Ukraine and Europe: One Step Forward and Half a Step Back

September 30, 2010
James George Jatras

Two recent developments point to Ukraine’s prospects for progress in its relationship with Europe. One, a formal action by Kiev to join the European Energy Community, builds on Ukraine’s opportunities as the chief conduit country between Russia and the European Union (EU). The other, a rogue fuel smuggling operation by Ukrainian military personnel deployed in Kosovo, illustrates the dysfunctional nature of Ukraine’s “cooperation” with NATO.

On September 24 Ukraine’s accession to the Energy Community (EC) was jointly announced by Yuriy Boyko, Ukraine’s Minister of Fuel and Energy, and by representatives of the EC and of the EU, which is a member of the EC along with a number of countries in southeast Europe. Earlier this month, European Commission President José Manuel Barroso discussed reform of Ukraine’s energy sector with President Yanukovich. Hailing what he called Ukraine’s “real” progress, Barroso called for Kiev to “move forward on the implementation of the gas sector reforms” and with modernization of the Ukrainian gas transit network. “Ukraine will remain a key transit country provided long-term and stable transit conditions can be found,” he said, “which reflect the interest of all parties: Ukraine, EU and also Russia.”

Ukraine’s accession to the EC – which still must be ratified by the Verkhovna Rada – came after Kiev’s adoption in July of a new law requiring legal separation (referred to as “unbundling”) of gas transmission (essentially, Russian gas to Europe) from energy production. Europe considers the unbundling essential to its energy security. However, some observers are doubtful, pointing out that Naftogaz already runs different businesses through subsidiaries which are separate legal entities. According to one expert, it remains to be seen “whether those are just empty promises because there are financial, industrial and political groups in Ukraine who oppose this reform.” Also uncertain is the impact of unbundling on Naftogaz-Gazprom join venture discussions.

It is perhaps irrelevant that the EC accession signing took place in Skopje, capital of the Former Yugoslav Republic of Macedonia. (Until now, despite its name, the EC, with its southwest European membership, has been less a “European” energy community than a “Balkan Community.”) But the geography coincidently points to the second, less edifying “Balkan energy” story recently in the news regarding Ukraine.

According to press reports, Ukrainian soldiers deployed with NATO’s mission in the occupied Serbian province of Kosovo and Metohija bought duty-free fuel at the Bulgarian port of Burgas, ostensibly for the contingent’s operational needs. Instead, however, they trucked it into Kosovo – presumably via Skopje – without customs formalities (per NATO’s special status) and sold it through Kosovo ethnic Albanian intermediaries to local petrol stations. The operation reportedly took place with a wink-and-a-nod from (and maybe a cut for?) members of the French contingent, though why they were involved is unclear, given that the Ukrainians are located in the U.S.-led sector. In 2009, some 2.75 million Euros in taxes was lost through the scheme – not big money in international affairs but presumably worth the trouble to those engaged in it. For its part, the NATO mission issued a terse statement: “KFOR condemns all criminal acts and the involved nation has initiated all appropriate measures, including disciplinary and criminal investigations.”

It seems the KFOR command is unaware of the bitter irony of NATO’s posing as a guardian against “criminal acts” in Kosovo. NATO forces are in Kosovo in the first place only because of the illegal aggression against Serbia in 1999 and -- under the nose of NATO forces after the war had ended -- the subsequent eradication of two-thirds of Kosovo’s Orthodox Serb people, and destruction of 150 Orthodox churches and monasteries by the jihad terrorist “Kosovo Liberation Army.” NATO countries, led by the U.S., have spearheaded ongoing efforts to gain the pseudo-state’s international recognition, against the majority of the international community. This majority includes Ukraine, which even under the Yushchenko administration refused to recognize the Albanian separatist entity, whose economy is controlled by Albanian organized crime structures.

All of which raises the question: Why does Ukraine have soldiers in Kosovo as part of KFOR at all? To be sure, now that Kiev wisely has decided, under the Yanukovich administration, that Ukraine will not join NATO, it still maintains good ties with the alliance as part of Partnership for Peace and cooperates in other areas. So far, so good. But that doesn’t mean Ukraine should indiscriminately participate in NATO missions which bring no benefit to Ukraine and implicate Ukraine in the uglier side of an alliance that should have gone out of business when communism collapsed.

To sum up, the Kosovo fuel scandal is a symptom of a residual relationship with a western “partner,” NATO, whose (at best) questionable value to Ukraine even as a non-member should be reevaluated. In sharp contrast, Ukraine’s EC entry is an example of assertive strategy by Kiev in relation to Ukraine’s most important long-term western partner, the EU.