Raid of Ukraine gas company escalates political war

Masked and heavily-armed secret service agents raided the Kiev headquarters of Ukraine's state-owned natural gas company Naftohaz Wednesday, in what commentators see as an escalation of the political war between President Viktor Yushchenko and the ambitious populist Prime Minister Yulia Tymoshenko.

The fresh turmoil could threaten domestic supplies of Russian gas – pumped through Naftohaz's pipeline system – and possibly even reignite the harrowing midwinter gas shutdown that left 18 European countries literally out in the cold in January.

"It's not between Ukraine and Russia this time, but a consequence of the internal struggles in Ukraine," says Oleksandr Sushko, an analyst with the independent Institute for Euro-Atlantic Integration in Kiev. "But it can have serious consequences, and could badly disrupt the flow of gas."

The raid by agents of the SBU security service, which is controlled by Mr. Yushchenko, seized dozens of documents, including original copies of Naftohaz's supply contracts with the Russian state gas monopoly Gazprom, as part of what an SBU spokeswoman described as a criminal investigation of corruption at the company.

In January, Ms. Tymoshenko negotiated a deal with Russian Prime Minister Vladimir Putin that effectively doubled the cost of gas for Ukraine, but ensured that large quantities of Russian gas being held in underground Ukrainian storage facilities would be turned over to Naftohaz to meet Ukraine's domestic needs.

The SBU spokeswoman suggested that Wednesday's raid was part of an investigation into an attempt by unnamed conspirators to "divert" more than 6-billion cubic meters of that stored gas, worth almost $900 million.

But Ms. Tymoshenko, who is responsible for the Ukrainian gas industry, told journalists that Yushchenko was trying to sabotage her work.

"This is an act of intimidation on the part of the president and his pocket services against all those who want to stand up against corruption," she said Wednesday. "There is no way [this raid] could have taken place without direct orders from the president."

Former allies in the pro-democracy Orange Revolution, Yushchenko and Tymoshenko have been locked in a bureaucratic power struggle that has virtually paralyzed Ukraine's government machinery in recent months, as the Monitor reported in this story.

In an interview published in the Paris daily Le Monde Wednesday, Tymoshenko argued that the only way out of the crisis is to bring forward Ukraine's presidential elections, currently slated for the end of 2009, and hold them "as soon as possible."

While Ukraine's top politicians have been warring, the country's economy has nosedived (for details, click here), and some experts warn that mass popular protests could erupt if conditions don't improve.