I followed this news. First, Russia offered Ukraine $250 per cubic meter. Ukraine rejected that and wanted an increase of transit fees of gas going through their country to Europe. This prompted Russia to cut off gas in Ukraine and all over Europe. Now, they settle at $360, and no increase in transit fees? It's either Ukrainians have a lot to learn about negotiations, or is there a lot more that went on?
It seems they arent good negotiators. However it is not that straight forward. It appears that the gas price is likely to collapse by the second quarter as there is a link to the oil price. The average price paid will be around $230. They have stored a lot of gas and industry consumption is reducing so they may do better. There has been no real mention of the debt which was one of the big issues in shutting off supply. Dont know how they will pay for gas as things are getting pretty tight here.
RB: It it's most simplistic form, it is basically about undermining the Ukrainian presidency and his aspirations to move closer to the west, both from within and without. At the brink of total negotiation collapse, the Russian and Ukrainian Prime Ministers (Note, not the presidents) pull a deal together on the side and leave the Ukrainian president looking............. Notice how Medvedev has remained out of the picture for the most part also.
This still doesn't answer the question. If the prime ministers want to undermine the president's move to the west, why do it with higher gas prices? Don't they want to also convince the people of this?
RB Ukraine was loosing a lot of favour with the EU and it cost Russia 2 billion dollards. Both sides were hurting and a deal needed to be struck.
The deal isnt necessarily bad for Ukraine. It is expected that the the floating rate for gas could fall to $250 in the next 2 months and with the 20% discount Ukraine will then be on $200 per 1000 m3.
In the mean time Ukraine still has significant stores and may not need to buy mch gas at $360.
Naturally Russia is pushing Ukraine closer to make prices but they need eachother.
Time wil tell who got the good deal.
When the storage gets depleted, Adman, and that will be soon, the gas is at $360. How can that be not necesarily bad for Ukraine. From now on, the starting negotiating point is $360. If the market price is $250, their price is still $30. My gf is in Ukraine. She told me before this deal was struck that everything went up in price in the last few days. This deal was anticipated, wasn't it?
OK, Nasfan. You must now elaborate. What practices?
Just as in America, I think people really need to get ready for survival and preparedness. A prepared plan for self sufficient energy is important. Of course, such things are not so easy to get in Ukraine, so expect the expense of importing such goods.
RB: Moscow is painting Medvedev as having his nose clean by keeping him on the sidelines. It is painting Putin as being the great negotiator and settler of all. It is painting Yulia Getherlegsapartforvova as their darling and it is painting Yushchenko as the bastard, all of which suits the Kremlin's agenda quite well, which in the macro picture is (At least in part) to have Ukraine very much under Moscows wing, if not control and the micro picture is, gas sales to Europe, raising the profile of the Pro Moscow Ukrainian politicians, leaving Yanukovich (Who is Pro Moscow) with a possible avenue of return and Putin as “The Man”.
Does it concern them that they are using the people badly to pursue their agendas? One would be very naďve to think so. Generally speaking, if the people suffer at least a little, they will back those who can remove that suffering quickest. The easy take for the people in this one is to side with those who are Pro Moscow as they will be seen as the ones who can ensure continuity of supply.
IMO, the whole Russo/Ukrainian gas debacle is largely a game of chess being played with sledgehammers. Notwithstanding, there is a whole lot of other factors playing in the background, some of which will be about ensuring money is flowing into the right pockets of the right people. Don’t think that those pockets are necessarily ultimately the “State Pockets”.
Moscow wins – Yulia T wins and Victor Y looses “Big Time”
One of the big wins from this, is the deletion of the middle man company “RosUkrEnergo”
Although it has not been made official (and most likely never will) it appears Victor Yushchenko has had financial benefits from this, in political campaign and most likely in personal gains.
This seems the logical reason he has kept a very low profile in media over this gas dispute. His brother has definite links to this company.
Yulia will benefit the most with the Ukraine election this year.
The Kremlin will take several advantages from this 3 week dispute also.
They will now get greater support from Western Europe for their two pipelines that will circum navigate Ukraine and possible financial assistance to get them finished.
They have most likely put pay to the western leaning President and any hopes of reelection this year. Ukraine's chances of EU entry put back to the never – never.
Also the obvious – which is – keep the F~~k out of Georgia and don’t supply arms to them.
