Wu Wei

Ukraine's anocracy

I'm in the middle of reading Steven Pinker's The Better Angels of our Nature.  It's a big book and I stop and start. But today's reading seemed rather appropriate (though it's mostly quotes from other people).  In the chapter, the New Peace, he is looking at why since the 90s, there have been so few wars and so few killed (OK it's a controversial book, with a lot of statistics).  

His major argument is that democracy inhibits war (well, you can argue, but I won't here). So a little democracy must be better than none, ie autocracy?  These semi-democratic administrations  or crappy governments, (the term he prefers to anocracies) don't do anything well. Unlike autocratic states they don't intimidate their populations into quiescence, but nor do they have more-or-less fair systems of law enforcement of a decent democracy.  They retain the kleptocratic habits of autocracies, from which they evolved, doling out tax revenues and patronage jobs to their clansmen, who then extort bribes for police protection, favourable verdicts in court, or access to the endless permits needed to get anything done. When governments are periodically up for control in a "democratic" election, the stakes are very high. Clans, tribes and ethnic groups try to intimidate each other away from the ballot box and then fight to overturn a result they don't like.  

Pinker quotes the "Global Report on Conflict, Governance and State Fragility" as saying that anocracies are "about six times more likely than democracies and two and one-half times as likely as autocracies to experience new outbreaks of societal wars" such as ethnic civil wars, revolutionary wars and coups d'etat.

So far so bad for Ukraine as it tries to improve its democratic system!    A further Pinker quote is from Mueller's The Remnants of War:  "new wars" are more nearly opportunistic predation by packs of criminals, bandits and thugs, applying ethnic, nationalist rhetoric.  The damage can be extensive particularly to the citizens who are their chief prey, since the gangs are just drunken hooligans.

Some of the so-called self-defence bands being formed in Eastern Ukraine sound pretty much like they have swallowed Putin's anti-Nazi and anti-fascist "defenders of Russia"  rhetoric but in fact are just gangs of titushki, being used by the Party of Regions to intimidate people.   

Let's hope the real democrats are tough enough to cope. And that the EU manages to provide help in more ways than just finance with conditions.  (more on that later I think).

I wrote this yesterday.  A bit worrying that already an unidentified armed paramilitary group is operating openly in the Crimea.  

Ukraine's constitution

So Ukraine is back to the 2004 Constitution and the Prime Minister will have more power?  

But Parliament won't be re-elected till 2017.  So Ukrainians have to depend on these very biddable MPs who are suddenly all for democracy whereas before they were for the Party of the Regions?  And judging from their appearance on TV recently, they seem little better than titushki, with their scruffy clothes and brawling habits.  Someone should tell them to watch Parliamentary debates elsewhere and learn something.  Surely they could at least spend part of their bribes on a decent suit to wear?  

Is the 2004 Constitution such a bargain?  The President can no longer choose or dismiss the Prime Minister, but he still has considerable powers.  A useful one is the right to dissolve Parliament and presumably call new elections, according to the Handbook of Political Change in Eastern Europe 2013 (via Wikipedia).  I guess the new President could do that after May.

Does any of this matter while there is no conflict of interest being a lawmaker and a "biznesmen"? In any case, it is still the oligarchs who decide things behind the scenes. They are marginally in favour of being big fishes in the small(ish) pool of Ukraine compared with small fish in an enlarged Russia. They are marginally in favour of property rights now they have got something themselves to protect.  Yanukovych was however just the most brutish of the lot.  So the oligarchs will still be ruling how the lawmakers will vote, and probably even now the current lawmakers are going to the highest bidder, after their sudden flush of conscience about the killings of protestors. 

Would a fresh election for Parliament a good idea?  If a clean sweep is needed of all the old lawmakers (an oxymoron in Ukraine where there is no rule of law), where will the new ones come from?  I guess since no one has much experience of operating a Parliament properly, let alone governing the country democratically, there is not much institutional memory lost in a clean sweep. But we are talking about a major behaviour change here, not just a change of personalities. 

A long way to go before Maidan gets the Parliament it deserves.

 

 

 

Is election fever worse than swine flu?

It seems the politicians in Ukraine are using swine flu as just another issue for electioneering. 

Yushchenko seems to have caught it particularly badly see here and here and here he is even suggesting Ukraine has its own hybrid version of swine flu. 

Levko is pointing out that the Brits seem to have about the right level of calmness about the fact that most cases are occuring in Britain, but those who are dying are vulnerable from something else as well.

You should know that doctors in the UK now advise only to take Tamiflu if you have bad flu. People who took it said that the side effects (nightmares and vomiting) are worse than ordinary flu.  Of course this could just be a plot by the NHS to save money. 

