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Ukrainian Government Survives No-Confidence Vote, Gazprom Loses LNG Monopoly

Plus, Lukashenka demands fast growth with low inflation, and a verdict is reached in the Bolshoi acid-throwing case.

by Ioana Caloianu, Ky Krauthamer, and Alexander Silady 3 December 2013

1. Yanukovych flies to China as government in Kyiv survives no-confidence vote

 

Ukrainian opposition deputies failed to oust the government in a no-confidence vote today, RT reports.

 

The attempt fell 40 votes short of the simple majority of 226 needed. Opposition leaders Arseniy Yatsenyuk, Vitali Klitschko, and Oleh Tyahnybok called a motion of no confidence on 2 December.

 

Prime Minister Mykola Azarov called on the opposition to end its blockade of the government building, according to RT.

 

Thousands of anti-government protesters gathered outside parliament ahead of the vote as people continue to rally on Kyiv’s Independence Square, CNN reports.

 

 

Mass opposition rallies broke out last week after the government announced it would give in to Russian demands not to sign an agreement on closer cooperation and trade with the EU. Embattled President Viktor Yanukovych appeared to crack open the door to Brussels 2 December, asking European Commission President Jose Manuel Barroso by telephone to send a delegation for further talks, the commission said in a statement quoted by RIA Novosti.

 

Yanukovych promised Barroso to investigate the use of force against anti-government demonstrators and admitted police had overreacted in cracking down on protests, the agency writes. More than 300 protesters and police were injured in clashes over the weekend as hundreds of thousands rallied in central Kyiv.

Yanukovych departed today for a scheduled visit to China. Earlier, Reuters cited some analysts as saying the president hoped to secure new Chinese loan guarantees, while others chided him for flying off during a national crisis.

 

2. Guilty verdicts in acid attack on Bolshoi director

 

Sergei FilinSergey Filin
Capping a day of drama for Moscow’s famed Bolshoi Theater, a one-time star dancer and two others were convicted and sentenced today for the January acid attack on the theater’s artistic director, Sergey Filin.

 

Dancer Pavel Dmitrichenko was given a sentence of six years for planning the attack, which nearly blinded Filin, CNN reports. An accomplice, Yuri Zarutsky, was sentenced to 10 years, and another defendant, Andrei Lipatov, to four years.

 

The judge in the Moscow courtroom concluded that Dmitrichenko had been dissatisfied with Filin’s allocation of roles and payment of bonuses, RT reports. According to CNN, the dancer claimed he only intended to send Filin a warning, or perhaps have him beaten up. Zarutsky testified that he had the idea of throwing sulfuric acid in Filin’s face and that he acted independently.

 

RT reports that Filin has been under treatment in Germany since the attack, which caused extensive damage to his eyesight, face, and internal organs.

 

The three defendants were also ordered to pay about $100,000 in compensation to Filin.

 

The day before the verdict, Bolshoi music director and chief conductor Vassily Sinaisky handed in his resignation, according to AFP. The move came as a surprise, as Sinaisky was due to conduct the premiere of Verdi’s opera Don Carlos in two weeks. Sinaisky is also a principal conductor with the Malmo Symphony Orchestra and chief guest conductor with the BBC Philharmonic, AFP writes. He is thought to be in the running to become chief conductor of the St. Petersburg State Symphony Orchestra.

 

The prestigious Moscow theater reopened in 2011 after undergoing a costly and controversial renovation.

 

3. Kremlin ends Gazprom’s monopoly in LNG market

 

Russian President Vladimir Putin has signed a law to open up a growing segment of the energy industry to greater competition, RIA Novosti reports.

 

The state-controlled company Gazprom has enjoyed a monopoly on many parts of the energy production and distribution system. Though Gazprom will retain its sole right to export Russian natural gas in pipelines, the new law allows state-owned Rosneft and independent Novatek to break into the market for liquefied natural gas ( LNG). Gazprom owns the only LNG plant in Russia, located on Sakhalin Island and operated in consortium with Royal Dutch Shell, but Novatek is investing $20 billion alongside French and Chinese firms into producing LNG in the Arctic, according to the news agency.

 

A key advantage of LNG is its compactness, which allows it to be transported by ship and truck.

