Pustovoitenko meets in Moscow with Russia's new prime minister (09/05/99)

Pustovoitenko meets in Moscow with Russia's new prime minister

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Ukraine's Prime Minister Valerii Pustovoitenko flew to Moscow on August 27 to meet with the latest Russian prime minister, Vladimir Putin, and to discuss current relations and, more specifically, how to liquidate Ukraine's billion dollar oil and gas debt to its northern neighbor.

After two days of talks the two sides agreed only that more discussions are needed. However, both prime ministers inferred that the next meeting, slated for late September, may produce concrete results. Mr. Pustovoitenko went so far as to assess that by the beginning of next year Ukraine's largest gas debt will have been at least reduced.

"Ukraine will most likely begin the year 2000 free of indebtedness to Russia's Gazprom," said Mr. Pustovoitenko after the two government leaders had concluded their talks. Gazprom is the second largest Russian oil and gas supplier and is 51 percent owned by the Russian government.

Kyiv and Moscow have been at loggerheads for months over an ever-increasing Ukrainian debt for Russian oil and gas. The disagreements have centered on the method of payment and the amount.

Ukraine has stated that it owes $1 billion, while Russia claims that the costs should include money owed by private Ukrainian enterprises, which raises the figure to $1.8 billion. The two sides also have had difficulties agreeing on a method of payment. Although consensus was reached during a visit to Kyiv in July by Sergei Stepashin, Mr. Putin's predecessor, that Ukraine would pay in commodities, the parties could not agree on a pricing structure. After Mr. Stepashin was ousted and yet another Russian government installed, Kyiv was concerned that the progress that had been made would be halted or even reversed.

But Mr. Pustovoitenko said he had found common language with Mr. Putin and that more meetings between the two are planned.

Russia has demanded that Ukraine charge no more than the domestic price of Russian commodities, which are much cheaper than on the world market since the drastic depreciation of the ruble. Ukraine has objected, especially since Russia has charged Ukraine world prices and better for its oil and gas in the past.

The two prime ministers now apparently have turned to military goods as a form of payment. There has been conjecture that Moscow and Kyiv have found common language in the sale of several Ukrainian strategic bombers as compensation.

In fact, Ukraine's recently appointed first vice prime minister, Anatolii Kinakh, alluded to reporters in Luhansk, after his return from Moscow on August 28, that an agreement had been reached on the sale of the military aircraft.

He said that by September 20 the two sides will have worked out "the mechanism for the formation of prices of the goods to be supplied by Ukrainian manufacturers in repayment of the debts" and said that it would include the supply of special technologies, including strategic bombers and auxiliary equipment, according to Interfax-Ukraine.

However, as Mr. Kinakh admitted, first the Ukrainian side must determine how the sale would affect the disarmament agreements Ukraine has signed with the West, and particularly the United States.

Russian Prime Minister Putin clouded the issue further when he refused to confirm at a press gathering in Moscow whether an agreement had been reached. "Russia has not received the bombers, and we are not yet quite sure whether we need them or not," explained Mr. Putin, according to Interfax-Ukraine.

The Russian prime minister admitted that Russia had disregarded debts by Russian manufacturers to Ukrainian suppliers, especially in the military-industrial sector, a problem that had been remedied during the Moscow talks, he said.

The two prime ministers also discussed continuing import barriers on Ukrainian sugar and alcohol products, the ongoing border demarcation negotiations and the Black Sea Fleet, as well as Mr. Pustovoitenko's pet project, the development of a free trade zone across the entire region of the Commonwealth of the Independent States.

In Kyiv, Mr. Pustovoitenko said that it is becoming increasingly doubtful that all the CIS countries will agree to a free trade zone, but that Ukraine should, nonetheless, move toward such a policy.

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