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Ukraine: Diversion Of Russian Gas Continues

Ukraine continues to divert Russian natural gas despite agreements to halt such practices, the head of the Russian monopoly Gazprom said this week. Our correspondent Michael Lelyveld says Kyiv's political crisis has only served to delay a solution to the problems of gas transit, debt, and energy reform.

Boston, 23 March 2001 (RFE/RL) -- Russia's Gazprom charged 20 March that Ukraine is still diverting its gas, despite President Leonid Kuchma's promise last year that the practice would stop.

On the surface, there seemed to be little new in the accusation by Gazprom's chief executive Rem Vyakhirev, except for the suggestion that the theft of Russian transit gas to Europe may no longer be a source of serious conflict.

Vyakhirev's statement contained few signs of the outrage that brought Russia's relations with Ukraine to the brink of an energy crisis last year.

Vyakhirev told RIA Novosti on 20 March, "In the event Ukraine starts paying for gas and stops stealing, in future it may be possible to talk about the usage of its transportation system in no less volumes than the present ones." He added that Ukraine owed Russia about $2 billion for gas.

The comments were far milder than those that Vyakhirev made last year when Gazprom announced plans to build a pipeline through Poland to bypass Ukraine. Last June, Vyakhirev vowed to complete the project before retiring from his post, saying, "In all the years I worked in the gas industry, Ukraine always took more gas than it was entitled to."

The crisis was aggravated when Kuchma admitted in an interview that the diversions took place "according to a resolution of the Ukrainian government." Kuchma excused the practice, saying that it represented only "an insignificant fraction" of Russia's transit gas.

Last November, Russian Deputy Prime Minister Viktor Khristenko called the theft of gas the key issue in relations between Moscow and Kyiv. Ukraine's pipelines carry 90 percent of Russia's gas exports to Europe, making the supplies hard to control.

Ukraine responded initially to the bypass threat by trying to reform its power sector under former Deputy Prime Minister Yulia Tymoshenko, who increased collections of unpaid bills.

Tensions also eased after a series of agreements between Kuchma and Russian President Vladimir Putin that were aimed at halting the thefts and solving the problem of Ukraine's debts. Putin voiced support for Kuchma and pledged new military ties. But it turned out that the key gas agreements were only preliminary, and the diversions soon started again.

In January, Gazprom's trading partner Itera tried to cut supplies to Ukraine when four of its electricity producers failed to pay their bills. The generating companies responded by resuming the gas thefts to keep the power on.

Gazprom has said little about the problem for the past three months, although there seems to be no reason why the issue should be less serious than it was before the winter began.

Since the start of the winter, political conditions have changed dramatically in Ukraine as a result of events related to the murder of journalist Heorhiy Gongadze. Tapes linking President Kuchma to the scandal have stirred civil unrest and concerns for the country's stability.

In the crisis environment, Ukraine's energy problems have received scant attention. In January, Kuchma sacked Tymoshenko, perhaps to draw attention from his own problems. Tymoshenko has been jailed on unproven bribery charges since February. In the meantime, the corruption in Ukraine's power sector has continued much as before. The question is why Gazprom has lowered its pressure over the problem for the past three months.

One possible explanation is that Putin's political support for Kuchma has forced Gazprom to tolerate the diversions. Vyakhirev may only be raising the issue now to explain why it seems short of cash for developing new resources in Russia. This week, he warned that Gazprom's production was falling and that the company would be forced to raise tariffs even though citizens are unable to pay.

Another explanation is that the bypass threat was only a way of keeping Ukraine on the fragile edge between dependence and instability. Thanks to Kuchma's troubles, the country's position is already precarious enough. Vyakhirev cited political resistance in Poland for slow progress on the bypass plan.

Whatever the reason, the problems of Gazprom and Ukraine seem unchanged despite last year's maneuvers, and Kuchma's political crisis has only resulted in further delay.