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UKRAINIAN OPPOSITION LEADER SEES ECONOMIC SPACE AS SOLUTION TO GAS PROBLEM. Former Ukrainian Prime Minister Viktor Yanukovych, head of the opposition Party of Regions, told journalists in Donetsk on 6 February that the creation of a Single Economic Space with Belarus, Kazakhstan, and Russia is "the only realistic way for resolving the gas crisis," the "Ukrayinska pravda" website (http://www.pravda.com.ua) reported. According to Yanukovych, that conclusion was reached during recent talks between his party and the pro-Kremlin Unified Russia. "Our countries should have a single energy policy," Yanukovych noted. "Russia is vigorously integrating with the European economic space, and it is very important for Ukraine not to let this process bypass our state." JM

RADIO FREE EUROPE/RADIO LIBERTY, PRAGUE, CZECH REPUBLIC

A Survey of Developments in Belarus, Ukraine, and Moldova by the Regional Specialists of RFE/RL's Newsline Team

LUKASHENKA SAYS WEST WANTS POST-ELECTION UNREST. Belarusian President Alyaksandr Lukashenka on 27 January gave an interview to several channels of the state-run Belarusian Television. "Belarus segodnya/Sovetskaya Belorussiya," the main mouthpiece of the presidential administration in Belarus, published a transcription of the interview on 31 January. Below are translated excerpts.

Question: In your New Year address to the Belarusian people you said that the main achievement of the past five years was the building of an independent state in Belarus. Simultaneously the politicians and media that do not treat the authorities in a very friendly way also admit that, indeed, Belarus has built an independent state. They even underscore that it is only Lukashenka who is able to consolidate and support the true Belarusian sovereignty. How do you assess such an acknowledgment of your political opponents?

Alyaksandr Lukashenka: Yes, indeed, we have built a sovereign, independent state. And it is a worthy result of the past decade.

In the early and mid-1990s there was an opinion that, since the Soviet Union had broken up, "we were sovereign and independent." But we were not sovereign then in actual fact. Sovereignty means authority over a certain territory. But we could not say then that we, the Belarusians, had that authority in actual fact. Also, we could not assert that we would maintain that authority on the territory of our country. In my opinion, independence is a notion that is one order of magnitude higher [than sovereignty]. Indeed, we have created a sovereign and independent state.

We have been left with just one thing that can make us uneasy and prevent us from saying freely that we are absolutely independent -- it is our dependence on natural gas from the Russian Federation. Mark my words, I'm not speaking about energy resources in general. All the rest we buy for world-level prices.

We will continue buying natural gas [from Russia]. There are no problems here. Even the current [gas] price [for Belarus] cannot be called unambiguously preferential. It is lower than, for instance, that for Ukraine, but we settle our accounts with other things, for which Russia does not pay -- [military] facilities, transit, border services, customs services. All this costs a lot of money. The Russian Federation pays for similar services to Ukraine, Kazakhstan, and other states.

Do we have a discount price for gas? But the tariff we charge for pipelining [Russian gas] across our country to Europe is three times lower than that in Ukraine. Therefore one must not say that there is some charity [on the part of Russia]. It is not. But I'm worried about something else. Now we can buy oil on any market, but gas -- only from the Russian Federation. Therefore I link this problem directly to that of achieving full independence. This will become possible only when we replace at least 25-30 percent of gas we consume with our own energy resources.

I have openly and honestly warned that such a gas price [for Belarus] cannot be maintained when others around us pay $160-$230 [per 1,000 cubic meters]. Russia, of course, will not be selling [gas] to us at such a price forever. They in Russia speak about this openly but they simultaneously mention market relations. That is, if we switch to some other prices for Belarus, then, naturally, according to market rules, we will have the right to negotiate changes in our relations in other spheres where the Russian Federation will be ready to pay us higher prices.

Question: It is evident for everybody today that Belarus has essentially put to shame a lot of eminent economists, market-oriented economists, liberals who asserted and continue to assert that an economy cannot develop without two things -- privatization and foreign investments. Our country has proved that it can develop at the expense of its own resources. Are you going to correct your economic course or do you think that today's model is the only correct one and should remain unchanged in the near future?

Lukashenka: You're right. Some liberal economists have been disgraced in connection with Belarus. They have no right whatsoever now to appear on television and say anything. There have been many such economists -- from the International Monetary Fund, Russia, and other republics -- as well as big businessmen who have predisposed me toward landslide privatization and proposed external investments.

We have managed without that. We have not opposed privatization totally, but we have resorted to it only when the state was unable to cope with some processes or some properties. We have taken external investments but they were small and consisted exclusively of untied loans with small interest, in order to develop what we deemed necessary.

Today our foreign debt is a little bit over [$]1 billion. Most likely no other state in the world has such a small foreign debt. We repay our credits absolutely on time. One billion means nothing when compared to our gross domestic product (GDP). We produce an annual GDP of $50 billion-$70 billion, according to the real dollar exchange rate of the Belarusian ruble. It is a very decent GDP. We could essentially repay our [foreign] debt within one year.

