After murky gas deal, Ukraine bows to West

Kiev / AFP

The scandal was complex but its outcome potentially simple — Ukraine tried to fiddle with its murky gas sector and upset its EU partners enough to freeze huge sums of financial help.
The fight for control over a profitable company that transports Russia’s blue fuel to Europe also exposes the clan warfare and backstabbing that surrounds Ukrainian President Petro Poroshenko and hampers Kiev’s bid to anchor its ties to the West.
Ukrtransgaz is the money-making branch of the former Soviet republic’s chronically struggling state oil and natural gas company.
It moves about half the gas purchased by Europe from Russia — or nearly one-tenth of the EU states’ needs — and charges Moscow fees that added up to nearly a billion dollars (euros) last year.
There seemed to be few troubles on its horizon until Ukraine’s economy ministry unilaterally decided on September 7 to place the cash cow under its control.
The order sparked an immediate EU outcry because it put both Ukrtransgaz and its parent company in the same ministry’s hands.
This violated the European Union’s “unbundling” rules that are designed to create competition and split up countries’ pipeline networks from their production units.
The timing was especially puzzling because it came just a week before the International Monetary Fund completed a months-long review and granted Ukraine a $1-billion (900-million-euro) loan that had been held up for a year over corruption concerns.
The switch also threatened Poroshenko’s bid to apply for EU membership by 2020 and get a $300-million payment from the European Bank for Reconstruction and Development (EBRD) for future gas
purchases.