 

Russia controls 4.5 percent of the world LNG market, Reuters writes, and Putin's government aims to double that figure by 2020. LNG production increases would help Russia break into markets in southern and eastern Asia as Europe, its primary customer base for fuel exports, aims to reduce its dependence on Gazprom.

 

Gazprom and other huge state monopolies received more bad news in November when the government ordered them to slash costs in half by 2017.

 

The gas, oil pipeline, railway, and electric power distribution monopolies were told to cut costs by 10 percent in each of the next five years, RIA Novosti reports, citing Kommersant.

 

Sources in the oil pipeline company Transneft and electricity distributor Rosseti told Kommersant it would be difficult to implement such deep cuts, RIA writes. 

 

4. Bulgarian green energy producers face tougher times

 

Bulgaria’s finance minister is defending a move to raise money from renewable energy producers in next year’s budget, saying it will not result in EU penalties, Novinite reports.

 

The proposal to reduce the feed-in tariffs paid to solar and wind power producers, thereby effectively imposing a 20 percent tax on them, was approved by the two strongest parties in the governing coalition, The Sofia Globe reports. The idea was floated by the far-right Ataka (Attack) party last week.

 

Finance Minister Petar Chobanov sought to quell concerns the tariff cut would incur EU penalties for failing to support the renewable energy industry, Novinite writes. On 30 November he said other EU countries have in the past imposed taxes on energy companies to restrict “excessive profits.”

 

Renewable energy companies in Bulgaria receive a preferential feed-in tariff when selling to the government, which accounts for much of the industry’s revenues. Under the new budget proposal, companies would be required to pay 20 percent of those tariffs back to the state. Biomass and hydroelectric producers are so far exempt from the measure, which Bulgarian Solar Power Association head Meglena Rousseva called discriminatory, The Sofia Globe writes.

 

Anger over high energy prices helped ignite protests that forced the previous government’s resignation earlier this year. The public is suspicious of solar and wind energy producers, because of a 13 percent energy price hike in 2012 – although only a small part of that was due to renewables – and the high profits reaped by trading in these energy sources, according to The Globe. Ataka leader Volen Siderov has called for energy companies to be nationalized.

 

5. Lukashenka tongue-lashes economic planners over low growth, high inflation

 

Though not near the stratospheric heights it reached two years ago, inflation continues to bedevil Belarus.

 

Consumer prices rose 12 percent in the first 10 months of the year, and they were up nearly 16 percent over October 2012, giving fuel to a scolding of the country’s economic planners by President Alyaksandr Lukashenka 29 November.

 

The president said planners had failed to meet “an absolute majority” of their economic targets for the year, the official news agency Belta reported last week.

 

“You were eager to keep inflation as low as 12 percent. In reality people are still tense about rising prices. In January-October 2013 inflation reached the figure we planned to secure at the end of the year,” Lukashenka said after the government and the central bank presented an economic status report.

 

Inflation in Belarus has far outpaced that in other post-Soviet countries, according to the website of Charter ’97 an opposition group. Across the former Soviet Union, prices either dropped or rose by rates of 0.5 percent to 5.3 percent, it reports.

 

Lukashenka also complained that economic growth would struggle to reach 1.5 percent this year, far below the 8.5 percent target set by the government.

 

Inflation leaped to more than 100 percent in late 2011, months after the government ordered a drastic currency devaluation. The central bank was able to rein in price growth with steep interest rate hikes, which were then gradually lowered to below 40 percent in March 2012 and around 23 percent by early 2013, CentralBanking.com wrote in August.

 

Nadezhda ErmakovaNadezhda Ermakova
Lavish government spending and public wage hikes in the 2010 presidential election campaign kick-started the price rises and subsequent devaluation, CentralBanking.com wrote. The banking website saw a clash of policies between Lukashenka and Nadezhda Ermakova, who took over as central bank governor in 2011. Bringing inflation below 10 percent was “the most important task” for the bank, Ermakova told the banking website. At the same time, Lukashenka was “pressing for economic growth this year at more than seven percentage points above International Monetary Fund predictions,” the website noted.

 

Perhaps hinting at economic policy changes, Lukashenka told the economic planners last week, “We should uncover reasons behind the failures and the problems that slow down the country’s development.”

Ioana Caloianu is a TOL editorial assistant. Ky Krauthamer is a senior editor at TOL. Alexander Silady is a TOL editorial intern.
Home page photo and video of Kyiv protest from euronews/YouTube.

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