Carl Thomson 2 Carl Thomson is a commentator on Russian and East European
affairs and was the Conservative Party candidate for Glasgow East at
the 2005 General Election.

On 17th January, Ukraine will hold its fifth presidential election since it declared independence from the Soviet Union.  The incumbent, Viktor Yushchenko, has the lowest opinion poll ratings ever recorded by a serving head of state.  The most recent polls suggest he would have garnered just 3% of the vote had the election been held at the beginning of this month, putting him in sixth place and well behind Viktor Yanukovych, the man he defeated for the presidency in 2004.  Current projections indicate that Yanukovych is not only ahead, but would remain triumphant in a run-off election with the second placed candidate and Yushchenko’s former partner in the Orange Revolution, Yulia Timoshenko.

Yushchenko’s abysmal approval ratings are in some ways an indicator of how far Ukraine has come since the days of the Soviet Union.  It is easy to be a popular president when most media outlets are run by the state and competition for power is stage managed or non-existent.  But we should not underestimate the real problems the country is facing.  Ukraine is highly dependent on exports of raw materials and is suffering greatly as a result of the global recession.  Its economy contracted by an annual rate of 16% in the third quarter of 2009. 

At the same time, it is gripped by political deadlock that pre-dates the economic crisis.  A botched package of constitutional amendments in the aftermath of the Orange Revolution curtailed the powers of the presidency, but without going so far as to establish a parliamentary democracy.  The result has been political instability, with repeated elections leaving the president reliant on unstable and erratic coalitions made up of his most implacable opponents.

Ukraine is of strategic importance because its geographical location makes it the most practical route to transit oil and natural gas from Russia and the Caspian Sea to European markets.  The country hosts four international gas pipelines, and 80% of Russia’s energy imports to Europe pass through Ukrainian territory.  However, there is real concern that Ukraine will be unable to pay for its gas imports after the end of the year. 

It is currently paying for its energy supplies using foreign currency reserves and a loan brokered by the IMF.  This money will run out in February.  Ukraine’s squabbling politicians are too focused on the election to agree a plan to balance the books.  The state budget still assumes the economy will grow by 0.4% in 2009, and the IMF recently withheld payment of a $3.4 billion tranche of its loan after deputies from the Yushchenko and Yanukovych camps forced the Timoshenko cabinet to increase public sector salaries and double the minimum wage.

The perilous state of Ukraine’s public finances is likely to have a knock-on effect on the rest of Europe.  Russia suspended energy imports to Ukraine in 2006 and at the beginning of 2009 over unpaid bills, with eighteen European countries reporting a fall in supplies as a result, leaving tens of thousands of homes in Central and Eastern Europe without heating during one of the coldest winters on record.  Yushchenko’s supporters have claimed that the “gas wars” were politically motivated and designed to punish Ukraine for the Orange Revolution.  This ignores the fact that Russia turned off supplies in 1992, 1993 and 1994 for non-payment, and that the Kremlin had been in negotiation with Yushchenko’s predecessor for years about ending gas subsidies and moving towards payment of market prices.

Although Ukraine garnered much sympathy in the 2006 gas war, Western support was more muted in 2009, and the EU has now come to the view that neither Russia nor Ukraine can be regarded as reliable guarantors of energy security.  The Nabucco pipeline project will bring Caspian Sea gas to Europe via Turkey and Georgia, while Russia hopes that Nord Stream in the Baltic and South Stream in the Balkans will help reduce its dependence on pipelines that pass through Ukraine, while allowing it to maintain a grip on its smaller neighbours.

Most coverage of Ukrainian politics has focused on the attitude of the different political factions towards Russia, creating a dividing line between “pro-Western” and “pro-Russian” forces in the country.  Viktor Yanukovych is often characterised as “pro-Russian”, insinuating that he is antagonistic to the West and indifferent to Ukrainian statehood, while Viktor Yushchenko and Yulia Timoshenko are usually categorised as “pro-Western”.  This is an overly simplistic analysis. 

