The latest on the Ukrainian turmoil

By Aussiegirl

In an excellent analysis, Ander Aslund of the Ukraine Action Report takes apart the latest happenings on the Ukraine/Russia gas agreement and the resulting turmoil in domestic Ukrainian politics -- specifically the political ramifications of the sacking of the government by the Ukrainian parliament called the "Verkhovna Rada".

His conclusions mirror my own suspicions about Yulia Tymoshenko's role in the parliamentary maneuvering, and her possible alliance with communist and pro-Yanukovych forces in order to defeat Yushchenko in the coming elections. We see the dirty hand of Moscow once again meddling in the internal affairs of Ukraine.

The ouster of the Ukrainian government does not mean that the agreementwas bad for Ukraine but that a group of party factions in Ukraine has found it a good excuse to oust the government, and thus weaken it, before the elections.

One of the most important outcomes of this vote might be that Tymoshenko managed to line up with Victor Yanukovich, Victor Medvedchuk and the Communists. A change of political alliances inUkraine might be under way.

To sum up, the key results of the gas agreement appear to be:
1. Rosukrenergo has taken control over more of Gazprom's and Central Asia's gas export. This can only benefit the owners of Rosukrenergo, and to the disadvantage of Gazprom's minority shareholders.

2. Ukraine has got low gas prices, but only for half a year.

3. Gazprom has achieved somewhat higher prices and stabilized its access to the European markets in the long run.

4. Russia has lost the international beauty contest and shaken its credibility in Europe as a reliable energy supplier, tilting the energy debate toward nuclear energy and LNG rather than gas through pipelines.