GAS WARS. On Saturday, Prime Ministers Tymoshenko and Putin met in Moscow and fairly quickly came to agreement. For this year, Naftohaz will pay European prices less 20% with the transit fees remaining as previously agreed. For next and subsequent years it will be full European prices and full European transit fees. In short, an agreement not hugely different from what President Yushchenko walked out on last month and fully in line with the Tymoshenko-Putin agreement of three months ago. There is one significant difference – but always implied by Gazprom – which is that the “European price” is linked to the price of oil. Previously the contracts had been for a fixed price (attractive to Ukraine at a time when oil prices were rising). No doubt Belarus will be given the same deal when its contract comes up. So what took so long and why did all those customers have to get cold? It looks to me very much as if the whole thing was connected to the bitter political struggle in Ukraine and Tymoshenko is now able to position herself as the person who can solve the problems Yushchenko causes. Certainly she is blaming “corruption at the highest political level [in Ukraine]”. This should stand her in good stead in the presidential elections in a year. (Or sooner, maybe: both Yanukovych and Tymoshenko say he should resign and between them they control about 70% of the seats in parliament. But they don’t like each other either.) Stay tuned.

BUT. Ukraine has continually been in arrears: how will it, with a failing economy, pay the higher price? And what happens when it fails behind? Will Kiev, locked in its political war, keep the agreement?

SIGNS OF THE TIMES. I am interested that The Economist, which I regard as only useful on Russia because it gives the “mean sea level” of conventional opinion at the moment of publishing, doesn’t seem to be quite able to make up its mind whom to blame for the gas cutoff. (JRL/2008/11/22). August and January have been learning experiences for many in the West and coverage has been much more balanced.

MARKELOV. On Tuesday Stanislav Markelov was murdered in central Moscow in an obvious mob hit. Given that he had been acting for the family of Elsa Kungayeva, murdered in 2000 by Yuriy Budanov, given that Budanov had just been granted parole and that Markelov had just finished a press conference protesting the parole, almost everyone decided that the two were connected. I’m not convinced: after all Budanov had won his parole, after several earlier refusals, and it is unlikely that Markelov’s activities would have put him back in jail. So I suspect that the cause is something else. In November the editor of a newspaper in Khimki was almost beaten to death: he had been running a campaign to prevent developers from destroying a forest and Markelov had begun an investigation into that case. And he had other dangerous enemies. Yesterday the case was passed over the Investigative Committee of the PGO which is supposed to be Russia’s top investigation group.

COURTS. Russian courts have just reversed two tax claims against foreign companies: Lufthansa on the 14th and PricewaterhouseCoopers on the 20th. And, it is reported that a judge has ruled the raid on Memorial’s offices last month to be “unlawful”. As always in Russia, one never knows whether this was the result of “telephone justice” with a new phone, or a sign of genuinely impartial legal procedures.

LENIN. Yesterday was the anniversary of Lenin’s death and time for the usual poll. According to VTsIOM, two-thirds now think the body should be taken out of the Mausoleum. Some people appeared on Red Square dressed as mummies. The police, lacking a sense of humour, but also prudently fearing a riot while communists were making their annual pilgrimage to their Holy of Holies, detained them.

GEORGIA OPPOSITION. Readers will know that I expected Saakashvili to be long gone. But I have come to the conclusion that three things have kept him in power so far: his near-total control of news outlets; the understandable desire to avoid the third extra-legal departure of a president in a row and the disunion of the opposition. The third is being repaired: almost all opposition parties have agreed on a three-point program. Salome Zurabishvili (yet another of Saakashvili’s former colleagues) appears to have taken a leading role; according to her the three are: Saakashvili’s resignation, electoral system reform and early presidential and parliamentary elections. Not all opposition parties agree on the first and consultations on tactics continue. The Europeans are starting to clue in: a €500 million aid package over 3 years is in the works. But there are conditions: there must be political improvements (media freedom and freedom of assembly were emphasised) and “We do not want to see any Euro spent on any military and I think that is the most important”.

© Patrick Armstrong Analysis, Ottawa, Canada (See