Thursday, January 19, 2006

Ukraine's Yushchenko Goes From Hero To Goat

It wasn't too long ago that Ukrainian President Viktor Yushchenko was addressing throngs of adoring followers in downtown Kiev after their 'Orange Revolution' overturned a fixed presidential election that annulled victory for pro-Moscow candidate Viktor Yanukovych and set up a revote won by Yushchenko. Those were heady days back in December 2004. Ukrainians cheered as former president Leonid Kuchma and his corrupt cronies -- among them Yanukovych -- were shown the door and welcomed Yushchenko with his promises to clean up politics -- quite messy in the former Soviet republic -- and reposition the country's compass due West. Russian leader Vladimir Putin didn't like the fact his candidate Yanukovych lost and was nervous about Yushchenko's talk of Ukraine joining the European Union, and even more unthinkable: Ukraine joining NATO. Notions of NATO soldiers and hardware in Ukraine, flush on Russia's borders, spooked Russia's military brass. It was only a question of time before ties between the "brotherly" Slavic nations got heated. Ironically, it was natural gas turning up the temperature. Ukraine balked at Russian gas giant Gazprom's demand to charge Ukraine four times more for gas deliveries. Russia answered by turning off the gas taps on New Year's day, sending a shiver through the rest of Europe which saw their own Russian gas shipments dip. An agreement between Moscow and Kiev was finally cobbled together and Ukraine would pay just double rather than quadruple for Russian gas thanks to cheaper gas from Central Asia being added in to the mix. Both Yushchenko and Putin hailed the agreement, but not the parliament in Ukraine, which accused Ukrainian Prime Minister Yuriy Yekhanov of selling out the country. Last week, the lawmakers voted to boot out Yekhanov and his government, a move Yushchenko rejected as anti-constitutional. Whether it was or not was tough to figure out since Ukraine's legislation is getting a much needed overhaul. Regardless, the once lionized Yushchenko was looking more and more like a fallible politician vulnerable to attack. Ironically, launching some of the sharpest barbs was Julia Tymoshenko, a stylish firebrand and erstwhile Yushchenko ally dubbed the "Joan of Arc" of the Orange Revolution. Tymoshenko was prime minister up till September last year when Yushchenko fired her. Their fallout was reportedly over a decision by Tymoshenko to allow the intelligence services to shed some light on the shady figures behind the company, Rosukrenergo. Tymoshenko is no stranger to the sometimes dirty gas business, having been the president of United Energy Systems of Ukraine, a privately owned company which became the main importer of Russian natural gas in 1996. During that time, Tymoshenko earned the sobriquet, the "gas princess," after charges she reaped huge profits illegally selling abroad siphoned off Russian gas. But her probe into Rosukrenegro reportedly got too close to exposing ties between the company and Putin. Eager to avoid angering the Russian bear, Yushchenko unceremoniously sacked her. Interestingly, the shady Rosukrenegro is integral to the recent deal brokered between Kiev and Moscow. Under its terms, Gazprom sells gas at $230 to Rusukrenegro. Ukraine buys the gas at about $95, the price slashed due to cheaper gas added to the batch from central Asian states including Turkmenistan, Kazakhstan and Uzbekistan. Confusing? Absolutely. So is who exactly owns Rosukrenegro. Gazprom's banking unit owns about half, while the other is in the hands of unknown owners represented by an Austrian bank, Raiffeisenbank. The shadiness of the deal has further disillusioned Ukrainians, already losing patience with Yushchenko's failure to change their lives for the better. And with parliamentary elections coming in March, if not sooner, Yushchenko's enemies are exploiting the gas imbroglio to the max for political gain, including Yanukovych and Tymoshenko who expect to make inroads at Yushchenko's expense. Yushchenko has been wobbled by the crisis but he is still standing. Whether the upcoming election will deliver a knockout blow is unclear.

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