Ukraine's Yushchenko: Tymoshenko's Russia gas deal betrayed nation

Oil&Gas Materials 10 February 2009 20:36 (UTC +04:00)

Ukrainian President Viktor Yushchenko on Tuesday called his political rival Prime Minister Yulia Tymoshenko a "traitor" for signing a disadvantageous gas import deal with Russia and secretly agreeing to emergency credits from the Kremlin, dpa reported.

"This is nothing less than a betrayal of the national interest," Yushchenko said at a televised national security council meeting.

Tymoshenko flatly denied Yushchenko's claims, calling them "groundless" and "invented."

At issue is a January agreement between Tymoshenko's government and the Russian natural gas monopoly Gazprom setting terms for the fuel's import into Ukraine, and on-shipment into Europe.

Yushchenko accused Tymoshenko of failing to negotiate a sufficiently low price for gas sold to Ukraine, in exchange for a back channel commitment by the Kremlin to give Kiev 5 billion dollars in emergency credits, among other alleged errors.

The Ukrainian president singled out the effect of higher prices for Russian gas agreed to by Tymoshenko as particularly dangerous, arguing Ukraine's government would not be able to pass on the price hikes to consumers, making inevitable the bankruptcy of Ukraine's state-owned energy infrastructure, and its eventual capture by Russian big business.

Tymoshenko and her government agreed to the allegedly ruinous deal, Yushchenko claimed, because of widening deficits in the Ukraine state budget, and a likely cut-off of loans to Ukraine from the International Monetary Fund (IMF), Yushchenko claimed.

Ukraine's parliament, led by Tymoshenko's faction, in December approved a national budget planning substantial deficit spending and increased excise barriers to foreign imports - both direct violations of loan terms set by the IMF. Yushchenko signed the bill, a decision he later described as "a mistake."

Tymoshenko described the accusations by Yushchenko as political grandstanding, counter-factual, and linked to corruption. Cancellation of the gas deal with Russia could lead to a cut-off of gas supplies to Europe similar to the crisis hitting Europe in early January, she said.

"What is happening here is that (Yushchenko and his allies) are attempting to reverse the terms of the gas agreement ... and earn themselves some 4 billion dollars," Tymoshenko said.

A key term of the January agreement between Russia and Ukraine was mutual acknowledgement of Ukrainian title to some 4.4 billion dollars of natural gas held in Ukrainian underground reservoirs, fuel that prior to 2009 had been controlled by a Swiss company owned by Gazprom and a group of Ukrainian private businessmen.

The businessmen's close alliance with Yushchenko, and their desire to retain control of gas owned by the Ukrainian state, lay at the bottom of the Ukrainian President's charges, she claimed.

Yushchenko and Tymoshenko in 2004 were close allies during Ukraine's pro-democracy Orange Revolution, with Yushchenko acting as the titular leader of the protests and Tymoshenko leading crowds with fiery oratory.

Their relations have soured in recent years, with both politicians accusing each other of close links to corrupt commercial tycoons.