Fighting Back
Ukraine has reacted aggressively to Turkmenistan latest threat to hike gas prices yet again. Foreign Minister Boris Tarasyuk suggested that Turkmenistan’s move was most likely an attempt to extricate itself from deals that it now realises it cannot fulfil. In remarks to journalists reported by Interfax he said:
“There is reason to believe that the Turkmen side is starting to move away from reached agreements and so in such a case, the best defence is offence. Turkmenistan has in effect signed contracts with Russian and Ukrainian companies for two times more volume than it is able to export.”
On its front, the Turkmen government claims that Ukraine still owes it around $159 million for prior gas deliveries. This was denied on Tuesday by Ukraine , which claims that the outstanding debt is only $77.4 million and that the payment of this sum was being impeded by inefficient Turkmen bureaucracy. Ukraine went on to argue that the debt was irrelevant anyway, as it had already paid an advance of $88 million at the beginning of this year as a deposit for future deliveries.
Future developments in this spat will be watched closely by observers across Europe.
UPDATE: Meanwhile, according to a Radio Free Europe report, interest in the Turkmenistan-Afghanistan-Pakistan gas pipeline has been formally expressed by India:
“The TAP pipeline is a $3.45 billion undertaking designed to transport natural gas from the Dawlatabad field in Turkmenistan through Afghanistan into Pakistan and then eventually to India. India now has three months in which to gain the “necessary official approval” to join TAP, Indian Petroleum Minister Murli Deora told PTI. He added that the pipeline will be renamed TAPI, to stand for Turkmenistan-Afghanistan-Pakistan-India pipeline, once the Indian cabinet approves the decision. Officials in New Delhi have said that a pipeline from Turkmenistan would be less problematic than a planned new pipeline to transport natural gas from Iran, a project that runs the risk of being blacklisted by U.S. and European financers, the report added. While India is not looking at Turkmen gas as an alternative to gas from Iran, New Delhi believes the TAP project has a better chance of being implemented.”
on February 22nd, 2006 at 5:13 pm
From the past decade’s experience, any Ukrainian government was pathetic, but this one especially so. No single year since 1991 was without reports about Ukrainians not paying on time, or trying to negotiate lower price in the middle of the season, or trying to substitute cash payments for gas with the deliveries of low quality Ukrainian goods, or something else.
Their own parliament has just initiated inquiry into the Oil & Gas Dept’s state of finances, cases of bribery, etc. and all they do now is try to shift the attention elsewhere.
Overall, Ukrainians’ reaction in the last few days is another sign of their strategic weakness vis-a-vis gas suppliers in Turkmenistan and Russia - weakness, which at least in part is the result of their own making. It will remain so until their internal institutional arrangements conducive for corruption and inefficiency remain weak. Changing these arrangements appears increasingly unlikely under the present administration.