THE EUROPEAN UNION "RESETS" RUSSIAN-UKRAINIAN RELATIONS

Recently, one of the most fashionable and topical subjects in commentaries on world politics has been the issue of the United States' new foreign policy, prospects for rapprochement between Washington and Moscow and how relations in the USA-EU-Russia strategic triangle will be established. The hopes and expectations linked to changes in the foreign policy of the new US administration in the European and post-Soviet directions are so great that the 24 March expanded session of the Russian Security Council, which was chaired by President Dmitriy Medvedev and planned to adopt a strategy of Russia's national security until 2020, decided to postpone the approval of this document. According to some experts and the authors of the draft strategy, Moscow decided to postpone its approval until the meeting between Dmitriy Medvedev and US President Barack Obama in order to formulate new foreign policy tasks for Russia depending on the results of "resetting" its relations with Washington.

In the context of these expectations and possible changes in the policy of leading world centres, the Brussels summit of EU leaders held on 19-20 March gained special importance. Several decisions were adopted, and they are already exerting significant influence on the EU's policy on the newly-independent states in the post-Soviet area, the European and energy policy of these states and their role and status in the geopolitical triangle between the USA, the EU and Russia.

It must be noted that the EU's spring summit focused mainly on the fight against the financial crisis. The leaders of 27 countries who arrived in Brussels on 19 March solved important problems. Specifically, they agreed on ways of spending the anti-crisis budget allocated by the European Union for the settlement of common and private economic problems inside their union. Having approved the main articles of expenses in the next two years, they decided to allocate 75 billion euros for supplementing the assets of the IMF. Secondly, according to Czech Prime Minister Mirek Topolanek, who holds the presidency of the EU, a decision was adopted to expand the budget of urgent assistance to EU countries from the current 25 billion to 50 billion euros.

The second important subject which the EU leaders examined was the Eastern Partnership initiative. The Brussels summit reaffirmed the priority role of this project in Brussels' foreign policy and formally approved the foreign policy initiative of the EU. Moreover, the leaders of the member states in fact completed preparatory procedures for the launch of this new European programme and adopted a special EU declaration on Eastern Partnership as an attachment to the final document of the summit. The most important elements of the declaration are the following.

First, the European Union included Belarus in its Eastern Partnership programme ahead of time, expanding the list of post-Soviet countries within the sphere of its special interests. Initially, it was planned that the programme, which is to be officially launched in Prague on 7 May, would include five post-Soviet republics - Azerbaijan, Armenia, Georgia, Moldova and Ukraine. However, various European officials have repeatedly said in the recent period that Belarus should also be included in Eastern Partnership. In Brussels, the Europeans moved from words to deeds, sending official invitations to all six countries to take part in this programme. However, the issue of inviting Belarusian President Aleksandr Lukashenko to the Prague summit of Eastern Partnership member countries has yet to be solved. Czech Foreign Minister Karel Schwarzenberg explained that this will depend on the "behaviour of the Belarusian government" and Mr Lukashenko himself.

Second, the declaration confirms the main goals and parameters of Eastern Partnership, including support for political and socioeconomic reforms in "eastern partner" countries, the harmonization of their national legislation with EU standards, the creation of an atmosphere of trust and consolidation of relations between "eastern partner" countries with the aim of Brussels' political rapprochement with member states and their economic integration in the EU. The starting level of funding for the programme will be about 600 million euros.

Third, the basis of Eastern Partnership, as is confirmed in its concept, will be formed by principles of common responsibility, differentiated approach to partner countries (taking account of their path in the sphere of European integration, experience and achievements, interest in cooperation with the EU and the implementation of important EU-backed domestic reforms) and conditionality. The latter principle means that the degree of the EU's openness to cooperation with each of the eastern partners will depend on their allegiance to principles of democracy, the supremacy of the law and respect for human rights.