As regards the adjustment of our course -- only a fool can follow one track forever. Life is changing. And, of course, every year we do this, we adjust our course depending on the domestic and foreign situation, including the economic course. But the principal, fundamental things that we have achieved with you through suffering remain unchanged.

I have often drawn your attention to our gigantic growth rates. They are very high growth rates -- no other state has a 9 percent increase in GDP compared with the level we have already achieved. On the other hand, why are we not so rich as many leading countries in the world? Because we have a very cost-based economy. Our outlays to produce a commodity are by 30 percent or 50 percent higher than or even twice as high as those in the West. Why?

First, we are a northern country. There was a sudden cold spell below minus 30 degrees Celsius, and every day we had to spend from $10 million to $20 million more for fuel than at temperatures higher than minus 10 degrees Celsius. Second, we are careless in many things. Third, we need new technologies that would allow us to produce goods with lower outlays. Fourth, we need to look for alternative energy sources.

You know, we have already squeezed practically everything out of what we have inherited from the Soviet era and what we have built in recent yeas. Practically all of our production sector works to its 100 percent capacity, apart from some small and medium-sized enterprises. How to increase productivity in the future? At the expense of new technologies, innovative policies, science. Second, at the expense of new, very science-intensive enterprises. And we will do this.

Question: What is your prognosis of political activity in the country for the next three-four years?

Lukashenka: Of course there will be a drop in the political activity after the [presidential] election. In general, it will depend on our so-called opposition. If they win, they will need no activity any longer. [But] they will be defeated. And they will contest this defeat. They will contest it as never before. Why? Because they have already taken the money. They have been paid for street riots. Our "friends" in the West have told our opposition: We will give you money only for riots in the country. They are pushing them to foment such riots.

But you know, even among the opposition there are not so many people who support other candidates with conviction. There are not so many fools. They have children and families, they are living in this society, and they all won't flee abroad. Those who handle these processes, who oppose the president today -- the opposition candidates -- have already secured a place for themselves. Some will flee to Germany, some to America, and some to Poland, following in the footsteps of other well-know oppositionists.

I don't think that after the election, when the opposition suffers a defeat, someone will erect barricades to fight against Lukashenka. As always, there will most likely be some drop in political activity after the election. Even though one cannot rule out a demonstration of such activity, attempts to organize some clashes. This won't grow into riots, of course, because there are not so many fools and geeks in Belarus who will take to the streets to smash everything there. There will be no repetition of the Georgian or Ukrainian scenario. I guarantee this.

Question: But if the opposition has changed and will propose more cunning moves? Perhaps, some new political trends, youth groups, and so on. Do you take all this into account in your calculations?

Lukashenka: They will not propose anything. I know perfectly well what they can propose and what they currently do. They sit and demand just one thing [from the West] -- give us money, we will work against the current authorities. They do not task themselves to win power in a worthy way, in elections. Their primary task is to simply fight against [the authorities] for money. It's their business, you see? And if some new trends appear among the opposition, they seek to destroy them immediately. Because they mean new mouths to feed. They mean competitors for those grants given by the West and America. So much for our opposition.

Question: In one of your answers you differentiated between the West and America. My understanding is that you meant Europe while speaking "the West." We have good economic relations with Europe? Does Belarus have prospects for EU membership? Do we need to join the EU?

Lukashenka: I did it on purpose when I made a distinction between the policies of the U.S. and Europe. Had it not been for America, we would not have had problems with Europe. The Americans are pressurizing Europeans to have them conduct this policy. They are forcing Europeans to even outstrip the Americans, pursuing the pro-American policy with regard to Belarus and other countries. They are dictating [what to do] today.

There are very many pragmatic politicians in Europe, most politicians are pragmatic there. They are aware of what is going on in Belarus. And even if Europeans make some [critical] statements, they do this under pressure from the United States. The inertia of this [U.S. state] machine is most likely so big that it is difficult to stop for them.

America has a stake in everything. They believe that they are the masters in the world and this will be for a long time, that's why they need to meddle in the affairs of Georgia and the affairs of Belarus. And what, aren't there any other countries that have interests both in Belarus and Georgia? No, [they think that] only they do. Such a global foreign policy is based on wrong principles and methods. The Europeans suffer from it as well.

Question: You demonstrate confidence, determination, and the knowledge of your opponents, and few people are likely to doubt your victory. So against whom are you fighting? Who is your main competitor in this election?

Lukashenka: I do not fight against anybody. I fight for a better life for the people. It has been extremely cold for 10 days. These were the 10 days of my political campaign. Imagine if everything began to freeze, break, and the whole country began to thunder. How would the people react?

