Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis

Merkel and Putin negotiate to trade Crimea’s sovereignty for guarantees on energy security and trade

Germany and Russia have been working on a secret plan to broker a peaceful solution to end international tensions over Ukraine.

The Independent can reveal that the peace plan, being worked on by both Angela Merkel and Vladimir Putin, hinges on two main ambitions: stabilising the borders of Ukraine and providing the financially troubled country with a strong economic boost, particularly a new energy agreement ensuring security of gas supplies.

More controversially, if Ms Merkel’s deal were to be acceptable to the Russians, the international community would need to recognise Crimea’s independence and its annexation by Russia, a move that some members of the United Nations might find difficult to stomach.

Sources close to the secret negotiations claim that the first part of the stabilisation plan requires Russia to withdraw its financial and military support for the various pro-separatist groups operating in eastern Ukraine. As part of any such agreement, the region would be allowed some devolved powers.

 

At the same time, the Ukrainian President would agree not to apply to join Nato. In return, President Putin would not seek to block or interfere with Ukraine’s new trade relations with the European Union under a pact signed a few weeks ago.

Second, Ukraine would be offered a new long-term agreement with Russia’s Gazprom, the giant gas supplier, for future gas supplies and pricing. At present, there is no gas deal in place; Ukraine’s gas supplies are running low and are likely to run out before this winter, which would spell economic and social ruin for the country.

Vladimir Putin at a natural gas pipeline in Vladivostok in Russia’s far east in 2011 (Getty) Vladimir Putin at a natural gas pipeline in Vladivostok in Russia’s far east in 2011 (Getty)
As part of the deal, Russia would compensate Ukraine with a billion-dollar financial package for the loss of the rent it used to pay for stationing its fleets in the Crimea and at the port of Sevastopol on the Black Sea until Crimea voted for independence in March.

However, these attempts by Ms Merkel to act as a broker between President Putin and Ukraine’s President, Petro Poroshenko, were put on the back-burner following the shooting down of the MH17 plane in eastern Ukraine.

But insiders who are party to the discussions said yesterday that the “German peace plan is still on the table and the only deal around. Negotiations have stalled because of the MH17 disaster but they are expected to restart once the investigation has taken place.”

Video: More pressure on Putin over Ukraine

“It is in everyone’s interests to do a deal. Hopefully, talks will be revived if a satisfactory outcome can be reached to investigations now taking place as to the causes of the MH17 catastrophe.”

Closer trading ties with the EU have been one of the big ambitions of Mr Poroshenko’s presidency. He has been a staunch supporter of the country’s pro-European movement even though he is unaffiliated to any political party. He was one of the backers of the 2004 Orange Revolution and served as Foreign Minister under Yulia Tymoshenko.

Pro-Kremlin activists in Crimea's capital Simferopol (Getty) Pro-Kremlin activists in Crimea's capital Simferopol (Getty)
A spokesman for the Foreign and Commonwealth Office said they had no knowledge of such negotiations taking place. However, the spokesman said he thought it highly unlikely that either the US or UK would agree to recognising Russian control over Crimea. There was no one available at the German embassy’s press office yesterday.

Reaching a solution to the ongoing dispute is pertinent for the Germans as Russia is their single biggest trading partner. Under Ms Merkel, the Russo-German axis has strengthened significantly and, until the plane shooting, her government had been staunchly against punitive sanctions for commercial but also diplomatic reasons. 

Such strong trade ties between the two countries have also served to strengthen Ms Merkel’s hand and the Russian speaker has emerged as the leading advocate of closer relations between the EU and Russia. “This is Merkel’s deal. She has been dealing direct with President Putin on this. She needs to solve the dispute because it’s in no one’s interest to have tension in Ukraine or to have Russia out in the cold. No one wants another Cold War,” said one insider close to the negotiations.

Some of Germany’s biggest companies have big operations in Russia, which is now one of Europe’s biggest car markets, while many of its small to medium companies are also expanding into the country. Although Russia now provides EU countries with a third of their gas supplies through pipelines crossing Ukraine, Germany has its own bilateral gas pipeline direct to Russia making it less vulnerable than other European countries.

