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You're reading: Why is the Yulia Tymoshenko case so important?

first point is that Tymoshenko was not convicted for graft, but for exceeding
her authority in signing the 2009 gas price agreement with Russia. Now that
agreement has been slated as a bad agreement for Ukraine – recently I heard
suggestions that the deal could have cost Ukraine $10-$20 billion in higher
energy import costs. In response I would counter that two years after her
jailing, and despite the weight of the prosecutors’ office focusing on the fine
detail of that agreement, no evidence from what I can make out has been gleaned
of graft related to the 2009 agreement. It may have been a bad agreement, but
likewise the 2006 agreement concluded by the Viktor Yushchenko administration
was equally questionable (perhaps worse) for Ukraine. I think many politicians
in Europe have signed bad agreements – they may even have exceeded their
authority in signing such agreements, indeed I would contend that this may have
been common through the current Eurozone crisis, however I cannot think of any
who have been jailed as a result.                                                                       

the impact and cost of the 2009 agreement?                                      

the claims of losses of $10-$20 billion from 2009 are based on the premise that
Ukraine, pre-agreement, was paying $180 per 1,000 cubic meters for gas, and
subsequently has been paying prices of $300 to more than $450, and on 30
billion cubic meters of annual imports it is easy to get to the $10-$20 billion
price tag. The reality though is that the existing pricing structure, post the
2006 agreement, was unsustainable, in early 2009 Ukraine faced the prospect of
another gas price war with Russia, and Russia wanted a higher price for gas.
The global mood was concern over gas supply/energy security and the assumption
was that gas prices were going higher – the idea of locking in certain supply
(42 billion cubic meters) at that time did not appear that wacky. She could
perhaps have agreed to a lower price, but she would have had to give Russia
something in return – that little something (pipeline control) would probably
have diminished Ukraine’s sovereignty. The plus from the 2009 deal was though
that it set a proper system for ensuring timely payment of gas – until very
recently Ukraine has managed to settle the gas bill on time, and on the 7th of
every month. And the annual gas price supply/crisis, which were a feature of
the post-Soviet space, were largely avoided in the period 2010–2012. I would
also argue that the market pricing of gas, post the 2009 agreement, has
actually been good for Ukraine, as it has broken the dependency on Russia, and
forced more rational use of gas/efficiency gains, and also forced Ukraine to
finally look to energy diversification. Over the longer term this will be good
for Ukraine, and will surely decisively change the energy supply equation in
Ukraine – I would contend that without the 2009 agreement all this would not
have happened, i.e. no gas shale agreements with foreign majors, because  Ukraine would have still been looking to
Russia for cheap gas and bail-outs.                                 

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