Voices from Russia

Sunday, 29 October 2017

Steinmeier vs Klimkin: Why Kiev Will No Longer Receive Money From the West


In recent days, there have been three different, but significant and interrelated events. German Federal President (former Foreign Minister) Frank-Walter Steinmeier made a working visit to Moscow. The Ukrainian Minister of Foreign Affairs, Pavel Klimkin, paid a similar visit to Berlin. The head of the board of Naftogaz Ukrainy Andrei Kobolev said that, according to Kiev, the first stage of the Turkish Stream will be operational by 2018, after which the Ukraine will lose a minimum of 500 million USD (29 billion Roubles. 3.32 billion Renminbi. 32.44 billion INR. 640 million CAD. 650 million AUD. 430 million Euros. 380 million UK Pounds) in annual transit fees. This is about a quarter to a fifth of the total amount of 2-2.5 billion dollars (116-145 billion Roubles. 13.28-16.6 billion Renminbi. 129.76-162.2 billion INR. 2.56-3.2 billion CAD. 2.6-3.25 billion AUD. 1.72-2.15 billion Euros. 1.52-1.9 billion UK Pounds) that Kiev still earns on the transit of Russian gas to the EU. Kobolev was also concerned that if the second stage of Turkish Stream enters into operation, and it should by the end of 2019, then the total losses of the Ukrainian budget will amount to 1 billion USD (58 billion Roubles. 6.64 billion Renminbi. 64.88 billion INR. 1.28 billion CAD. 1.3 billion AUD. 860 million Euros. 760 million UK Pounds), and the annual earnings will drop to 1-1.5 billion USD (58-87 billion Roubles. 6.64-9.96 billion Renminbi. 64.88-97.32 billion INR. 1.28-1.92 billion CAD. 1.3-1.95 billion AUD. 860 million-1.29 billion Euros. 760 million-1.14 billion UK Pounds). However, Kobolev didn’t say a word about the Nord Stream-2. Nevertheless, in the last two years, Kiev has focused its main attention on it, and disrupting this project has become almost a Ukrainian national ideal.

In an attempt to persuade Germany to abandon the project, Kiev enlisted the support of Poland, the Baltic states and, most importantly, the USA. Washington actively pressured its German partners, even threatening the companies involved in financing the project with sanctions. America had a double interest. Firstly, it was necessary to save at least partial funding for its Ukrainian project, which was dying from lack of money, at the expense of Russia. The payment for gas transit isn’t the only reliable source of foreign exchange earnings in the Ukrainian budget. Besides that, there are remittances from Ukrainians working abroad, but their volume is more difficult to plan, and the people really don’t want to share their foreign exchange with the state. Secondly, the USA hoped that faced with inevitable problems from the Ukrainians (the usual theft of gas in winter, the deterioration of the Ukrainian gas transportation system, as well as serious political risks) and without alternative ways of delivering gas to the EU, Gazprom would lose part of its European market. The resulting vacuum would allow the Americans to offer more-expensive but politically-correct North American gas as a replacement.

The final success of the fighters against Nord Stream-2 was Denmark’s passing of a law to block the construction of a gas pipeline in its waters. This can’t stop the project; it only creates some additional (but surmountable) difficulties. We can say that the Danish incident was a consolation prize for those who lost the fight for blocking Nord Stream-2. They didn’t achieve their goal but received some moral satisfaction. Since Nord Stream 2 should be operational in 2019, Berlin had a need to inform its Kiev clients about the fundamentally changing geopolitical situation. Starting in 2020, Germany won’t have to deal with the Ukraine as an indispensable partner. Yet, it was also necessary to save face and demonstrate that “support for the reform policy” allegedly pursued by Kiev is still relevant, and show that Germany hasn’t changed its position on the Crimea and the Donbass, despite their wholehearted participation in Russian gas pipeline projects that bypass the Ukraine.

To this end, the Germans simply summoned Klimkin to Berlin, where, according to the Ukrainian Ministry of Foreign Affairs, he held meetings with politicians representing the ruling coalition, discussing with them the problems of the settlement in the Donbass, the implementation of the Minsk agreements, the Crimea, and further extending reforms. They issued no joint statements and signed no documents. That is, the usual briefing of an official representing a client-state took place. If you translate the double-talk of the foreign press release into normal language, you’ll surmise the contents of the briefing. Berlin informed Klimkin that the Ukraine would have to carry out its “reform policy” at its own expense. The West not only won’t extend any more credits, it’ll end payment for gas transit to the Ukraine in the next two years. They’ve resolved everything involved with Nord Stream-2, so Kiev had better not cause trouble for Berlin.

As a consolation prize, Berlin guaranteed its unchanged position on not recognising the accession of the Crimea to the Russian Federation (which in reality doesn’t give anything to Kiev, for Siemens turbines will still go to the peninsula) and on the Donbass. As a result, Berlin would continue to insist on the preservation of anti-Russian sanctions. However, this is only moral satisfaction for Kiev. Note that the sanctions don’t oppress Russia at all, but only encourage the import substitution policy. Moscow derives more benefits than it does costs from the sanctions restrictions. On the other hand, the EU has costs and no positives. Finally, the annual extension of anti-Russian sanctions requires the consensus of all EU members. It’s enough for one member-state to oppose them (those who oppose them have been around for a long time) and the sanctions will simply lapse, as has already happened with the restriction of the rights of the Russian delegation to the PACE. Until now, Berlin has successfully suppressed such dissent in the EU. However, over the long haul, it can simply “fail” to convince its junior partners in the EU, without violating commitments made to the Ukraine, whilst strictly adhering to the advocacy of sanctions.

In this respect, Steinmeier’s visit to Moscow is symbolic. On the one hand, the Federal President is a purely decorative office in the German political system, a sinecure for honoured political retirees. On the other, Steinmeier suddenly told the press that he intends during his meeting with President Putin not to limit himself to a formal ceremonial conversation, but to focus on the German position about the Crimea, the Donbass, and sanctions. One could assume that the German President, who, by the way, is the last active politician of those who acted as guarantors of the agreement between Yanukovich and the opposition that opened the door to the February 2014 coup in Kiev, was once again trying to probe Putin’s position to see whether his position has softened. However, German politicians of all levels, including the Bundeskanzlerin, have done this so many times that no one has any such hopes. At the same time, against the backdrop of Steinmeier’s formally rigid statements, the German press wrote effusively about how he loves Russia and how he wishes to restore normal relations. This is a perfectly obvious hint that it isn’t important what he specifically said says about Berlin’s commitment to supporting the Ukraine, but what he says to whom, how he says it, and in what context.

Steinmeier, speaking of his commitment to sanctions, always emphasised that he stated his personal position, but the German government determined German foreign policy. All this took place against the background of Berlin’s continuing commitment to the completion of Nord Stream-2. Well, the general warm background of the German press hinted that it wasn’t necessary to take too much stock in the repetition of old shop-worn clichés. In principle, cooperation is developing, this is the main thing, but Germany has to observe certain forms. Judging from the despair of Andrei Kobolev, who preferred to remain silent about the Nord Stream-2, expressing timid hope with regard to Turkish Stream, that maybe at least the second stage won’t be in operation soon, everyone in Kiev understands the truth. The West will continue to mouth the same shibboleths for a while until it finds an excuse to nullify its obligations. However, there’ll be no more money. Absolutely none.

28 October 2017

Rostislav Ishchenko

RIA Novosti



Create a free website or blog at WordPress.com.

%d bloggers like this: