Ukraine: Daily Briefing – March 2, 2018, 5 PM Kyiv time

The General Staff of Ukraine’s Armed Forces reported at 12:30 PM Kyiv time that in the last 24 hours, no Ukrainian soldiers were killed or wounded in action. In the last 24 hours, Russian-terrorist forces opened fire on Ukrainian positions on the Luhansk and Donetsk sector of the front twice, both times with mortars.

The US Defense Security Cooperation Agency stated on March 1, “The State Department has made a determination approving a possible Foreign Military Sale to Ukraine of Javelin Missiles and Javelin Command Launch Units (CLUs) for an estimated cost of $47 million.  The Defense Security Cooperation Agency delivered the required certification notifying Congress of this possible sale today.

            The Government of Ukraine has requested to buy two hundred ten (210) Javelin Missiles and thirty-seven (37) Javelin Command Launch Units (CLUs) (includes two (2) Javelin CLUs to be used as spares).  Also included are Basic Skill Trainers (BST); United States Government and contractor technical assistance, transportation, training and other related elements of logistics and program support.  The total estimated cost is not to exceed $47 million.

           This proposed sale will contribute to the foreign policy and national security of the United States by improving the security of Ukraine.  The Javelin system will help Ukraine build its long-term defense capacity to defend its sovereignty and territorial integrity in order to meet its national defense requirements.  Ukraine will have no difficulty absorbing this system into its armed forces. […]

          The prime contractors will be Raytheon/Lockheed Martin Javelin Joint Venture of Orlando, Florida and Tucson, Arizona.  However, these missiles are being provided from U.S. Army stocks and the CLUs will be obtained from on-hand Special Defense Acquisition Fund (SDAF)-purchased stocks.”

Writing for the Atlantic Council, Timothy Ash stated, “Ukraine received a useful fillip on February 28 when the Stockholm Court of Arbitration ruled in favor of the state gas supply and transit company, Naftogaz, and against its Russian counterpart, Gazprom, in a four-year dispute over gas transit.

           The court awarded Naftogaz $4.63 billion in damages, finding that Gazprom failed to pump agreed upon volumes through Ukraine’s pipeline system, thereby depriving it of transit revenues.

           An earlier ruling against Ukraine over the 2009 “take or pay” gas supply contract for $2 billion means the net payment due to Naftogaz is $2.56 billion, or more than 3 percent of Ukraine’s GDP. No two ways about it, this is a major win for Ukraine. […]

          While Gazprom and Russia immediately reacted by questioning the fairness of the award and signaled a desire to challenge the decision, I cannot see a situation in which Gazprom does not pay. Both sides agreed to participate in the arbitration on the understanding that there is limited scope to appeal.

          And not paying would send a bad message about Gazprom’s creditworthiness. Given the close proximity between Gazprom and the Russian state, such an outcome is undesirable. The Putin regime has worked hard in recent years to ensure Russia’s ascent back to an investment grade rating. Instead, Gazprom will likely stall for a few months, but it has the cash and financing options to pay, and will have to eventually pay or face further litigation from Ukraine, and potential reputational damage as a result.”

Naftogaz Ukrainy reported, “Naftogaz and Poland’s PGNiG have signed a contract for urgent gas supplies following the yesterday’s Gazprom’s decision to refuse starting supply of gas to Naftogaz, which happened a day after the announcement of the award of the Stockholm Tribunal.

           The contract with PGNiG is effective until the end of March 2018. The contracted volume totals over 60 mcm. The delivery started today at 6 a.m. through Hermanowice node that connects Polish and Ukrainian gas transmission systems.

           ‘The current situation around gas supply proves that our focus on diversification of supplies was the right decision. Thanks to our Polish partners, yet another attempt of Moscow to use gas as a political weapon against Ukraine has failed. I hope that the EU and governments of the relevant member states will consider this case when making their final decision on Nord Stream 2,’ commented Naftogaz CEO Andriy Kobolyev. […]

           Piotr Wozniak, President of PGNiG Management Board stated, ‘Energy solidarity and good cooperation between neighboring countries is our duty. […] We are prepared to increase the volume of deliveries or extend the effective term of the contract, depending on Ukrainian market demand. PGNiG can ensure stable and secure gas supplies thanks to its diversified portfolio, which is a mix of domestic production in Poland and import supplies including regular deliveries of LNG from Qatar and USA.'”

Ukraine’s Presidential Administration reported, “President Petro Poroshenko addressed CEO of NJSC Naftogaz of Ukraine Andriy Kobolyev, Prosecutor General of Ukraine Yuriy Lutsenko, Minister of Justice Pavlo Petrenko and Minister of Foreign Affairs Pavlo Klimkin with a request to develop a plan of common actions as soon as possible in case Gazprom doesn’t fulfill the decision of the Stockholm arbitration tribunal.

          During a meeting of the National Security and Defense Council, the Head of State noted that, according to the decision of the Stockholm arbitration tribunal, Gazprom must pay more than $2.5 billion to NJSC Naftogaz of Ukraine in a very short time.

          ‘If Gazprom does not pay money, NJSC Naftogaz of Ukraine will have to arrest its assets and enforce decisions of the Stockholm arbitration tribunal. We have a lot of assets involved, similar to the Nord Stream 2,’ Petro Poroshenko emphasized. […]

          According to the President, disrespect for the execution of court decisions has extremely important geopolitical consequences. ‘How Europe can count on the reliability of this gas supplier,’ the President added. At the same time, he noted: ‘How can we talk about the Nord Stream 2 or the Turkish Stream when the company officially declares in negotiations with NJSC Naftogaz of Ukraine that it is not going to comply with the court decision?'”

The Associated Press reported, “NATO says Russian President Vladimir Putin’s threat to target its members are unacceptable and that the military alliance will continue using its armed forces to deter aggression.

          NATO spokeswoman Oana Lungescu said Friday that ‘Russian statements threatening to target allies are unacceptable and counterproductive.’ […]

Noting Russia’s ‘aggressive actions’ in Ukraine and military buildup around Europe, she said: ‘NATO is pursuing a twin-track approach to Russia: strong deterrence and defence, combined with meaningful dialogue.'”