Ukraine's politicians manipulate increase in gas prices in the run-up to elections

Author : Yaroslav Konoshchuk

Source : 112 Ukraine

Those in power and in opposition try to blame each other or their "forbearers" for gas tariffs increase
10:20, 29 October 2018

Open source

Ukraine’s parliament has decided to raise gas prices for the population by 23.5% during an emergency meeting held on October 19. The IMF demanded to increase the prices, Ukraine was forced to agree, as the country really needs external financing now. Until recently the Ukrainian authorities have been arguing with the IMF about the need to postpone the increase to the post-election times. It is not a secret that political risks after tariff increases are very high. Both the coalition and the opposition understand it, and therefore immediately after the decision of the Cabinet of Ministers to raise the price of gas, all of them began to cry "who is really to blame for the growth of utility tariffs."

Related: Why natural gas production does not increase in Ukraine?

Blame the forbearer

“Ukraine assumed the obligation to raise gas prices back in 2008. Failure to comply with it would lead to default and hyperinflation,” Prime Minister Volodymyr Groysman explained the decision to increase gas prices for the population from November 1. The logic of Ukraine’s PM is simple - if we do not raise it by a quarter now, we will pay much more later. Groysman stressed that he has achieved an increase of 23.5%, "although 60% were demanded." In addition, the government likes to remind that it is forced to go to the IMF because of the need to repay the debts of the forbearers. However, the authorities tend to omit that new debts would be a pain in the neck of the successors.

Related: IMF demands to increase gas prices for Ukrainians by 40%

The country leaders (let us not forget about the memorandum of cooperation with the IMF, signed by the president, the prime minister, and the National Bank chairman), realizing the potential rating losses in 2019, try to pose themselves as the harsh defenders of the common people. In fact, the logic of this defense is simple - we will pay with one of the means of other taxpayers.

Consequently, PM Groysman declared that those in need will be protected. According to the head of government, the number of recipients of subsidies can again reach 7 million households, which corresponds to December 2017.

In turn, President Poroshenko instructed the government to "expand the subsidy program due to the increase in gas prices." The Cabinet of Ministers, for its part, promptly simplified the procedure for obtaining subsidies. So, now those unemployed, who are registered at the employment center, can count on the state assistance. Previously, an unemployed person could count on a subsidy only after paying a single social contribution for three months. In addition, the area of apartments whose owners can apply for a subsidy increased.

Related: Next gas price increase in Ukraine slated for May 2019

The experience of previous years shows that there might be a lack of money for all those in need. However, the size of subsidies is periodically reduced, among other things, by reducing social norms. Social Policy Minister Andriy Reva said that the number of subsidies would not be increased since salaries and pensions have increased this year, which should cover the growth of tariffs. Well, by this step the authorities essentially rolled back the effect of raising wages and pensions as such.

Related: Ukraine's Naftogaz counts Gazprom's $9 million of overpayment as gas transit debt

Selfies at the background of the fight against tariffs

And what about the opposition? Immediately after the decision to raise gas prices, the leader of the Batkivshchyna faction, Yulia Tymoshenko, expectedly raised the tariff issue, promising to reduce the cost of gas for the population in the event of their own victory in the elections. Good move, but banal. Tymoshenko did not blame anyone but the president for raising gas prices for the population, and also she called on parliament speaker Andriy Parubiy to hold an extraordinary parliament session in connection with the government’s decision to increase gas tariffs. But 150 signatures of the MPs, necessary for holding an extraordinary session, were not collected. No one wants to turn the parliament into a mouthpiece of the opposition.

The extra-parliamentary struggle with tariffs is also weak. October 24, about 500 people came to the Presidential Administration demanding to cancel the government’s decision on raising utility rates.

The first protest near the Administration was chaotic and weak. Some of the protesters took selfies against the background of the building.

Related: No more gas prices hike, - Ukraine's Prime Minister

Since people have not yet received bills with the new tariffs, the “fight against bullying people” will be shifted closer to the elections. Batkivshchyna says it will provide legal support to citizens in the tariff courts.

Even fewer people came to a similar action organized by far-right Svoboda party. About 30 people gathered under the Cabinet of Ministers.

However, this is only the beginning, and after the first payments, the protest potential will inevitably increase, given the approach of the official start of the presidential election campaign. The question is how the opposition will take advantage of it, and whether subsidies and hot radiators can neutralize it.

Related: We will suffer minimal losses, - Prime Minister on gas prices increase

* * *

One way or another, the tariff problem will never disappear before or after the elections, whoever came to power in 2019. According to sources in the Cabinet of Ministers, Ukraine has promised the IMF to bring gas tariffs to the level of import parity until 2020. According to our interlocutors, in the autumn of next year, the gas tariff for the population may rise. Yes, and Prime Minister Groysman hinted that the gas price will not rise only until the end of the current heating season. So far no one knows what will happen next season.

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