The courts have spoken - Ukraine’s former Prime Minister Yulia Volodymyrivna Timoshenko has received a seven year prison sentence from Judge Rodion Kireyev of Kiev’s Pechersk Court, convicted of the abuse of power while negotiating natural gas contracts with Russia in 2009.
The ruling also adjudged that the agreements damaged Ukraine’s Naftogaz Ukrayiny to the level of roughly $191 million, for which Ms. Timoshenko is liable.
Justice served or justice denied?
Bit of both, actually – with enormous potential consequences for Ukraine’s energy future.
Quite aside from her incarnation, Ms. Timoshenko has been ordered to repay “all material damage” she caused to state-owned Naftogaz Ukrayiny to be paid back in full, a fine assessed at $191 million.
In 2009 Timoshenko negotiated a contract between Gazprom and Naftogaz Ukrainy on purchase and transit fees. Prosecutors allege that in doing so, Timoshenko, then Prime Minister, abused her authority for personal benefit, violating Article 19 of the Ukrainian Constitution.
Timoshenko reportedly during the 1990s increased prices for Russian natural gas imports while head of the common energy systems of Ukraine, to take revenge on current President Victor Yanukovych.
The European Union has already weighed in the verdict, with EU foreign policy chief, Catherine Ashton stating that the Ukrainian government ensures that Ms. Timoshenko a transparent and fair appeals process, as a failure to do so would have "profound implications" for Ukraine-EU relations.
Ms. Timoshenko’s tycoon background?
During 1995- 1997 Timoshenko was the president of Ukraine’s natural gas trading company United Energy Systems of Ukraine, which became Ukraine’s main importer of Russian natural gas to Ukraine. Accusations swirled that she was reselling enormous quantities of stolen gas and avoiding tax, having given former Prime Minister Pavlo Lazarenko kickbacks in exchange for her company's access. In August 2006 Lazarenko was convicted and sentenced to prison in the United States for money laundering, wire fraud and extortion.
Interesting company the Ukraine’s “gas princess” keeps, along with her personal wealth estimated in the millions. That said, Ms. Timoshenko is simply a product of her environment, and the 2009 natural gas deal that she cut with Russia was pragmatic, which raises the question of why she’s on the rack now.
Speaking of personal fortunes – in the past two decades it has been impossible for anyone in the post-Soviet space to become rich.
Simple – because theoretically, according to Marxism, “property is theft” and in December 1991 every Soviet citizen following the collapse of the USSR started out on the same starting line.
Not – those with connections prospered, those on the assembly line did not. Timoshenko, cagey about her private wealth and reinventing herself as a populist politician, was nonetheless one of the former.
Why is the EU so interested in Ms. Timoshenko’s fate?
Because the case opens so many cans of nasty worms, including the EU’s growing dependency on Russian energy imports, much of which travels via Ukraine through Soviet-era pipelines, but its commitment to political evolution in Eastern Europe and the post-Soviet space, which makes the fate of such a high-profile detainee as Ms. Timoshenko a matter that ought, nor, needs, to be addressed.
But how to indicate to Kiev that such actions are unacceptable whilst ensuring gas flow?
Startlingly, even Moscow also reacted harshly to the conviction, with the Russian Federation Foreign Ministry noting that "many states and the world public perceive this entire judicial process as initiated for purely political reasons."
So, where’s the compromise? Some Ukrainian analysts have speculated that the leadership in Kiev could attempt to save face by pardoning her, which would alleviate Timoshenko from doing hard time but under Ukrainian law, bar her from further participation in the country's politics.
Expect such a deal so Russian natural gas shipments to Europe continue uninterrupted. If Moscow is pressuring Kiev over the case, some democratic lipstick whitewash will need to be applied to the Ukrainian judicial pig in an attempt to convert it into a judicial silk purse, but the fix already seems to be in, and its seems to be less about justice than settling political scores.
At least Timoshenko isn’t facing U.S. justice, where her Prime Minister predecessor in 2006 got a nine-year sentence.
After all, gotta keep those Europeans warm… especially as they pay their bills on time.
By. John C.K. Daly of Oilprice.com