According to the Kyiv Post, EU will provide aid to Ukraine for gas purchases. However, it will be tied to reforms in the gas sector. TYmoshenko assures the public that Ukraine will pay on time. Meanwhile, Paul Taylor commentsin the Moscow Times over the current situation between Russia and Ukraine. His article includes also includes criticism of the January gas deal.
The dispute arises out of an unrealistic deal that Prime Ministers Vladimir Putin and Yulia Tymoshenko signed in January to end the previous round of gas wars. The deal committed Ukraine's Naftogaz to fill up its storage tanks this summer with gas bought from Gazprom and sell it back in the winter for supply to the West.
The problem is that Ukraine is skint, and Naftogaz, which can barley manage to pay its monthly gas bill to Moscow, can't afford the reserves. Ukraine has thrown itself at the mercy of the EU, begging Brussels to lend it the money. But the EU has no fund to make such a loan, and it doesn't trust the Ukrainians to keep their hands off the gas.
Instead, the EU says Ukraine should borrow the money from the International Monetary Fund on three conditions: that it implement long-promised budget reforms, raise domestic gas prices and, most controversially, spin off some of Naftogaz's assets, in which European companies could buy a stake. The European Commission has called a meeting with international financial institutions on Monday to discuss a loan.
But the budget reforms are blocked by internecine warfare between Tymoshenko and President Viktor Yushchenko. Hiking domestic gas prices is not the kind of measure that anyone wants to take before an election. And Tymoshenko is adamant that Naftogaz -- officially one of Ukraine's crown jewels and unofficially a cash cow for its political elite -- is not for sale, in whole or in parts.The ex-speaker of the Rada, Arsen Yatsenyuik, has also criticized the gas deal and called it Gazprom's best deal. According to him, the deal has led to high prices for Ukraine, while world price has fallen because of the global recession. He predicts $600 dollar for gas, which sounds more like rhetoric than an actual forecast. However, his point on the deal isn't as far fetched like his prediction.The deal gave the advantage to Gazprom and forces Ukraine to come up with the money for gas purchases each month. Whats astounding is that the deal seems to have no mechanism for handling dispute that were bound to emerge (it may, I haven't read the full document so I could be wrong).
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