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Ukrainian Deputy Prime Minister Says Energy Deal 'Not A Failure'

Ukrainian Deputy Prime Minister Hryhoriy Nemyria

Ukrainian Deputy Prime Minister Hryhoriy Nemyria

This week, Ukraine and Russia signed a 10-year contract on natural-gas supplies and transit, which ended the latest energy dispute between the two countries. RFE/RL's Ukrainian Service Director Irena Chalupa sat down with Ukrainian Deputy Prime Minister Hryhoriy Nemyria on January 23 to talk about the gas deal and the bad relations between the country's prime minister and president.

RFE/RL: Both you and the prime minister are on record as saying that these latest gas agreements between Russia and Ukraine are very beneficial for Ukraine and this is the best Ukraine could have hoped for. Yet Ukrainian President Victor Yushchenko and his team have been deeply critical of these latest arrangements saying that they are not good for Ukraine. What's the truth?

Hryhoriy Nemyria: The truth is that when there is no gas everybody loses, when there is gas, everybody wins. I think as far as the gas conflict is concerned, when Prime Minister [Yulia] Tymoshenko took full responsibility and in a pragmatic constructive manner conducted the final stage of the negotiations and concluded this agreement with [Russian] Prime Minister [Vladimir] Putin, it's good for Ukraine, it's good for the Russian Federation, it's good for the European Union.

Everybody should learn lessons from this crisis: one of the lessons is that for the negotiating position to be strong, solid, and consistent, it requires political consensus and coordination on the highest political level. We very much hope that the president would support this agreement...[however from] his advisers we are already hearing this criticism, calling this Ukraine's failure, catastrophe.

It's neither a failure nor a catastrophe, it's a compromise that we reached and it clearly shows that for the energy security to be real, it should be considered in a wider framework, not just between Russia and Ukraine, but it should also include the European Union. Furthermore, if you take such a dimension as transparency of the energy sector, it clearly should have also a trans-Atlantic framework. We are not just talking about the supply of Russian gas, we are talking about uninterrupted supply of gas from Eurasia, this includes Central Asia, the Caucasus, the whole Caspian route. Therefore we very much hope that as it was in the course of the conflict, the president, instead of torpedoing the agreement, would support the government and we'd speak with one voice.

RFE/RL: Is there any way that these agreements can be broken? How binding are they? Can the Ukrainian president override them in any way?

Nemyria: I'm of the firm belief that this is exactly the case when "pacta sund servanda," the agreement should be respected. We are very pleased that the initial intention to challenge these agreements within the framework of the National Security and Defense Council are now cancelled. We welcome this move as a wise move and we very much hope that the president's trip to Brussels next week, when he will have an opportunity to discuss this issue with [European Commission President Jose Manuel] Barroso, will provide the president a new opportunity to listen to what President Barroso already expressed in conversation with Tymoshenko, that this agreement is vital and crucially important for the energy security of the whole of Europe and he called on the Ukrainian authorities to respect this agreement and welcomed the very important achievement as a part of this agreement, namely that since January 1 of this year there will be no intermediary between [Ukraine's state energy company] Naftohaz and [Russian state-controlled energy giant] Gazprom.

RFE/RL: You said that these agreements are an important step in establishing transparency in Ukrainian-Russian gas relations. To the best of my knowledge and memory, none of the agreements between Russia and Ukraine as far as gas is concerned have ever been made public. Will these agreements see the light of day?

Nemyria: You know there are political agreements and there are commercial agreements and, of course, for the political agreements, it's normal that they are public. Whenever it's commercial agreements, there is a confidentiality clause and that's a typical situation when the particular parts of these agreements can be prevented from being publicized by the signatories....

This is part of the commercial side, but I do agree that the basics of the agreement and the principles of this [agreement] should be in the public domain, and in view of that fact Prime Minister Tymoshenko signed a memorandum in October 2008 with Prime Minister Putin which contained two key features: direct contracts, no intermediaries, and a gradual structured transition to international economically justified prices. I think that those agreements that were signed most recently are fully in the spirit of this memorandum and make the relationship between the two countries in the gas sector more transparent, more predictable. Also, because they are going to be based over the next 10 years on the formula that has clear conditions and neither of these conditions are political.

RFE/RL: We have already mentioned the disagreements between the prime minister and the president. These conflicts have existed between them for quite some time. This is something that is hard to ignore and frankly it looks a little strange to Western observers. What is the source of this standoff? Why do they hate each other so much?

Nemyria: I don't agree that they hate each other.

RFE/RL: Why can't they get along? They are ostensibly from the same team, they represent the same country, they seemingly have the same interests at heart.

