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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 49,537 41,380 37,600 55
GNI per capita
 US $ 970 770 720 137
Ranking is given out of 208 nations - (data from the World Bank)

Books on Ukraine

Update No: 361 - (28/01/11)

Non-stooge of Russia
When the pro-Russian party came to power last year under the Russophile, Victor Yanukovich, it was assumed that Ukraine had come under Moscow’s orbit once again. There are 11 million Russian Ukrainians in the country of less than 55 million (the population has declined due to the global crisis and emigration).

This means that there are still 40 million or so Ukrainian Ukrainians in the country, many of whom owe allegiance to former premier and opposition leader, Yulia Timoshenko, who polled 45% of the vote and a clear majority of the latter.

The victory of Yanukovich, the leader of the Russian Ukrainians, in the February 2010 presidential election over premier Timoshenko by 55-45% might have seemed to secure Russian ascendancy over Ukraine again.

This is proving not simple and not true. Cautious at first to establish firm relations with Moscow, he wants more than puppet status and is diversifying Ukrainian foreign policy. He wants to be the leader of all the Ukrainians.

See-saw between West and East
There has long been a tug-of-war between western and eastern influences upon Ukraine. In 1654 it fell for centuries into the Russian orbit, not to emerge until 1917, when Tsarist Russia collapsed. The new occupiers for a very brief period were the Germans, a military autocracy.

The Germans imposed very harsh terms on defeated Russia at the Treaty of Brest-Litovsk, the surrender of Ukraine amongst them. In WWI it involved them in having to keep a million men under arms in the east at a time when it was urgent to switch troops to the west to face the mounting armies of the US, which had just entered the war. The eastern front did, thereby, contribute to the defeat of Imperial Germany - as it was so mightily to do to that of Nazi Germany.

The collapse of Imperial Germany allowed the nascent Soviet Union to repossess Ukraine. It was firmly under the control of an eastern despotism once again.

Of course 1991 changed everything. An opening to a liberal-democratic West was for the first time a possibility. It only materialised in October, 2004 with the Orange Revolution. Unfortunately it has all come to grief, with a devastated economy and similarly to Russia, a breed of apparatchiks turned businessmen who were determined to use their freedom from Moscow’s oligarchs in order to become Ukrainian ones –which they have done. In all parties, the drive for personal wealth got in the way of the common interest. The West was in a triumphalist mood in winning the Cold War. Its advocacy of shock therapy and instant privatisation undermined the shift towards liberal democracy, indeed led to a very liberal kleptocracy.

The aftermath of the Orange Revolution was dominated by infighting between its leaders, Viktor A. Yushchenko and Yulia V. Tymoshenko. They neglected constructive economic and political reforms, failing to capitalize on their immense popular support and refusing to stamp out corruption. Ukraine is currently ranked 146th out of 180 countries in the annual Corruption Perception Index published by Transparency International.

Back to Russia
In today’s Ukraine, the euphoria of the 2004 pro-democracy Orange Revolution has evaporated. In February came the victory of the pro-Russian candidate, Viktor Yanukovich, leader of the Party of the Regions, based in the east of the country adjacent to Russia with a solid phalanx of support for what they see as their mother country. Since he was elected, the Ukrainian president, journalists, local and foreign non-governmental organizations and independent television channels have come under pressure from the security services.

In June the authorities withdrew the broadcasting license from the 5 Kanal television station. If the decision is upheld, one of the last independent stations will go off the air. Valery Khoroshkovsky, a media magnate and head of Ukraine’s security services, or S.B.U., is poised to take over the frequencies, a move that will increase even further the growing powers of the security services over the dissemination of news.

Mr. Yanukovich himself has proposed reintroducing official guidelines for journalists. The abolition of such guidelines was one of the gains of the Orange Revolution. The pressure on the media has become so intense that the 2010 Press Freedom Index published by Freedom House ranked Ukraine 115th out of 195 countries, alongside Kuwait and Mexico.

More significantly, relations between Ukraine and the Russian leadership, which had opposed the Orange Revolution and which has always supported Mr. Yanukovich, have greatly improved.

President Dmitri A. Medvedev agreed last April to supply Ukraine with cheaper gas in return for Russia keeping its Black Sea Fleet in the Crimea until 2042. Susan Stewart, an expert on Russia at the German Institute for International and Security Affairs in Berlin, estimates that by this deal, Ukraine will save up to $40 billion over the next 10 years.

