Marchuk pinpoints national security concerns (08/13/00)

Marchuk pinpoints national security concerns

Interfax on July 26 published an exclusive interview with Yevhen Marchuk, secretary of Ukraine's National Security and Defense Council. Below are excerpts from that interview as released by RFE/RL.

Q: What in your opinion are today's threats to Ukraine's national security?

A: I would prefer to speak not about threats to Ukraine's national security, but about negative and dangerous factors that show either growing or falling trends. As regards the trends that are developing outside Ukraine and pertain to our country, there is the complex problem of debts, which shows a very unfavorable tendency.

Only a few months had passed since Ukraine's restructuring of its foreign debt to European creditors when the country fell $711 million into debt to Russia for siphoning off [Russian transit] gas. From the viewpoint of Ukraine's partners this means that we are incapable of rationally managing [our economy]. As a result, the country's image has suffered, important investments have been blocked, work with international financial structures has become more difficult. All this has delivered a palpable blow to the economic situation within the country. ...

However, the most important aspect of this debt problem is that we provide Russia with a mechanism for exerting influence or even pressure on Ukraine. Everybody knows that relations between Ukraine and Russia are not developing in a simple way. But quite often it is we who provide Russia with opportunities to use such unpleasant forms of influence on Ukraine as Russia's appeals to the International Monetary Fund, the World Bank and other organizations. As far as I know, the Russian side has prepared such appeals. One would wonder if Russia had failed to do that. ...

One more consequence of the debt problem and the siphoning off of gas are statements by Russian commercial structures about the construction of gas pipelines to bypass Ukraine, as well as a gas pipeline in the direction of Novorossiisk. This is a very negative circumstance for us. It will be necessary to make enormous efforts to stop this tendency. True, there are no reasons to expect that this can be done in a short time, given the increasing ruthlessness of Ukrainian-Russian economic relations.

Q: Can Ukraine influence this process, and what will Ukraine have to sacrifice to that end?

A: I would not call it sacrifice, even though the Russian side does not conceal that it wants Ukraine to repay its debts, including with property. Of course, this is a very bad situation for us, but I would not make a tragedy out of it.

I think that it is a quite acceptable mechanism for Ukraine when one-third of the property of the gas and oil transporting system is given in the form of shares to a Russian partner as debt repayment, one-third is sold to a European partner, and one-third is left in Ukraine's hands. At first glance, the idea may sound offensive. But what is better: to give Russia a 30 percent stake in [Ukraine's] refineries as well as gas and oil transporting system, ensure the viability of this system and obtain profits from this deal - or "to fight to the bitter end" and subsequently show vacated [gas and oil industry] facilities to tourists? One should not be afraid of drawing Russia into this privatization sphere. This, of course, is only a working idea. One needs to consider all this very thoroughly and estimate [profits] for the future. ...

Q: Speaking about Russia's increasing influence on Ukraine, you mentioned the possibility of exerting counterinfluence. Does Ukraine possess some real mechanisms to influence Russia?

A: Of course it does. They are not simple, [I would even say they are] very complicated, but feasible. I mean tariffs for transporting Russian gas and oil via Ukraine to Europe. These tariffs are old and very low. This is a very painful problem for Russia, since we have in mind enormous volumes of raw materials that are shipped via Ukraine. The other, but no less complicated problem is [Ukraine's] share in the property of the former USSR. Ukraine's Parliament has recently held hearings on this issue, and it has been met with a very nervous reaction from the Russian side. This topic has not yet been exhausted. Today Russia receives very considerable dividends from what belonged to the USSR and should have been divided fairly, whereas Ukraine receives nothing. ...

Q: Energy resources, as earlier, remain one of Ukraine's most acute internal problems. The opinion that the situation in the fuel and energy sector is Ukraine's national security issue has become commonplace. What is your assessment of today's situation in this sphere, and what are your prognoses for the future?

A: ... Today we see illusory improvements in the fuel and energy sector - they coincided with the joint sessions held by the Council of Regions and the government, when the frequency in the country's power grid reached [the required value of] 50 hertz. On one hand, this is really very good. But this result was achieved thanks to an additional burning of costly imported gas, as well as of coal and fuel oil. This situation, in turn, has put the brakes on storing fuel for the fall and winter period.

Another reason for the "improvements" is the reduction of [electricity] consumption quotas for oblasts or, speaking in plain language, electricity cutoffs, applied not only to debtors but also to those who pay, including exporters.

As regards preparations for the winter, today we are lagging behind in all respects. Therefore, the prospects of the fuel and energy sector for storing fuel and exacting payments [for electricity] are quite alarming. At the same time, I do not want to over-dramatize the situation. I think that the president also will not allow [the country] to enter the winter with such a risk.

Q: How do you assess the construction of the Odesa-Brody-Gdansk oil pipeline?

A: There has been a lot of speculation around this oil pipeline - that was caused by the fact that one lobbying group in the Parliament and western Ukraine had been pushing through only a small segment of this issue.

The Odesa-Brody oil pipeline is part of an enormous project for transporting Caspian and, possibly, Kazak oil. Its construction is impossible without [creating] a fleet of tankers, coordinating the transportation of oil with its owners, agreeing on the volume of oil transported via the pipeline (the pipeline can be profitable with a transporting [throughput] capacity of 20 million to 25 million tons per year), and completing the construction of the oil terminal [in Odesa]. None of these problems has been resolved. Today the project's financial needs are a minimum of $266 million. ... To build a pipeline without resolving the above-mentioned problems means to bury enormous funds in the ground. ...

In my opinion, we are nearing a large investigation into the Odesa-Brody oil pipeline. Who and why, without having considered how this [oil transportation] system is going to function, buried enormous funds in the ground? I think that in August-September the president of the country and the National Security and Defense Council will finally decide how the current segment of the oil pipeline can be perceived - as an achievement, or as a major failure that entails gigantic losses.

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