The Key to Kiev

On January 7, 2009, after an unexpectedly severe disagreement between Russia and Ukraine, ostensibly over natural gas prices, Moscow cut off gas supplies to Ukraine. Then, Ukraine did the same to Europe. European reserves soon dwindled, and with neither Russia nor Ukraine willing to give in, it took intense European pressure to lead both parties to reach a compromise agreement, which they did on January 18. Russia got higher prices for its gas, and Ukraine got a modest price rise in 2009, relative price stability, and favorable terms for gas transit costs.

The crisis made clear -- yet again -- several lessons that Western policymakers routinely forget. First, although the feud apparently centered on prices, pipelines, and transit fees, it was driven primarily by geopolitics. Moscow cared less about economic disagreements than about undermining Ukraine's pro-Western president, Viktor Yushchenko; gaining control over Ukraine's energy pipeline system in exchange for forgiving Ukraine's mounting gas debts; and building support in the West for Russia's plans to bypass Ukraine's gas pipeline system with a new network by emphasizing that Ukraine was an unreliable transit country. Second, Ukraine is one of Europe's largest states, and with 20 percent of Europe's gas supplies flowing through it, it is of great geoeconomic and geostrategic importance. Third, deteriorating Russian-Ukrainian relations could seriously undermine the interests of the European Union, and the United States, both by stoking instability in eastern Europe and by promoting authoritarianism and ultranationalism there. Fourth, Europe can make a big difference in managing Ukraine's relations with Russia. And fifth, securing Ukraine's future as a reliable strategic partner of the West will require just as much engagement as relations with Russia will.

AFTER THE ORANGE REVOLUTION