• South Stream is to pump Russian gas under the Black Sea, bypassing Ukraine (Photo: eastpole)

EU says No to Russian pipeline, as Ukraine talks resume

06.12.13 @ 09:29

  1. By Andrew Rettman
  2. Andrew email

BRUSSELS - The EU has given Ukraine a gift on Russian gas, amid fresh talks on an EU-Ukraine treaty.

The European Commission told the Kremlin in a letter on Wednesday (4 December) that its "South Stream" pipeline - designed to bypass Ukraine, costing it billions in lost transit fees - violates EU law.

Klaus-Dieter Borchardt, a senior EU official, made the decision public the same day.

Referring to Russia's deals with Austria, Bulgaria, Croatia, Greece, Hungary, Serbia and Slovenia, he told the European Parliament that "the commission has looked into these intergovernmental agreements [IGAs] and came to the conclusion that none of them is in compliance with EU law."

An EU spokeswoman added that if they go ahead, Brussels will trigger "infringement proceedings."

EU "unbundling" and "third-party access" laws say energy firms must separate production and distribution and must let competitors use each other's pipes. But the IGAs give Russia exclusive control of South Stream from Siberian gas fields to EU consumers.

EU officials say the decision has nothing to do with new talks on an EU-Ukraine free trade treaty.

They also say they will not make "cheap deals" with Ukraine to salvage the trade pact.

But the South Stream decision squares with Ukraine's threat to leave the European Energy Community, a club of south-east European states, due to lack of EU "solidarity."

EU countries have also dropped demands for Ukraine to free its former PM, Yulia Tymoshenko.

The gas news came one day before Ukrainian envoys came to the EU capital for talks on reviving the trade pact.

The Ukrainian delegation was led by deputy central bank chief Mykola Udovychenko and deputy foreign minister Andrii Olefirov, who met with mid-level diplomats in the EU foreign service.

One contact told EUobserver the talks were "not bad," despite a rift in EU-Ukraine relations after Ukraine said No to the trade treaty on 21 November.

Another contact said Ukrainian deputy PM Serhiy Arbuzov is to come to Brussels next week.

The EU has refused to reopen negotiations on the trade pact: five and a half kilos' worth of documents, which took six years to put together.

Instead, Arbuzov is drafting new terms on "implementation" of the treaty.

He is calling it, informally, an EU "Marshall Plan," referring to US funding to rebuild Europe after World War II.

It will detail how much extra money Ukraine wants in order to put into life individual EU directives or industrial standards.

It will also contain safeguards to ensure the money - as much €10 billion - is not stolen or misused.

The fresh talks come amid ongoing pro-EU protests in Ukraine.

Swedish and Polish foreign ministers at a meeting with the Ukrainian PM, Mykola Azarov, in Kiev on Thursday urged him to stop police violence.

Meanwhile, Russia and the US spoke of "hysteria" and "chaos."

"This situation is connected to some Europeans' hysteria, which was caused by the fact that Ukraine exercised its sovereign right in deciding not to sign [the] agreement," Russian FM Sergei Lavrov told press at a meeting of the OSCE, a Vienna-based pro-democracy club, also in Kiev on Thursday.

The US state department's Victoria Nuland said: "This is Ukraine’s moment to meet the aspirations of its people or to disappoint them, and risk descending into chaos."

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