Poroshenko’s press conference, Putin’s address, gas wars, and more: Weekly Update on Ukraine #49, 26 February – 5 March 2018

UCMC turns 4!

In four years the press center of UCMC hosted over 5,300 briefings and roundtables featuring 13,000 speakers. They were attended by 14,000 journalists and resulted in over 12,300 press releases. Over

12,000 domestic and international journalists, politicians and opinion leaders have subscribed to UCMC newsletters. Over 7,500 press-releases have been translated into English, French, German, Italian, Spanish, or Portuguese. Now, UCMC’s international contacts stretch beyond 30 countries. We have assisted over 300 international journalists with their information or logistical requests and organized 9 international press tours for over 50 journalists from 8 countries.

Situation in the combat zone

OSCE. Last week, the OSCE Special Monitoring Mission (SMM) recorded over 8,000 ceasefire violations in eastern Ukraine. Ninety percent of all recorded use of Minsk-proscribed weapons took place in the Popasna-Pervomaisk area. “The worst of the violence was recorded in places where the sides have moved their positions closer to one another,” reported Alexander Hug, Principal Deputy Chief Monitor of the OSCE Special Monitoring Mission to Ukraine, at a press-briefing at Ukraine Crisis Media Center. Last week, the OSCE Special Monitoring Mission observed 52 heavy weapons in violation of withdrawal lines – 46 of them in areas not controlled by the government. SMM unmanned aerial vehicle spotted four multiple launch rocket systems near non-government-controlled Miusynsk, one more – near government-controlled Kostiantynivka.

 President Poroshenko’s press conference: partial answers to inconvenient questions

On February 28, the President of Ukraine Petro Poroshenko held a big press conference. He had not addressed journalists since May 2017, right after the EU introduced the visa-free regime with Ukraine. We herewith present the key questions and answers of the press conference.

 Why the President of a poor country gets richer? Answering the journalist’s question on what it feels like “being an oligarch President in a country where people are struggling to survive in a situation that is close to the humanitarian catastrophe,” the President responded that his “life is not sweet” and suggested that the journalist spent a day with him. “I would like to emphasize that when I was campaigning for the post of the president my assets were much bigger than they are now. I am the only president showing such trend,” Poroshenko said. As you remember, Petro Poroshenko is being criticized for passing his business to the so-called blind trust rather than selling it and thus failing to fulfill his campaign promises.

On relations with the IMF and on the anti-corruption court. The draft law on the Anti-Corruption Court submitted by the President turned to be subject to criticism both on the part of the Ukrainian civil society and the country’s western partners. [Read also: “Simulation or step forward: will there be the Anti-Corruption Court in Ukraine?”] Next tranches of the International Monetary Fund (IMF) depend on whether the law is passed or not. Answering a straightforward question on why the Presidential Administration that was unconditionally following the IMF recommendations in the beginning of the presidential term and is ignoring them now, the President said: “I am not involved in the negotiation process with the IMF. But I do regularly meet our big friends – heads of the IMF and of the World Bank. As the President, I have never allowed anyone to dictate anything to us, neither will I now. It is all subject to a compromise. I would like to emphasize, that it was me to have addressed the Parliament so that the draft law on the Anti-Corruption Court is sent to the Venice Commission. The Parliament may approve any amendments anytime as they will be considering it in the second hearing.”

On Saakashvili. Answering the question on whether the President regrets granting the Ukrainian passport to Mikheil Saakashvili in 2015 or taking it back in 2017, Poroshenko said: “I was trying to create each and every opportunity for him. He used to be the governor of the Odesa region, he was set clear tasks of combatting corruption and reforming the governance. He was given an opportunity to appoint the police head as well as the prosecutor of the Odesa region. No one before him enjoyed such opportunities. The results we all saw – there weren’t any. When I received a report from respective state agencies on the violations during the procedure for granting of the citizenship, I had no other choice but to terminate the citizenship in accordance with the Constitution. The only thing I can emphasize is that the readmission procedure to Poland after the law was violated by Saakashvili and his allies, is legally impeccable,” Poroshenko said.

Deoligarchization, Akhmetov, and Rotterdam+. Responding to the question on deoligarchization, with regard to Rinat Akhmetov in particular, Poroshenko said: “It is for the first time in the history of independent Ukraine, that the oligarchs have no influence upon the president’s decisions. Authorities cannot be fighting particular persons. I am not going to do that either, neither will I support if someone else does this, regardless of who it might be – whether it is Kolomoiskyi, Akhmetov, Firtash or Kurchenko. Where are they all now anyway? Are we witnessing the position of Firtash significantly improved? Did Firtash come to Ukraine? Does Firtash or Kolomoiskyi manage the parliament, president or government? Are there not changes in Ukrnafta (Ukraine’s oil company) or in PrivatBank (nationalized commercial bank)?” Poroshenko said. He did not elaborate on Akhmetov.

Welcome to arms: Putin’s hawkish speech

The President of Russia Vladimir Putin addressed the Federal Council. The address continued for two hours and saw him speaking about pensions, economy and, mostly, the new weapons. The main part of the speech concerned Russia’s armament and its place in the international arena.

The warmonger’s speech. As reported by BBC, this time the address was “unprecedentedly warlike”. The international agenda took a big part of it. Putin was blaming on the US the violation of the anti-aircraft agreement. In a series of videos and animated clips, he also demonstrated the Russian intercontinental ballistic missiles and cruise missiles, as well as other weapons.

Open threats. “The systems that we created, you won’t find anything like this anywhere else in the world. We did not make our plans secret, in order to encourage others to negotiate. But no one actually wanted to talk to us. No one was listening to us. Do listen to us now (…). I hope that everything said today will sober any potential aggressor, while such unfriendly steps towards Russia as the setup of the anti-aircraft defense system, bringing the NATO infrastructure closer to our borders etc. becomes inefficient from the military standpoint, unreasonably costly from the financial standpoint as well as simply meaningless for those who initiate and do this,” the President of the Russian Federation said.

