Ukraine: Current Issues and U.S. Policy

Steven Woehrel
Specialist in European Affairs

On February 7, 2010, Viktor Yanukovych defeated Prime Minister Yuliya Tymoshenko to win Ukraine's presidency. International monitors praised the conduct of the election. President Yanukovych will try to form a parliamentary majority from parties in the current parliament. If he cannot, new parliamentary elections will have to be held later this year. 

The global economic crisis has hit Ukraine hard. Ukraine's real Gross Domestic Product fell by an estimated 15% in 2009. In November 2008, the International Monetary Fund approved a $16.4 billion standby loan for Ukraine to bolster its finances. The loan was conditioned on a commitment from Ukraine to allow its currency to depreciate in a controlled way, to recapitalize the banking sector, and to pursue more rigorous fiscal and monetary policies. Political infighting during the presidential election campaign hindered Ukraine's implementation of the conditions of the IMF loan. A post-election struggle for a parliamentary majority could further delay Ukraine's reforms. 

Under the leadership of former President Viktor Yushchenko, Ukraine sought integration into the global economy and Euro-Atlantic institutions. In the longer term, Yushchenko set the goal of Ukrainian membership in the European Union and NATO. Relations with Russia have been tense over such issues as Ukraine's NATO aspirations and energy supplies. President Yanukovych has said he will pursue closer ties with Russia, especially in the economic sphere. He has said he will seek reduced prices for natural gas supplies from Moscow, in exchange for giving Moscow an ownership stake in Ukraine's pipeline system. He has said EU integration is a key priority for Ukraine. He has said he will drop Yushchenko's policy calling for NATO membership for Ukraine. 

U.S. officials have remained upbeat about Ukraine's successes in some areas, such as securing WTO membership, as well as in holding free and fair elections and improving media freedoms, while acknowledging difficulties in others, such as fighting corruption, establishing the rule of law, and adopting constitutional reforms. The Bush Administration strongly supported granting a Membership Action Plan to Ukraine at the NATO summit in Bucharest in April 2008, a key stepping-stone to NATO membership. However, opposition by Germany, France, and several other countries blocked the effort. On the other hand, the Allies surprised many observers by confirming that Ukraine will join NATO in the future, without specifying a timetable. 

The Obama Administration has worked to "reset" relations with Russia, but has warned that it will not accept any country's assertion of a sphere of influence, a tacit reminder of U.S. support for Ukraine's sovereignty. It has reaffirmed its support for NATO's "open door" to NATO aspirants such as Ukraine. In a telephone conversation with Yanukovych on February 11, President Obama praised the conduct of Ukraine's 2010 presidential elections and expressed a willingness to work with President Yanukovych to promote the two countries' shared values and interests. .


Date of Report: March 2, 2010
Number of Pages: 20
Order Number: RL33460
Price: $29.95

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