For Now, In Ukraine, Only Thing Certain Is Uncertainty

October 3, 2007 (RFE/RL) -- Political opponents Viktor Yanukovych and Yulia Tymoshenko barely waited for polling stations to close before each claimed a decisive victory in the September 30 vote. Exit polls appeared to hand the win to Prime Minister Yanukovych's Party of Regions, with 35 percent of the vote. The same polls indicated the Yulia Tymoshenko Bloc (BYuT) would take 31 percent.

Taken individually, however, the results represented a dramatic 10-percent gain for Tymoshenko over the March 2006 vote, whereas Yanukovych's results saw little variation. Tymoshenko had in mind both this and the fact that a partnership with the bloc backed by her erstwhile ally, President Viktor Yushchenko -- the Our-Ukraine-People's Self-Defense bloc (NUNS), which exit polls handed 13 percent in expected votes -- would have given them a majority in the 450-seat Verkhovna Rada and a chance to run the government on their own.

The early stage of the ballot count seemed to bolster Tymoshenko's hopes. The BYuT lead the Party of Regions by several percentage points for most of the tally's first day. Things began to change, however, when the Central Election Commission began to process voter protocols from Yanukovych's traditional strongholds in southern and eastern Ukraine. Slowly but surely, the Party of Regions relegated the Tymoshenko bloc to second place, with an ever-widening margin.

Today, with more than 99 percent of the ballots counted, the Party of Regions tops the election list with 34.27 percent of the vote. BYuT is second with 30.78, and NUNS third with 14.20.

Socialists May Demand Recount

These preliminary results translate into a slim majority of 229 seats for Tymoshenko and Yushchenko's blocs. But this majority is largely contingent on the fate of a fourth group, the Socialist Party -- which, with 2.87 percent of the vote, currently falls short of the 3-percent barrier required to enter parliament. The Socialists have indicated they will demand a recount. If their demands are met, and they ultimately cross the 3 percent hurdle, they will be rewarded with 15 seats and deprive the potential Orange Revolution BYuT-NUNS coalition of their competitive edge.

Were the Socialists to enter parliament, Tymoshenko and Yushchenko would be forced to take a third party into their coalition in order to form a cabinet. The Communists (who have already safely passed the 3 percent hurdle) and the Socialists are unpalatable options for both BYuT and NUNS. The only possible option left is the bloc led by former parliament speaker Volodymyr Lytvyn. The Lytvyn Bloc, which has also cleared the 3 percent threshold, might well play the role of kingmaker with its 20 parliamentary mandates.

The mathematical possibilities don't stop there, however. The former Orange Revolution enemies Yanukovych and Yushchenko could form a coalition, with or without the Socialists in parliament. (Tymoshenko, eyes clearly on the premiership once more, has publicly touted a BYuT-NUNS alliance, but the pro-Yushchenko bloc has been far more circumspect about an Orange reunion.) And a partnership between the Party of Regions, the Communists, the Socialists, and the Lytvyn Bloc would also hand that group the slimmest of majorities.

Considering the mind-boggling odyssey of coalition-building that followed the March 2006 polls in Ukraine, it is entirely reasonable to say all of these postelection scenarios stand an equal chance of coming to fruition. Thus, the real winner of the September 30 elections will become clear only once a new parliamentary majority is formed.

Another Vote Unlikely

The Ukrainian Constitution stipulates that such a majority must be formed within one month of the new legislature's inaugural session. If the deadline passes with no resolution, Yushchenko has the right to dissolve the legislature and call for yet another round of elections. Since the September 30 polls were the third general elections in Ukraine in the past three years, however, another vote seems highly unlikely.

It is anybody's guess when the Central Election Commission will announce its absolutely final election results and give the go-ahead to the new Verkhovna Rada. If the Socialists make good on promises to challenge the election results in court, a counterchallenge by BYuT and NUNS will likely follow. Both Tymoshenko and Yushchenko have branded Socialist leader Oleksandr Moroz a "traitor" to the Orange Revolution, so it's reasonable to assume they will do everything possible to bring about his political demise by stripping him of a decimal point or two in the official vote count.

Gazprom Sends Message To Nascent Ukrainian Parliament

October 3, 2007 (RFE/RL) -- The timing of Gazprom's threat to reduce supplies to Ukraine by the end of October unless outstanding debts are paid is curious, coming as the votes of Ukraine's parliamentary elections are still being counted and with the formation of a new government on the way.

It also sparked fears of a repeat of the January 2006 gas crisis in which the Russian energy giant briefly shut off the flow of gas to Ukraine -- which in turn affected European supplies.