Kiev’s “Orange Revolution” was supposed to be evidence that Ukraine was finally leaving behind the Soviet past. But the fact of the matter is Ukraine remains very Soviet in many ways. As long as Russia subsidized the Ukrainian economy, the Orange Revolution could have it both ways – Western “politics” and old Soviet-style “economics.” Russia is now saying NO more freebies !!!
It goes way deeper than this.
Yulia (the Gas Princess) supposedly benefited 12 Billion from the 90’s – when she had control (oversee) of gas transit. On selling gas to Europe at huge profits. In fact most that was on sold was at no cost as it was siphoned off free of charge.
The Kremlin appears to have some hold over her, and have been able to twist her arm a little, this became clear in the October/November meetings between her and Putin.
Was created in 2004 by Putin and former Ukraine president Kuchma. 50% owned by Russian Gazprom, the other half of this companies ownership/beneficiaries is very grey ???
Because most gas from Russia is now coming out of Turkmenistan at market costs, this middleman company “RosUkrEnergo” has/will have little future benefit for Moscow/Gazprom. Profit margins now to squeezed and transparent for future benefit. Its done its coarse for Moscow and the other half cant be trusted and Moscow doesn’t want ANY $$ going towards assisting Pro Western leadership support.
RB The deal for 2009 is that if the EU price for gas falls to $250/ unit then Ukraine will only pay $200/unit. So its a gamble whether accepting $250/u was a better deal.
From 2010 Ukraine will have to pay full EU price but they will do nicely out of the full transit fees they will recieve.
Apparently Yulia has signed the deal up for 10years so she must think it a good deal.
They are saying a price of approx $208 for this year. $360 for Q1 and then it will fall considerably. The $208 is this Q1 price and other 3Q estimates averaged out.
Kiev will have a huge problem paying any price - they are literally Bankrupt - default later this year or early 2010 is very likely !!!!
BUT - The price of gas is really not the issue.
This was about shifting the control and benefits from gas profits.
Kiev has demonstrated to much Pro Western intent – while still expecting old style funding and favours from ex mother Russia
Max its going to be an interesting year
I heard Ukraine had 30 Bil in loans that had to be paid back this year and not a dollar in the bank to pay them.
But whose problem is this other than the person who loaned them the money?:)
The buz word at the moment is the most countries are going to start printing money to cover gov spend. I thought this was supposed to be a big no no.
What I dont get is why the russians are wasting all their money trying to support the rouble.
Surely theyd be better to let it fall through the floor and then aggressively buy it back?
What is happening is a movement towards a world controlled economy do stave off economic crisis that are happening now. UN has it's dirty fingers all over this. This is nothing new in the New World Order movement. A single entity to control world economies and create more fiat money. This will create the destruction of national sovereignty and move the world towards a more socialist possible fascist control. There are two great books written about 20 years ago that describes the current crisis that exists today. One is "The Shadows of Power" and the other is "The Creature from Jeykll Island." Though Jekyll Island is more a book about the United States it diagrams the game plan to a controlled global economy. All very scary propositions. With a World Bank in control to destabilize strong economies to create equality among nations.
I think (probably b proved wrong again) the Rouble has levelled off . The Russian treasury (if you call it that ??) has slowed its support to the Rouble and in the last few days it appears to have stabilized.
Interesting year - indeed !!!
The M-Inlaw did actually get her pension, a bit late and all her apartment rates and fees deducted. This is a 1st time for her to have these cost taken out beforehand. She has no arrears so didn't make much difference to her, but some would have had nothing to collect.
The teachers and some other Govt employees have not been paid and some getting paid only half.
My wife Lena, saw this before in the mid - late 90's. Worked in her library job and didn't get paid for months.
40% of domestic loans are either in default or will be in the next few months. Cars are been repossessed by Banks. Rents have fallen dramatically in Kiev just this last 2 months. Down 20 -40%. Huge oversupply of apartments for rent due to workers been laid off and returning to prior cities and villages. Also alot of apartments were bought on spec and cant be sold so trying to rent them instead.
I fear for the industrial workers out East etc. Steel, construction and mining has all but stopped. There is going to be huge unemployment this year.
They should have got their agriculture sector (and Russia is not much better here also) into a stronger more updated status during these last few years of boom prices. But he trouble is – the fat cats at the top take to much cream for themselves and everything else just plods along picking up the crumbs.
American farmers have leased a lot of land for grain. Brought in the latest machinery from the States (John Deere etc) and have done a great job. Turned unused land into productive land and given massive employment opportunities to locals. This should have been encouraged more and had more local government support earlier. I just hope their Lease agreements are more rock solid than the Gazprom – Naftagaz one :-))))