Like Elmer Said
Interestingly, Yushchenko looks like a natural ally for Yanukovych in a campaign to undermine the government of his former Orange Revolution allies. Yanukovych probably meant Yushchenko when he suggested that “a certain portion of my opponents should join us to build our Ukraine together” (Channel 5, January 6). Both Yanukovych and Yushchenko deny the legitimacy of the new coalition, arguing that it controls less than half of parliament. They also agree that the main aim of the coalition is to keep Tymoshenko’s “populist” government afloat. Both hold Tymoshenko, rather than the global crisis, responsible for the current economic hardships and want her resignation.
Yushchenko and Yanukovych have also been on the same side in the recent banking scandals and possibly in the continuing Russia-Ukraine gas row. Tymoshenko accused the central bank, Yushchenko, and the Nadra bank of conducting illegal currency operations. She wants to oust the head of the central bank Volodymyr Stelmakh (Ukrainski Novyny, December 12; Ukrainska Pravda, December 20). Yushchenko defended the Nadra bank and refused to dismiss Stelmakh (Ukrainska Pravda, December 22, 27). Nadra is linked to businessman Dmytro Firtash, who is believed to be among the main financiers of the PRU. Firtash also co-owns RosUkrEnergo, which has been the intermediary, with Yushchenko’s consent, in gas trade between Russia and Ukraine since 2006. Tymoshenko has pledged to expel RosUkrEnergo from the market.
There are so many cross-currents in the Russo-Ukrainian gas standoff that anyone who predicts a quick or lasting resolution is, in my view, completely unrealistic. Bilateral monopoly situation creates immense rents. Numerous parties with both economic and non-economic agendas are contending for these rents. The economic agendas are relatively easy to comprehend, but the political agendas are much more amorphous. They include geopolitics (Russia wanting to undo the Orange revolution, and reassert control over Ukraine), grubby domestic infighting (obviously on the Ukrainian side, but likely occurring under the carpet on the Russian side), and the pettily personal (with Putin being famous for his hatreds, and pursuing them ruthlessly). All of this taking place in two nations with weak, not to say non-existent, institutional constraints (e.g., policy transparency, electoral accountability) on corrupt rent seeking.
Gossip that the mafia has its hands in the export and transit of Russian gas via Ukraine became even louder after the gas crisis in Europe began.
Allegedly, Semyon Mogilevich, considered to be one of the bosses, or even the chief mafia boss in Russia, is at the helm of the mysterious company RosUkrEnego, which sells gas to Europe and Ukraine, the Slobodna Dalmacija daily reported.
He is a Russian citizen of Ukrainian descent whom the FBI considers the key person of international crime. What is interesting is the fact that, due to special services for Zagreb, he was granted Croatian citizenship. During his arrest for tax evasion last year, allegedly, police found a Croatian passport on him.
Mogilevich was arrested using a false name of Sergei Schneider, which is one of the 17 false names he used. Claims that Mogilevich is the head of the RosUkrEnego company began back in 2005 when the then Ukrainian counterintelligence service chief, Olexandr Turchinov, said he had proof that the Russian mafia boss was the director of the mysterious company. Soon after, Moscow’s daily Komersan wrote about Migolevich taking part in negotiations about the prices of gas supply for 2006.
Since Mogilevich was arrested a year ago, it is unclear whether he is pulling any of the strings now. (Though notorious criminals, ranging from Pablo Escobar to Chicago homey Jeff Fort of El Rukn infamy have been known to run criminal operations while in “custody.”) Even if Mogilevich is not currently involved in RosUkrEnergo, and is not playing a role in the resolution–or not–of the current situation, his purported involvement gives a flavor of the kind of bottom dwellers associated with that “company” which has a throttlehold on Europe’s gas.
In any event, it is pretty clear that Tymoshenko’s year old assertion was wildly optimistic:
The arrest of suspected crime boss Semion Mogilevich should signal the end for shadowy middlemen in Ukraine’s $6.5 billion gas trade with former Soviet states, Ukraine’s Prime Minister Yulia Tymoshenko said Monday.
