We have never broken the impasse in gas relations with Ukraine

27 february 2015 | RBC-TV

Leonid Grigoriev, the Chief Adviser for the Head of the Analytical Center, spoke on RBC-TV about problems of the Ukrainian economy.

Leonid Grigoryev
Leonid Grigoryev
Chief Adviser to Head of the Analytical Center

The Ukrainian economy has a pyramidal structure, considers Mr. Grigoriev. "Since the end of 2013 hryvnia has fallen by almost 4 times. Due to this fact those suffer, who have hryvnia deposits, but there is a current flow of dollars from abroad, which is brought by guest workers. They receive more hryvnia per dollar for the whole year. Now the devaluation is steeper, so they win", said the expert. The population is a bit protected as most of them work outside the country, according to the expert. "It is difficult for population to pay the normal dollar money for energy, but it's not that simple. They have their own means of survival", said Mr. Grigoriev.

The expert noted that there is an issue which is widely discussed and which is of particular concerne for the Americans. "The Chinese often come in infrastructure projects with the own workforce. The western idea is the investing in the state. This relates to education and transfer of experience, technology. And the Chinese come into the country, develop what they need, and then take it away with them. This is the commercial conflict between the West and China", says Mr. Grigoriev.

The expert touched upon the problem of gas relations between Russia and Ukraine. Mr. Grigoriev does not believe that it has reached the impasse. "You know, in a sense, we have never been out of it. And it began during past 5-7 years, when we were selling the gas to Ukraine at a Russian domestic price $50. That was the basis for a part of metallurgy, chemistry, nitrogen fertilizer industry to appeare. In fact, we sponsored them", said the expert. Today the main factor  is that Russia is suing in Stockholm, a judgement is expected in autumn. "Therefore, Gazprom can not retreat. Therefore, all these talks "make it cheaper for us" are impossible", considers the expert. There is another issue associated with the advance payment - Ukraine is very poor of money. In general the Ukrainians have to survive for several months, in  summer gas prices will fall, according to Mr. Grigoriev. It will be cheap under the formula tied to the oil. "But with all this, they still have to pay. And then there is the factor of the Donbass supply, because at the time of the Minsk Agreement the strengthening of the economic blockade of Donbass began. They turned off the gas, and it's a disaster for the continuous production. And Donbass had to pay taxes during all this period. People still pay for the gas to Naftogaz of Ukraine", said Mr Grigoriev adding that as of January, 2015 the industrial production fall was 87% in the Luhansk region and 58% in the Donetsk region.

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