Ukraine's Viktor Yanukovych might be more vulnerable to Russian pressure in hardball negotiations on gas after being spurned by the European Union, but he is not likely to turn away from Europe and fall into Moscow's embrace.
And there is no sign he will yield to the EU and free opposition rival Yulia Tymoshenko either. A day after EU leaders left town, the 51-year-old politician was still in jail and her defence lawyer was back in action in Kyiv’s Appeals Court.
In the gilded meeting room of his cavernous headquarters, Yanukovych listened impassively on Monday as European Council President Herman Van Rompuy delivered the EU snub.
All technical questions for a landmark association agreement had been solved – but the pact would remain unsigned and so unratified until Tymoshenko’s jailing was resolved, he said.
The low-key EU summit, with its conflicting messages of encouragement to Kyiv and disappointment at democratic failings, reflects the ambiguity of Ukraine’s relationship with the West.
Though Ukraine remains one of the freest post-Soviet societies, Yanukovych’s 22 months in power have been marked by media censorship and growing corruption at every level.
The Tymoshenko affair, his critics in the West say, is a clear case of selective justice being applied by one political group against an adversary. Her plight has become a symbol of all that is wrong with Ukraine under Yanukovych.
So where will he take Ukraine from here?
Some analysts say the heavily built hard-man from eastern Ukraine has, by keeping Tymoshenko locked up, kept onside with the wealthy industrialists who put him in power.
As prime minister, the charismatic Tymoshenko directly endangered the business interests of many of Ukraine’s oligarchs whose colossal wealth now underpins the economy.
A hiccup on the road to an agreement with the EU, stalling the creation of a free trade zone, is a price worth paying for keeping her behind bars, so the reasoning goes.
By that token, she could be in prison for much, if not all, of the seven years to which she has been sentenced.
“Domestic politics carries all before it in Ukraine,” said Olga Shumylo-Tapiola of Carnegie Europe. “Yanukovych’s interests and those of the oligarchs whose businesses are dependent on gas prices are the only thing that counts here. There is (the question of) personal revenge too.”
Others say Yanukovych has overplayed his hand with the EU. By failing to secure an agreement validating his proclaimed pro-Europe policy, he has compromised himself in the eyes of the electorate, less than a year before a parliamentary election.
“Lack of progress with the EU is a setback for the Ukrainian president who pledged to be the bridge between Russia and the EU,” commented Lilit Gevorgyan of IHS Global Insight. “This setback is even harder to stomach in the light of deteriorating relations with Russia over gas price disagreements.”
A QUESTION OF GAS
The gas issue and the outcome of talks with Russia are crucial for Ukraine, with a population of 45 million the most populous ex-Soviet republic after Russia itself.
The Kyiv leadership’s game-plan has been to portray Tymoshenko as the main culprit for the high price Ukraine pays for its gas imports which are a huge drag on the economy. Her seven-year sentence for abuse-of-office is linked to a 2009 gas deal with Russia which she brokered.
The government of Mykola Azarov, Yanukovych’s dour, hard-nosed prime minister, is now pressing Russia to bring the price down from a high-end $400 per thousand cubic metres to plug a budget deficit.
If it can get a lower price from Russia, the government will be spared from raising the price that consumers pay at home, which, with a parliamentary election next October, could be tantamount to political suicide.
Yanukovich might appear to have had reason to expect a good hearing from Moscow. Soon after coming to power in February 2010, he extended the basing rights of Russia’s Black Sea fleet in a Ukrainian port by 25 years and scrapped NATO membership as a foreign policy aim.
But things have not worked out with Moscow since then. Vladimir Putin’s government has yet to be won over. And Russia’s gas export monopoly Gazprom has little incentive to hurry with a deal while it stands to gain leverage as Ukraine’s fiscal position worsens.
Putin is certain to be president of Russia again from March, and he is known to have little personal regard for the Ukrainian president. He has derided Ukraine’s aspirations to EU membership and is beckoning to Kyiv to join other ex-Soviet republics in a customs union which would yield immediate economic benefits.
More particularly, Moscow is pressing for a share of control over – and possibly even partial ownership of – Ukraine’s gas transit pipeline system, as it has managed to wrest in neighbouring Belarus.
In a contrived slip-of-the-tongue this month while announcing Gazprom’s acquisition of 100 percent of the pipeline system in Belarus, Putin mixed up Ukraine with its smaller neighbour. The message was clear: “What we have got from Belarus, we want from you too.”
MORE VULNERABLE
Yanukovich shows no willingness to join a Russian-led customs union which would be against the business interests of his powerful backers. These include steel billionaire Rinat Akhmetov, and gas and chemicals oligarch Dmytro Firtash with whom Yanukovych is said to be particularly close.
But some analysts say the failure to tie up a summit agreement with the EU has left Kiev more vulnerable at the bargaining table with Moscow.
“The bottom line is that, absent a change in its domestic policies, Ukraine’s leadership will find itself having to deal with Moscow with a weakened hand owing to its flagging relationship with the West. The Russians see that and undoubtedly will seek to take full advantage,” Steven Pifer of the Brooking Institution wrote.
Some analysts harbour serious doubts over Yanukovych’s commitment to European integration and his proclaimed long-term aim of EU membership.
Shumylo-Tapiola of Carnegie Europe believes he is destined to situate his country in a “grey zone” between the 27-member bloc and Russia, taking advantage ad hoc of whatever economic concessions might come from either side and picking up financial aid from whatever source presents itself.
If that is so, then the future looks bleak for Tymoshenko.
Commentators say Yanukovich has never forgotten his humiliation in the 2004 Orange Revolution street protests which she led and which deprived him of the presidency when his election was judged rigged and overturned.
Even if her appeal against conviction succeeds, authorities have piled up a raft of other criminal cases against her.
But keeping her locked up will continue to harm Ukraine’s international image in talks with the International Monetary Fund and other financial institutions as a global economic downturn threatens.