Makes you wonder what happened to the years of testing drugs before they are safe for humans.  I don't suppose they tested Tamiflu on swine first did they?  

It's actually quite hard to get hold of Tamiflu, because the doctors tell you to stay at home and you have to use the internet or telephone to obtain permission both to register for Tamiflu and to collect it from a central polnt.  Or to get someone else to do it for you. 

When I rang from Georgia to find out what to do for my daughter, who had read the website and was convinced she had got swine flu,  our doctor's receptionist replied (in a rather Soviet way), "that's nothing to do with us here".  "And this is a butcher's, not a doctor's?" I was tempted to reply.

Faced with reports from one of her friends about the side effects, Bee recovered rather quickly.

The truth about Ukrainian men

In Kyivpost here, Alina Rudya regrets what she calls “Slavic man syndrome.”

This is what happens to a man in his 30s when he doesn't engage in sports very much, when he drinks and smokes heavily, and when he eats a lot of unhealthy food. It appears that 80 percent of Ukrainian men have this syndrome.

It also gets worse when a man is married. He stops thinking about his looks and health altogether, it seems, and at the crucial age of 40 he turns into a balding, beer-bellied unattractive creature with yellow teeth and bad breath. My father was not like that. You are probably not like that either. But I am not writing about you, remember, so don't be offended. Nevertheless, I didn't invent this term. Moreover, I've noticed a tendency among my 20-something male friends to get this syndrome.

The reason men develop this syndrome is obvious. For every 10 girls, there are only nine guys in Ukraine. So, no matter how bad you look, you still have a chance to find a girl. This is why you can see so many cute girls with not-so-attractive guys on the streets. And since some girls are not satisfied with this deal, they go looking for a husband or a boyfriend from somewhere like New Zealand, where there are 10 guys for nine girls. But that's a different story.

Some might say that leading a healthy way of life requires a decent amount of money, which some men don't have. But please, quitting smoking and drinking and starting to jog every morning doesn't cost money – it saves money.

My observation is that most Ukrainian men think that a guy has to look just a bit better than a gorilla, an attitude that sets them apart from most European guys I've met. I also think many Ukrainian men tend to be a bit homophobic, so caring too much about one's appearance is considered too gay.

Some guys don't even take a shower more than once a week, let alone get manicures or shave their armpits. If you don't believe me, walk into a stuffed metro car during rush hour in the middle of summer. The smell is so bad that sometimes it feels as if you're under a chemical attack.  more....

However the headline is: People of Ukraine: Part 1 – Men.  So presumably Part 2 - will give men their revenge.

A good sales pitch from Ukraine

Kyivpost today recommends in its editorial:

Investing in Ukraine's gas pipeline is the best and cheapest option for Europe to secure Russian gas supplies

The January natural gas war between Ukraine and Russia was a badly needed wake-up call for European Union bureaucrats who have dragged their feet on energy diversification and who have long been wimpy with Russia.

The cutoff of natural gas supplies revealed how deeply dependent both Ukraine and Europe have become on a nation whose leaders are keen to use energy as a geopolitical tool of influence and blackmail. One of Russia's aims was to smear Ukraine, undermining its reputation in Europe as a functioning democracy and as a reliable transit route for Russian gas to Europe.

The Russians also hoped to build support for costly alternative pipeline projects bypassing Ukraine. But that's a tough sell.

Kremlin leaders are finding it hard to finance the $20 billion Nord Stream project across the Baltic Sea, and for good reason. It's a very expensive way to pump 30-55 billion cubic meters of gas.

Another Kremlin favorite is the $20 billion South Stream, which would go through the Black Sea into Bulgaria, also an expensive way to move 30 billion cubic meters of gas.

A third option to bypass Ukraine, touted mainly in the West, is the $13 billion Nabucco gas pipeline. But that's a stiff price tag to move 30 billion cubic meters.

But the better and cheaper option would be to invest up to $3 billion or so in strengthening Ukraine's pipeline system, which already pumps a whopping 120 billion cubic meters of gas each year. The nation's network could pump more, and do so more efficiently, with needed upgrades.

While Russian bad behavior has shown that Europe and everyone else should explore other energy options, Europeans should also back a consortium that would invest into Ukraine's state-owned pipeline. Ukrainian leaders should embrace this option as well. It would bolter the nation's free-market credentials and its economic importance. Europeans would then be deeply involved in the gas issue all the way to the Russian border. Ukraine's gas pipeline might also be a key to opening the door to future membership in the European Union.
In the next five to seven years, Ukraine's vast pipelines will remain dominant, yet vulnerable. Still, the existing network remains the best and cheapest way to pump Russian gas to Europe.

I can't vouch for the numbers, but the argument seems clear.  Though it's only a newspaper that is talking, not the government. 

