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UKRAINE: Between the Kremlin and a Hard Place

Marina Litvinsky

WASHINGTON, Feb 24 2009 (IPS) - Ukraine's internal political problems and tensions with Russia threaten its path to stability and its candidacy for NATO and the EU, warns a new Council on Foreign Relations (CFR) report.

The report, "Averting Crisis in Ukraine," analyses the country’s difficulties related to both domestic conditions, including its often disorderly politics, and foreign policy, such as issues related to Ukrainian and European dependence on Russia’s natural gas.

The examination concludes that the U.S. needs to improve its dialogue with Ukraine to avert a bigger crisis.

"A more divided Ukraine would be less able to formulate a coherent foreign policy course with which the U.S. government could engage," said report author and former U.S. ambassador to Ukraine, Steven Pifer, a visiting fellow at the Brookings Institution's Centre on the United States and Europe. "It could even be driven to reorient itself on a more Moscow-focused course."

Domestically, Ukraine faces a presidential election, expected in late 2009 or early 2010, and perhaps preterm parliamentary elections in 2009 that will play out against a backdrop of economic recession and financial crisis.

According to the Bloomberg News Agency, inflation in Ukraine soared to 22.3 percent last month, the highest level in Europe. Ukraine’s currency, the hyrvnia, has lost more than 50 percent against the dollar in the past six months, signaling Ukraine’s first economic contraction in a decade.

President Victor Yushchenko and Prime Minister Yulia Timoshenko, who stood side by side during the 2004 Orange Revolution, have since engaged in fierce infighting, delaying decisions needed to revive the economy. Due to Ukraine’s failure to meet loan obligations, the International Monetary Fund (IMF) withheld a key second part of a 16.4-billion-dollar loan.

The IMF isn’t the only one putting external pressure on Ukraine. In the aftermath of the August 2008 Russia-Georgia conflict, Kiev must cope with an increasingly assertive Russian foreign policy. Ukraine is regarded by the Kremlin as part of its sphere of privileged interests.

Moscow has made clear its unhappiness with Kiev’s desire to integrate into the European and Euro-Atlantic communities, and will attempt to disrupt that course. Moscow, driven by its geopolitical aims, could fan Ukraine’s internal frictions by escalating its rhetoric against the NATO-Ukraine relationship.

"The Kremlin sees a messy Ukraine as a good thing," Pifer told IPS. Moscow portrays the former Soviet state as an inadequate partner for NATO and the EU.

The Kremlin also capitalizes on Kiev’s political chaos in its domestic politics. The criticisms of Russians who, inspired by Ukraine’s struggle for democratic transformation, want to draw closer to the West are deflected by Moscow’s portrayal of Ukraine as an unattractive alternative political model.

By pointing to Ukraine’s political problems and instability, the Russian government is saying, "Look at the turmoil – that’s what democracy is," adds Pifer.

The CFR report speculates that a new gas dispute between Ukraine and Russia, similar to the most recent incident in January, could again transform into a broader European energy crisis.

A Russian decision to more actively oppose Kiev’s effort to integrate into NATO could spark such a dispute, causing Moscow to cut off its gas supply, impose other economic sanctions, or make a demonstrative military move, such as redeploying army units closer to the Ukrainian border.

But Yushchenko is unlikely to back down in the face of Russian threats, which may, anyhow, be in vain.

According to Walter Zaryckyj, executive director of the Centre for U.S.-Ukrainian Relations, there is little Russia can do to prevent Ukraine’s entrance into NATO. "Russia is bluffing," he said. "I think Russia is willing to do a lot, but they are not in a position to."

Zaryckyj contends that Russia, too, is in economic crisis, having spent much of its money on the Georgia conflict and on the recent agreement with Kyrgyzstan to close a U.S. air base in return for more than 2 billion dollars in loans and aid. The West, therefore, has an opportunity to take a hard stance against Russia.

"The West must say hands off (Eastern Europe) – stop playing games with gas and oil," adds Zaryckyj.

Despite Russia’s opposition, NATO has signalled that it will continue to keep the door open to Ukrainian membership. According to the International Herald Tribune, before a closed-door meeting with Ukrainian Defence Minister Yury Yekhanurov and NATO defence ministers, Secretary-General Jaap de Hoop Scheffer said NATO officials were considering "ways in which the alliance can continue to support its preparations for NATO membership" for Ukraine.

Also, EU Commissioner for External Relations and European Neighbourhood Policy Benita Ferrero-Waldner laid fears of the possibility of a new pro-Russian Ukrainian government to rest, telling journalist in Brussels on Tuesday that, "Whoever comes to power [in Ukraine] in the future, they will certainly want to continue the process of Ukraine's integration into the EU." According to the CFR report, since the early 1990s, the U.S. government has attached special importance to Ukraine. It has applied billions of assistance dollars to facilitate the country’s development.

"What happens to Ukraine will matter to Washington," says the report, recommending that the U.S. administration "should maintain the goal of Ukraine’s development as a stable, independent, democratic, and market-oriented country, increasingly integrated into European and Euro-Atlantic institutions."

The report encourages the Obama administration to adopt certain strategies, including restoring regular high-level dialogue, counselling Ukrainian leadership and increasing technical assistance to promote energy security. It urges the U.S. to support continued Ukrainian integration with NATO, though it recommends waiting to back concrete steps toward membership until Kiev achieves consensus on this point.

Ukraine, however, "falls fairly low on a list of priorities (for the Obama administration)," said Pifer. "The problem I think that Ukraine has as a foreign policy issue is it’s competing with lot."

The report, however, points to a reawakening of the West to a potential problem in Eastern Europe. According to Zaryckyj, "the report’s title mischaracterises it. The debate is just beginning; I don’t think its ending."

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