Nemyria: Difficult to answer, I don't think I'm well-equipped to answer. What I know and I would like to see this issue in the [context] of the commitments made in the course of the Orange Revolution and immediately after, promises that were given, and the implementation record. I think this is the major issue to look into, to answer your question, to what extent and how and who tried wholeheartedly to implement and where we saw a deviation, including I think the most attractive and appealing to many Ukrainians promise to fight corruption, in reality and not just in words. I think this is a major source of disagreements that's produced a very unhealthy phenomenon of quarrelling.

The other part of answering this question has to do with what we call entourage. You haven't heard from the prime minister's team anything close to the accusations, groundless, shameful accusations that were and are coming from the secretariat of the president. It's very unfortunate. We believe that if the aim is a scandal -- scandals are normal for a democratic society and it's basically one of the definitions. If there is a scandal then there is a possibility for the media [to investigate them] and that's part of normal society.

But this is not a scandal, it's a shame because those people who are making these statements and accusations against the prime minister, they are civil servants. As one French politician put it, the ideal civil servant should be tasteless, colorless, and odorless, so it should not smell. So I do agree that as far these people who put forth these accusations, they are colorless and they are tasteless, but I'm afraid that sometimes they cannot do anything to prevent the smell and it smells bad.

RFE/RL: The smell permeates outside the country.

Nemyria: That's an issue. That's an issue. Because that's a responsibility and that's the accountability, it's not something that helps the country. It's just loyalty by default, a servility and an attempt to please. The first time this type of accusation erupted in the course of the [August 2008] Russian-Georgian war, when one of the collaborators of the secretariat of the president accused the prime minister of high treason.

I went on the record then as saying, I don't want to discuss this with this person, but we do expect the president to somehow react. Again, it's a shame and it's not normal and it does not help Ukraine project a positive image, but again in this time, a very difficult time for Ukraine, we call on everyone to put aside their personal ambitions and personal differences and to unite, because as many people know, a house divided cannot stand.

RFE/RL: Do the president and prime minister ever meet, do they have consultations, do they talk shop, or do they just write letters to each other?

Nemyria: What I can clearly say for the prime minister's side, she's open and she was always open for this communication. Both the president and the prime minister established quite a working pattern at the beginning of last year in the term of the government I represent. But again I think what then started to be a dominant picture is the upcoming presidential campaign and that has produced idiosyncrasies, suspicions, and practices which are intolerable and shameful. And again, I am very sorry that this practice is still continuing. The prime minister has never been and is never going to be part of this smearing campaign.

RFE/RL: Will the prime minister run for president?

Nemyria: The prime minister's answer was consistent, she wants to be there, where it is good for Ukraine, and she promised at the very beginning that she could put her ambitions behind [her] if there will be cooperative, consensual behavior between the president and the prime minister, especially in the context when for the first time after the Orange Revolution, we've got an almost ideal situation having a majority in the parliament, a coalition government being in place on an equal basis representing two wings of the Orange coalition, the president being the winner of the presidential campaign and the Orange Revolution, and the prime minister [as a] very important if not decisive force behind it.

So all the conditions were met to secure cooperative behavior for the sake of the Orange Revolution agenda. It didn't happen. I think we almost crossed the line when one could fully remedy this and I think the public opinion polls speak for themselves. As of today, the approval rating of the president unfortunately is in a very low one-digit range of 3-5 percent. Every person, especially a politician of such caliber, has a responsibility and accountability and it's an answer that both the president and the prime minister should give for themselves. I would not try or even dare to answer for the president or the prime minister.

RFE/RL: A financial question. The Ukrainian currency has been doing crazy things for the last few months. The dollar is relatively stable in most countries, yet it continues to fluctuate wildly in Ukraine. There's lots of talk of default. What do you make of this?

Nemyria: Ukraine is one of those countries who were severely impacted by the global financial crisis and I think the depth of this impact has to do with the institutional capacity to deal in a coordinated and cohesive manner with the financial crisis and the implications for the economic slowdown and the recession. Of course, the body who by law is responsible for the exchange is the Central Bank and only under those circumstances when the Central Bank is really independent and applies transparent procedures to its activities, including the procedures for recapitalization and refinancing of the commercial banks, this task of successful results dealing with the consequences of the hryvnia, the exchange rate to the dollar or the euro could be performed well.

Unfortunately what we observed in the course of the last several weeks was basically a lack of transparency on the side of the Central Bank leadership and also an attempt to intervene in the independence of the Central Bank. As far as Ukraine is a recipient of the [International Monetary Fund] program of $16.4 billion and currently we are hosting the IMF working mission to evaluate the first results of the implementation of the first stage [of the loan]. It is very important to make everything possible for the Central Bank to be a constructive player, rather than a problem.

RFE/RL: So who is tampering with the Central Bank's independence?

You know, I would not dwell on that issue. I would just say that this is something that is a source of concern for the IMF, the level of the transparency of the procedures and they are concerned about the independence of the Central Bank. This is part of what needs to be remedied and we are calling on all those who are part of this problem to behave responsibly, to avoid temptation to use the Central Bank as a tool for damaging a political opponent.