It must be noted that the EU foreign relations commissioner, Benita Ferrero-Waldner, a group of Scandinavian countries and EU old-timers such as Germany, France, the Netherlands, Britain and a number of other countries insisted on this condition. The following is an excerpt from Ferrero-Waldner's statement: "Relations with our 'eastern partners' are a two-way street. They want a free trade zone and more privileged conditions for travelling in Europe. In return, the EU wants the development of reforms in those countries. Agreements on free trade are possible only with countries whose economies are really ready to open for competition. As for the simplification of the visa regime, only the countries that can ensure the reliability of travel documents and the functioning of the border regime and take the necessary measures to solve issues of readmission will get it."

Another important result of the EU summit was the decision of European leaders to allocate 3.75 billion euros for energy projects, among which the construction of the Nabucco gas pipeline was recognized as the largest and priority project. Czech Deputy Prime Minister Vondra said in this regard on 20 March that as a result of the EU summit, disagreements on this project were overcome, and the construction of the European gas pipeline Nabucco was recognized as a priority. According to Vondra, the EU budget has allocated separate funds to finance the project. It must be remembered hat the status of Nabucco was lowered earlier, and its financing was included in the Southern Gas Corridor investment section. "Nabucco is on the list of priority projects," Vondra said after the two-day EU summit in Brussels. He said that this project will be financed separately from the unspent funds of the EU budget. About 200 million euros have been reserved for the implementation of this project. "If we speed up the rhythm of its implementation, it has many chances," the Czech deputy prime minister said.

Initially, it was planned to allocate 250 million euros for the financing of Nabucco. At the end of February, the EU decided to allocate 50 million euros for Nabucco, which is five times lower than the initial sum. On 17 March 2009, the status of the project was lowered, and it was equaled to other energy projects in Southern Europe and included in the Southern Gas Corridor investment section. The lowering of Nabucco's status for political reasons was lobbied by Germany, France and Italy. The most active supporters of the project were countries of Central and Eastern Europe. At the last EU summit in Brussels, its participants managed to come to a single conclusion on the status of the gas pipeline, calling it the first priority.

However, despite such obvious success by supporters of this project, speculations about the viability of this initiative have not come to an end yet. The thing is that the final document of the summit contains no direct mention of Nabucco. Point 24 of the document, which examines issues of energy and climate change, only mentions the need "to complete work by the end of this year on proposals regarding specific actions to develop the southern corridor, including the mechanism of ensuring access to Caspian gas". In other words, the fight inside the EU between its "old-timers" and new members is continuing. The fate of Nabucco will be finally decided at the May summit of member states of the project in Prague where it is planned to sign an intergovernment agreement on its construction.

Nevertheless, the results of the Brussels summit allow us to conclude that Brussels is ready to play a more active role in issues of ensuring the energy security of the EU and its allies and may speak out on this important issue "with one voice". Three days after the summit, on 23 March, Brussels hosted an international donor conference on issues of modernizing the Ukrainian gas transport system. On the basis of its results, the Ukrainian government, the European Commission, the European Bank for Reconstruction and Development, the European Investment Bank and the World Bank signed a joint declaration in the presence of European Commission President Jose Manuel Barroso and Ukrainian President Viktor Yushchenko. According to this document, the Ukrainian government promised:

-To guarantee the independence of the Ukrainian operator of the gas transport system (GTS) in terms of its judiciary and organizational form;

-To ensure the transparency and openness of the borrower responsible for the modernization of the GTS;

-To ensure equal access to networks due to the need for its systemic integrity and improvement and to reflect the real expenses, including the commensurate payback of investments;

-To provide third parties with access to reservoirs in compliance with transparent commercial conditions and under the control of a regulator;

-To develop by the end of 2009 a programme on reforms in the gas sector which will comply with the obligations conforming to the context of the agreement of the EU-Ukraine Association and Ukraine's involvement in the agreement of the energy community.

