Gas and regional geopolitics

“Ukraine and Slovakia will create an energy hub for Eastern Europe,” headlined Ukrainska Pravda on Monday , citing the words of Ukrainian Prime Minister Denis Shmyhal after his meeting with Prime Minister Robert Fico, who has recovered and returned to his post after the assassination attempt that put his life in danger. Although the Ukrainian media mainly focused on news about energy cooperation, the Slovak president did not hesitate to repeat to Shmyhal his position regarding Ukraine’s geopolitical position. As Politico stated on Monday, the Slovak president said on Sunday in an appearance in a Slovak media that “as long as I lead the government, I will direct the deputies under my control as chairman of the party [Smer] to never accept Ukraine’s accession.” According to Strana, Fico insisted on his “100%” support for Ukraine’s entry into the European Union, but not into NATO. This “no” attitude towards Ukraine’s entry into the military bloc is compounded by Fico’s intention to resume normal relations with Russia if the war ends during his term in office. However, as his meeting with the Ukrainian prime minister shows, this position is not in contradiction with cooperating with Kyiv on issues affecting both countries, including energy.

“Slovakia will transfer 500,000 euros for Ukraine’s energy needs,” Ukrainska Pravda added to its report on the energy hub agreed by the two countries, which, according to Shmyhal, will aim to “use gas storage facilities, develop the Mukachevo-Veľké Kapušany interconnector and cooperate in the nuclear industry. This will strengthen not only the energy security of our two countries, but also that of the entire Eastern European region.” At the meeting, Kiev obtained half a million euros from one of the poorest countries in the European Union for “energy needs and restoration of Ukraine’s energy infrastructure within the framework of the Bilateral Cooperation Plan in the field of development of Slovakia” and an agreement that should benefit both states. “I would like to emphasize that Slovakia is the second most important country in terms of exporting both emergency and commercial electricity to Ukraine,” Shmyhal added, making clear the role of the neighbouring country in Kyiv’s attempt to reduce the effects of Russian attacks on the national electricity system.

However, cooperation has its limits, and in this case, war and geopolitical positions play an important role. Before the meeting, Fico had asked Ukraine for a “friendly gesture” on the gas issue, after Kyiv had already stopped the transit of Russian oil to countries such as Slovakia. Gas gives Ukraine a bargaining chip, a pressure chip and a blackmail card that Kyiv will not give up. “After meeting Fico on Monday, Ukrainian Prime Minister Denys Shmyhal confirmed that Kiev would not renew the transit contract between Naftogaz, the Ukrainian energy company, and Russia’s Gazprom, which expires at the end of this year,” wrote the Financial Times on Monday . Ukrainian media echoed Ukraine’s refusal to continue dealing with Gazprom even if it were to be done at the expense of neighbouring countries that are helping Kyiv to alleviate the energy crisis it is currently suffering from due to the war.

Over the past decade, Ukraine’s stance on the gas issue has been a reflection of the country’s economic and political situation. Its ability to stop the flow of gas at any time has already been used in the past as a tool of pressure on both the East and the West, and the likely involvement of the Ukrainian state in the destruction of the Nord Stream gas pipeline would confirm Ukraine’s willingness to do everything in its power to make a project that is contrary to its interests unviable. As in the case of the possible halting of Russian gas transit through Ukraine, which would harm countries such as Slovakia, Austria and Hungary, the attack on the Baltic Sea gas pipeline primarily affects the second largest provider of military assistance to Ukraine, Germany, a factor that did not prevent the attack on the infrastructure.

But gas transit brings in revenues that Ukraine, which has made clear its intention to break with Gazprom once and for all in its emphasis on completely isolating its economy from Russia and renouncing all economic relations with its eastern neighbour, does not want to give up. In this balancing act between refusing to reach an agreement with the Russian national gas company and losing a significant flow of money, Ukraine would be willing to continue transit if it is the Western countries that reach agreements with Russia. This is a repeat of the situation in which Kiev claimed during the years of war in Donbass to have completely freed itself from Russian gas, replaced by gas purchased precisely from Slovakia, which has no production and which received its own from the Russian Federation. In other words, Gazprom sent gas through Ukraine to Slovakia to then be sent to Ukraine. In this way, Kyiv kept its transit revenues and could claim that it did not deal with Gazprom.

The current situation is marked by Ukraine’s perceived strength. After the meeting with Fico, Shmyhal admitted the vulnerable situation in which countries such as Slovakia find themselves due to what he perceives as a dependence on Russian gas, which he hopes will decrease in the future through diversification. Able to give lessons to its neighbours despite being a country whose economic survival depends on foreign subsidies, Ukraine defended the possibility of using its transit system to export Azerbaijani gas to the European Union – which would presumably also include Russian gas, especially given the good relations between Baku and Moscow – and did not hide the fact that its aim is to obtain sanctions against Russian gas. Kyiv does not want to lose its privileged position in gas transit, nor the income it brings, but it does want to decide which gas its neighbours, who are currently helping it to alleviate its crisis, should buy.

The media that reported the news also forget one detail. The current agreement between Russia and Ukraine, which has allowed gas transit to continue uninterrupted despite the war, was the main outcome of the Normandy Format summit of heads of state and government held in December 2019 in Paris. For weeks, the then newly elected President Volodymyr Zelensky begged his allies and also Vladimir Putin to hold a meeting. Zelensky was even forced to confront the soldiers of the Azov Regiment, who refused to comply with the order to partially withdraw from an area of just two square kilometers under an agreement reached more than two years earlier. It was the Russian president’s demand for agreeing to hold the meeting. That summit, like the current statements, was a reflection of Ukraine’s priorities. Although it was theoretically presented as an opportunity to move forward in resolving the conflict in Donbass via the Minsk agreements, the war was a secondary issue and the gas agreement was the only tangible result of that summit. There was no progress in finding a solution to the war, something of little interest to Kyiv given that it involved political concessions, but Ukraine guaranteed itself five more years of income from the transit of Russian gas. A raw material that it now intends to sanction, but from which it continues to obtain income.