Identifier
Created
Classification
Origin
05PARIS8684
2005-12-29 15:45:00
CONFIDENTIAL
Embassy Paris
Cable title:  

FRANCE CONTENT TO OBSERVE RUSSIAN-UKRAINE GAS

Tags:  ENRG EPET ECON PREL UP RS FR 
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C O N F I D E N T I A L PARIS 008684 

SIPDIS

STATE FOR EUR AND EB/ESC/IEC

E.O. 12958: DECL 12/29/2015
TAGS: ENRG EPET ECON PREL UP RS FR
SUBJECT: FRANCE CONTENT TO OBSERVE RUSSIAN-UKRAINE GAS
NEGOTIATIONS WITHOUT INJECTING COMMENTS

REFS: (A) State 229253

(B) KRAMER/TERRAL TELCON 12/23/2005

Classified By: Econ Counselor Ken Merten for reasons 1.4 (b)
and (d).

C O N F I D E N T I A L PARIS 008684

SIPDIS

STATE FOR EUR AND EB/ESC/IEC

E.O. 12958: DECL 12/29/2015
TAGS: ENRG EPET ECON PREL UP RS FR
SUBJECT: FRANCE CONTENT TO OBSERVE RUSSIAN-UKRAINE GAS
NEGOTIATIONS WITHOUT INJECTING COMMENTS

REFS: (A) State 229253

(B) KRAMER/TERRAL TELCON 12/23/2005

Classified By: Econ Counselor Ken Merten for reasons 1.4 (b)
and (d).


1. (C) Summary. French officials agree that the Russia-
Ukraine gas dispute bears watching, but do not believe that
intervention by European officials recommending gradual
market solutions is warranted at this time. They suspect
that commenting now might even be counterproductive.
Dismissing concerns about a potential cut-off of gas to
Western Europe, they are relatively confident that ongoing
negotiations will bear fruit. End summary.


2. (C) On December 23, EconOff delivered reftel points to
Foreign Ministry Economic Directorate, while PolOff
delivered same points to the MFA Directorate for Continental
Europe. DAS-equivanlent for energy and transportation
affairs, Nicole Taillefer, responded on December 29 by
saying that French officials viewed this as one of many
tense energy sector negotiations in the region which almost
invariably ended with last-minute solutions brokered under
pressure. In their view, the "risk is low" that Russian or
Ukrainian authorities would seriously disrupt gas flows.
Taillefer noted that Moscow's posturing included
contradictory statements, saying that Russia will continue
to furnish gas to Europe without disruption come what may,
while at the same time saying that any Ukrainian diversions
of transiting Russian gas would be considered theft. If
diversions are a possibility, then European supplies could
be disrupted. Nevertheless, Taillefer saw no crisis at
hand, since Europe has adequate stocks.


3. (C) Taillefer rejected our suggestion that European
officials should talk with both Ukraine and Russia to
encourage them to move gradually toward a market-based
arrangement. They agreed with the sentiment and with the
goal of a gradual market-based solution, but saw no upside
to injecting comments based on their role as a buyer of
Russian gas. Likewise, France agreed that Ukraine should
take this opportunity to transform its energy sector to
improve efficiency, root out corruption, identify
alternative energy sources, and develop domestic resources.


4. (C) Taillefer noted that amid much recent posturing on
both sides, the Ukrainian Energy Minister is currently in
Moscow to work out a negotiated solution. The Russians in
particular would likely try to use any European statements
about supply security to further their own arguments.
Taillefer agreed with our position that a gradual market-
based arrangement should be reached, but viewed this as a
commercial arrangement and not a political one. She felt it
could be counterproductive to intervene politically at this
stage. She added a personal comment when she wondered allow
whether Russia was not committing (yet another) strategic
political error.


5. (C) Yannick Tagand, who handles energy issues in
Taillefer's office, mentioned that he had coordinated with
the Ukraine desk on this issue, but did not as yet have a
read-out of Jean-Francois Terral's conversation with EUR DAS
David Kramer, since Terral is currently on vacation. France
will continue to watch the situation closely via its
embassies in Moscow and Kiev, but -- at least for the time
being -- will watch from the sidelines and hope for a
negotiated solution. Taillefer said that even if a solution
is not reached by January 1, she envisioned the possibility
that the two countries might "stop the pendulum" -- i.e.
maintain the status quo -- while a solution is finalized.

Please visit Paris' Classified Website at:
http://www.state.sgov.gov/p/eur/paris/index.c fm

Stapleton