Moreover, Kiev has asked Brussels to buy all gas on the Russian-Ukrainian border. This aspect is clearly outlined in the preamble to the declaration. In other words, the transit of Russian gas can now be ensured not by Russia and not even by Ukraine, but by the EU which can buy Russian gas on the Russian-Ukrainian border and take care of its delivery.

This declaration immediately caused a big political scandal in Moscow's relations with Kiev and the EU. Russia assessed these agreements as a conspiracy between consumers (EU) and transitters (Ukraine), which they think may destroy the existing system of gas supplies and cause a new gas crisis in Europe. The Foreign Ministry said in its comments on this issue that "the Ukrainian gas transport system through which Russia carries out 80 per cent of its natural gas supplies to Europe is technologically linked with Russia's gas transport system. For this reason, any modernization actions that are not agreed with the Russian side will increase technological risks and cause possible failures in natural gas supplies to Ukraine and Europe." "For this reason, any agreements that do not take account of the mutual dependence of these interests are capable of disrupting energy cooperation and forming divisive lines in this sphere," the commentary said. A member of the Gazprom board, Oleg Aksyutin, even said that any changes in the working regime of the Ukrainian GTS, which are not agreed with his company, will immediately affect not only export contracts, but also the process of extracting Russian and Central Asian gas, which may have unpredictable consequences in the whole Eurasian area.

Indeed, the implementation of the Brussels agreement may become a new basis for the expulsion of the Ukrainian GTS from the Russian system of gas supplies, with which it is completely synchronized (both were established as a single technological complex of gas extraction and transportation in the former USSR) and its stage-by-stage integration into the European energy and gas transit area. For this reason, Moscow's reaction is understandable. The issue of controlling the Ukrainian GTS is a matter of principle for Russia. In recent months, the Kremlin has been hoping to set up an international gas transport consortium which would rent this system.

As a result, the implementation of the Brussels agreements may lead to the significant restriction of Russia's influence on Ukraine both in gas and political issues. Natural gas may no longer be used as a tool of pressure on another country (or an EU country) in order to solve its geopolitical and domestic political problems.

As for relations between Russia and the EU, in its dialogue with the Europeans, Moscow is also ready to take an extremely tough position. Russia's behaviour, if the EU refuses to make concessions, was announced by Prime Minister Vladimir Putin. He said that constant attempts to ignore Russia's interests will force Moscow to change its attitude to all energy projects in the Russian Federation in which European capital is participating. "This concerns coal, atomic energy and electric energy where European companies have made huge investments worth billions of dollars. This also concerns oil and gas extraction and transport," Putin said. In the same context, the prime minister mentioned the purchase of "gas transport equipment worth 26 billion dollars" in Europe. "If Russia's interests are ignored, we will be forced to reconsider the principles of our relations with partners," he threatened.

Thus, the geopolitical struggle for gas is rising to a new and unpredictable level. But what is notable here is that Brussels demonstrated to Moscow and other post-Soviet capitals for the first time in "gas discussions" that it is ready to support its "eastern partners" in ensuring their energy security not only in words, but also in deeds. This point is one of the most important elements of the EU's "eastern policy" and the Eastern Partnership programme. If we take into account that the idea of purchasing Russian gas on the Ukrainian-Russian border was actively lobbied not only by the EU, but also by the US State Department, it is possible that the gas "resetting" of relations between the EU and Russia may have a negative impact on the "resetting" of American-Russian relations.

Meanwhile, it became known at the end of March that the State Oil Company of Azerbaijan and Gazprom have signed in Moscow a memorandum on mutual understanding, according to which the parties agreed to start talks on conditions for the sale of Azerbaijan gas. But this agreement, unlike the Ukrainian-Russian declaration, did not irritate other interested countries. Unlike others, Azerbaijan is the full master of its own gas and gas transport system. Today Baku supplies agreed volumes of gas to European partners, and its cooperation with Moscow in the sphere of supplies does not harm the interests of other countries.