russia's gas agreement with Ukraine will warm up Eastern Europe after 12 freezing days without sufficient heat or power. It may also warm up relations between Prime Minister Vladimir Putin and Ukraine, where the deal elevates Putin's preferred political power broker and weakens his rival.
The accord let Putin portray himself as a strong leader at a time of economic turmoil and boosted Ukrainian Prime Minister Yulia Timoshenko over Putin's political foe, President Viktor Yushchenko.
“It certainly looks like a good deal for Putin,” said Chris Weafer, chief strategist at UralSib in Moscow. “He has won his game of chicken with Ukraine. It also looks like a victory for Timoshenko. She has emerged as the can-do politician who brokered a deal.”
Yushchenko is pushing for Ukraine to join the European Union and the North Atlantic Treaty Organization over Russian objections. While he and Timoshenko came to power on a pledge of pulling Ukraine from Russia's influence in the 2004 Orange Revolution, Yushchenko's popularity has tumbled since a similar gas price dispute in 2006 and Timoshenko has been more willing to deal with Russia.
Russia emerged with its reputation in better shape than after a previous attempt at pushing a West-leaning neighbor around: the August military invasion of Georgia.
"Russia will get more confident and become more assertive'' leading to possible confrontations with the U.S. and Europe, said Peter Havlik, the deputy director of the Vienna Institute for International Economic Studies, at a Euromoney conference today in the Austrian capital.
Gas Standoff
Putin and Timoshenko presided over the signing of a 10-year contract yesterday, ending a standoff that deprived millions of Europeans of heat and power. Both countries' reputations have been battered as European leaders called for the building of alternative pipeline routes and faster implementation of nuclear power projects. Putin took pains to praise Timoshenko after the accord was signed and promised to do “everything we can to support Ukraine.”
“These are the best possible agreements and are fully in the interests of both Russia and Ukraine,” he said. “In this very complicated situation, she took upon herself the responsibility for making these most important decisions, which allowed us to find a way out of a dead end.”
Putin has weakened Yushchenko, 54, more than he was able to undermine Georgian President Mikheil Saakashvili after Georgia's army was routed in a five-day August war. Russia invaded to protect local Russians in the separatist region of South Ossetia.
SAGGING POPULARITY
Saakashvili, who also is pushing to join NATO, remains in power as his opposition flounders. Yushchenko's party has a popularity rating of 4.5 percent, according to a survey last month by the Kiev-based Razumkov Center for Economic and Political Studies.
Saakashvili, 41, also can boast pledges from Washington to rebuild the nation's shattered military and a promise to provide Georgia with $1 billion in humanitarian and economic assistance. “Saakashvili is luckier,” said Yulia Latynina, a political commentator on the Ekho Moskvy radio station.
In Ukraine, the currency has tumbled 80 percent, the government has sought $16.5 billion in aid from the International Monetary Fund and yields on Ukraine's $105 billion of government and company debt are the highest of any country with dollar- denominated bonds except Ecuador, which defaulted in December.
To be sure, even if Yushchenko is knocked out of the political arena, Timoshenko, 48, would still face a serious fight against pro-Russian opposition leader Viktor Yanukovych.
'CONTINUED INFIGHTING'
Ukraine is tired of the “continued infighting between the president and prime minister,” said Kaan Nazli, director of Medley Global Advisors LCC, a New York-based policy intelligence service. “The conflict will first and foremost benefit Yanukovych as the polls show a majority of the Ukrainian public disagree with the government's handling of the conflict.”
Russian gas flows via Ukraine were halted on Jan. 7 after OAO Gazprom accused Ukraine of siphoning off transit flows for its own needs, a charge the country denies. Europe relies on Russia for a quarter of its gas, 80 percent of which is carried via Ukraine.
The deal will see Ukraine pay higher, European prices for Russian gas starting in 2010, after a 20 percent discount this year. At the same time, 2009 transit fees paid by Russia to send gas through Ukraine will remain at last year's level.
Russia can use the money. While gas prices are based on oil prices, currently falling, Gazprom would have earned an extra $12 billion last year had it charged Ukraine market prices for gas, according to Uralsib. The deal comes as Russia's economy is poised to enter a recession this year and budget revenue is falling on depressed demand for the nation's main export.
Putin, 56, touted the accord as putting an end to Soviet-era discounts for Russia's neighbors and a final shift to transparent market pricing.
“Today's decision unblocks a range of issues in the economic sphere,” he said after the signing.
NOTE: To contact the reporter on this story: Alex Nicholson in Moscow at anicholson6@bloomberg.net.
LINK: http://www.bloomberg.com:80/apps/news?pid=20601087&sid=aoajdZhj95_M&refer=worldwide
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http://www.volia-software.com/.
6. U.S.-UKRAINE BUSINESS COUNCIL (USUBC), Washington,
D.C., Promoting U.S.-Ukraine business investments since 1995.
LINK: http://www.usubc.org
7. UKRAINIAN ORTHODOX CHURCH OF THE USA, Archbishop
Antony, South Bound Brook, New Jersey, http://www.uocofusa.org
8. WJ GROUP of Ag Companies, Kyiv, Ukraine, David Holpert, Chief
Financial Officer, Chicago, IL; http://www.wjgrain.com/en/links/index.html
9. EUGENIA SAKEVYCH DALLAS, Author, "One Woman, Five
Lives, Five Countries," 'Her life's journey begins with the 1932-1933
genocidal famine in Ukraine.' Hollywood, CA, www.eugeniadallas.com.
10. ALEX AND HELEN WOSKOB, College Station, Pennsylvania
11. SWIFT FOUNDATION, San Luis Obispo, California
12. DAAR FOUNDATION, Houston, Texas, Kyiv, Ukraine.
http://www.daarfoundation.org/home.htm.
13. ArtUkraine.com; www.ArtUkraine.com
PUBLISHER AND EDITOR - AUR
Mr. E. Morgan Williams, Director, Government Affairs
Washington Office, SigmaBleyzer, The Bleyzer Foundation
Emerging Markets Private Equity Investment Group;
President, U.S.-Ukraine Business Council (USUBC)
Trustee, "Holodomor: Through The Eyes of Ukrainian Artists"
1701 K Street, NW, Suite 903, Washington, D.C. 20006
Tel: 202 437 4707; Fax 202 223 1224
mwilliams@SigmaBleyzer.com; www.SigmaBleyzer.com
mwilliams@usubc.org; www.usubc.org
Needed: 'Vice Presidents in Charge of Revolution'
To keep the power and spirit of the Orange Revolution alive and well
Power Corrupts and Absolute Power Corrupts Absolutely.
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