Ukraine and Russia later signed an agreement restoring the right of Russia’s counter-intelligence services to operate on the base of the Black Sea Fleet, giving them an official foothold in Ukraine. Russia’s policy toward Ukraine is about re-establishing its hegemony in the region so as to become stronger vis-à-vis the West. The Kremlin has resented Ukraine’s independence ever since the collapse of the Soviet Union in 1991 and assiduously worked for its reversal.

But a new opening to a wiser West is possible
Despite using Mr. Yanukovich’s election as an opportunity to entrench itself in Ukraine, Russia has made only limited inroads into Ukraine’s economy. Jonas Grätz, security analyst at the Norwegian Institute for Defence Studies, argues that Ukraine’s oligarchs, who dominate most sectors of the economy, are prepared to challenge this aspect of Russia’s influence. They would lose out financially if Russian businesses took over the country’s energy resources and gas transit pipelines, which the Kremlin has long coveted.

This is where the E.U. could exercise some leverage. All the more reason, say analysts and diplomats, for the European Union and especially Germany to adopt a much stronger and united policy if they want to prevent Ukraine from sliding away from democracy and moving into the orbit of Russia which it has largely done.

“The great shame is that there is no actual German or European Union policy towards Ukraine,” says Grätz. “Everything seems to be focused on the reset button with Russia,” a reference to the United States, and now the EU, improving relations with Russia. But by making Russia its priority among the countries east of its borders, the EU risks losing a still democratic and stable Ukraine, say analysts.

It is willing to offer Ukraine a free trade agreement provided the government embarks on major structural reforms. Such an accord would benefit some of the oligarchs; it would give them access to more markets and make their businesses more competitive.

Since Mr. Yanukovich says he is committed to bringing Ukraine closer to the EU, Brussels should make any free trade negotiations conditional also on press freedom, an independent judiciary and the rule of law. “After all, these are the values of the EU,” said Mr. Lange. “We should use conditionality in a much more forceful and convincing way,” he added.

EU diplomats say they have repeatedly tried to do this with all the leaders since the Orange Revolution, but with little success. “There is a massive sense of frustration in Brussels because no matter what the EU offers, it receives only empty promises by the Ukrainian authorities,” said Katinka Barysch, deputy director of the Centre for European Reform in London.

When the EU offered recently to modernize Ukraine’s inefficient energy sector, there was enthusiasm by reformers, but reluctance by the oligarchs. Modernization would mean transparency over supplies and prices, eroding the influence of the oligarchs. Russia also opposed the plan: it would make it more difficult to acquire parts of the energy sector.

No wonder then that Brussels is frustrated
Nevertheless, the EU, like Germany, is still too focused on Russia to really do something about Ukraine. Were Berlin to establish a separate strategy for Ukraine instead of always looking at the region through the prism of Russia, Europe might have a real chance in halting Ukraine’s slide away from democracy and further into Russia’s sphere of influence.

The Kiev-Kyoto axis
New developments in an entirely different quarter are opening up. Yanukovich went to Japan on January 20, hoping to forge a new geopolitical and business relationship with this Far Eastern country. Thousands of miles though they are from each other they abide by Kautilkya's principle, that neighbours of a formidable power (so long as they are not neighbours themselves) are natural allies. Yanukovich pleaded for more business contacts with Japan at all levels. Ukraine should become a unique gateway into Central Europe and EU for enterprising Japanese business men. Ukraine is a low wage economy, it has a co-operative work-force and lies in the heartland of Central Europe. What more could you want? Well the rule of law would be a key thing.

The Baku-Kiev axis cometh
A very interesting development has occurred in international relations that brings Ukraine into the Caucasus. A new alliance is forming on the world stage between two very disparate countries, Azerbaijan and Ukraine. This is cross-culture, cross-continent, and against the super-powers, Russia and the US, who respectively patronise the two powers, much to their chagrin.

Baku and Kiev are forging an accord, still in its infancy, but it has great promise and makes great sense. Of course energy is at the heart of the matter; but it is by no means what it is all about. Azerbaijan produces a lot of energy, notably oil, while Ukraine consumes a lot. A new arrangement is afoot to fix up a deal on energy.

But there is far more to it than that. The two countries want to extricate themselves from super-power domination, Ukraine from Russia and Azerbaijan from the more recent suzerainty of the US. Ukraine is after all the central power of Middle Europe, while Azerbaijan is really that of the Caucasus, both geographically and geopolitically. Azerbaijan and Ukraine paradoxically make a good pair. They do not encroach on each others' ideological or physical territory at all. They are not neighbours – by a long shot. They feel themselves as equals, which they are.

It seems that they deem a Baku- Kiev axis a new and original departure in world politics. Let us see where it may lead.

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