Frank-Walter Steinmeier,
Germany's foreign minister, is not normally a man lost for words. In an
interview with the FT last week he talked fluently on how to cope with
the global economic crisis and on relations with Russia.
On one subject, however, he was temporarily silenced: what to do about the crisis in Ukraine, correspondent Quentin Peel of The Financial Times writes.
"We haven't got an answer to everything," he said with a grin.
Ever
since the collapse of the Soviet Union, Ukraine has been a high
priority for German foreign policy. Russia has never come to terms with
the idea of the country being independent - Vladimir Putin, then
Russian president, said as much when he attended last year's Nato
summit in Bucharest. It is a vital conduit for 80 per cent of Europe's
natural gas supplies from Russia, as last month's total shutdown of the
transit pipes demonstrated.
Berlin wants stability in Ukraine, to
avoid creating the grounds for any unnecessary conflict with Moscow.
Russia wants a compliant government in Kiev that does not talk about
joining Nato and does not control the transit routes for Russia's gas
supplies to Europe.
Mr Steinmeier's concern, however, is that
instead there is "complete deadlock" in the Ukrainian political process
with the stand-off between the president, Viktor Yushchenko, and the
premier, Julia Tymoshenko. It undermines attempts to draft a recovery
programme in the face of a collapse in gross domestic product - down 20
per cent in the 12 months to January.
"On the one hand it makes them incapable of acting, and on the other the preparation for elections is not happening," he said.
"We
have supported Ukraine at the IMF [which agreed a two-year standby
credit last year of $16.4bn], and we supported them at the [European
Bank for Reconstruction and Development]. Whether we can do more, I do
not know."
Yet more is almost certainly needed. For a start, the
gas deal negotiated with Russia in January could well fall apart in a
matter of months, if not weeks.
Naftogaz, the Ukrainian state gas
monopoly that is responsible for paying Gazprom, the Russian supplier,
is in effect bankrupt. It is forced to sell gas to Ukrainian consumers
at a huge markdown and loses about $2bn (?1.5bn, £1.4bn) a year, a sum
that has to be met with government subsidies.
Anders
Aslund, former adviser to the Ukrainian government, is more sanguine
than Mr Steinmeier. He argues that Ukraine simply has "the most open
democratic discussion that you hear anywhere, apart from Britain and
India". He also believes that the economy has already hit bottom. But
another $5bn is needed - beyond the funds from the IMF, World Bank,
European institutions and commercial banks - to plug its financing gap.
"It
is very small money," he says, "but the consequences of not giving it
are horrendous. It is important that you should have funds available
that can be used for fire brigade exercises."
Mr Steinmeier is
unhappy about any such idea. "If you say Yes to Ukraine, what do we do
in Moldova or in Georgia? Where does it begin, and where will it end?
Can you restrict it to Ukraine?" he asks.
Russia, on the other
hand, has said yes in principle to helping out. But what strings will
be attached? Not the sort of budget discipline Berlin would demand. Mr
Putin - and Gazprom - have made little secret that they want to end up
in control of all the gas pipelines and storage facilities in Ukraine.
Then there would be no need for any more disputes about gas prices in
the middle of winter.
