Expert: the main thing for Ukraine is to survive during the next few months, waiting for the fall in gas prices

3 march 2015

"Backgrounds of the Ukrainian situation are very simple: a 20-year-old social and political crisis is at the heart of all conflicts, including political. They could not get out of it and during this time the GDP of their neighbors, Romania and Turkey, not to mention Poland and Russia, has increased by 3-4 times per capita. This is a fundamental point", said Leonid Grigoriev, the Chief Adviser to the Head of the Analytical Center speaking at the round table "Ukraine: latest agenda. Gas and more" at the Press Center of the agency "Rossiya Segodnya".

On March 2 Ukraine was discussed both at the Geneva’s meeting of Sergei Lavrov, the RF Minister of Foreign Affairs and  John Kerry, the US Secretary of State, and at Brussels where tripartite gas talks between Russia, the EU and Ukraine were taking place. The agenda of the talks was on terms of gas supplies in Donetsk and Lugansk regions and the implementation of the winter package of arrangements until the end of March. The roundtable participants talked about the outcome of these meetings and statements made.

"Another issue is related to investments in Ukraine - it is an investment in dollars per year per person. They are 5 times smaller compared to us, and this is a problem of Ukraine. They have never invested, which is obviously bad. The poor government with "Naftogaz" in debt and oligarchs live separately there. The concentration of wealth is by 2 orders higher there than in Russia. And the population lives off the guest workers' money", said the expert. The decline of the government reserves is connected with a few things, according to Mr. Grigoriev. "The devaluation of hryvnia makes it hard for guest workers to transfer money through the banking system. They bring their money in cash, thereby enhancing the devaluation of hryvnia. But they really won, because they received 30-40 hryvnia per dollar, so the population has a better position than economists describe. The population in Ukraine will be able to survive with the help of the guest workers' money, but the economy will not rise", considers Mr. Grigoriev.

The expert also noted there is still quite a strange situation with the transit in Ukraine. "Let me remind you that there is no pipe for Ukraine, only this one from the Rostov region for Donbass”, Mr. Grigoriev said. “In fact, I think the problem with the spring-summer package will disappear by itself, because, after 6-9 months of low oil prices, the Algerian and the Norwegian pipeline gas prices will fall". Then pipelines, as it has happened many times, are cheaper than spot prices for liquefied natural gas at some time. Now the main thing for Ukraine is to survive the next few months, they need to wait for reducing of the cost of gas”, said the expert.

Mr. Grigoriev has noted another important issue. "Gazprom will not make any concessions to reduce the price of gas for Ukraine, because it will affect the case at the Court of Arbitration in Stockholm, where a judjement is expected in autumn. The prices lowering for Ukraine is impossible. Yesterday's talks showed that the Europeans are interested only in their transit, they do not give Ukraine money. It turns out that Ukraine has no real money at all”, Mr. Grigoriev said adding that parties are in an "infinite" and "torturous" financial conflict.

Video of the roundtable is on the website of the Press Centre of the INA "Rossiya Segodnya".