Still Waiting

Economic News

22 Jul 2010
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A new government has yet to form due to political squabbling in the aftermath of the March parliamentary elections, thus paralysing Ukraine's ability to act decisively.



The latest event in the row between the pro-Western governing coalition and the pro-Russian opposition occurred on Sunday when 225 US marines began leaving the Crimea at the end of their three-week mandate without having fulfilled their intended mission.



The soldiers arrived at the Staryy Krym in Ukraine on May 27 to begin upgrading living quarters and medical facilities in order to serve international troops from 12 countries scheduled to take part in Sea Breeze military exercises in mid-July, part of Ukraine's bilateral co-operation with the US. Sea Breeze exercises have been held in Ukraine since 1997.



However the marines, who were mostly engineers from the 4th Marine Aircraft Wing, were greeted by angry protests from locals that lasted for the duration of their stay.



The Crimean Peninsula, which extends into the Black Sea, is mostly populated by ethnic Russians sympathetic to Moscow rather than current President Viktor Yushchenko, who is openly pro-Western.



President Yushchenko, who came to power in the 2004 Orange revolution, has said he wants Ukraine to join NATO by 2008, a move many Ukrainians, particularly the Russian-speaking ones, are deeply opposed to. Moscow has also made clear that it strongly disapproves of NATO expansion to include Ukraine and Georgia, in the northern Caucasus.



In the coalition talks following the recent elections, the President has been seeking political partners to commit to this goal.



In the current highly politicised environment, many see joint military exercises with Western countries as a precursor to the establishment of a NATO base. Officials from NATO and member governments have denied any such plan.



The marines sent to make repairs were only reservists, whose mission was to last for two to three weeks before they return to their civilian jobs back home. They will not take part in the military exercises.



Though the Associated Press reported that the marines were unable to fulfil their mission because of the protests, Navy Lieutenant Corey Barker, a public affairs officer for the US European Command, said that the planned repairs could not be made because the marines did not have the necessary materials to complete the job. This was due to the commercial shipping boat carrying the 500 tonnes of materials needed for the repairs being held up at the nearby Black Sea port of Feodosiya. The goods were not allowed to pass through customs. No reason, political or otherwise, was given for the delay.



The military exercises are still scheduled to be held next month, but the Ukrainian parliament will have to approve a request for foreign troops to be on Ukrainian territory. If the request is denied, according to the head of Ukraine's National Security and Defence Council, the exercise will be held as a "Ukrainian-only" exercise.



Complicating the problem is the lack of an enduring resolution to the outcome of the last election. No single party won a majority of votes in the election, and those who won the most votes were attempting to hammer a coalition government out of groups with conflicting agendas and deep, sometimes personal, rivalries. This week, talks had come to a complete standstill. Rather than working toward any national goals or projects, the situation in the government has led to the blocking of some state activities. The protests in the Crimea, for example, resulted in the cancellation of a visit by US President George W. Bush that was planned for late June.



Other planned military exercises with Ukrainian and British troops have been postponed.



However, pro-Western, anti-Russian elements in the government have managed to accomplish one major deal of late.



On Thursday, June 8, Ukraine's NAK Naftogaz subsidiary, Ukrgazdobycha, signed an agreement in The Hague with Shell Exploration to produce oil and gas at the Dnepr and Donetsk basin in Ukraine. The deal is meant to help reduce the country's almost complete dependency on Russia for fuel supplies.



President Yushchenko said it is the, "First time in over 15 years of our independence a leading world company sets foot on the soil of Ukraine."



The negotiations had in fact been going on for eight years. But with pro-Russian elements still without a majority in parliament and the so-called "gas wars" with Russia in early January of this year highlighting the country's lack of energy security, the negotiations may have been fast tracked. Shell is expected to invest at least $100m in the country.



But the deal will not make Ukraine independent of Russian gas. The fields in question may not yield more than 1m tonnes of oil or 5bn cu metres of gas.



Despite the dramatic victory of President Yushchenko in 2004, political infighting and disappointment with his government's performance led to his party's third-place showing in the elections. These issues have also emboldened both Moscow, as it seeks to maintain its sphere of influence in former-Soviet states, and pro-Russian elements within the country, who remain deeply opposed to further engagement with the West.



It remains to be seen if the two sides can unite internally and engage in productive dialogue. Ultimately what is being asked by political actors is whether Ukraine belongs in the sphere of Russian influence or with the West or will it be forced to maintain a balance between the two.

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