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Monday, May 9, 2011

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, although Tymoshenko charged that the election had been fraudulent. Yanukovych was able to quickly to form a new parliamentary majority in the current parliament by inducing dozens of supporters of the previous government to change sides.

The global economic crisis hit Ukraine hard. Ukraine’s real Gross Domestic Product fell by an estimated 15% in 2009. The economy began to recover in 2010, due in part to a surge in demand for Ukrainian steel exports. However, living standards for many Ukrainians remain low, leading to a rapid drop in Yanukovych’s popularity when compared to the period soon after his inauguration.

Under the leadership of former President Viktor Yushchenko from 2005-2010, 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 were tense over such issues as Ukraine’s NATO aspirations and energy supplies. President Yanukovych has pursued closer ties with Russia, especially in the economic sphere. A major focus of his policy has been to seek reduced prices for natural gas supplies from Moscow. In April 2010, he agreed to extend the lease of the Russian Black Sea Fleet in Ukraine for 25 years in exchange for a reduction in gas prices. Yanukovych has said EU integration is a key priority for Ukraine, but his administration appears to be wavering between a free trade agreement with the EU and an incompatible customs union with Russia, Belarus, and Kazakhstan.

During Yushchenko’s presidency, U.S. officials were 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. The issue became moot after Viktor Yanukovych became president in February 2010 and announced that Ukraine would no longer seek NATO membership.

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 reminder of U.S. support for Ukraine’s sovereignty. The Administration has not publicly expressed concern about what some observers view as the increasing pro-Russian tilt of Ukraine’s foreign policy under Yanukovych. The Administration has focused on practical issues, such as helping Ukraine rid itself of its supplies of highly enriched uranium, and diversifying Ukraine’s sources of energy, including advice on unconventional natural gas development. Administration officials have expressed concerns about regression in Ukraine’s democratic development since Yanukovych took power, including in such areas as media freedoms, election laws and the conduct of elections, and perceived selective prosecution of the government’s political opponents.

Date of Report: April 26, 2011
Number of Pages: 17
Order Number: RL33460
Price: $29.95

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