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Page added on December 12, 2013
Ukraine’s Two New Energy Deals
If one was to believe the picture that most Western media outlets are painting, Ukraine has been lost to Russia. Though the country fought valiantly to sign an Association Agreement with the European Union in Vilnius, Lithuania last month, President Viktor Yanukovych suspended negotiations with the EU at the last possible moment, betraying Ukrainians everywhere. Two recent energy deals that Ukraine has reportedly made, one with Russia and the other with Slovakia, however, show that the reality of the situation is slightly more complex.
Claiming that Yanukovych had always wanted negotiations with the EU to fail would arguably be giving him and his advisors too little credit as political strategists. In terms of public opinion, signing the Association Agreement would have all but secured Yanukovych’s re-election in 2015, whereas his step down from the deal has visibly shaken his legitimacy as President to its core. Rather, too little attention is given to the very real economic pressure Russia has placed on Ukraine and the EU’s reluctance or inability to offset Putin’s ‘trade war’. Furthermore, while Yanukovych did not sign the Association Agreement in Vilnius, he did not commit his country to Putin’s rival ‘Eurasian Union’ either.
Prior to the Vilnius Summit in November, the Ukrainian government found itself between a rock and a hard place. On one hand, Russia was imposing exorbitant gas prices and devastating economic sanctions on Ukraine’s already fragile economy. By October 10th, 2013, trade between the two countries had fallen by 25% and prices for Russian gas, on which Ukraine remains dependent, stood at $420/1000 m3, $50 more than the European average. On the other hand, EU leaders refused to hold tripartite negotiations with Russia and Ukraine, instead using all their leverage to insist that jailed former Prime Minister Yulia Tymoshenko, convicted of abuse of office and embezzlement in 2011, be freed.
All of this comes on top of Ukraine’s dire situation. The country faces $10 billion in principal and interest payments next year and has the third-highest default probability in the world . In an address following his decision to suspend negotiations with the EU, Yanukovych stated, “I would have been wrong if I hadn’t done everything necessary for people not to lose their jobs, receive salaries, pensions and scholarships.” While many Ukrainians and outside observers may not take the President’s words at face value, it is no lie that, had Ukraine signed the agreement, economic disaster would have been imminent.
Two energy deals
As there was little the EU could/would offer to offset the immediate Russian reprisals on Ukraine’s economy, the government renounced signing the Association Agreement. However, two gas deals currently in the works show that, far from being sucked forever into Russia’s orbit, Ukraine will continue to flirt with both East and West and, most of all, move towards energy independence.
While the exact details of the deal Yanukovych has hammered out with Russian President Vladimir Putin in Sochi last Saturday remain unknown, Edward Lucas, the international editor of The Economist claims that gas prices for Ukraine will be brought down to $200/1000m3 while $5 billion cherry payment on top. Lucas also claims that Yanukovych has promised that Ukraine will join Russia’s customs union as part of the deal, though this has been virulently denied by the Russian administration. At the same time, payments for Russian gas transferred from Gazprom to Naftogaz between October and December 2013 have been deferred until the Spring of 2014, all of which gives Ukraine some much-needed breathing room.
On the Western front, however, Ukraine agreed on the conditions for a gas deal with Slovakia for importing European Union gas through Slovak pipelines. These new flows, including gas from Poland and Hungary, could exceed 10 billion cubic meters annually, enough to meet Ukraine’s entire import needs. The move, which has long been heralded as a strategy to curb Ukraine’s energy dependence on Russia, comes less than two weeks after negotiations with the EU broke down, questioning the dominant narrative that the Ukrainian government is content to sign itself away to Moscow.
Source: http://oilprice.com/Energy/
6 Comments on "Ukraine’s Two New Energy Deals"
Arthur on Fri, 13th Dec 2013 12:05 am
This two days old article is already superseded by events and Ukraine is going to sign a deal with the EU after all, no doubt as a result of the pressure from the streets of Kiev. Although I am a fervent supporter of the Paris-Berlin-Moscow axis, events are moving too fast in that direction. As it stands now the Ukraine could be drawn into the EU, while that entity is still more or less a US colony. As such this could mean the weakening of the only real hope European civilization has left: Wladimir Putin as the only real opponent of ZOG-USA and it’s Zionist agenda of the planned death of the European civilization/white race. On the other hand, the US is already showing all the signs of imperial overstretch and it is unlikely that a ‘premature’ movement of the Ukraine in the direction of Europe will cause real damage to the Greater European cause. In fact Putin came with a remarkable restrained reaction to this news… because he wants to go himself where the Ukraine is going.
Today an Israeli ex-army chief named Halutz has said that Israel prefers Assad over Islamists ruling Syria. Good thinking Watson! In the mean time we have 100,000+ deaths and a destroyed country, but better late than never.
http://www.jpost.com/Defense/Ex-army-chief-Halutz-Israel-prefers-Assad-over-Islamists-in-Syria-334644
This simply means that Assad and thus SCO has won the standoff over Syria. Game, set and match for Wladimir the Great.
