In another “divorce” in Europe, Ukraine is lost to Russia… again

While the world was focused on the “divorce” between Britain and the EU, in London at that time held the hearing in the divorce case two other former partners. On Wednesday, in the case of Ukraine against Russia, the UK court ruled that Kiev still owes the Russians $ 3 billion.


Russia has provided Ukraine paid in 2013 when Viktor Yanukovych, in the form of Eurobonds governed by English law. The money was largely intended for company, Naftogaz, the state energy giant of Ukraine to pay Gazprom.


In its ruling, the British judge William Blair said, “ultimately, it is the requirement to return a debt in respect of which, in the opinion of the court, cannot be justified on the basis of protection. It would be wrong to refer the matter for a full trial under these circumstances.”


Moscow uses these three billion dollars as a guillotine above the head of Ukraine, gaining small victories in the struggle with a three-year government. Kiev insists that Russia had to participate in the debt restructuring with the IMF in 2015, but at that time Russia did not have the desire, and it is still missing. A year ago, Pro-Russian Yanukovych was overthrown during the Euromaidan uprising.


The new government was formed by Arseniy Yatsenyuk, who at the time was considered the favorite of Victoria Nuland, the Secretary of state for Eurasia and supporter of regime change. Since Moscow does not trust the new government. Even now, when Yatsenyuk left, the two sides continue to clash.


Ukrainian Eurobonds fell today because of the news about the resolution, but not enough to cause alarm. For the economy, which still supports the IMF, the bonds of Ukraine are estimated very close to the nominal value and less vulnerable to shocks than it was two years ago, thanks to the large multilateral institutions, supporting prices.


The biggest drop is political. It gives points to Russia, and her lawyers are already discussing money, at least in two cases involving Naftogaz and Russia. On Monday, Naftogaz filed a separate petition in another court, this time in Luxembourg. Naftogaz is a key supplier of natural gas to Russian Gazprom in Europe. It’s their only foreign supplier. Naftogaz has filed a separate suit in the General court of the European Union with the requirement to cancel the decision taken in October 2016, which gives Gazprom more bandwidth for the OPAL pipeline in Germany and increases the volume of gas transportation through the pipeline “Nord stream” pipeline in the Baltic sea that connects Russia with Germany.


For a country that seems to be set against Vladimir Putin and is part of the narrative of the government of the United States of Russian interference in internal politics, the Germans are very interested in helping Gazprom and to a lesser extent, in the preservation of Naftogaz. Naftogaz claims that the decision of the court in Luxembourg, contrary to the stated directives of the European Commission to strengthen the energy of competition and endanger security of supply not only to EU markets but also to Ukraine. Gazprom less dependent on its former Soviet partner for its gas supplies to southern Europe.

For Naftogaz is the problem and if it’s a problem for Naftogaz, it is a problem for Ukraine. Naftogaz is the most important company in Ukraine. Naftogaz and Gazprom will once again fight in the coming weeks at the arbitration hearing in Stockholm. “We believe that the court this year will decide on what should be considered fair according to European standards and how to apply settlement”, — said General Director of “Naftogaz” Andrey KOBOLEV on the ongoing dispute with Gazprom.


“The decision of the Stockholm court is divided into two cases, and I think that in the first case, the purchase price of gas will be reduced in April, and then we are going back to court in July for discussion of the rules of transit. We are still waiting on them $ 70 billion. If we win, it will be the largest case in commercial arbitration in Stockholm”. But at this stage Ukraine should not bet on any decisive victory against the Russian.