This article is part of our special report EU-Ukraine Relations.
Hopefully the process of European gas export to Ukraine this year will increase to the announced level because this will be a concrete, serious step to reduce Ukraine's Russian gas dependency, writes Roman Rukomeda.
Roman Rukomeda is an independent political analyst in Ukraine.
"On the background of contradicting relations between the European Union and Russian Federation in recent times there is a strong Ukrainian factor that influences the negotiations between Brussels and Moscow. It consists of several key aspects.
First one is geopolitical. The issue of Ukraine’s strategic integration choice – whether it wants to join the EU or the Customs Union – will with high probability be solved in this year.
The one who will push Ukraine to make this decision the most will be Russian President Vladimir Putin. The reason is quite simple – until the current Ukrainian administration joins the Customs Union and the Common Economic Space with the Russian Federation, Belarus and Kazakhstan, planning to create the Eurasian Union by 2015, Russian integration initiatives will not be complete and develop dynamically as Putin is forecasting.
Many Ukrainian experts claimed that at the December 2012 EU-Russia summit Putin planned to come with a Ukrainian decision to join Customs Union. But the visit of the Ukrainian president in Moscow before the summit was postponed at the last moment so the possibility for different decisions of Ukraine’s authorities was saved.
If Ukraine signs an Association Agreement with the EU in 2013 and continues its full-scale integration into European legislative, political, economic, energetic and cultural dimensions then it will be the final historical resurrection of Eastern European space to its civilization roots.
Geographical, economic and political borders of a united Europe will finally match and be the same. It will provide the necessary geopolitical initiative and drive for EU that now is at a very low level.
The second one is energy. Now there are a couple of arguments that allow us to say there's practical help from the EU to reduce the Russian gas dependency of Ukraine.
Both of them are from the side of German structures. First, a signed agreement in December 2012 between DC “Ukrtransgaz” and Deutsche Bank AG to open the credit line of €53.5 million for the compressor station “Bar” of the gas pipeline “Union”.
The project will produce an annual gas savings in the amount of 40 million cubic metres. This step became first a practical joint project of Ukrainian gas transportation system’s modernisation with help of European financial institutions. So hopefully further steps on this will be made.
The second moment – the beginning of gas supply to Ukraine from Germany’s RWE Supply & Trading starting from 1 November 2012. The deliveries of gas were made through the Poland-Ukrainian border in accordance with the framework agreement of 8 May 2012, signed between the German company and NJSC Naftogaz of Ukraine.
It was a pilot project and the terms of this contract were from 1 of November 2012 up to the 1 of January 2013. The supplied amount of natural gas was about 56.74 million cubic metres.
In November, the minister of Energy and Coal Industry of Ukraine said that starting from 2013 the gas supplies from EU will come from the Hungarian-Ukrainian border and can make up to 5 billions cubic metres that will save Ukraine in 2013 about $2 billions.
Hopefully the process of European gas export to Ukraine this year will increase to the announced level because this will be a concrete, serious step to reduce Ukraine's Russian gas dependency.
Concerning the German initiatives on Ukraine's direction, it is possible to forecast that the level of EU economic interests, including from Germany, in Ukraine will increase.
It seems that the European Union now is not ready to lose Kyiv through involvement in Russian integration projects. But still it is too early to predict massive German business presence in Ukraine in 2013.
Third is economic. According to the information of Ukraine’s Customs Service the two-way trade between Ukraine and EU is expected to reach $30 billion by the end of 2012.
After the launch of Free Trade Area (FTA) between Ukraine and the EU, as a part of the Association Agreement, the level of bilateral trade will increase. It will make according to a potential increase in cumulative welfare gains for Ukraine in the long term at a rate between 4% and 11%.
In turn, in the case of the EU, this indicator will not exceed 1%. But the main option for Ukraine is that the EU standards and norms will be implemented in national economy and legislation.
This will expand the European economic standards to the Russian borders, integrating Ukrainian markets to European common energy and economic space.
Taking into account the volume of Ukrainian-Russian bilateral trade in 2012 (for the period of January-September 2012 it made $33.5 billion) it can create great problems for the Russian Federation.
As a result – there is obviously a clash between European and Russian interests in Ukraine. The key point in this game is the activisation of German policy on Ukrainian direction.
But also Ukrainian authorities now have a real chance to succeed with European Integration by signing the Association Agreement until the end of 2013 in spite of the serious amount of criticism from the EU in selective justice, nontransparent Parliamentary elections and weak support of democratic standards and practices.
But there is also another perspective. Ukraine really has the potential to change the Russian Federation closer to the European standards and norms, including principles of democracy. It already happened previously in the history in 18 and 19th centuries.
It was so just after the victory of the Orange Revolution in 2004-2005. So it can be now if the European strategy towards Ukraine will successfully ends up with signing of the AA by the end of this year and Kyiv will have to reform general basis of its legislation according to the European standards and norms.
Hopefully Ukraine will play a constructive role of uniting European Union and Russia. And who knows, maybe then a Greater Europe from Irish Dublin to Russian Vladivostok can appear, as Putin previously announced."