Liberal Empire on the March?
Last Thursday chief ideologist of the liberal empire, a person in charge of Russia’s “enlightened” reality, and renowned expert on empty Xerox boxes, head of the RAO UES of Russia [Unified Energy Systems of Russia Joint Stock Company] Anatoly Chubais visited Kyiv. In the words of the Moscow politician cum businessman, his visit proved a success. The result of his negotiations with Leonid Kuchma, Viktor Yanukovych, and the government delegation was signing an agreement on purchasing a considerable share of Ukraine’s energy system assets. The RAO UES of Russia arranged for purchasing one third of the stock in a joint holding that will include assets of ten Ukrainian oblast energy companies (in general, according to Mr. Chubais, this will amount to 30% of Ukraine’s energy market). The holding will include from 16% to 100% stock of the oblenerhos. Mr. Chubais named businessmen Kostiantyn Hryhoryshyn and Viktor Pinchuk as major partners in this deal. The Russian entrepreneur pointed out that the RAO UES of Russia would own enough stock to veto any action in five of these companies. However, this far from exhausts Mr. Chubais’s energy aspirations. “Our goal is enlarging our share and reaching majority holding,” he said.
At that, the businessman did not conceal that with entering Ukraine’s energy market he is implementing his doctrine of liberal empire in the post-Soviet space. The RAO UES head admitted that he is aware of Ukraine’s reaction to his ideological invention: “I closely follow media coverage of the liberal empire issue. By my estimate, there have already been hundreds of articles published on this topic. This is good. This means that the idea is under discussion.” Anatoly Chubais suggested that Ukraine chose one of the policies currently implemented by Russia: “The number one strategy is named Tuzla. The number two strategy is purchasing energy assets and Russian investment in Ukraine’s economy.” In Mr. Chubais’s opinion, “The Tuzla strategy has brought nothing but Russia’s national humiliation, sharp deterioration in the Russia-Ukraine relationship, and considerable stimulus for a rise in anti-Russian sentiments in Ukraine.”
Mr. Chubais also gave his explanation of the need to invest precisely in the period when the state is living through difficult times. “This is the golden rule of business: you have to enter from the low point. This is exactly what we are doing. This is how we acted in Georgia. The development of the situation (Eduard Shevardnadze’s resignation and the opposition coming to power — Ed.) completely confirmed the great eternal nature of our decision not only in terms of politics but also business,” Mr. Chubais explained.
Answering journalists’ questions on Russia’s expansion into Ukraine, the Moscow visitor said, “I want Russia to be a leader, and I work for this purpose. At that, I don’t want it to be a leader in attempts to capture a spit that doesn’t belong to it. As if they didn’t have more important things to do than playing with sand! I want it to be a leader in developing business. There is no third way. Third options are national patriots’ stupidity” (no explanation followed as to which national patriots Mr. Chubais had in mind). Recently the RAO UES head has developed such broad ideological and politico-economic activity one might assume that it is authorized from above, if it had not been for certain liberties he took toward the Kremlin in the YuKOS case. However, the version that Chubais is prepared to try on the liberal empire crown is completely plausible.
The information released on Thursday by the Ukrainian head of state’s press service disavowed to a large extent the comment of Russia’s chief energy man who would also like to take controlling shares of the Ukrainian energy sector. The truth is that when Mr. Kuchma was receiving Mr. Chubais, he confirmed Ukraine’s serious interest in foreign investments. But at the same time the president of Ukraine stressed that selling the shares of Ukrainian regional power-supply companies (oblenerho) to the United Energy Systems of Russia (RAO UES) is now out of the question because Ukraine is not prepared to consider this matter.
In Mr. Kuchma’s opinion, this country’s law needs updating, as far as privatizing national strategic assets is concerned, especially when shares are being bought by a company with a sizable state- owned stake (RAO UES is precisely such a case — Author). In other words, this in fact comes down to an interstate deal which must be made, accordingly, under the general pattern of international agreements, the president of Ukraine believes.
What Chubais is now suggesting is nothing but nationalization of the Ukrainian energy sector by Russia. Also noteworthy is Mr. Kuchma’s comment that the Liberal Empire slogan presumably coined by Mr. Chubais causes a certain uneasiness in Ukraine. In his words, what Ukraine looks forward to is Russian investments but not the prospect of being told by Russian investors what policy to pursue.
Conversely, Mr. Chubais said, unruffled, after his meeting with Mr. Kuchma, “I gained an extremely positive impression, which means that in my opinion what we agreed upon with Ukraine’s topmost political leadership is in fact the second stage of large-scale burgeoning cooperation in the field of energy between Russia and Ukraine.” The Russian side seems to have preferred to turn a deaf ear to the quoted “is now out of the question” as well as to the remark that energy talks should be conducted on a government-to-government level.
Could Chubais assign the role of a privatization player in Ukraine to any private business under his control? It is not ruled out that things may develop precisely in this way. In that case, our government will have to do nothing but keep its current promise to provide RAO UES with “equal conditions in privatizing the energy sector.” This naturally raises a question: what precisely does Chubais want Ukraine to do? When The Day’s Maryana Oliynyk put this question to Chubais’s deputy Andei Rappoport in the summer of this year, he said the main goal was capitalization. In his words, a Ukrainian power electric business can be bought today for an average $100-150 per active user, while this requires $300 in Poland and $500 in Germany. The calculation is that what is cheap today may cost tomorrow as much as it does in Poland.
But should we believe these statements? Experts presume that the main goal of Russian energy executives is not at all confined to some speculation with Ukrainian energy assets. What causes the greatest concern in Russia today is the emerging prospect of Ukraine exporting its electric energy to Europe. Thus, when Chubais speaks about the supplies of Ukrainian electricity to Russia, he is, by all accounts, bringing into play his own version of electric reverse route (it will be recalled that Russia chose this strategy with respect to the Odesa-Brody oil pipeline, when it became clear that this could provide competition with Russian supplies of oil to Europe).
It is interesting to note that RAO UES looks somewhat down at Ukrainian law. For example, the Antimonopoly Committee of Ukraine (AMC) has announced that the Russian company “failed to send the Antimonopoly Committee of Ukraine a notification of concentration” in connection with the possible acquisition of Ukrainian oblenerhos. On its part, our AMC notified RAO UES in writing about the norms and requirements of Ukraine’s competition law regarding this kind of deals and requested it to furnish the relevant explanations. “All we can say now with certainty is that an AMC permission is required for purchasing even one, let alone ten, oblenerhos. And it is unlawful to perform such operations without permission from the committee,” AMC of Ukraine chair Oleksiy Kostusev told The Day.
