Two weeks after German authorities approved Russia’s controversial Nord Stream 2 pipeline project, Ukrainian President Petro Poroshenko came to Berlin on April 10 with a stark message for Germany’s political and business leaders: “Don’t trust Russia.”
Speaking in Kyiv in an interview with German business newspaper Handelsblatt the day before his trip to the German capital, Poroshenko said: “Russia is an extraordinarily unreliable partner – including in the energy sector.”
He pointed to Russia’s failure to recognize a ruling made in late February by the Stockholm court of commercial arbitration, which ruled that Russia’s Kremlin-controlled giant gas company Gazprom must pay Ukrainian state gas company Naftogaz of Ukraine compensation of $4.6 billion.
The compensation was awarded because Gazprom failed to provide Ukraine with enough transit gas, and paid too little for transiting its gas via Ukraine’s overland gas transport pipeline system.
But instead of respecting the ruling, and the terms of its contract with Ukraine, which stipulated arbitration in Stockholm in the case of disputes, Gazprom on March 1 abruptly cut off gas supplies to Ukraine. Kyiv was left scrambling to arrange new supply contracts and the country was forced to slash gas consumption in the midst of a cold snap.
Poroshenko warned that Gazprom could do something similar to Western companies.
“This raises a question for European utilities – is Gazprom going to do the same to them if they have a dispute?”
Most European utilities have a similar arbitration clauses in their Gazprom supply contracts as Naftogaz of Ukraine, Handelsblatt noted.
Poroshenko also criticized Russia’s $10 billion Nordstream-2 project to pipe gas in a second undersea pipeline from Russia to Germany, describing it as “bribery.”
“Nord Stream 2 is a political bribe for loyalty to Russia – an economic and energy blockade against Ukraine to put pressure on Ukraine and massively harm my country. The project has no economically justifiable basis.”
It would be much cheaper to upgrade the existing transit pipeline through Ukraine, Poroshenko said.
During the interview, Poroshenko also talked up his reform record – although Ukraine’s Western backers have for several months warned that Kyiv has been putting the brakes on its reform drive – particularly in the judicial system.
“We’ve implemented fundamental reforms,” Poroshenko said, listing sectors in which he said decisive action has been taken: justice, banking, health, education, privatization, state procurement, the defense sector, and the energy sector.
“These (reforms) were all very unpopular, but necessary steps,” he said.
He also touted his government’s success in attracting investment to Ukraine, particularly in the automotive industry:
“Today, hardly a single German car is built without supplies of cables or seat covers from Ukraine. We’re now part of the German automotive assembly line – we weren’t three years ago.”
Handelsblatt’s interview with Poroshenko (in German) is here.
