By Jacinda Chan, Contributor
Ukraine stands in the middle of the gas trade between Russia and the EU—the latter receives 20 percent of gas through Ukraine coming from Russia. After the 2009 Russian-Ukrainian gas dispute, which left 17 EU countries without heat in the dead of winter, the EU has found alternative routes.
The Nord Stream Pipeline, approved in January, will travel through the North Sea bypassing Ukraine. Ukraine fears that without a pipeline running through their country, their influence will dwindle—enabling Russia to exert more political power. Even though Ukraine may experience a power vacuum for a time it will still emerge stronger than before without any power exerted from Russia or the EU. The election of a more pro-Western president, Viktor Yanukovych will give Ukraine the impetus to seek alternative energy to reduce dependence on Russia.
The Nord Stream Pipeline will take power away from Ukraine for awhile, which will create a power vacuum. In 2007 and 2009, Ukraine turned off gas supplies to the EU over price disputes with Russia. The EU pressured Russia to stop insisting on payments because the EU cannot survive without Russian gas. Without control over EU gas, Ukraine will not have a bargaining chip against Russia since the latter could independently continue supplying the EU with gas while debating with Ukraine. Russian gas also supplies Ukrainian steel and chemical plants—the backbone to the Ukrainian economy.
In the end this power vacuum and intrigue will allow Ukraine to emerge even stronger.
On February 15, Viktor Yanukovych—considered a Russian puppet—was elected president of Ukraine. However, Yanukovych was elected because voters believe he can move Ukraine closer to Orange Revolution ideals. Yanukovych is seen as the opponent of the leader of the Orange Revolution, Viktor Yushchenko—president from 2004-2010. Yushchenko promised to fight corruption and move Ukraine closer to the West but he could not deliver because he and PM Tymoshenko constantly fought. This left little room to come to agreements on deciding policy. PM Tymoshenko’s coalition government was recently dissolved, which opens the door to more consensus in parliament.
Yet, Yanukovych fought corruption and moved Ukraine closer to the West. His oligarchs became economically transparent. He hired first-rate managers, enforced fair taxes on oil tycoons, and promoted philanthropy. Yanukovych is criticized for being anti-NATO, but he only acts friendly towards Russia for strategic reasons. In 2006, Yanukovych told NATO that Ukraine was not interested in a membership action plan. At the Center for Strategic and International Studies (CSIS), Yanukovych emphasizes he did not want to harm friendly relations. Some people saw Ukraine joining NATO as a direct slight to Russia. But this time Yanukovych’s first visit was to Brussels and later to Moscow, showing his strategic preference towards the West.
However, Ukraine also wants friendly relations with Russia. Yanukovych has also suggested to extend indefinitely Russia’s Navy fleet in Sevastopol. Previously, Russia felt offended because Yuchshenko wanted Russia out of Ukraine’s waters. Yanukovych’s offer has calmed waters between Kiev and Moscow.
Nonetheless, Ukraine will not have to depend on Russia anymore. Yanukovych’s policies can move Ukraine towards energy independence. Yanukovych intends to give financial incentives to energy-saving technologies and upgrade existing power structures—reducing energy needs 10 percent. Yanukovych also plans on increasing Ukraine’s use of natural resource of coal and nuclear energy and developing alternative energy facilities.
Ukraine also has excess Kyoto emission quotas that can be traded for funds to improve alternative energy. In the 1990s, Ukraine’s economy slowed—decreasing manufacturing. This produced fewer carbon emissions. Ukraine is a signatory to the Kyoto protocol. Not reaching their carbon limits in the 1990s gave Ukraine excess quotas, which can be exchanged for alternative energy funding.
However, Ukraine will lose out on foreign investment they could gain through alternative energy. Yanukovych, like many, thinks foreign investors will take away money from the economy. He has proposed developing the stock market, improving permits, licensing, and the regulatory system, which hindered entrepreneurship, and reducing government intervention to enable investment in alternative energy by building the economy. However, these policies only promote small and medium business—they are not enough to support alternative energy.
These policies do combat one major obstacle—the need for transparency. Developing the stock market means businesses have to be more open in order for people to invest. Improving permits, licensing, and regulatory systems allows the government to monitor businesses to prevent corruption. Reducing government intervention allows for a free market. Businesses would need transparency to compete. Prices would no longer be set but must be sold to the consumer.
With the new Nord Stream Pipeline, Ukraine has the potential to become a stronger power. Because Ukraine will be completely independent of Russia and the EU, yet pro-Western, the EU will not just have another member but an actual partner, who can implement policy to a degree as if it were its own state, not just part of a group. Its ability to stand on its own two feet will help Ukraine become a major player in the region to lead the rest to the West. This will give both Ukraine and the EU more clout as the dominant culture of democracy and a free market.
