Publication: Monitor Volume: 6 Issue: 124

Ukraine’s Deputy Energy Premier Yulia Tymoshenko did not, contrary to expectations, run in the parliamentary by-elections on June 25. It had been anticipated that the pressure of “oligarchs” against her energy reform plans would drive her back to parliament (see the Monitor, May 17), but Tymoshenko managed instead to squeeze her main opponents out of the government and secured parliament’s approval of amendments redirecting money flow in power engineering.

On both of these, she received timely, if somewhat reluctant, support from President Leonid Kuchma. On June 8, Kuchma met with the cabinet to discuss the critical situation in the energy industry, blaming the government for stockpiling so little fuel that the Ukrainian power grid is heading for a collapse in winter, and for accumulating debts in the energy sector. Prior to the meeting, the tycoons Oleksandr Volkov and Hryhory Surkis, Tymoshenko’s main opponents in parliament, insisted that Kuchma should fire Tymoshenko. They blamed her reforms for the energy crisis, calling them awkward and amateurish. While Kuchma reproved Tymoshenko for her management style, he directed most of his criticism against Tymoshenko’s opponents in the government–Fuel and Energy Minister Serhy Tulub and the managers of the Naftogaz Ukrainy oil and gas monopoly. Tymoshenko retained her post.

On June 15, Tulub resigned, explaining that it was impossible for him to work as a team with Tymoshenko. He had opposed both her plan to strip the regional power distribution companies (oblenergos) of the privilege to collect payments from electricity consumers and her idea that coal be sold at auction. Shortly thereafter, on June 21, Naftogaz acting chairman Ihor Didenko was dismissed; Didenko was formerly a deputy of Ihor Bakay, who Tymoshenko had forced out of his post as Naftogaz chairman in March. First Deputy Premier Yury Yekhanurov explained that Didenko was fired on the basis of unjustified gas cuts to enterprises and his refusal to obey direct orders from Prime Minister Viktor Yushchenko. On June 23, however, Tymoshenko admitted that it was she who had initiated Didenko’s dismissal for pursuing personal interests at the expense of state interests, as she alleged. It is interesting that Tymoshenko got rid of Tulub and Didenko when Yushchenko and Kuchma were away from Kyiv. It would seem that state leaders are deliberately distancing themselves from energy feuds, and giving a free hand to Tymoshenko.

On June 22, Tymoshenko celebrated a victory in parliament, where her draft amendments to the electric energy law were passed despite an obstinate opposition from Volkov’s Regional Revival faction and the United Social Democrats, who support Surkis. These amendments provide for an accumulation of payments for electricity in special accounts in Ukraine’s regions, bypassing the oblenergos. Tymoshenko alleged that eight privatized oblenergos, reportedly controlled by Surkis, hid the payments in off-shore zones rather than paying the power plants for power generation.

Having defeated her opponents in the government and pushed her legislation through parliament, Tymoshenko seems to be facing no official obstacles to her energy market reform design. But, outside the government, she is left with “the oligarchs,” who are formidable opponents. (In a TV debate with Tymoshenko on June 18, Hryhory Surkis alleged that she misrepresented her incomes in the tax declaration last year.) Her image as a reformer is tarnished by her close association with the company she founded in 1995, United Energy Systems of Ukraine (UESU), with fugitive former Prime Minister Pavlo Lazarenko. (The UESU was mentioned in the prosecutor general’s recent allegations against parliamentary member Mykola Ahafonov, who was reportedly involved in a number of Lazarenko’s shady deals, and whose parliamentary immunity was recanted on June 22.) A muckraking campaign against Tymoshenko in the numerous media controlled by Surkis, Volkov and Bakay seems in the making (UT-1, June 8; STB TV, June 15, 22; Zerkalo nedeli, June 17; Studio 1+1, June 18, 23; UNIAN, June 22; see also the Monitor, March 30).