But on what terms will this be offered? Will the EU (or the corporation it says it will set up for pipelines) enter into  a bidding war with Gazprom for use (and modernisation) of the Ukrainian network, or will it be outright privatisation? If so, given the current legislation in Ukraine preventing the gas transmission system's  privatisation or use through concessions (or other ways) we can predict some tough battles ahead, on the usual lines in the government.

And a bidding war under the current financial crisis will be interesting.  Does anyone have any money to bid?  And can Russia afford to lose?

Still Ukraine stands to gain if it can get the network modernised free and still retain ownership.  We live in interesting times. 

   

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The EU Neighbour "Reality" Problem (with afterthought)

Much has been written  about the "Eastern European Mentality" and its problems.  As I made clear  here, it's not a phrase I like, and mentality problems exist elsewhere as well.  It's a rather dated phrase now, since 2004 when the new Member States joined the EU.

Nevertheless I noticed that a new phrase is creeping into discussions in countries now designated as the European Neighbourhood, a phrase trying hard to compete with Russia's "the Near Abroad", though it extends rather further.

This lunchtime I had an interesting discussion with a colleague working in the Ministry of Finance in Georgia.  Since in my project I have nothing to do with ministries (the first time in 15 years) I was interested to see how Georgia compares.  Badly, they said, "all this talk about how measures which are absolutely standard in the EU will not work at all in the "Georgian reality"".  And no progress in concrete work to join the EU.  Just like Ukraine, I said, in 1994-7 and I found no better in 2007. 

Just what is this "reality".  First of all, it is not an objective analysis of the country, its problems and  what needs to change.  If it were, discussions on how to implement EU measures could continue.  After all, EU Directives are implemented in 27 different ways, so at least one of them should be suitable for Ukraine and maybe another for Georgia.  There are plenty to choose from, after all, and all the new Member States managed to find one suitable to their reality.

What it is, is a set of values and perceptions about "reality" in the country.  These values and perceptions are deemed to be shared by everyone, (or at least those without any political power) and the belief exists that these values and perceptions keep everyone in a straightjacket, making change impossible and thus avoiding any personal responsibility for change.

Secondly, it assumes that foreigners must "adapt to the Ukrainian (or Georgian) reality". In practice, this means they should recognise that nothing in Ukraine or Georgia can change, or at the very least, the EU must change itself to recognise what little can be done.  At this point (especially after working for 15 years on this sort of thing) one tends to ask "hello, who was it wanted to join the EU?  This is what you have to do, this is what everyone else has done, now get on with it. You don't want to join the EU after all?  It's your choice."

The EU does not always send this message clearly enough.  I speak from experience in working on oil stocks in Ukraine, where the Ukrainian "reality" apparently required to set up an agency for oil stocks first,  then worry about what it would do later (legislation, finance, ownership of the stocks even, don't they come in somewhere first? No, that's too difficult, let's just pretend it is in place and do it later, when people understand that). 

So it was interesting to see the phrase appearing in an excellent article entitled "Where East Meets West: European Gas and Ukrainian Reality" by Edward Chow and Jonathan Elkind, published by the Center for Strategic and International Studies in the The Washington Quarterly, hat tip to the EU Energy Policy Blog, a new blog for me. 

In this article, you can find what seems to me, a fair description of the Ukrainian reality, without any quotation marks, and what needs to be done in the energy sector.  It needed to be done 15 years ago, not much has changed.  And EU entry has got more complex and more demanding in the meantime.  There is no way it will get simplified to meet the Ukrainian or the Georgian "realities". 

More discussion in the next post.

Afterthought:

There must be countries where officials are so fed up with the current mess, that they could just say "we really want to join the EU, now tell us what to do and help us do it".  But this approach always founders when it comes to confronting the quite difficult decisions about change management at the political level.  Change management isn't something that ex-communist countries had any experience of, in the past.  And change is painful and difficult at the time, witness the Thatcher years in the UK. Change can't start till it's agreed there are problems and they must be solved not hidden.  That consensus doesn't seem to have evolved yet in some countries, more's the pity.

Failure of gas to Europe due to "Act of God" according to Gazprom

It seems that Russia does not accept any responsibility for its failure to supply gas  to Europe.

Mr Makis Papageorgiou CEO  said that DEPA (the Greek Gas Company) had received a letter from Gazprom which described the current situation as an Act of God, which gave the impression that Russia was not intending to compensate the company for the gas shortages.  Calling it an Act of God enables Russia claim that it is necessary to deal with the problem under the provisions of "Force Majeure" in the contract, and which mean it is harder to extract penalties for failure to deliver.  Force Majeure includes floods and other natural disasters as Acts of God but also covers outbreaks of war, riots etc. 