Experts’ reaction. The majority of experts noted that Putin’s rhetoric is suggesting the return of the arms race era. At the same time, the economic weakness of the Russian Federation, the proximity of the pre-election campaigning suggests that Putin’s speech is most likely a bluff largely crafted for the domestic audience, rather than something representing a real danger.

Counter-arguments to the threats of the Russian Federation: Russian assets in the West. Restraining is not only about the nuclear weapons, commented Edward Lucas, Senior Vice President at the Center for European Policy Analysis, as quoted by “The Day” newspaper. “In the West, we have $800 billion worth of Russian assets. Putin will not make a nuclear attack upon his own assets. If he acts badly, we can freeze and take away these ‘financial hostages’”, Edward Lucas said.

The exaggerated technical excellence of the new weapons. Russian historian and expert in religious studies Andrey Zubov is of the opinion that “the Russian missiles rarely start properly and make it to the target on even more rare occasions, even the simple ones. An underdeveloped country is no good when it comes to technical matters.” He thinks there is a huge distance between the threats and the actual actions.

A show for the electorate. “Putin’s words on nuclear weapons demonstrate that he finds himself in a very complicated situation (…). One may recall the involvement in the US elections, the drug smuggling that was recently disclosed internationally, terrorism, the bombardments of Syria, and much more. Ahead of the elections, he had to reclaim his credibility as a strong leader capable of making an impact upon anything in this world. He seeks to rehabilitate himself in the eyes of his potential voters (…). For no, Putin is exaggerating the actual threat of his weapons for the West, and his claims are to target the domestic audience in the first place,” Andrey Zubkov said.

Blackmailing the West. Apart from sending a message to the internal audience, Putin’s speech does intend to blackmail and intimidate the US and Western countries. “Military hysteria is dominating in Russia. The regime tries to convince Russians that they are nearly facing World War III. Sanctions are perceived not as a punishment for Ukraine but as an intent to restrain the rise of Russia,” says historian and journalist Galina Akkerman. “It’s clear that Russia is getting armed to the teeth and thanks to its military advantage wants to become a major actor in the international scene. The operation in Syria actually demonstrated that (…). These claims demonstrate that Russia becomes a more dangerous actor in the international arena. The West is actually being blackmailed,” the historian added.

 Another gas war between Ukraine and the Russian Federation

Last week PJSC “Naftogaz of Ukraine” announced an emergency situation and called upon all Ukrainians to economize gas and have the temperature in their houses decreased. The government announced a five-day plan suggesting the closing down of schools as well as a special gas consumption regime for industrial plants foreseeing the switch to alternative types of fuel. The reason behind these actions is a problem with gas supply from the Russian Federation. However, many Ukrainians were surprised by these reports, as Ukraine was thought to not be buying Russian gas for two years and 98 days, at least not in the direct way (while it does buy the Russian gas from the European Union). The gas consumed by Ukrainians comes from the EU, from the own gas storages as well as from the own extraction. So what happened?

Decrease of pressure in the gas pipeline. Ukraine keeps pumping the gas for the EU through its gas transportation system. Thus, the decrease in pressure also brings down to the minimum the supply volumes for Gazprom’s EU clients. In accordance with the contract, the pressure is supposed to be set at the level of 60-65 kgf/cm2. However, as per “Ukrtrasgaz” (Ukraine’s gas transportation company), in January-February 2018 Gazprom was systematically not complying with the technical standards supplying the gas to the Ukrainian border with the pressure at the level of 51-59 kgf/cm2. Starting from March 1, Gazprom decreased the pressure even further so that it reached its low this year – 50,3 kgf/cm2.

The Stockholm arbitration court’s ruling. On February 28, the Arbitration Institute of the Stockholm Chamber of Commerce ruled that Gazprom has to pay $ 2.56 billion to Naftogaz Ukraine. It was called to put an end to the gas dispute between Ukraine and Russia ongoing from 2014. Secondly, in accordance with the court ruling Ukraine has to restart gas purchase from the Russian monopolist by 2019 whether it wants it or not. The ruling of the Stockholm arbitration court of February 28 sets it mandatory for Naftogaz.

Thus, by the time the contract expires in 2019, Ukraine will be buying from Gazprom between four and five billion cubic meters of gas annually. Ukraine has sent a prepayment for the Russian gas.

What went wrong. On March 1, the Russian side returned the prepayment back and refused to supply the gas to Ukraine. Naftogaz claims that Ukraine was supposed to get 0,5 billion cubic meters of gas from Russia in March. According to the Gazprom’s head Alexey Miller, the company initiates breaking the agreement with Ukraine on the supply and transit of gas.

The solution. An emergency solution was to increase gas imports from the EU. Effective March 3, Ukraine increases the imports of the natural gas from the EU bringing it to 25 million cubic meters daily that will allow to satisfy the country’s needs entirely. “We were supposed to be getting from Gazprom 18 million cubic meters of gas daily. Starting from March 3, we will be getting from the EU 25 million cubic meters of gas per day,” said chief commercial director of PJSC “Naftogaz Ukraine” Yuriy Vitrenko.

The price. According to President Poroshenko, in March Ukraine was supposed to be supplied with natural gas paying $238,55 for 1,000 cubic meters of gas as stipulated by the contract with Gazprom. At the same time, the prices on the spot market at which Ukraine is currently buying gas in the EU range from 250-300 to 500 US dollars. Naftogaz is going to make the Russian company reimburse the price difference as it did not supply gas in time and actually did not live up to its commitments as ruled by the Stockholm court.