UKRAINE RELIEVED BY AGREEMENT WITH GAZPROM.

First Deputy Prime Minister Anatoly Holubchenko yesterday expressed full satisfaction with the agreement he has just concluded in Moscow with Gazprom. Ukraine will repay through domestically produced goods–mainly foodstuffs, rather than cash or industrial equity–four-fifths of its US$1.2 billion arrears to Gazprom. Furthermore, Ukraine will transit via its pipelines 125 billion cubic meters of Gazprom’s gas destined for Central and Western European countries. Gazprom guarantees to deliver to Ukraine 25 billion cubic meters of gas in 1999, priced at a maximum of US$80 per thousand cubic meters. Additionally, Gazprom will supply to Ukraine another 30 billion cubic meters in 1999, valued at US$50 per thousand cubic meters, as repayment for Ukraine’s transit services.

Holubchenko described the terms of the agreement as “economic salvation” for Ukraine at the onset of winter. The deal should, moreover, help the country maintain its trade and balance of payment deficits within manageable bounds (UNIAN, Itar-Tass, Reuters, November 3-5).

While residential and industrial consumers will welcome the agreement as a matter of course, the deal provides major relief to Ukrainian agricultural producers, who can now see their way back to the Russian market. This should, in turn, help President Leonid Kuchma politically with the agrarian lobby, which is led by Parliament Chairman Oleksandr Tkachenko. His faction currently plays a pivotal role in the legislature, and so will the agrarian vote in next year’s presidential election. Russia, for its part, obtains, first, a guaranteed transit for its gas exports to hard-currency markets and, second, food imports on a barter basis at a time of Russian supply shortages and financial insolvency.–VS

DIFFERENCES EMERGE IN AIOC OVER CHOICE OF PIPELINE ROUTE.