Sun, Jan 08, 2006 - Page 11 News List

Ukraine's former prime minister attacks gas pact

SECRET DEAL Orange Revolution icon Yulia Tymoshenko vowed to scuttle the deal with Russia because it transfers control of gas imports to what she called a `front company'


Former Ukrainian prime minister Yulia Tymoshenko, who was a driving force behind last winter's Orange Revolution, is emerging as a leading critic of the intricate commercial deal that ended the gas dispute between Ukraine and Russia.

Though Ukraine was widely seen as a winner in the dispute after forcing Russia to about-face on its natural gas embargo after one day, and then negotiating a price lower than most other former Soviet states pay, Tymoshenko said she would work to scuttle the deal because it transfers control of energy imports to a company she calls corrupt.

She also said she hoped to use the deal, negotiated by aides to Ukraininan President Viktor Yushchenko, to discredit his bloc in parliamentary elections in March. In place of the new deal, she said, Ukraine should insist that Russia uphold a 2004 agreement that fixed gas prices through 2009 at US$50 for 1,000 cubic meters.

Her opposition adds another layer of uncertainty to the settlement, a multibillion-dollar contract signed by Gazprom, the Russian natural gas company that is the world's largest. Tymoshenko, who worked closely with natural gas policy in government, is a powerful figure in Ukraine. She and Yushchenko were allies in the Orange Revolution, the popular uprising that overturned an election and changed the political course of the nation, but fell out last fall during a corruption scandal.

Tymoshenko said the settlement left in place an energy-trading scheme run by RosUkrEnergo, a company that has been criticized for ties to organized crime.

"It is a front company, an artificially created company, so that gas coming to Ukraine comes through a filter that will catch a significant amount of money," Tymoshenko said in a telephone interview.

On Friday, she filed suit in Ukrainian court to annul the contract, and a copy of the ostensibly secret deal among Gazprom, Ukraine's national gas utility and RosUkrEnergo was posted on her Web site.

The contract posted on her site -- uncontested by Gazprom -- disclosed that as part of the arrangement, Ukraine also agreed to open half of its domestic natural gas market to a joint venture 50 percent owned by RosUkrEnergo. By extension, that gives Russia more direct access to Ukraine's internal energy market, as Gazprom is a 50 percent owner of RosUkrEnergo.

Even as details trickled out from Wednesday's deal, investors in Moscow were still uncertain how Gazprom would emerge financially.

Yushchenko will meet Russian President Vladimir Putin on Jan. 11 in Astana on the sidelines of ceremonies to inaugurate Kazakh President Nursultan Nazarbayev, Putin's spokesman said on Friday.

Alexei Gromov was quoted by the Ria-Novosty news agency as saying the pair agreed to the meeting during a telephone conversation on Friday two days after clinching the deal on gas prices.

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