Ukraine's energy bill on top of Yuschenko's agenda in Moscow (01/30/00)

Ukraine's energy bill on top of Yuschenko's agenda in Moscow

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Prime Minister Viktor Yuschenko returned from his his first face-to-face meeting with Russia's acting President Vladimir Putin in Moscow on January 21 convinced that efforts to resolve outstanding issues on Ukraine's energy bill, the future of gas and oil supplies to Ukraine, and overall trade relations between the two countries had proved productive.

After daylong talks with President Putin and First Vice Prime Minister Mikhail Kasianov, Prime Minister Yuschenko said he was satisfied with the results.

"There was movement on most of the problems that we discussed during the talks," explained Mr. Yuschenko.

Mr. Kasianov had explained earlier that the meeting had lifted some of the tension that had built up between the two governments during the last several months over the issue of what Ukraine owes and how it is to be repaid, according to Interfax-Ukraine.

In discussions with President Putin, agreement was reached on the lifting of export ceilings on petroleum deliveries, which had been erected in the last part of 1999, with the stipulation that now Ukraine will make payment for oil at the time of delivery.

Russia-Ukraine energy relations again moved to the top of the political agenda after First Vice Prime Minister Yulia Tymoshenko returned from Moscow on January 11 to state that the balance of Ukraine's gas debt to Russia is not the $380 million thought to be owed after an agreement reached last October, but about $2.8 billion.

Ukraine has eliminated some $750 million of its debt to Russia by handing over to Moscow several strategic bombers, most of which had sat idle in recent years and were in need of some repair.

Ms. Tymoshenko's comments brought shock and criticism from some that she was trying to push aside certain energy trading firms to regain a foothold for her own firm, United Energy Systems, which once controlled the market but has seen its fortunes decline since the political demise of Pavlo Lazarenko, once its strongest backer.

Ms. Tymoshenko ostensibly traveled to Moscow to resolve problems in an increasingly chaotic Ukrainian energy supply market. The pronouncement she made only increased the confusion, however.

President Leonid Kuchma, commenting on the uncertainty over the extent of Ukraine's energy debt said that the problem was Ukraine's, and that Russia had nothing to do with it.

"When our government members offer differing figures for gas indebtedness, it is our problem, not Russia's.

Nonetheless, on the eve of his trip to Moscow, Prime Minister Yuschenko met in Kyiv with Rem Viakhirev, the head of the giant Russian oil and gas monopoly Gazprom, to which most of Ukraine's remaining debt is owed.

After their meeting Mr. Yuschenko said the two sides had agreed to restructure the remaining debt Ukraine owes the firm. He said he would not put a figure on the debt owed by Ukraine until a government review had been completed, but he underscored that Ukraine would not take responsibility for what is owed by private commercial entities.

Mr. Yuschenko was alluding to the private Ukrainian firm Naftohaz Ukrainy, which has run up a substantial bill with Gazprom. While Ms. Tymoshenko accused the Ukrainian firm of owing more than $2 billion and stealing about $10 million daily from Russian gas pipelines that run through Ukraine to Europe, Ihor Bakai, head of Naftohaz Ukrainy, said at a January 17 press conference that the company owed some $800 million and that it has no disagreements with Gazprom.

In Moscow, Mr. Yuschenko also discussed the overall dynamics of Ukraine-Russia trade cooperation, which he said has been plagued by inconsistencies in Russian trade policy and an uneven economic playing field. Russia has choked the import of cheap Ukrainian sugar and alcohol with high import tariffs, while selling its own oil and gas at prices higher than even some Western European countries are paying.

Mr. Yuschenko announced after his meeting with President Putin that the two countries will begin talks immediately to lift restrictions on bilateral trade, which the prime ministers said are present in every sector of trade, but especially in the energy market.

"I had the chance to explain that the trade conditions for Ukraine, especially in the energy sector, are the most severe for any country, either in the near or far abroad," said Mr. Yuschenko.

He said that President Putin expressed his willingness to proceed with a proposal put forward by the Ukrainian prime minister to do a top-to-bottom inventory of all goods and services the two countries exchange to develop a better view of where their economic relations stand.

The inventory must also include an audit of what Russia owes Ukraine, underscored Mr. Yuschenko, who noted that Russia has an extensive debt for facilities used to house the Russian Black Sea Fleet in Sevastopol.

"We should settle these problems for the good of our people," Interfax-Ukraine quoted Mr. Putin as saying.

A meeting also took place between the Ukrainian prime minister and Anatolii Chubais, a member of President Putin's inner circle and head of the Russian Integrated Power Grids joint stock corporation.

After returning to Kyiv, Mr. Yuschenko said he was most pleased that the dialogue between the two sides in all his meetings was open and frank.

"These were not positions of the older and the younger [brother], not who has the monopoly and who needs the service. We talked a single language, as equals," explained Mr. Yuschenko.

Three days later the Ukrainian prime minister was back in Moscow with President Kuchma to attend the CIS heads of state summit held on January 25. While Mr. Kuchma pressed Ukraine's demand for the CIS to concentrate on economic matters and to transform itself into a single free-trade zone, Mr. Yuschenko attended the heads of government meeting, where he was elected chairman of the Council of Heads of Government. He will complete the term of his predecessor, Valerii Pustovoitenko, which runs to June 2000.

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