Navigating the road from Warsaw towards a climate agreement in 2015. CEPS Commentary, 5 December 2013

The latest round of climate negotiations that took place in Warsaw (Conference of Parties, COP19) finally resulted in a decision to agree on a timeframe for the new agreement due in COP21 in Paris in 2015, and on ways to enhance the levels of ambition in pre-2020 mitigation pledges. Specifically, Warsaw produced two milestones: i) Parties were asked to communicate “intended nationally-determined contributions” by March 2015 and ii) the Ad-hoc Working Group on the Durban Platform for Enhanced Action was requested to identify before COP20 in Lima, the information that Parties will provide when putting forward their contributions. This Commentary by Noriko Fujiwara explores what the Warsaw decision means in practice and offers some preliminary ideas about what is still needed.

Under the veneer of decentralisation. Ukraine's modernisation efforts stall due to lack of local government reform. OSW Commentary No. 102, 2013-02-12

President Viktor Yanukovych and his Party of Regions have been repeating the pledge to decentralise power in Ukraine and to give local government a greater decision-making role ever since the party appeared on the Ukrainian political scene. The implementation of this reform is crucial both for the economic recovery of Ukraine’s regions and the overall modernisation efforts of the Ukrainian state. At present relations between central government and the regions are regulated by Soviet-era legislation that fails to address the modern-day challenges facing Ukraine. The political elite in the country, including the opposition, appear to have reached consensus on the importance of the decentralisation reform. The first attempts to implement changes in this area were made in the late 1990s, followed by a comprehensive reform programme developed between 2007 and 2009 by Yulia Tymoshenko’s government. In 2012, the Constitutional Assembly under the President of Ukraine appointed a team of experts who drafted a document detailing the reform of local government and the territorial organisation of power1. The document envisages the implementation of what effectively are two major reforms: (1) an administrative-territorial reform, which would help consolidate the fragmented administrative structure, creating larger and more economically self-sufficient administrative units, and (2) local government reform, focusing on creating clearly defined powers for local authorities with a view to securing government funding for specific tasks delegated from central government. Nonetheless, despite these measures, and in spite of the rhetoric coming from President Yanukovych and other members of the Party of Regions, it seems unlikely that the reform will be implemented in the foreseeable future. A series of concrete political decisions taken by the president over the past three years indicate that Yanukovych has not abandoned his plan to build a highly centralised political system. This in turn limits the capacity to govern of local authorities and further restricts the sources of funding for Ukraine’s regions. This apparent resistance to change stems from the fact that by implementing the proposed reforms, the president and his political allies would be forced to relinquish much of their control over the political processes taking place in the country and would have to free up the distribution of budgetary resources between Kyiv and the regions. The implementation of the reform within the specified timeframe (i.e. by 2015) is also unlikely due to the upcoming presidential election and the deteriorating economic situation in Ukraine. Without a comprehensive reform of local government, however, Ukraine will be unable to undertake effective modernisation measures, which are key for the socio-economic development of the country’s regions.

An inexhaustible source of income? The significance of Belarusian refineries and the outlook for the future. OSW Commentary No. 81, 2012-06-20

Belarus generated a surplus at US$1.9 billion in foreign trade in goods and services in the first four months of 2012 as compared to a deficit of US$2.8 billion for the same timeframe a year earlier. Minsk owes this, its highest positive trade balance since 1991, mainly to a significant increase in exports of petroleum products manufactured by the refineries in Navapolatsk and Mazyr. This is a consequence of the favourable contract for supplies of Russian oil until 2015 which Belarus signed in December last year. This contract has resulted in a de facto resumption of Russia subsidising Belarus. The favourable conditions of Russian oil supplies will allow the Belarusian refineries to remain the driving force of the country’s economy, and the Belarusian government will not allow them to be privatised, which Russia has been seeking for years. The two refineries initiated an ambitious modernisation programme, which is aimed at increasing their output and improving the quality of their production. Owing to this, their share in the market of petroleum products in the region, including on the Polish market, may grow within the next few years.

The Iasi-Ungheni pipeline: a means of achieving energy independence from Russia? Moldova's attempts at gas supply diversification. OSW Commentary No. 118, 2013-10-08

Since taking power in 2009, the Alliance for European Integration (AIE) has been trying to end Moldova’s dependence on Russian gas. Currently, natural gas accounts for about 50% of the country’s energy balance (excluding Transnistria), and Gazprom has a monopoly on the supply of gas to the republic. The key element of Chișinău’s diversification project is the construction of the Iasi-Ungheni pipeline, which is designed to link the Moldovan and Romanian gas transmission networks, and consequently make it possible for Moldova to purchase gas from countries other than Russia. Despite significant delays, construction work on the interconnector began in August 2013. The Moldovan government sees ensuring energy independence from Russia as its top priority. The significance and urgency of the project reflect Chișinău’s frustration at Moscow’s continued attempts to use its monopoly of Moldova’s energy sector to exert political pressure on the republic. Nonetheless, despite numerous declarations by Moldovan and Romanian politicians, the Iasi- -Ungheni pipeline will not end Moldova’s dependence on Russian gas before the end of the current decade. This timeframe is unrealistic for two reasons: first, because an additional gas pipeline from Ungheni to Chisinau and a compression station must be constructed, which will take at least five years and will require significant investment; and second, because of the unrelenting opposition to the project coming from Gazprom, which currently controls Moldova’s pipelines and will likely try to torpedo any energy diversification attempts. Independence from Russian gas will only be possible after the the Gazprom-controlled Moldova-GAZ, the operator of the Moldovan transmission network and the country’s importer of natural gas, is divided. The division of the company has in fact been envisaged in the EU’s Third Energy Package, which is meant to be implemented by Moldova in 2020.