9. WHO IS BLACKMAILING WHOM?

Original article by Mykhailo Krasnyanskyi
“Ukrayinska Pravda”, Kyiv, Ukraine, December 12, 2005

For a while now, I have been tired to listen and read about how the cowardly
Ukraine is blackmailing Russia with natural gas.

The Russian side’s main argument defends the need to raise the price of
natural gas for Ukraine by pointing to the West where the price is
determined by market conditions. Thus, for example, Germany purchases
natural gas at the price of $160.

Can the price which Germany pays Russia for natural gas be considered a
sound, valid reasonable argument? Not really. The only argument that can be
considered is the mutually signed contract between Russia and Ukraine!

In that contract between “Naftogas Ukraine” and Gazprom (to be specific
under the Clause #4 dated 21 June 2002) is written that the value of natural
gas delivered to Ukraine in exchange for transit consists of $50 per 1000
cubic meters, and the value of the actual transition through the territory
of Ukraine – $1.09.

Also discussed, in this contract, is the permanency and obduracy of the
agreement by either side until 2009. The $50 and $1.09 are not prices per
se; these are mutually agreed upon “interconnected digits” by both parties.

In other words, if either party intends to multiply one side of the equation
by any coefficient, for example: 50 (x) 3.2=$160 then the “altering party”
is required to multiply the other side of the equation by the same
coefficient: $1.09 (x) 3.2 = $3.49 – and European price averages have
nothing to do with this.

If, after all, Russia in a unilateral manner wishes to re-evaluate her
agreement on natural gas with Ukraine, then she ought to understand that
this is a PRECEDENT, and that Ukraine has all the basis to re-evaluate her
agreement with Russia regarding the Black Sea Fleet.

The change – demanded by Russia – to market-oriented relations concerning
natural gas should be justly “paralleled” with re-examinations of all other
bilateral agreements (not just those at which the ring of Gazprom is
capriciously pointing), including agreements with regards to the Black Sea
Fleet, and the “understanding” concerning financial accounts between the
Bank of the USSR and the banks of previous Republics dating from 10

October 1991.

As far as the latter mentioned “understanding,” Russia received from Ukraine
an interbank credit (zero interest) in the amount of 83 billion of Soviet
rubles which to this day has not been returned. But these legally Ukrainian
83 billion are – with little patience – awaited from Russia by millions of
deceived Ukrainian account holders who placed their savings (na knyzhku) at
the Central Bank of the USSR.

The author experiences a feeling of true admiration and envy when he
observes with what unyielding ruthlessness and a huge chunk of cynicism that
the Russian government fights for the national and geopolitical interests of
Russia.

This position also enjoys the full supports of Russian politicians and mass
media. Learn Ukraine!

Yet when Ukraine’s government took on a similar approach the Ukrainian mass
media judged it as “inability to agree about natural gas?!”

The agreements with Russia about oil and natural gas are considered probably
the most noteworthy achievements of former president Kuchma. Indeed, they
represent some of the largest failures of the Kuchma’s government.

During the 15 years of Ukraine’s independence, the numerous “successful
understandings” brokered by Kravchuk-Kuchma should have been substituted

(or at least alongside with those “understandings”) by alternative sources of
energy and energy conserving technologies, including new accounting
techniques. Had this been accomplished, the issue would not have arisen in
the first place.

By today, Ukraine would have rid herself from the monstrous (more than 8-10
times compared with EU) energy dependence in our heavy industry sector and
everyday energy needs!

Ten years ago, what stood in the way for Ukraine to produce her own
synthetic liquid heating substance made out of still “young” coal mines of
Luhansk, red coal of Alexandria, peat of Volyn, by either purchasing United
Arab Republic’s coal technology “Sasol” or by developing our own?

During the past 10 years, what stood in the way of reopening and building
more of Ukraine’s own small hydroelectric stations?

Why did Crimea not get “dressed” in solar panels, and the steppes of
Ukraine did not get covered with wind turbines?

Who or what served as an obstacle, five to six years ago, for Ukraine to
start actively develop the growth of rapeseed (Brassica napus) for the
production of biodiesel (today for a ton of rapeseed pay $160-180, while for
a ton of Ukrainian wheat – only $80; in other words this would have raised
the value of domestic farming sector)?

Why did the previous governing elite – when on numerous and costly foreign
trips – not pay attention at the nearby Austria? Austria meets 50% of its
energy demand with small hydroelectric stations, 30% – by capturing solar
energy, and 5% – by using wind turbines (and only 15% of its energy needs
are met by importing natural gas)?

The facts after all are that the yearly quantity of solar radiation which
covers Austria is equal to that covering Ukraine (1200 kWh/m^2); the level
of potential wind-power is lower than middle Ukraine’s, and the energy
potential of Austria’s rivers is not that much higher than the potential
held in middle Ukrainian rivers. (Translated by Vitaliy Voznyak)

Professor Mikhail Krasnyanski at Donetsk National Technical
University for “Ukrayinska Pravda”

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