Setting the record straight on the matter of the gas dispute between Ukraine and Russia

I was surprised by the tone and substance of your editorial titled «Kiev gets a taste of the free market,» published in the Kathimerini English Edition on Tuesday, 3 January. Your editorial presents an extremely biased viewpoint against the Ukrainian government, and ignores several key facts in this dispute. The negotiations between the Ukrainian government and Gazprom over gas prices dates to June 2005. Contrary to your statements that the Ukrainian government is «unwilling to pay for the goods at their real market price,» Ukraine has made a number of offers to the Russian government and Gazprom. The bone of contention is the real market price. While Gazprom is negotiating for a price of $220-$230 per 1,000 cubic meters, this price is far higher than that paid by other gas consumers in the region. Armenia, Georgia and the Baltic States, for example, pay $110 per 1,000 cubic meters, and these countries are all within similar or even further geographic distance of Ukraine. Belarus pays $47 per 1,000 cubic meters, but in this case Gazprom owns the distribution pipelines. Your editorial assumes that $220-$230 per 1,000 cubic meters is a «market price»: In fact, it is the market price per 1,000 cubic meters delivered to Germany, which implies both long-distance transit, pipeline maintenance and transit fees. Different geographical markets have different average prices. By putting the blame solely on the Ukrainian side, your editorial ignores the blatant attempt by the Kremlin to use energy distribution as a means of political control. Ukraine has already rebuffed efforts by Gazprom to buy the pipelines running through Ukrainian territory. Furthermore, you make no mention of the fact that Ukraine has accepted the principle of a price increase, but will not accept an increase of this magnitude within the space of six months. Indeed, it is President Yushchenko’s government that has opened the issue for arbitration by the Stockholm Court of Arbitration: Rather than arbitrate, Gazprom engaged in the politically crude tactic of symbolically reducing gas pressure in a televised broadcast. It is indeed interesting to contrast the stance taken by your publication with that of the International Herald Tribune, which you co-publish, on the same date. At least three major articles («As supplies drop, EU officials appeal to Moscow»; «Putin’s Russia turns trade into a political weapon»; «For Putin and Russia, bad start to a new year») indicate that the responsibility for this situation rests not with some Ukrainian act of piracy or parasitism, but with the Kremlin.  Of course, everyone is entitled to his own opinion. But as a newspaper of your standing, you should present a balanced viewpoint. If you believe that labeling Ukraine «a parasitic economy» or engaging in «international piracy» without a real understanding of the geopolitical and economic issues in the region, don’t be surprised if your more informed readers draw their own negative conclusions about the veracity and objectivity of your newspaper. PHILIP AMMERMAN, Athens. The free market is alive and well in Russia and the Ukraine; that is good news. Neither party in trade is a blackmailer for demanding full value for their product or service. It might seem painful, but it is fair for Russia to regulate the sale of fuel; it owns it. It might seem unfair, but Ukraine may regulate the flow of oil through its pipeline; it owns it. The free market works on supply and demand. If Russia can get a good price for its oil, it will. If Ukraine can get a good price for the use of its pipeline, it should. Either party could quit the business altogether – that is freedom. The market may be very upset. The parties have a lot to gain and a lot to lose; this is the moderator of their market actions. Russia is not being forced to subsidize Ukraine when it uses the pipeline! Russia can ship the oil by truck if it has to. No authority can force Ukraine to manage the movement of Russia’s oil, that is subsidization! The greatest threat to the free market is government regulation of commodities and services. Europe has suffered most under government regulation, not under the principles of free market economy. Don’t attack the free market. JEFFREY P. CLAGETT, Virginia, USA.

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