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. Government opponents charged that bribery and threats to the business interests of members were used to effect the change.

The global economic crisis hit Ukraine hard. Ukraine’s real Gross Domestic Product (GDP) fell by an estimated 15% in 2009. The economy began to recover in 2010, with GDP increasing by 4.2%, 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.

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. However, the impact of the deal on gas prices has been less than anticipated, as oil prices (on which Ukraine’s gas price is calculated) have soared due to unrest in the Middle East. As a result, Yanukovych has sought additional gas price cuts from Moscow, so far without success.

Yanukovych has said that EU integration is a key priority for Ukraine, but his administration appears to be wavering between a free trade agreement with the EU currently under negotiation and an incompatible customs union with Russia, Belarus, and Kazakhstan. Russian officials have said Ukraine’s natural gas costs would decrease if it joined the customs union.

At the NATO summit in Bucharest in April 2008, the Bush Administration strongly supported granting Ukraine a Membership Action Plan, 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. However, Ukraine has maintained its cooperation with NATO, including the holding of joint military exercises.

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 helping Ukraine rid itself of its supplies of highly enriched uranium, assisting Ukraine with the clean-up of the Chornobyl nuclear site, and diversifying Ukraine’s sources of energy, including advice on developing Ukraine’s shale gas reserves. 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 selective prosecution of the government’s political opponents.


Date of Report: May 12, 2011
Number of Pages: 17
Order Number: RL33460
Price: $29.95

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