Slovakia Could Play a Vital Role in Ukraine's Recovery

5 MINS READFeb 28, 2014 | 11:06 GMT
Slovakia Could Play a Vital Role in Ukraine's Recovery
Slovakian Foreign Minister Miroslav Lajcak listens to a journalist's question in the Hungarian Ministry of Foreign Affairs in Budapest on Feb. 24.

Ukraine's western neighbor, Slovakia, has not been as vocal as other European countries or the United States in supporting Ukrainian protesters as they ousted their president. Bratislava's condemnation or support for the opposition would have had little effect on the political crisis. However, because Slovakia is an important natural gas transit state, it is likely to play a large role in the West's long-term efforts to help stabilize Ukraine's economy, especially if Russia increases Ukraine's natural gas prices.

Slovakia's relatively cautious approach to the Ukrainian crisis has included official condemnation of the outbreaks of fighting and support for limited sanctions targeting those responsible for the violence. In addition, Slovakian Prime Minister Robert Fico said Feb. 21 that his country was ready to offer medical assistance to Ukrainians and would not distinguish between protesters and supporters of the former government.

On Feb. 24, the foreign ministers from the Visegrad Group countries — Poland, Hungary, the Czech Republic and Slovakia — met in Budapest, offering their help in the upcoming Ukrainian transition process and praising the end of violence and the release of Yulia Timoshenko. At the meeting, Slovakian Foreign Minister Miroslav Lajcak said that the next government should have broad support and should include members of former Ukrainian President Viktor Yanukovich's Party of Regions. Lajcak, his Hungarian and Czech counterparts and at least one official from the Polish Foreign Ministry arrived in Ukraine on Feb. 28 to meet with members of Ukraine's interim government and the local administration in Donetsk.

Slovakia is a small country with a population of about 5.4 million. Its limited foreign policy clout and fear of being affected by the instability in neighboring Ukraine led Bratislava to react to unfolding events rather than push for change in Kiev. Another factor in Slovakia's behavior is Bratislava's hesitance to take actions that could sour its relationship with Russia — for example, helping to weaken the pressure that Moscow can put on Kiev through Ukraine's dependence on imports of natural gas from Russia. Unlike Poland and Lithuania, Slovakia was not an important actor in the Eastern Partnership initiative

Previous Attempts at a Natural Gas Deal

Currently, natural gas flows from Ukraine into Slovakia and on to the rest of Europe. However, as we noted late last year, Slovakia could use a technique called reverse flows to channel natural gas to Ukraine from European companies that pay less for the supplies, though most of this natural gas would still have come from Russia. 

Russian-European Natural Gas Networks

In November 2013, Ukraine and Slovakia reportedly agreed to sign a memorandum of understanding, which Bratislava had drafted and sent to Kiev. In early December, the Ukrainian delegation did not show up to sign the agreement. Later in the month, Ukraine unilaterally signed a memorandum of understanding, the details of which were not made public, regarding reverse natural gas flows from Slovakia through a currently unused pipeline that likely would require a 15 million euro ($20.6 million) investment before it could be used. However, Slovakia has not signed the agreement yet; in early February, an official in Bratislava noted that because of the instability in Ukraine, an agreement could not be signed until a new government is in place.

Russia likely used its leverage as an important natural gas supplier to both countries to hinder an agreement. When Yanukovich and Russian President Vladimir Putin agreed in December 2013 to a $15 billion loan and 33 percent reduction in gas prices for Ukraine, the reverse flow option became less attractive because the European companies could not match Russia's offer. Moreover, on Dec. 12, it was announced that Russia's Gazprom and Slovakia's state-owned SPP, which is the main supplier of natural gas in the country, reached a deal to lower natural gas prices (no details of the agreement were disclosed). Under pressure to cut natural gas prices for households, SPP welcomed Russia's offer of lower prices.

However, after the toppling of Yanukovich, it is questionable whether Moscow will honor the lower natural gas prices it promised Kiev. Thus, the reverse flow option — and Slovakia's position — has regained importance.  

Risks and Obstacles for Slovakia

Considering the recent events in Ukraine and the pressure on the West to support Kiev, Slovakia likely will face more pressure to finalize a reverse flow agreement with Ukraine. This destabilizes Slovakia's balanced foreign policy, which means to maintain good relations with Russia and the West. Yet Slovakia cannot afford to alienate its European partners by becoming the outlier that is unwilling to support Ukraine in its stronger orientation toward Europe. 

However, even if an agreement is signed, there are still plenty of obstacles to overcome before natural gas will flow from Slovakia to Ukraine. Russia has not said yet whether it will increase natural gas prices again, and even if it does, it can raise the price just high enough to ensure that it would not make economic sense for European companies to sell to Ukraine. As long as there is no strong interest for companies to sell natural gas back to Ukraine, it is unlikely that the investment in the infrastructure upgrade necessary for the reverse flow will be made.

In the long term, the crisis in Ukraine also gives Russia a strong impetus to follow through on its plans to build the South Stream pipeline. This natural gas export route would circumvent Ukraine and would also diminish Slovakia's role as a transit state.

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