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Ukraine: Chernomyrdin May Resolve Gas Line Problem

The appointment yesterday of former Prime Minister Viktor Chernomyrdin as Russia's new ambassador to Ukraine may give Moscow its best chance ever to solve the critical problem of gas transit to Europe. The former Gazprom chief led previous efforts to trade Ukraine's debt for control over its export pipelines. RFE/RL correspondent Michael Lelyveld fills in the background.

Boston, 11 May 2001 (RFE/RL) -- The naming of former Prime Minister Viktor Chernomyrdin as Russia's ambassador to Kyiv may signal a new push by Moscow to control Ukraine's pipelines for Russian gas exports to Europe.

As Russia's longest-serving premier, Chernomyrdin is a veteran of Kremlin negotiations over Ukraine's gas debts and transit routes. As a past chairman of the Russian gas monopoly Gazprom and a former Soviet minister for gas, he has dealt with issues related to Ukraine's pipelines since the 1980s.

This combination of roles could give President Vladimir Putin his best chance of ending Russia's dependence on Ukraine's pipelines for its strategic gas exports.

Kyiv owes Moscow nearly $2 billion in gas debts, but Russia continues to be vulnerable to Ukraine's diversions from the pipelines during winter months. The problem of controlling the export route to Europe has frustrated Moscow ever since the breakup of the Soviet Union.

Chernomyrdin's appointment comes at a time when Ukraine's government is in disarray. For the past several months there have been calls for President Leonid Kuchma to step down because of his alleged involvement in the disappearance of an opposition journalist, and two weeks ago a no-confidence vote forced the resignation of the government of reformist Prime Minister Viktor Yushchenko.

In announcing the appointment yesterday (10 May), Putin called Ukraine a "fundamental partner," calling economic and trade ties the basis of their relations. Putin described Chernomyrdin as an ideal choice to forge future relations:

"It would hardly be possible to find a person who knows so well the weak and the strong sides of the Russian economy -- and the Ukrainian economy as well."

Much of Chernomyrdin's experience with Ukraine, however, has been in pursuing a series of failed plans to gain command over its pipeline system and gas infrastructure.

In March 1998, for example, Chernomyrdin led a carefully calibrated Russian campaign to convince Kyiv that it should trade its gas-storage facilities and transit lines for debt forgiveness. The move came one week after Russia and Ukraine signed an economic pact that was supposed to double their trade over the next decade.

At the time, Chernomyrdin was quoted as saying that Moscow did not want to force Ukraine into one method of debt settlement over another. Chernomyrdin said: "It is a complicated question, but a mechanism for paying the debts must be found."

But Ukraine resisted the solution because of fears that Russian ownership would weaken its leverage and sovereignty.

Two weeks later, former President Boris Yeltsin dismissed Chernomyrdin as prime minister -- only to rehire him four months later, amid economic turmoil.

Late last year, Putin and Kuchma signed a series of cooperation agreements that followed much the same path as the Chernomyrdin negotiations in 1998. Once again, the accords appeared to be a warm-up to a debt settlement that would give Russia control over Ukraine's pipelines. And once more Kyiv balked, refusing to surrender the export route.

Since then, Russia has been actively pursuing plans to build pipelines that would bypass Ukraine. In the past month, it has launched studies with possible European partners for new routes through Poland and across the Baltic Sea.

But building new lines could take years and billion of dollars in investment. And Ukrainian transit could still offer Russia a valuable volume of export capacity. So, if Moscow can reach a deal for control over Ukraine's pipelines, it might drop its costly bypass plans.

Chernomyrdin's appointment also comes at a sensitive moment on energy questions for Russia.

The contract of Gazprom's chief executive, Rem Vyakhirev, expires at the end of this month, but it is still unclear whether he will be forced out. Only Chernomyrdin has greater experience at the company. Putin has yet to reveal his position on the question of reforming Gazprom, the world's biggest gas company, which is 38 percent state-owned.

Chernomyrdin's long experience serving both the Russian state and Gazprom has frequently led to questions about which interest was paramount. Over the years, he has repeatedly denied accusations that he accumulated secret wealth through his holdings in Gazprom.

But there's little doubt that Chernomyrdin will again be in a position to solve one of Gazprom's toughest problems through his new post in Ukraine. The question is whether he will bring new ideas or only old forms of pressure to bear.