I am fighting against all those natural disasters in order to protect our people and demonstrate to them during this election campaign that they have a normal president. They do not need a different president. (Translated by Jan Maksymiuk)

UKRAINE

TERMS OF NEW GAS UNCLEAR. Officials in Kyiv announced on 2 February the finalization of a gas deal from January, under which Ukraine is now to receive gas from Russia at $95 per 1,000 cubic meters. According to Kyiv, the price of $95 is to remain unchanged for five years. However, RosUkrEnergo, a Swiss-based company that was made the monopolist of gas supplies to Ukraine, signals that this is not quite so. Does this mean that the Russian-Ukrainian gas war has not yet ended?

On 2 February, Naftohaz Ukrayiny, Ukraine's gas transportation company, signed an accord with the Swiss-based gas trader RosUkrEnergo in Kyiv on the creation of a joint venture to sell gas in Ukraine. Both companies were obliged to do so by a framework gas agreement of 4 January, under which RosUkrEnergo became the monopolist of gas supplies to Ukraine for the next five years.

Ukrainian Prime Minister Yuriy Yekhanurov praised the five-year accord as advantageous for Ukraine. But he told journalists that he is also fully aware that the document may be bitterly criticized by his political opponents: "My future political career is not important here. It is important that it will be warm in your apartments tomorrow. In summer you may curse me to your souls' content. But in winter you may find a good word for me."

On 4 January, Naftohaz Ukrayiny, RosUkrEnergo, and Gazprom signed a deal whereby Ukraine is to obtain 34 billion cubic meters of gas in 2006 from Russia for $95 per 1,000 cubic meters -- up from $50 in previous years. The deal also provided for the creation of a joint venture between Naftohaz Ukrayiny and RosUkrEnergo to sell gas in Ukraine and share profits from it.

Critics of the deal said it was valid for only the first six months of the year as regards the gas price for Ukraine, simultaneously pointing out that it set the gas transit tariff for Gazprom for five years. Such critics also slammed the government for making RosUkrEnergo -- a murky intermediary created by Gazprom -- the monopolist responsible for gas supplies to Ukraine.

On 10 January, Ukraine's parliament, the Verkhovna Rada, passed a no-confidence motion in Yekhanurov's cabinet over the gas deal. Yekhanurov and his ministers, however, have remained in office due to a constitutional reform that took effect on 1 January and effectively prevents the current legislature from appointing a new cabinet.

The joint venture created on 2 February, named UkrGazEnergo, has a charter capital of 5 million hryvnyas ($1 million) with stakes shared evenly between its founders. The same day UkrGazEnergo and RosUkrEnergo signed a contract under which Ukraine is to obtain 34 billion cubic meters of gas in 2006 and some 60 billion cubic meters annually in 2007-2010.

Naftohaz Ukrayiny spokesman Eduard Zanyuk told journalists in Kyiv on 2 February that neither gas storage facilities nor gas pipelines in Ukraine will be included in UkrGazEnergo's charter capital. Zanyuk was thus addressing the common fears in Ukraine that Moscow is using gas price as a weapon to gain control over Ukraine's gas transportation network.

In a no less important statement Zanyuk announced that the new gas price for Ukraine will remain stable for five years: "Responding to questions from skeptics in Ukrainian political circles, we announce that the gas price defined in this contract is fixed for five years and is $95 for 1,000 cubic meters."

If this is really so, then the new contract represents a major victory for Kyiv, which had initially been promised the price of $95 per 1,000 cubic meters just for the first half of 2006. The victory seems to be even more significant if one takes into account that the gas price for Ukraine is lower than that charged by Gazprom for all other post-Soviet countries except Belarus. For example, Gazprom set the new gas price for Moldova and Georgia at $110 per 1,000 cubic meters.

However, the same day, RosUkrEnergo managers, Konstantin Chuichenko and Oleg Palchikov, cast doubt on Zanyuk's words. Chuichenko said the price may be changed depending on the price of Russian gas for RosUkrEnergo. In his turn, Palchikov asserted that there is no "price formula" included in the contract, adding that the price for Ukraine will depend on the price of Central Asian gas in the total gas volume supplied to the country.

And Andriy Halushchak, Naftohaz Ukrayiny's representative on the UkrGazEnergo supervisory board, admitted that a change of the gas price may actually take place, but only after mutual consent from both sides. If there is no such consent, he added, the sides should appeal to court.

Thus, it seems that the deal does not end the gas supply controversy between Kyiv and Moscow and may lead to a renewed row in the longer run, particularly if Turkmenistan, a major gas source for Ukraine, moves to increase its price for RosUKrEnergo.

It should also be expected that the gas supplies will continue to be a topical issue for the opposition in the ongoing parliamentary election campaign in Ukraine. There is still a mystery surrounding the owners of RosUkrEnergo, which came into the global spotlight on 4 January. And this latest gas contract, instead of dispelling this mystery, has added some of its own. (Jan Maksymiuk)

"RFE/RL Belarus, Ukraine, and Moldova Report" is prepared by Jan Maksymiuk on the basis of a variety of sources including reporting by "RFE/RL Newsline" and RFE/RL's broadcast services. It is distributed every Tuesday.