In another development, US analyst and CFR member Charles Kupchan, most known for his book ‘The End of the American Era (2002)’, the title alone showing that he is not deluded by unrealistic views concerning US ‘exceptionalism’, observed yesterday: ‘Ukraine shouldn’t be made to choose between Russia and Europe’ and that is exactly right. Not bad for a Jewish CFR member like Kupchan. In my view the EU should pass the message to Moscow that in return for letting the Ukraine function as a bridge between Brussels and Moscow, the EU should declare that no missile shield is going to be build in Europe. In his 2002 book Kupchan wrote: “The Europeans are… making a choice that will inevitably give Europe more geopolitical clout—at the expense of American primacy… And the impetus will come not just from Europe’s new ambition, which will gather slowly, but also from America’s domestic politics and its schizophrenic reaction to the rise of Europe.”. And this is exactly what we see unfolding before our eyes these days.
Also this week, Putin delivered his yearly ‘State of the Union Address’, saying that Russia has no ambitions of becoming a superpower. What he really wants for Russia is merging with Europe before he literally runs out of gas (and oil).
The first step towards the rise of the North was the refusal of Paris, Berlin and Moscow to join the Iraq safari in 2003. Today the Ukrainians have clearly stated that they want to become Europeans. Putin himself has said nothing else since 2000. He is just worried about the timing.
BillT on Fri, 13th Dec 2013 12:37 am
Interesting perspective Arthur, but may not be reality. After all, Russia was Germany’s ally until they weren’t. As I see it, Russia wants to run Europe, not partner with it.
And, the US Empire still has about 80,000 troops in Europe. Why are they still there 68 years after the war ended? Answer: You leave troops in countries you want to control. Europe has the largest US bases with 20,000 more troops than is in Afghanistan today. Why is that? There are almost as many in Germany as in Afghanistan.
Arthur on Fri, 13th Dec 2013 2:38 am
Russia wants to run Europe, not partner with it.
http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)
EU: $17T
Russia: $2T
That’s a factor of 8.5.
Almost all income Russia has comes from sale of oil and gas to Europe.
There is a strong co-dependence between EU and Russia (money – energy) that works both ways. But the most important aspect is that Russia no longer has an ideology to justify a takeover of Europe, even if they could (they can’t).
Yes, the US has still troops in Europe as a sign that Europe is subservient. But that is not going to last. Once the dollar is gone as reserve currency, so will the US leverage over Europe go with it and the troops will go home. Or told to leave.
DC on Fri, 13th Dec 2013 3:09 am
Then Arthur, it is my sincere hope for Europe’s sake, and good people everywhere, that Europe wakes up and declares its independence from the US and tells those 80,000+ thuggish,rapist, corporate mercenaries to start packing.
If you all wait for the dollar to collapse it might be too late. The US would see Europe and Russia in ruins again rather than see them co-operate and work together on there own terms, free of US meddling and interference.
The US has been pushing its NATO satrapies ever further east, all in an effort to ‘contain’ and encircle Russia. Despite the fact that Russia is not threatening anyone. Some may find it ironic that Russia does its best, little though it may be, to restrain the amerikan beast. Now the US is trying to take over Ukraine in another CIA-NED managed ‘color revolution’ so it can place its ‘defensive’ missile batteries right on Moscows doorstep. Endless provocation form the uS. EU membership is a stalking horse for eventual Nato Membership. Not what the world needs right now….
Arthur on Fri, 13th Dec 2013 10:10 am
I have not seen signs that the recent uprising in the streets was yet another Jewish American Wallstreet color coded revolution (like 1917, Jacob Schiff, color red; 2004 George Soros, color Orange). This was a real grass roots uprising by people NWO guys like Soros normally do not want to hang out with: this was a revolution from the right, not the globalist left. There were 90% Ukrainian flags, 10% EU flags and 0 US flags. There were traditional Cosacs on horses, there was the ultranationalist and antisemitic Svoboda party, or neo-fascists in NWO speak. The whole operation was lead by Klitschko, who has strong ties to the German conservative CDU party of Angela Merkel, not Obama. Yes I know that John Kohn from State supported the demonstrators, but he does this for the same futile reasons why he supported the uprising in Syria, namely to weaken Putin and SCO, missing the real significance of the events, namely the formation of new power centers beyond control of Washington (Greater Europe of 700 million, Caliphate/Turkey). Kohn wants a New American Century, what he will get is a multi-polar world order.
Arthur on Fri, 13th Dec 2013 12:26 pm
Here is the ideological background of the recent demonstrations in Kiev:
http://en.wikipedia.org/wiki/Ukrainian_Democratic_Alliance_for_Reform
There are NO American ties. UDAR wants to be member of the EU, not NATO.
The only foreign ties they have are European conservatives, notably the German CDU. Klitschko is very popular in Germany and the CDU wants to see Klitschko to be the president of the Ukraine and they actively support him in this objective.