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Russia – Ukraine Natural Resource Game

Thursday, 18 September 2014
This is an opinion article by an external contributor. The views belong to the writer.

Moscow accused of trying to undermine Ukraine´s efforts to diversify its energy supplies.
On the face of it, the situation in Ukraine thankfully seems to be improving.

A wide ranging trade deal, the “association agreement”, was ratified by the European Parliament in Strasbourg on Tuesday and Russia has withdrawn most of its troops from eastern Ukraine, raising hopes that the fragile ceasefire between the two warring factions will continue to hold.

But, scratch beneath the surface, and things are not quite as rosy as they might appear with fresh fears being raised about how Russia may be flexing its very sizeable muscles in other areas.

The suggestion is that Moscow is very deliberately trying to undermine Ukrainian attempts to wean itself off its dependence on Russian oil and gas. With winter fast approaching, and memories still fresh of the last time President Putin turned off the energy taps to Eastern European, the allegations have to be taken seriously.

On 9 September in the centre of Kyiv, 25 officers from General Prosecutor`s office and Directorate for Combating Organized Crime conducted a raid on the offices of Ukraine’s biggest producer of energy – the state owned enterprise Energoatom.

The reason for the raid was speciously to obtain evidence relating to allegations of fraud and corruption by the company’s officers committed between 2012 and 2014.

But some believe the move is one example of how Moscow may be attempting to block Ukrainian efforts to move towards a more diverse energy mix and, in particular, domestically produced nuclear energy.

Many EU countries, as well as Ukraine, rely heavily on Russian deliveries of gas and nuclear technology so such incidents give cause for real concern.

Energoatom says that its operations are fully transparent and that the company will always cooperate in full with law enforcement officials.

“However,” he said, “conducting a raid on the company was a disruptive way to obtain information, and over the top in the sense that it needlessly sabotaged the company’s operations for one business working day.”

Crucially, no evidence to support the allegations were discovered by the investigators.

But observers believe there could me a more sinister motive behind the actions of the General Prosecutor.

A spokesman for the Brussels-based EU Ukraine Business Council said, “I suspect the long arm of the Russian Bear.

“It is no coincidence that the Ukrainian state owned enterprise Energoatom is crucial to Ukraine’s strategy to reduce reliance on Russian exports of energy this winter by increasing domestic nuclear power production. The company has been actively developing new partnerships with EU and US companies like Skoda, Holtec and Westinghouse to help meet its targets, and Russian suppliers have found their services being replaced by Western contractors.”

“It does not take Einstein to work out who will benefit most from sabotaging Energoatom’s operations.”

“It should be a matter of grave concern to the EU that the Fifth column appears to have infiltrated all organs of government in Ukraine including the law enforcement system. It is being manipulated by Russia in a crude attempt to interfere with Ukraine’s energy strategy. We should be vigilant to stop this kind of behaviour and secure protection for legitimate government priorities.”

This is not the first time that Ukraine’s primary energy producer has allegedly come under attack; environmental NGOs – often financed from overseas – regularly use the tactics of high profile law suits, public protests and media campaigns to seek to influence the strategic decisions of the government in the electric power sector.

Meanwhile,last Friday new EU sanctions against Russia came into force, blocking loans for five big state banks and curbing EU business with oil and defence firms.

The aim is to keep pressure on Russia over its role in the Ukraine crisis. But the measures could be eased or lifted if a ceasefire in Ukraine holds. A Russian official said cars imported from the EU could now be targeted.

The latest EU decision followed a conference call between European leaders, including UK Prime Minister David Cameron.

For nearly a week the EU member states had delayed imposing more sanctions, because last Friday a fragile truce was agreed between Ukrainian troops and pro-Russian rebels.

But Germany, the UK and some other countries pressed for the sanctions to put be into effect.

While the signing of the trade deal and the ceasefire are clearly welcome, it will be well worth keeping a watchful eye in the coming weeks on how things develop between the two sides on the energy front.