Both Sides Lose in the Gas War

It is too early to tell if the gas wars between Russian and Ukraine have ended for good. Although it would seem at first glance that the conflict was put to rest when Prime Minister Vladimir Putin and Ukrainian Prime Minister Yulia Tymoshenko signed a 10-year gas delivery agreement on Monday in Moscow, it didn't take long for Ukrainian President Viktor Yushchenko's camp to protest the pact.

Yushchenko supporters claim that Tymoshenko didn't have the authority in the first place to negotiate gas prices and sign an agreement with Putin. They accuse Tymoshenko of trading away Ukraine's national interests, including the claim that she supports Gazprom's purported plans for taking ownership of Ukraine's entire gas transport grid. Andrei Kislinsky, the deputy chief of staff in Yushchenko's administration, announced that Tymoshenko and the Kremlin have already created a working group to work out the details of this project. Tymoshenko's main objective in meeting Putin, they assert, was to demonstrate her unconditional loyalty to the Kremlin in exchange for the Kremlin's unconditional support for her in the Ukrainian presidential election in late 2009 or early 2010 (the exact date hasn't been set yet).

It is even possible that on Friday, Ukraine's National Security Council, with Yushchenko as chairman, will declare the gas agreement Tymoshenko signed with Moscow null and void.

It is well known that deliveries of Russian gas were conducted through RosUkrEnergo, a highly controversial intermediary, for the last three years. The company is registered in Switzerland, with a 50 percent stake held by Gazprom and 50 percent owned by private Ukrainian businessmen who purportedly profited by manipulating gas supplies and paid big kickbacks to high-ranking officials in Kiev and possibly elsewhere.

RosUkrEnergo has been a major point of contention among feuding political groups for a while; in fact, Tymoshenko made the issue a theme in her 2007 parliamentary election campaign, vowing to eliminate RosUkrEnergo from the transaction. In addition, allegations are occasionally made that Yushchenko has financial ties to RosUkrEnergo.

During the three-week conflict, Gazprom CEO Alexei Miller made a statement implying that Yushchenko had lobbied for RosUkrEnergo's interests and initiated the gas conflict with Moscow when he understood that Tymoshenko was serious about liquidating RosUkrEnergo. Now, as a result of Monday's agreement, RosUkrEnergo has been definitively removed as the middleman. It is difficult to imagine that Yushchenko will simply forgive Tymoshenko for her aggressive moves.

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It might seem that Russia came out on the losing end of the gas war. First, Russia lost because it suffered a huge blow to its reputation as a reliable gas supplier to Europe. Second, Europeans are seriously looking for other suppliers and routes to import gas. For example, an increasing number of German officials are beginning to question if the heretofore celebrated Nord Stream pipeline project, which would pump gas directly from Russia to Germany across the floor of the Baltic Sea, would make Germany too dependent on Russia. The gas war even damaged relations with Russia's traditionally strong European allies such as Serbia, which were without gas for three weeks. Serbs were burning Russian flags, something that just a couple of weeks ago nobody could imagine would ever happen. Even Austria, which has been a loyal buyer of Russian gas since 1968 when it became the first West European country to sign an agreement with Moscow, has started looking for alternative suppliers.

On the other hand, Moscow achieved at least part of what it hoped to accomplish in its conflict with Kiev. Although the Kremlin wasn't able to drive a complete wedge between Ukraine and Europe, the political elite in Kiev, who set their sights high on becoming integrated with Europe politically and economically, suffered a serious blow when Ukraine earned a reputation as an unreliable partner. But Moscow's largest battle gain was destabilizing Ukraine's internal political situation. Kiev's opposing political groups have again locked horns and are bogged down in another serious confrontation.

The Ukrainian media are already discussing the question: Did Moscow offer to support Tymoshenko in her presidential bid? If so, what did she offer the Kremlin in return? Perhaps a rejection of Ukraine's aspiration to join NATO or an extension of the contract for Russia's Black Sea Fleet that is set to expire in 2017?

In reality, these theories should be treated with skepticism. After all, Tymoshenko has no intention of committing political suicide by risking the alienation of the roughly half of Ukraine's voters located in the western part of the country, for whom a pro-Russia policy is absolutely unacceptable. Moreover, she is a quintessential politician -- which is to say an opportunist above all. She might have made various promises to Putin and President Dmitry Medvedev, but it would be naive to think that she would necessarily make good on all of them.

As is often the case, the Kremlin does not have a backup plan if things go wrong. What if the majority of European countries take Kiev's side in its ongoing battle with Moscow? What if Yushchenko follows through and annuls the gas agreement Tymoshenko signed with Putin?

Beyond the gas conflict, what if the global economic crisis cripples Russia worse than it ever expected? What if oil prices fall to $10 per barrel in 2009? What if the ruble exchange rate reaches 50 to the dollar? What if Putin's and Medvedev's ratings fall? If any one of these events were to happen, the Kremlin would have a lot more to worry about than Yushchenko and Tymoshenko. In this case, the Kremlin would quickly forget about its obsession to punish Yushchenko for all of his sins, including his 2004 Orange Revolution, NATO aspirations and arms shipments to Georgia in the August war.

Yevgeny Kiselyov hosts a political talk show on Ekho Moskvy radio and is chief editor of TVi, a new television channel in Ukraine.