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Ukraine Locked In Russia’s Embrace

The much-cherished Sevastopol naval base, an extensive gas pipeline network, and maintaining a strong presence in its traditional sphere of influence: the reasons for Russia’s rapprochement with Kremlin-friendly Viktor Yanukovych are manifold.  Ukraine’s willingness to sidle up to its domineering partner has caused more scratching of heads.  An analysis in the New York Times by Andrew Wilson clearly lays out some of the possible reasons for Kiev’s accomodation of Russian aims:

This new Ukrainian foreign policy is something of a mystery. Even some old hands are wondering why Ukraine is huddling so close to Russia, and why it has conceded so much so quickly.

Four possible explanations suggest themselves.

One is that Ukraine is still in economic trouble and the rapprochement with Russia is all about cheap gas. The gas discount obviated the need for harsh spending cuts, and Kiev thinks a budget deficit under 6 percent of gross domestic product will bring the International Monetary Fund back to the table. Standard & Poor’s has upgraded Ukraine’s credit rating from B- to B.

In the short term, the gas deal is also the one thing that pleases both competing wings of Mr. Yanukovich’s Party of the Regions. The Dmitry Firtash group runs several chemical plants; Rinat Akhmetov’s main business is steel. Together, they consume almost half of all Ukraine’s gas imports.

However, the I.M.F. is well-aware that hard choices and fiscalretrenchment have been postponed, possibly only for a matter of months.Moreover, Ukraine is still paying $230 per 1,000 cubic meters for gas –the price may have fallen, but only to levels common elsewhere inEurope.

So if economic trouble is the explanation, Russia cannot bail out the whole economy. Ukraine will come back to the Western table soon enough. The European Union in particular should reiterate that the deal that Ukraine signed but never implemented in 2009, promising substantial Western investment if Ukraine reformed its gas sector, can still be revived.

The second possibility is that Mr. Yanukovich’s priority is to strengthen himself internally. Playing closer to Russia makes this easier, as Russia is not likely to object to recent moves to chip away at media freedom and pack the judiciary. But a stronger Yanukovich might be a more prickly partner in the long run — not just for the West but for Russia as well. If this is the case, the West should avoid giving the impression that it is so fed up with the years of chaotic “Orange” government that it will allow Mr. Yanukovich to undercut freedoms won by the Orange Revolution in 2004 in the name of restoring “stability.”

See reasons three and four here.