Speech of Hryhoriy Nemyria, Vice-Prime-Minister for European and International Integration, Ukraine

It's a great honor to address the Second Kyiv Security Forum. I would like to thank the organizers, all those who were involved in the preparation of this important event, who did an excellent job of bringing together such a distinctive audience. Today's world highlights to all with short memories that security vacuum has consequences, which until they occur are impossible to predict. But let us look at the first lessons of a more constructive alternative: the current financial crisis and the role of the IMF, the World Bank, J7, and, of course, the EU. Imagine that less then a year ago, the IMF was a collective financial security apparatus whose very mission was questioned, and now it is playing a key role in a global crisis that was unimaginable just two months ago. All of these structures have been indispensable in this crisis. That is like a global front now.

There are numerous European specific structures that exist: from less ambitious frameworks so far, like the European Neighborhood Policy, to more, shall we say, enthusiastic efforts, like …you name it. Whether born out of crisis, or through thoughtful vision, the true utility of these frameworks and alliances is not apparent until they are immediately required. And then their presence or lack thereof is simply afeta compli.

It is my role as the Deputy Prime Minister for European Integration and it is my responsibility to lead the government of Prime Minister Tymoshenko in areas of cooperation, direction and legislation in Ukraine’s role as a critical partner within Europe and within the EU.

As with political and military security in this region, there is a security vacuum that exists in energy sector. More often then not the focus is on Ukraine. So, clearly, other nations represented here have been vulnerable also. Our neighbors and partners here know this all too well experiencing very frequently the same problems. This very Forum attempts in a very concrete way to manage one element of the situation - the transit space, and the government of Ukraine supports these efforts. There have been numerous calls for the collective energy security arrangements. And Prime Minister Tymoshenko said that the goal would be that no country would be left alone to deal with a problem which affects everyone. Interdependence is the order of the day and we must deal with this issue today on a multilateral basis. The same words apply to the global credit crisis. As we have seen, no country can withstand these problems alone. Whether through coordinated multinational interstate cards, or coordinated global liquidity infusions, we are all interdependent. The same holds for the natural gas and the broader energy spectrum.

What specifically can be done? Firstly, include Ukraine as a key transit space and other key transit space members in the current energy dialogue that exists between the EU and Russia. It is not unreasonable to suggest that the country that holds the majority of transit of gas shipments to Europe would be included in this dialogue, and other critical countries will be included as well. Secondly, establish a stronger energy policy framework of producers, consumers and transit space countries that would emphasize market transparency and access. The Energy Charter Treaty and its Transit Protocol are a good first step and provide a constructive conceptual framework. Initial focus would be on setting ground rules, harmonized contractual procedures, and agreed upon pricing points. Thirdly, institutionalize a forum for conflicts to be resolved collectively. When one member suffers gas interruptions due to the natural disaster or politically motivated reasons, members can meet to determine an appropriate course of action and respond to the crisis that affects everyone. What is clear, that without this type of framework for Europe, consumer and transit nations will remain divided in the face of sometime supply monopolies and possibly soon to be developed cartels.

It is the position of the government of Ukraine and part of its efforts to integrate more fully into the EU space, and the above points are pursued as part of our diplomatic agenda. We are pleased with the significant progress achieved with the implementation of the EU-Ukraine Memorandum of Understanding on the Cooperation in the Field of Energy. EU-Ukraine summit in Paris two months ago reaffirmed our joint strategic interest in energy cooperation. We will start soon negotiations of Ukraine’s accession to the Energy Community Treaty as part of extension of the common EU regulatory framework in the energy area. Modernization of Ukraine’s gas transportation system is an important item on our agenda. And we hope that the international pledging conference will be conducted hopefully next February. Nuclear safety cooperation is a good example of fruitful cooperation that requires positive continuation.

There are a number of problems and Speaker Yatsenyuk addressed them already. I would like to highlight just two. Underinvestment in the production of domestic energy resources is a clear problem that we have to deal with because Ukraine is the country rich in natural resources. To deal with that, we need various incentive programs for strategic foreign direct investments. Second problem, already touched upon, is extremely inefficient energy usage. Not just in industry but also among residential users. Therefore, we need energy efficient equipment and technologies. And this is again an invitation for investments and invitation for a greater involvement of the expertise that exists outside Ukraine, and outside this region.

At the end, I would like to add several specific remarks to the issue of the larger transit space. First, we understand Russian Federation’s fundamental interests in being a reliable energy supplier to Europe. And we strongly believe that democratic Ukraine governed by the rule of law, will provide many new opportunities for the cooperation in the energy sphere. Second, we are happy that RosUkrEnergo will be removed and new gas agreement will be reached in time so that there is not another crisis in 2009. Recently agreed principles between Ukraine and Russia on structured gradual transition to new prices on gas are important value-added developments to the energy stability of Europe. Transparent system of energy supply based on direct agreements between Gasprom and Naftogas is a system that European energy consumers can have faith in. Third, on Ukraine’s side, we as a nation need to show unity - it is time for unity, not for divisions. Ukrainian political turbulence, as sometimes it is elegantly called, unfortunately provides skeptics within some international constituencies with excuses to withhold support and solidarity. And finally, don’t bypass Ukraine. Yes, there are issues with transparency and inefficiency within Ukraine but it needs to more effectively integrate itself within the European energy infrastructure system. Bypassing Ukraine will make it much harder for Ukraine to reform. Greater diversity in energy supply and increased transparency in all of Europe’s energy contracts and policies is the only way that Europe can begin to end this age of energy insecurity. I think that these priorities should become an integral part of a more ambitious transatlantic transparency initiative as an element of renewed updated transatlantic agenda. The government of Ukraine and Prime Minister Tymoshenko have been advocating for these measures for many years now. The government and I, as a member of the Cabinet, responsible for these activities within the EU integration framework, support these measures. We look forward to working with you on these mutually beneficial and very much needed efforts. Thank you.

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