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Gazprom Tells Kyiv to Pay up Front, Torture Report Calls Out Uzbekistan

Also, the Ukraine crisis is sending wheat prices up, and VAT fraud mounts in Poland.

by Barbara Frye, Ioana Caloianu, and Marketa Horazna 15 May 2014

1. Gazprom demands $1.66 billion advance gas payment from Ukraine


Russian energy giant Gazprom has followed through on threats to make Ukraine pay in advance for gas shipments. This week the company sent Kyiv a $1.66 billion bill for gas deliveries for June, Reuters reports.


Gazprom spokesman Sergei Kupriyanov said Ukraine has until 2 June to pay.


Alexei Miller
Alexei Miller, Gazprom’s chief executive, said Ukraine owes the firm more than $3.5 billion and did not make any payments in March or April, Itar-TASS reports.


Alluding to a $17 billion loan from the IMF, Russian Prime Minister Dmitri Medvedev said, “Our Ukrainian partners have money,” according to Itar-TASS.


Russia has hiked the price of gas for Ukraine from $268.5 per thousand cubic meters late last year to the current $485, which Kyiv refuses to pay.


Ukrainian Energy Minister Yuri Prodan told Reuters last week that the lower tariff is “a market and a fair [price]” for gas. Prodan said his government would sue Gazprom if the two sides do not agree on price by 28 May – a tactic “used by Gazprom's other clients in Europe to win price cuts over the last couple of years,” Reuters notes.


A Gazprom official said earlier this week that Ukraine has only about half the gas it needs in storage for a “trouble free winter,” according to Reuters.


Europe gets about 30 percent of its gas from Russia, more than half of which flows through Ukraine, according to the U.S. Energy Information Administration. Gas disputes between Ukraine and Russia in 2006 and 2009 interrupted the flow of gas to customers downstream.


2. Amnesty torture report spotlights abuses in Uzbekistan


Torture is “flourishing” around the world, 30 years after 155 countries agreed to put an end to the practice, Amnesty International said in a report released this week.


The human rights organization said at least 79 of the 142 countries it researched this year – all of which are signatories to the 1984 UN Convention Against Torture – are still torturing. Among five countries or regions spotlighted in the report is Uzbekistan, where Amnesty said “torture and other cruel, inhuman, or degrading treatment [are] rife.”


The report cites the frequent use in Uzbekistani courts of confessions obtained through torture, reprisals against those who complain about abuse, and targeting of supporters of opposition political movements or members or some religious groups. Amnesty noted that investigations and prosecutions of torturers are rare and that the government has consistently disregarded the recommendations of international human rights bodies and refused to admit international monitors.


Even though a high court panel has twice in the past decade admonished lower courts in Uzbekistan not to consider evidence obtained through torture, “these directives have had virtually no effect,” the report states.


Among the alleged survivors of torture named in Amnesty’s report is Isroil Kholdorov, who spoke to foreign media about mass graves near the city of Andijan after a 2005 massacre there when government troops fired on hundreds of protesters.


Kholdorov fled to Kyrgyzstan but was arrested in 2006 in Uzbekistan under unclear circumstances. The following year he received a six-year prison sentence on charges of attempting to overthrow the constitutional order, organizing and leading a banned organization, and illegally crossing the border. The sentence was extended by three years in 2012, according to the report.


This week marks the seventh anniversary of the Andijan massacre. “No one has been held accountable for the killings, nor has the Uzbek government ceased its relentless persecution of those it suspects of having ties to the protest and of human rights activists and others critical of the government,” Human Rights Watch said in a 12 May statement.


The group singled out the EU and United States for not leaning on Uzbekistan’s government to bring the perpetrators to justice. 


3. Global unease over Ukraine pushing up wheat prices


The conflict in Ukraine and bad weather in the United States have combined to push global wheat prices up by more than 30 percent since early February, although the have seen a drop in the past week.


Ukraine is a major exporter of wheat and corn. Its crop yields are down slightly from last year but are still viewed as healthy. The problems come as buyers fear spreading violence in the country’s east could disrupt shipments, Bloomberg Businessweek reported last week.


Citing Ukraine’s foreign trade consultancy, J.P. Morgan reports that “international grain traders are reluctant to sign long-term forward contracts for the export of Ukraine grain.” Of particular concern is the turmoil in the country’s southeast, where most of its seaports are located and through which most its grain exports pass.


The higher prices have squeezed some European countries that rely almost exclusively on imported grain. The price of bread and cattle feed – and therefore meat – has already started to climb in the Balkans, according to SETimes.


“The crisis in Ukraine will lead to a general disruption of the wheat market, and we are part of that,” Nikolcho Gjorgjiev, president of the Mill Bakery Industry Group in Macedonia, told SETimes. 


4. VAT cheats costing Poland billions, auditors find


The amount Poland loses each year to value-added tax fraud has been steadily on the rise since at least 2011, Polskie Radio reports, citing findings from government auditors.


The government lost more than 2.5 billion zloty ($819 million) in 2011, more than 4 billion zloty in 2012, and almost 3.2 billion zloty in the first half of 2013, according to the review.


Auditors cited an increase in unpaid VAT on goods imported from other EU countries, doctored VAT receipts, and “bogus VAT returns,” according to Polskie Radio, which says VAT receipts have averaged 42 percent of budget revenue since 2011.


The EU’s lowered trade barriers have exacerbated VAT fraud elsewhere as well. A 2012 think tank report estimated that VAT fraud losses in Bulgaria linked to international trade more than doubled from 2006 to 2009. Bulgaria joined the EU in 2007.


5. 18 percent of working Czechs earn poverty-level wages


One in five working Czechs lives in poverty, the Czech Press Agency (CTK) reports, citing daily Mlada Fronta Dnes. They are primarily unskilled workers such as cashiers, cleaners, and security company employees, making less than 14,500 crowns ($724) per month.


That is slightly more than half the country’s average wage of 26,637 crowns.


The Czech working-poor figure, 18 percent, is 1 percent higher than the EU average, according to CTK.


Sociologist Jan Keller said the movement of jobs to cheaper countries outside Europe “is worsening the conditions of those who already have jobs.” Adding to the gloom is an increase in part-time and fixed-term jobs, CTK writes.


The Czech unemployment rate in January was 7 percent, down by a hair from January 2013.


A poll by the Median agency showed that the working poor in the Czech Republic are more pessimistic about their future and are only slightly more satisfied with their current situation than the unemployed, who sometimes earn more from welfare payments, according to CTK.


The Czech government raised the monthly minimum wage from 8,000 to 8,500 crowns last year and plans to lift it to 10,000 crowns by 2018, CTK reports.

Barbara Frye is TOL's managing editor. Ioana Caloianu is a TOL editorial assistant. Marketa Horazna is a TOL editorial intern.
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