Ukraine government squabbling on Russia gas deal, WTO

By Stefan Korshak Oct 13, 2006, 14:59 GMT

Kiev - Squabbles within Ukraine's unwieldy coalition government came to the fore again Friday over a recent gas deal with Russia, and on the former Soviet republic's plans to join the World Trade Organization.

Anatoly Hritsenko, Minister of Defence, attacked a tentative energy deal cut earlier this week between top Ukrainian officials and the Kremlin, saying 'it (the natural gas agreement) absolutely is not in the national Ukrainian interest.'

Prime Minister Viktor Yanukovich, who is Hritsenko's theoretical boss, announced Wednesday he had agreed with the Russian natural gas monopolist Gazprom for continued supplies of the fuel from Russia to Ukraine for the price of 135 dollars per cubic thousand metres, effective through June 2007.

The prevailing European price averages 250 dollars. Yanukovich on Thursday declared the terms obtained by Ukraine a major political victory, and proof of his skill in the international arena.

Yanukovich is a proponent of a pro-Russia slant to Ukrainian foreign policy. Russian President Vladimir Putin supported Yanukovich's unsuccessful bid for the Ukrainian presidency in 2004.

Hritsenko accused Yanukovich of continuing the Ukrainian government's long-established tradition insider dealing with Russian natural gas industry, and of avoiding badly-needed diversification of energy sources.

'It (the deal) is non-transparent, and it places us (Ukraine) at the whim of a single energy provider,' Hritsenko said.

It was the second public attack by Hritsenko on Yanukovich in a month. During a visit to Brussels in September, Yanukovich announced Ukraine intended to freeze its plans to enter NATO, causing Hritsenko to declare the country's NATO accession plan on track and functional the next day.

In a parliament speech on Friday, Ukrainian MP Viacheslav Kirilenko attacked the Yanukovich government for the gas deal, and for agreeing with the Kremlin that Russia and Ukraine should negotiate their entrance into the World Trade Organization (WTO) collectively rather than separately.

Yanukovich clawed his way into the prime minister's office as a compromise candidate, and on the strength of an agreement between the major political parties of country stipulating, among other things, that Ukraine would attempt to join the WTO as rapidly as possible.

'This (plan to join the WTO in coordination with Russia) is a direct violation of the agreement, and we (parliament) will not support it,' Kirilenko warned.

The site of the dramatic Orange Revolution in 2004, Ukraine has recently seen the work of its executive and legislative branches come almost to a full stop, because of wide divisions on policy between politicians.

The disconnection is most obvious at the top of the government, with the pro-Russia Prime Minister Yanukovich repeatedly clashing with the pro-Europe President Viktor Yushchenko.

The country's cabinet and parliament are similarly divided.

Ukraine imports roughly two-thirds of its natural gas needs and almost all of its oil from Russia.

The Kremlin in the past has given the energy to Kiev cheaply in exchange for use of Ukrainian gas and oil pipelines connecting Russia's energy industry with European energy markets.

Ukraine currently receives its natural gas via an offshore company with monopoly rights to sell Russian natural gas to Ukraine.

Neither Moscow nor Kiev have made company's shareholders public, leading media and opposition politicians in both countries to accuse their governments of participating in non-transparent and possibly corrupt energy agreements.

A short-lived dispute between Moscow and Kiev over natural gas pricing in January cut Europe off from Russian natural gas supplies for one day.