Tymoshenko has previously said Ukrainian-born Mogilevich, arrested last week in Moscow, is behind RosUkrEnergo, a mysterious joint venture which has a monopoly on the sale of Russian and Central Asian gas to Ukraine.
Mogilevich and the Ukrainian businessmen who own 50 percent of RosUkrEnergo have denied any links with each other. Russia’s gas monopoly Gazprom, which owns the other half, declined comment. “As far as gas transit from Uzbekistan, Tajikistan and other countries is concerned, we don’t need any shadowy intermediaries,” Tymoshenko told reporters after talks with European Commission President Jose Manuel Barroso in Brussels.
“There will be transparency in our government and society. It also concerns energy policy,” she said, responding to a question about the detention by Russian police of Mogilevich.
Since regaining the premiership last month, Tymoshenko has resumed a campaign against RosUkrEnergo, which won its monopoly in January 2006 after the price dispute that led Russia to shut off gas to Ukraine in mid-winter.
That jeopardised supplies to Europe, which counts on Russia for 25 percent of its gas needs.
Industry analysts have repeatedly questioned why Ukraine and Russian state gas monopoly Gazprom need RosUkrEnergo at all, since they could deal directly with each other.
Tymoshenko told the BBC’s Panorama programe in 2006 that she had “no doubts whatsoever” that Mogilevich was behind RosUkrEnergo, according to a transcript on the BBC website.
A Ukrainian security service investigation found “many indications” that Mogilevich indirectly controls the firm.
Mogilevich is wanted by the U.S. Federal Bureau of Investigation for alleged fraud, money laundering and racketeering. The Ukrainian security service SBU says it has no ongoing investigation regarding him at present.
Analysts said Mogilevich’s detention could mark the end of the firm’s grip on the gas mains of Ukraine.
“Mogilevich does not have any real political support and RosUkrEnergo is going through rough times due to these attacks from Tymoshenko. So this looks like some cautionary house-cleaning from the Russian side,” said Yevgeny Volk, analyst at the U.S.-based Heritage Foundation.
Stanislav Belkovsky, head of the National Strategy Institute in Moscow, said that a “critical mass of people in Ukraine has emerged against the existence of this middleman structure and at the same time, there is a group of people on the Russian side whose interests are in alignment with”.
Still waiting on that transparency thing, girl. And I repeat the suspicions I voiced in my reply to Elmer’s comment–Tymoshenko’s aversion is not middlemen in general, just to those who help fund her political opponents. Do you agree, Elmer?
That’s all, Folks! 😉
Professor, my hat is off to you for the excellent (as usual) materials and analysis you posted.
At the risk of being too lengthy (apology in advance) – a number of politicians have talked about getting rid of corruption. Yushchenko has done it repeatedly, and even went to the extent of allowing the steel mill, Kryvorizhstal, owned by Akhmetov (from the Party of Regions) to be re-privatized, as has been noted. That sort of suited things, because the proceeds went into the – Ukrainian budget.
Tymoshenko – well, she has her own set of oligarchs, and she herself is an oligarch.
However, under her, Interior Minister Lutsenko has been allowed to fight corruption on a much larger scale. Recently, an administrative judge named Zvarych was arrested – seems that he came into over $1 million, which he claimed was given to him via the Ukrainian “tradition” of sowing a new office – people come to a newly-opened judge’s office to wish the new incumbent well, and to “sow” money all over the office, as if sowing grain. In typical sovok style, Zvarych is on the lam. (I can post a link, if necessary).
Regardless of her motives, which do indeed fit nicely with possibly eliminating funding for the Party of Regions, it would work out very nicely for Ukraine and its people if RosUkrEnergo were eliminated as intermediary in these gas deals. It would be a huge step forward in elminating the corruption which permeates Ukraine, and which, as Yushchenko himself has noted, is killing the country.
Comment by elmer — January 11, 2009 @ 10:25 am