Yanukovych may be anxious to repair relations with the Kremlin, but he is certainly not anti-Western.  As prime minister, he supported the American-led invasion of Iraq and committed 1,600 troops to the conflict.  His financial backers in Ukraine’s industrial regions are keen to see the country integrated economically with the rest of Europe.  Yanukovych is opposed to Ukraine joining NATO, but on this issue he could be said to be more “pro-Ukrainian” than “pro-Russian” as according to an Interfax poll 57% of Ukrainians are against NATO membership. A Gallup poll in October showed 45% of Ukrainians believed NATO to be a threat to their country, while only 15% associated it with security and defence.

Yulia Timoshenko’s “pro-Western” credentials are similarly over-stated.  She is, like Yushchenko and Yanukovych, an advocate of EU membership, but on this subject the entire political establishment is out of step with the Ukrainian people. Polling suggests that only 20% of Ukrainians would like to see their country join the EU, whereas 35% favour a union with Russia and Belarus and 23% would prefer to pursue equal relations with Russia and the West.  Although Timoshenko is best known in the West for her role in the Orange Revolution, in the mid-1990s she was touting her services as a guarantor of Russian economic interests in Ukraine. 

By 2007, she was arguing that a strong Ukraine could act as a buffer against Russian encroachment in Europe.  More recently, she has downgraded her commitment to NATO membership, saying the country would first have to vote for it in a referendum, and sought to build bridges with the Kremlin once again.  Russia’s announcement that it would waive financial penalties after Ukraine failed to honour a contract to buy a specific volume of natural gas was seen as a fillip to her candidacy, and has led to speculation that Vladimir Putin is covertly backing her campaign.

While Timoshenko’s energetic handling of a serious swine flu outbreak last month won her plaudits and helped narrow Yanukovych’s opinion poll lead, her detractors accuse of her of seeking to establish an authoritarian regime.  She has said that has “a very big list” of businessmen whose assets will be nationalised if she wins the election, and has railed against corrupt officials and the oligarchs who control the broadcast media.  Ironically, some of Timoshenko’s former supporters in the Orange Revolution now fear the country’s nascent freedoms would be lost under her stewardship, and believe democracy would best be protected by a Yanukovych presidency instead.

The campaign itself is likely to be nasty.  We have already seen Timoshenko accused of high treason and corruption by Yushchenko.  Both the Timoshenko and Yanukovych camps have been rocked by – apparently unfounded – allegations of involvement in rape and a child sex abuse scandal. The fact that the main contenders are the same figures who have brought gridlock to Ukraine’s political system over the last five years does not bode well for the future.  Should Timoshenko or Yanukovych emerge victorious, they are likely to call fresh parliamentary elections, ushering in further uncertainty and political horse-trading at the expense of fixing Ukraine’s broken economy.

The first line of Ukraine’s national anthem states: “Ukraine has not yet perished”, but in spite of the country’s problems we should not be so despondent about its future.  Ukraine can boast a consumer market of 50 million people, a favourable climate and geographical location, rich natural resources and a highly educated labour force.  It is the most free and open society out of all the former Soviet republics except the Baltic States.

There is a growing consensus that the county’s future belongs in Europe, although not necessarily in NATO or the EU, but that this future must take into account the reality of Ukraine’s historical interdependence with Russia.  The country’s linguistic and political divisions are often over-played. Most Ukrainians will use their votes exactly as they should: to pass judgement on Yushchenko’s record over the last five years.

Despite the loud noises about independence and democracy, the Orange Revolution and subsequent elections in Ukraine were never a simple choice between Russia and the West, or freedom and authoritarianism.  Regardless of the rhetoric from the new cold warriors, Russia is not about to seize Crimea or re-occupy Ukraine. But, given that Britain is now a net importer of natural gas, and so long as the EU remains dependent on both Russia and Ukraine for her energy needs, it would be prudent to pay attention to what happens there at the beginning of 2010.