Gazprom and Ukraine quickly sought to assure Europe that such a scenario would not play out again, and reports emerged from Russia today that a deal had already been reached in connection the debt.

However, Ukrainian officials today were still questioning the amount of that debt, estimated by Gazprom to be $1.3 billion, with Finance Minister Mykola Azarov saying that amount must be based on "inaccurate data."

Azarov also strived to downplay the timing of the dispute, saying, "In view of the political situation in Ukraine now, this ordinary statement by an ordinary [Gazprom] official has drawn a lot of attention. If it had been made a month later, nobody would have paid any special attention to it. I stress once again, this issue has nothing to do with the political situation."

Bargaining Position Strengthened

Speaking in August, Fuel and Energy Minister Yuriy Boyko said that Ukraine's bargaining position ahead of negotiations on the price Ukraine will pay Gazprom for supplies in 2008 would be strengthened by the amount of gas held in Ukraine's underground storage facilities -- about half the amount needed for domestic consumption next year.

Boyko said at the time that the underground storage facilities contained 25.5 bcm of gas, of which about 4 bcm is locally produced, and about 8 bcm is gas from RosUkrEnergo. He estimated that the facilities would contain 32 bcm of gas by September 15.

"This means that we are to some extent protected against price fluctuations" Boyko said, going on to say that all of the stored gas would be consumed in Ukraine.

However, most of that gas belongs to RosUkrEnergo, the middleman company in which Gazprom has a controlling stake, and there are no legal restraints forbidding it from exporting its own gas to Europe.

'Difficult' Negotiations

Now that the time to negotiate has arrived, the current price of $130 per 1,000 cubic meters is expected to rise, but ongoing negotiations between Gazprom and Turkmenistan, according to Turkmen President Gurbanguly Berdymukhamedov, are "extremely difficult" and the results are difficult to predict.

Ukraine has relied mainly on Turkmen gas to meet its annual demand of over 70 billion cubic meters.

However, under the January 2006 agreement with Russia, Ukraine was effectively prevented from buying gas directly from Turkmenistan when RosUkrEnergo was given a five-year contract to handle all gas deliveries to Ukraine from Russia and Central Asia. Russia has a 25-year agreement to buy most Turkmen gas production, but Berdymukhamedov has questioned this agreement and is seeking to obtain a better price from buyers as well as find alternative customers.

Speaking at an energy conference in Kyiv in September, Russian Ambassador Viktor Chernomyrdin hinted that there was a political twist to the gas-price issue when he told the conference that the future Ukrainian government would determine the price.

"Unfortunately, Ukraine has lost Turkmenistan," former Ukrainian President Leonid Kuchma told the conference. "The contract on Turkmen gas deliveries to Ukraine expired in 2006, and Ukraine missed the opportunity to sign a new one. Now Ukraine will be buying Turkmen gas via Russia. It does not matter with whom Turkmenistan will be oriented -- with Washington, Brussels or Moscow. It will sell gas at market prices just the same. The time of charity is over."

Critics were quick to point out that Kuchma played a major role in establishing RosUkrEnergo in 2004. Two years later, the enterprise was selling Turkmen gas to Ukraine as "Russian gas."

Who Will Be Prime Minister?

The critical question in the current negotiations is who will be the new Ukrainian prime minister and what Ukraine's position will be on RosUkrEnergo's future role. If Yulia Tymoshenko becomes prime minister, the Russian side believes that she will insist that the company be removed from the agreement and that Naftohaz Ukraine deal directly with Turkmenistan or Gazprom on future gas purchases.

In the event that Viktor Yanukovych remains prime minister, he will most likely instruct his negotiators to maintain RosUkrEnergo as the middleman -- but without Ukrainian businessman Dmytro Firtash and his partner Ivan Fursyn, who control 50 percent of RosUkrEnergo through Centragas. According to sources in the Russian gas industry, Gazprom is upset with Firtash and is seeking to end the relationship with him. These sources also claim that Firtash is responsible for a good part of Ukraine's debt to Gazprom.

Much of the bargaining will need to take into consideration the position of Ukrainian President Viktor Yushchenko. During the 2006 negotiations, Yushchenko instructed Ukraine's energy minister to accept RosUkrEnergo into the settlement, although the Ukrainian security service and Tymoshenko insisted it was "a criminal organization."

In the run-up to Ukraine's September 30 parliamentary elections, Yushchenko was highly critical of RosUkrEnergo and told the press that during his scheduled meetings with Russian President Vladimir Putin he would ask that the company not be part of a future deal. However, Yushchenko's meeting with Putin never materialized, and the Ukrainian president subsequently dropped the issue.