Gas Issue Points to Ukraine's Failures

A worker in Kiev views an indicator board at the main gas distribution center of Naftogaz, the state energy company.
A worker in Kiev views an indicator board at the main gas distribution center of Naftogaz, the state energy company. (By Efrem Lukatsky -- Associated Press)
By Philip P. Pan
Washington Post Foreign Service
Monday, January 19, 2009

KIEV, Ukraine -- In the heady months following the Orange Revolution, after the crowds had swept the democratic opposition into power but before the hopes inspired by the movement had begun to fade, Ukraine's new, American-backed leaders decided to renegotiate the terms on which the country purchased natural gas from Russia.

President Viktor Yushchenko, the former banker who defeated the Kremlin's favored candidate, had campaigned on a promise to fight corruption, using the rallying cry, "Put the bandits in jail!" The gas contract with Russia, a notorious source of patronage and cash for the old regime, was a natural target for his new government.

But now, as Ukraine prepares to sign an accord ending an 18-day Russian gas embargo that disrupted energy supplies in much of Europe, the consensus here is that instead of cleaning up the gas trade, Yushchenko's first gas deal left this former Soviet republic more vulnerable to bullying by Russian leaders determined to thwart its turn to the West.

Concessions made three years ago -- under suspicious circumstances, some say -- sharply reduced Ukraine's leverage against Russia in this month's crisis. More broadly, according to a wide spectrum of political figures, journalists, diplomats and analysts, the Orange Revolution's failure to eliminate the corrupting influence of cheap Russian gas poisoned Ukraine's transition to democratic politics, tarnishing its reputation abroad and leaving much of the public here disillusioned.

"There are no reformers left," said Alexander Dubinsky, a business journalist for the Ekonomicheskie Izvestia newspaper. "After a reformer gains power, he becomes corrupt, too. That's what people think now."

In explaining the importance of access to Russian gas in Ukrainian politics, he added: "All the big money here was made in gas. If you control the gas, you can control industries, you can control politicians."

Early Sunday, Russian Prime Minister Vladimir Putin and his Ukrainian counterpart, Yulia Tymoshenko, emerged from late-night talks in Moscow with the outline of a deal to end the midwinter standoff over gas prices that has left large parts of Europe struggling to maintain heat and electricity for 12 days.

Russia said it would grant a 20 percent discount to Ukraine on European gas prices this year, while Ukraine agreed not to raise the low fee it charges Russia to use its pipelines to deliver gas to Europe. Tymoshenko was scheduled to return to Moscow on Monday to sign the contract, but the details, which have derailed previous deals, were still being worked out.

Depending on the fine print, the agreement will probably mean a gas price not far from the final negotiating positions of both sides before talks broke down, suggesting that the standoff has always been less about commercial differences than political ones.

Many in Ukraine and the West have seen it as an attempt by Russia to assert its influence in the region and weaken the pro-Western government of a neighbor, a sort of non-violent sequel to its August war against Georgia.

But the crisis also highlighted much of what has gone wrong with Ukraine's experiment in democracy, including a crippling feud between the Orange Revolution's leaders, Yushchenko and Tymoshenko, and a weak judiciary that has been unable to address pervasive allegations of corruption.

The political disarray has played into the Kremlin's efforts to portray Ukraine to the world as a failed state, unfit for membership in NATO and the European Union, and to convince the Russian people of the superiority of Putin's more authoritarian model of government.

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