MOSCOW (RIA Novosti political commentator Yana Yurova) - The new Ukrainian authorities cannot find a common language with Russian companies working in Ukraine.
The confrontation has grown in the past few days owing to a fuel crisis.
Relations between Ukraine's top officials and Russian companies started to become more tense after the new president, Viktor Yushchenko, spoke about the need to review the results of privatization in early spring. Prime Minister Yulia Timoshenko added fuel to the flames by saying that the Ukrainian government and the Prosecutor General's Office would initiate a review of the closed criminal cases on privatization of nearly 3,000 facilities.
Nobody knows who will be put on this black list, which is to include 29 facilities. The lack of information has put all Russian companies on edge. It is rumored that Ukrtatnafta, which owns the Kremenchug refinery and is controlled by Russia's Tatneft, may be on the de-privatization list. The Lisichansk refinery owned by TNK-BP Ukraine may have problems too and Russia's SuAl, which owns the Zaporozhye aluminum works, is also worried.
In this nervous situation, the Ukrainian authorities took a shocking decision to introduce fixed state prices of petroleum. This amounts to a ban on oil traders raising the selling prices of fuel by more than 13% of the price set by Ukraine's Economics Ministry this year, though fuel consumption and hence prices traditionally grow in the agrarian Ukraine in spring and summer.
The target is clearly Russian companies TNK-BP, LUKoil, Tatneft and Alyans Group, which are the leaders on Ukaine's fuel market. When the oil majors tried to contend the decision as a non-market method, they were warned that Ukraine's antimonopoly committee had opened a case on charges of non-competitive collusion between LINOS, TNK-BP Ukraine, LUKoil Ukraine, LITASKO Ukraine and LUKoil Odessa Refinery, and a case against TNK-Ukraine Trading House on charges of abuse of the monopoly situation on the petrochemicals market. These companies may face a fine of up to 10% of their 2004 revenues.
However, the short, victorious war did not materialize. The oil companies stopped complaining and promised to contain the growth of fuel prices. But in early May they curtailed oil deliveries to Ukraine and on May 16 introduced a limit of 10 liters per vehicle at the filling stations of TNK-BP Ukraine and LUKoil Ukraine.
From the economic viewpoint, the Russian companies acted correctly: to cut their losses provoked by the commitment to deliver oil to Ukraine at prices below global ones, they decided to provoke price growth by limiting supplies. According to market rules, stable high demand sends prices up.
However, the Ukrainian authorities view this measure as a malicious insult rather than the economic result of their policy. Timoshenko was so outraged that she accused Russia of blocking fuel deliveries to Ukraine for several days.
Did Timoshenko have any chances of winning? She knew, and admitted as much, that Russian companies control 90% of the Ukrainian petrochemicals market. But she refuses to publicly admit mistakes in her policy.
Vladimir Zharikhin, the deputy director of the Institute for the CIS, said even if the Russian companies were to be deprived of everything they have in Ukraine, Russia would not suffer economically. But Ukraine would not benefit from such highway methods either, because the democratic image of the new authorities would become less attractive in the eyes of investors.
Time is clearly on Moscow's side, because the new Kiev authorities are coming to see how closely the Ukrainian economy is integrated with Russia's. The transit of Russian gas and oil across Ukraine is a major item of revenues for the Ukrainian budget. So, transforming the dispute with the Russian oil majors into an international conflict will not benefit either side.
The opinions expressed in this article are those of the author and may not necessarily represent the opinions of the editorial board.
