Putin Calls for Merger With Ukraine on Energy
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Prime Minister Vladimir V. Putin of Russia has suggested merging Ukraine’s national energy company with the Russian gas giant Gazprom,
a move that, if approved in Kiev, would put Ukraine’s strategic network of gas pipelines under Moscow’s control.
Prime Minister Vladimir V. Putin of Russia has suggested merging Ukraine’s national energy company with the Russian gas giant Gazprom,
a move that, if approved in Kiev, would put Ukraine’s strategic network of gas pipelines under Moscow’s control.
Prime Minister Vladimir V. Putin of Russia has suggested merging Ukraine’s national energy company with the Russian gas giant Gazprom,
a move that, if approved in Kiev, would put Ukraine’s strategic network of gas pipelines under Moscow’s control.
Mr. Putin shocked many — including, apparently, his Ukrainian counterpart — by announcing the proposal at a news conference after talks in the Russian resort city of Sochi.
The Ukrainian prime minister, Mykola Azarov, said through a spokesman that the idea of a merger had not come up in their meetings, and that Mr. Putin had “expressed it in an impromptu way”…
Russia is heavily dependent on Ukrainian pipelines, which carry about 80 percent of its natural gas exports to Europe, and it has long coveted a greater degree of control over them. [br]
Mr. Putin’s idea is an audacious one politically, coming just two months after Ukraine elected a new president, Viktor F. Yanukovich, who vowed to increase cooperation with Russia.
Emotions are still raw in Ukraine over a deal Mr. Yanukovich negotiated with Moscow to extend the lease on a Russian naval base on the Crimean Peninsula for 25 years, and a vote on the issue in Parliament deteriorated into a melee.
If the deal were to go through, Gazprom would effectively swallow the Ukrainian company, Naftogaz, said Chris Weafer, chief strategist at UralSib Capital, an investment bank.
“In any merger, Gazprom would dominate — it would be seen as a complete Russian takeover over of the Ukrainian gas system,” Mr. Weafer said, in this article from the New York Times.
If it came up for legislative approval, he added, what happened during the vote on the naval base “would look like a kindergarten party by comparison.”
Mr. Weafer called Mr. Putin’s suggestion a “nonstarter,” but he said Mr. Putin could be laying the groundwork
for the more politically viable approach of forming a joint venture that would control the Ukrainian pipeline system.
“He’s probably trying out the extreme, knowing full well it would provoke a strong reaction inside Ukraine,” he said. [br]
And that it did, in a country still split between its Europe-leaning west and Russia-leaning east.
Yulia V. Tymoshenko, who lost to Mr. Yanukovich in a bitterly fought presidential race, said the merger proposal “could be seen as a joke” but warned of “a large-scale plan to liquidate independent Ukraine.”
She predicted the “full absorption of Ukraine by Russia,” and blamed Mr. Yanukovich for ceding too easily to Russia’s will.
“You can sculpt whatever you want out of plasticine Yanukovich,” she said, according to a statement posted on her party’s Web site.
Mr. Yanukovich, a former Communist apparatchik who ran on a platform of closer ties to Moscow, has closed a series of agreements with the Kremlin since taking office, including the vote allowing Russia to extend its lease on the naval base.
Russia, in return, agreed to cut the price of its natural gas by 30 percent — at a cost to Russia of at least $30 billion, Mr. Weafer said —
and went on to waive a $2 billion fine it could have levied on Ukraine for purchasing less gas than was included in a contract signed in January.
The deals come at a critical time for Ukraine, whose economy has contracted precipitously in the downturn,
with demand from industrial customers down by 50 percent during the first three months of the year compared with 2009.
Dmitri S. Peskov, Mr. Putin’s spokesman, dismissed the notion that Gazprom would take over the smaller company, saying the proposal would create a new legal entity.
He said that Ukraine was interested in finding a co-owner for Naftogaz, and that Russia sought to “receive a guaranteed route for the fulfillment of its obligations to customers in Western Europe.”
He also said, in comments carried by RIA Novosti, that it was too early to speculate on a possible asset swap.
