Inputs Monitor Editor Davis Michaelsen adds his perspective into the happenings of the inputs markets.
Ukraine Juggles Progressive Reforms and Soviet Pride
Nov 01, 2013
Jailed Ukraine former Prime Minister Yulia Tymoshenko lies at a pivotal intersection of Soviet pride and E.U. progressivism. Tymoshenko is currently serving a 7-year jail term for abuse of power, a charge the E.U. would like to see overturned. The implications for the future of the Former Soviet Union and the European Union run deep. At the center, jailed former Ukraine Prime Minister, Yulia Tymoshenko, the peoples' princess.
It all started with natural gas from Russia. Natural gas has been used as a weapon by Russia's Gazprom. In the winters of 2006 and 2009, Gazprom stopped natgas sendouts to Ukraine and parts of Europe. In an effort to keep thermostats running, Tymoshenko penned a 10-year deal with Gazprom that current Ukraine President Viktor Yanukovich says was beyond her authority. But a secured gas contract at an unacceptable price only begins to tell the tale.
Beneath the offtake agreement is a peoples movement which cast Tymoshenko as the symbol of a western awakening in Ukraine dubbed the Orange Revolution. The Orange Revolution called for reforms similar to those which the E.U. now echoes, as Ukraine is groomed for E.U. membership.
At the same time, Russia is pressuring Ukraine to join a customs block of its own placing Ukraine in a delicate position. The western leaning Ukrainian people look to the European Union as the way forward, with Tymoshenko as their champion while President Yanukovich is less willing to divorce from the Soviet bloc.
Eastern Partnership Summit --
The third Eastern Partnership Summit will gather the highest representatives of 28 E.U. member states and the 6 Eastern European partner nations which include Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine. These meetings take place every two years and are intended to bring progress to light and to plan for the coming two years.
Officials will also report on Ukraine's progress toward E.U. compliance as a condition of joining the E.U. First on the list is Tymoshenko. European Union authorities have been very vocal about Tymoshenko's detention and many believe her sentence is intended to keep her out of the public eye, and off ballots into the future. But as is often the case with martyrs, Tymoshenko's popularity, and her ideals with it, have grown since her detention in 2011.
Now authorities are calling for her conditional release to a German hospital for spinal problems she is having. But Yanukovich is reluctant to let her go, perhaps recalling Belarus' seemingly innocent invitation to Uralkali CEO Baumgertner to visit Minsk where he has since been detained and questioned.
As the old-school Soviet Ukraine President Yanukovich surveys the situation, he has to wonder if Tymoshenko would ever come back from a mission of mercy to Germany, and he is probably right to. The last thing Yanukovich needs now is a revived Orange Revolution, inspired by an exiled ex-Prime Minister who certainly would have no problem finding places to hide in Germany -- old scores and whatnot.
Yanukovich's dillema --
Meanwhile, the undercurrents of FSU dissension are not lost on Moscow. Russia is working on its own Customs Union with sympathetic nations in the region -- a union that would be in competition with the European Union in matters including trade.
Ukraine is pulled between the two. President Yanukovich cannot be seen as cow-towing to the people's movement in Russia's eyes, and would lose face by releasing Tymoshenko. Siding with the European Union would be something of a slap in the face to Russia, which provides nearly all of Ukraine's natural gas, and threatens to cut supplies at crucial times.
The other side of the coin is a new societal frontier with the European Union steering reforms in Ukraine -- reforms that start with an end to 'selective justice'. The citizens are largely in favor of joining the European Union and a failure to answer these progressive ideals could lead to another Orange Revolt in Ukraine, and political instability in one of the world's most dedicated nitrogen producers. Another natural gas war there would inflate European, South American and Asian nitrogen prices, and could have the same impact here in the U.S.
The Summit is to be held November 28 & 29 in Lithuania and Ukraine will be called to account for the reforms the E.U. has forwarded as a condition of Ukraine's membership. If Tymoshenko is not freed by then, the E.U. will likely block Ukraine's entrance into the E.U., leaving Ukraine with no choice but to make nice with Russia to save their winter natgas supplies, and keep the heat turned on.
But if Tymoshenko is exonerated for being too big for her britches, Ukrainian President Yanukovich may be seen by FSU hard-liners as an E.U. pariah, dismissing himself and his nation from the good graces of Moscow.
Juggler photo credit: puthoOr photOgraphy / Foter.com / CC BY-NC
Tymoshenko photo credit: Deirdre Boyer / Foter.com / CC BY-NC-ND
Ukranian homes photo credit: Stuck in Customs / Foter.com / CC BY-NC-SA