Of course it might be dangerous to identify this as an outbreak of war when it comes to legal niceties (though both sides in the dispute are happy to use this term as far as publicity is concerned).  Hence the resort to calling on God for someone to blame.

Despite the fact the Greeks and Russians share an Orthodox God, they also share a belief in capitalism, as shown by DEPA's  intention,  to sue in line with their contract with Gazprom.  It seems according to the contract, the Russian company should pay for its failure to supply the required volumes of natural gas, adding that DEPA could take legal action once supplies resume. He said that the compensation could amount to some EUR 1 billion.

And that's only Greece.  A few other countries might be queuing up to sue..... once the gas is flowing again. 

Information from Energy Tribune here

Is anyone keeping a list of the European countries who are seeking compensation from Gazprom? Current liabilities should be a large item in the accounts, if they are ever published.

German/Russian Consortium in charge of Ukraine's gas transmission system?

Why would anyone buy that idea, with Gazprom involved, especially with them holding a majority stake? How would German part involvement help? They are hardly those most affected.

Putin seems to be pushing this idea quite hard, (www.premier.gov.ru, January 8; Interfax, January 7, 8, 11; German ARD TV, January 11; Nezavisimaya Gazeta, January 13) but what do Europeans gain?  It's not Ukraine that is unreliable, but Russia and its political manipulation of Gazprom in a commercial dispute.

In fact the only reliable thing about Gazprom and Russia at the moment is their ability to predict a cold winter and engineer a gas dispute with Ukraine to coincide.

The answer may be to change the operation (but not necessarily the ownership) of Ukraine's gas transmission system, to make it more transparent and subject to European gas legislation, but that would only happen without the involvement of Gazprom.

Humanitarian gas deliveries from Russia?

Jonathan Stern has proposed the resumption of Russian gas deliveries to Central and Eastern European countries on humanitarian grounds.  You can find his proposal here.

He also makes it clear what the technical problems are at the moment.  The Ukrainians have to have gas to repressurise the network and the fuel to run the compressor stations.  Gazprom is unwilling to release this gas without immediate payment and without assurances that it will not be used for Ukrainian consumers.  Clearly this is where Putin thinks that Ukraine is "stealing" gas.  In fact, Gazprom pays a transit fee so that the gas gets moved on its way to Europe. 

You would think that proper agreements for operating the network would be included in the transit fee (which is not just a cash payment for opening the taps), and thus not a subject of the current dispute.  Yet more arguments for transparent and regulated agreements for gas in Ukrainian.

Recently I was offered a job in the Ukrainian energy regulator working on advising about gas tariffs.  Would have been interesting, but in the current climate of weak government, constant gas disputes with Russia and non-transparent energy sector, it seemed like a task for Sisyphus.

Gazprom continues to shoot itself in the foot:

Ukraine imports in 2008                              48bcm (billion cubic meters)
Ukraine paid in 2008                                  $8.6 billion
Increase in gas price demanded by Gazprom  $3.4 billion
Ukraine offers                                            from $1 billion to $2.7 billion more

EU imports                                                130 bcm
EU pays                                                    $60 billion

Gazprom's loss in 9 days non-supply             $1.1billion

Figures from Wall Street Journal here.

How can anyone pretend this is a commercial dispute?  They would have settled long ago if that were the case.
 

Terms of Reference for gas monitoring (and who buys the network?)

Abdymok provides a copy of the Terms of Reference for the Joint Ukrainian/Russian and EU Monitors here (letter with signatures) and here (actual text).

The letter says that the terms of reference are "for resuming the natural gas deliveries from the Russian Federation through Ukraine to the European Union".

It seems that apart from a start date (from immediate effect) there is no finish date.  Evidently nobody thought this would drag on and as soon as the monitors began monitoring everything would become clear and gas would flow.

Not so, as it turns out.  So how long will the monitors stay there?  It doesn't say.  Their costs are paid for by the countries sending them.  The Terms of Reference guarantee the right of access on the territory of Russia and Ukraine to the metering stations, and the right of access to data. 

How long will this go on? Will it become an annual event?  If the Ukrainian gas network gets sold to the Russians will it still stand, when the next dispute come up? 

Is this really a way to ensure security of gas supply to the EU? 

Now the EU is telling EU gas companies to sue Russia.  It will be an interesting question to see in which jurisdiction they need to sue.  With both Russia and Ukraine strapped for cash, will this help?  Or will EU companies accept the Ukrainian gas network as compensation?  Now that would really put the cat among the pigeons. 

But it might be a reasonable solution for the EU. Then Russia and Ukraine could have their annual battle about prices and the EU could share the gas as necessary.