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 scores 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, and GDP increased by 4.7% in 2011, 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. Expected slow growth in western Europe will likely result in slower growth in 2012 for Ukraine as well.

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, Ukraine 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 U.S. and European criticism of what is widely viewed as the politically motivated conviction and imprisonment of Tymoshenko in October 2011 on charges of abuse of power, has called into question whether a long-awaited association agreement with the EU (including a free trade agreement) will be signed and enter into force. Ukraine continues to reject Russian proposals that it join a customs union with Russia, Belarus, and Kazakhstan. Yanukovych has made clear that his country is not seeking NATO membership, but wants to continue 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 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: January 4, 2012
Number of Pages: 17
Order Number: RL33460
Price: $29.95

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