Ukrainian troops take up a position near the eastern city of Debaltceve, in the region of Donetsk (Getty) Ukrainian troops take up a position near the eastern city of Debaltceve, in the region of Donetsk (Getty)
However, Russia is still the EU’s third-biggest trading partner with cross-border trade of $460bn (£272bn) last year, and the latest sanctions being introduced by the EU towards Russian individuals and banks will hurt European countries more than any other – particularly Germany, but also the City of London.

Central to the negotiations over any new gas deal with Gazprom is understood to be one of Ukraine’s wealthiest businessmen, the gas broker, Dmitry Firtash. Mr Firtash – who negotiated the first big gas deal between Ukraine and Russia between 2006 and 2009 – is now living in Vienna fighting extradition charges from the Americans. But he has close relations with the Russian and Ukrainian leaders – he supported Mr Poroschenko – and has been acting as a go-between behind the scenes at the highest levels.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: HR, Payroll & Benefits Officer - Altrincham - up to £24,000.

£18000 - £24000 per annum + benefits: Ashdown Group: HR, Payroll & Benefits Of...

Recruitment Genius: Salesforce Developer

£50000 - £65000 per annum: Recruitment Genius: Due to continued business growt...

Recruitment Genius: Internal Sales Executive

£20000 - £22000 per annum: Recruitment Genius: An exciting opportunity has ari...

Recruitment Genius: Sales Executive

£20000 - £25000 per annum: Recruitment Genius: This is a fantastic opportunity...

Day In a Page

The saffron censorship that governs India: Why national pride and religious sentiment trump freedom of expression

The saffron censorship that governs India

Zareer Masani reveals why national pride and religious sentiment trump freedom of expression
Prince Charles' 'black spider' letters to be published 'within weeks'

Prince Charles' 'black spider' letters to be published 'within weeks'

Supreme Court rules Dominic Grieve's ministerial veto was invalid
Distressed Zayn Malik fans are cutting themselves - how did fandom get so dark?

How did fandom get so dark?

Grief over Zayn Malik's exit from One Direction seemed amusing until stories of mass 'cutting' emerged. Experts tell Gillian Orr the distress is real, and the girls need support
The galaxy collisions that shed light on unseen parallel Universe

The cosmic collisions that have shed light on unseen parallel Universe

Dark matter study gives scientists insight into mystery of space
The Swedes are adding a gender-neutral pronoun to their dictionary

Swedes introduce gender-neutral pronoun

Why, asks Simon Usborne, must English still struggle awkwardly with the likes of 's/he' and 'they'?
Disney's mega money-making formula: 'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan

Disney's mega money-making formula

'Human' remakes of cartoon classics are part of a lucrative, long-term creative plan
Lobster has gone mainstream with supermarket bargains for £10 or less - but is it any good?

Lobster has gone mainstream

Anthea Gerrie, raised on meaty specimens from the waters around Maine, reveals how to cook up an affordable feast
Easter 2015: 14 best decorations

14 best Easter decorations

Get into the Easter spirit with our pick of accessories, ornaments and tableware
Paul Scholes column: Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season

Paul Scholes column

Gareth Bale would be a perfect fit at Manchester United and could turn them into serious title contenders next season
Inside the Kansas greenhouses where Monsanto is 'playing God' with the future of the planet

The future of GM

The greenhouses where Monsanto 'plays God' with the future of the planet
Britain's mild winters could be numbered: why global warming is leaving UK chillier

Britain's mild winters could be numbered

Gulf Stream is slowing down faster than ever, scientists say
Government gives £250,000 to Independent appeal

Government gives £250,000 to Independent appeal

Donation brings total raised by Homeless Veterans campaign to at least £1.25m
Oh dear, the most borrowed book at Bank of England library doesn't inspire confidence

The most borrowed book at Bank of England library? Oh dear

The book's fifth edition is used for Edexcel exams
Cowslips vs honeysuckle: The hunt for the UK’s favourite wildflower

Cowslips vs honeysuckle

It's the hunt for UK’s favourite wildflower
Child abuse scandal: Did a botched blackmail attempt by South African intelligence help Cyril Smith escape justice?

Did a botched blackmail attempt help Cyril Smith escape justice?

A fresh twist reveals the Liberal MP was targeted by the notorious South African intelligence agency Boss