Opinion: Ukraine gas debt: To pay or not to pay?

By Anna van Densky

The closure of the gas supply on 16 June did not come as a surprise - a result of a failure of Russia-Ukraine talks facilitated by the EU as being the major client of Gazprom and dependent on the Ukrainian transit. The unpaid sum of $4.5 billion represents a part of a problem: the security of supply is the other, which should be structurally resolved in order to avoid long-term damage to fragile European economies struggling to overcome the recession. The member states’ various visions of the future of the EU energy market is bringing more turmoil than a solution.

The decision by Gazprom to stop free delivery followed as a response to the Ukrainian government’s determination to repeat the ousted president Viktor Yanukovych's record in obtaining the minimum price. Gazprom did not show any interest in subsidizing Ukraine’s integration into the EU in view of the upcoming signature of the association agreement.

The Ukrainian logic was not completely clear, as the policy of demonizing Russian President Vldimir Putin is an odd excuse for rejecting the bills. The sale of billions of energy cubic metres of gas is not in the same category as the sale of espresso coffee promoted by a Hollywood star - the charms of the salesperson are not required. If the Ukrainians are serious about their intention to integrate within the EU, they have to take a note that Europe always paid for gas deliveries, in spite of the fact it was not fond of Soviet leaders or the communist system.

Not paying for gas is a ‘faux pas’ as it creates real economic difficulties for the EU. Moreover, it undermines the image of Ukraine as a valuable partner – a state existing due to the generosity of international donors, and continuously claiming financial assistance, in spite of a well-established plutocracy with seven oligarchs in the government and a billionaire president, hardly arouses the sympathy of heavily taxed Europeans. The idea of enlargement placing a burden on Europe as caretakers of countries the economies of which are ruined by the corruption and greed of their own elites certainly will not contribute to popularity of Ukraine as a member of the EU club.

The creation of the Enegy Union called for by Polish Prime Minister Donald Tusk built on ‘gas solidarity’ is at odds with the liberal economies, as it is too reminiscent of the USSR. The North Stream pipeline can’t replace the full volume of gas transported through Ukraine. Clearly South Stream, supported by the economies of the southern Europe such as Italy and Greece, is a solution, but at the moment a victim of political wrestling, in an attempt to force Russians to continue to support the Ukrainian economy both in payments of transit fees and the forced offer of cheap gas.

However the campaign of profiling Russians as users of the gas tap as a weapon and the demonization of president Putin, has been heavily overplayed and has had the opposite effect.

The Russians came to understand that they will be bad either way as it is their traditional role in western politics: the delivery of gas to Ukraine for free for half a year has not brought them any credit. Ukrainian Foreign Affairs Minister Andrii Deshchytsia singing obscenities about President Putin to the crowd attacking the Russian embassy in Kiev has brought the curtain down on a period of hope in the gas dispute.

The new Ukrainian leadership’s continuous accusations of Russia conspiring against the sovereignty of a young state, viewing the request of payments for gas as part of a plan of the ‘destruction’ of Ukraine do not stand up, as the USSR collapsed 24 years ago and there is no obligation to sponsor the Ukrainian economy.

During the summer months the gas crisis will not be felt so dramatically, as there is no need to heat buildings, and winter seems far away. Still, the major question remains unanswered: to pay or not to pay the Gazprom bills? President Putin will not be turning into Geroge Clooney by magic, in spite of the billions at stake.

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