(LONDON)-Ukraine\'s political confrontation between Prime Minister Yulia Timoshenko and President Viktor Yuschenko is hardly the subject of casual conversation in the West. Yet Kiev matters, since 73% of Russian gas comes via Ukraine, and that supply fact could be affected by internal developments.
 
According to petro-experts, the current political crisis in Kiev is rooted in Ukraine\'s economy, and the most volatile issue at hand is the existing formula for gas flow to the West. President Yuschenko believes that “it is a waste of time to thrash about and look for a new middle man,\" since existing agreements provide for 55 billion cubic meters of natural gas to be delivered to Ukraine at $179.50 per cubic meter, considered by most as a good deal in terms of today\'s energy crisis worldwide.

Prime Minister Timoshenko disagrees. She shared a similar position during her first term although preferring to trade the traditional middleman (RosUkrEnergo) for the Itera Company which she believed would be more cooperative. She wants to do without agent companies altogether. According to Ukrainian analysts, the main lobbyist behind her change of concept is Vitaly Gayduk, Timoshenko’s chief economic advisor.

He survived the tumultuous early 1990s and has ended up heading a powerful company, Donbass Industrial Union (DIU). In 1998-2001, DIU was an exclusive supplier of gas in Donbass, where much Ukrainian industry is located, and imposed its prices. This caused a string of bankruptcies of many companies who were later bought out at bargain prices. Alexei Kostusev, the uniformly respected head of Ukraine\'s Anti-Monopoly Committee has claimed publicly that Gayduk tends to resolve competition problems with administrative methods. As for the sensitive issue of contacts with the notorious Semion Mogilevich, Gayduk’s partner Sergei Taruta, who officially heads DIU, admits that “in business you are forced to work with all kinds of people.\" It is no secret that Mogilevich\'s criminal file, reportedly 20 volumes in length and FBI wanted, was quashed during Timoshenko’s first term in office.

Be that as it may, Gayduk’s influence – at least for now – is hard to overestimate. According to Dr. Valentin Yakushik, professor of political science at the Ukraine\'s Kievo-Mogilyansky Academy, [it is] the main reason for Timoshenko’s “change of concept.\" The approach itself inspires little confidence, since direct gas supplies will most likely boost the prices for Ukraine, leading in turn to protests from industrialists and eventually the once-tried compromise with a middleman. This time it will be DIU, which has the contract to deliver gas from Uzbekistan.

It is possible that Yuschenko’s rejection of this scenario caused Gayduk, who earlier supported the President, to switch sides. Whatever politicians say, current DIU leadership is negotiating a merger with influential Russian business structures – in particular, Gasmetal, whose leaders are linked to Kremlin. In the light of Gayduk’s lobbying for Timoshenko on, it is clear that any \"correction\" of the Ukrainian course can have serious implications for Western energy supplies, and through that on the entire global economy.