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      Ukraine Seeks to Parry Russian Energy Pressures

      The Ukraine is trying to steer a middle course between Russia and the EU with the ultimate goal being EU membership.
      By Amiel Ungar
      First Publish: 8/26/2011, 2:35 AM

      After the leaders of the Ukraine's Orange Revolution failed to translate their victory into effective rule, they were succeeded by the man they ousted – Victor Yanukovych.

      When Victor Yanukovych assumed office, his plans for balancing between Moscow and Brussels were treated with skepticism. Although such a policy was touted as an attempt to prevent the Ukraine from fracturing along the lines of an anti-Russian West and pro-Russian East, Yanukovych was considered firmly in Moscow's pocket.

      This assessment may change now as the Ukrainian president is facing down an attempt by Russia to pressure Kiev into joining a customs union comprised of Russia, Belarus and Kazakhstan. The major inducement for joining this customs union would be a discount on gas prices which under the Ukrainian-Russian agreement of 2009 are pegged to oil prices and therefore have gone up considerably.

      Russia would be willing to forgo this condition providing the Ukraine followed Belarus and permitted a Russian takeover of the state energy company Naftogaz that moves the bulk of Russian gas sold to Europe.

      The Ukraine proposed a compromise under which it would sign a trade back, that is the so-called 3+1 deal, instead of joining the customs union. This is necessary to preserve the Ukrainian option of eventually joining the European Union. Russian president Dimitry Medvedev rejected the proposal this month.

      To show the Russians that the Ukraine is serious about preserving its independence, the Ukrainian government announced plans to sharply reduce its gas purchases from Russia by introducing energy efficiency and by replacing gas with coal. It will also announce tenders for producing gas from shale deposits.

      In an article published in the Wall Street Journal, Yanukovych, while prizing his country's "historical connection" to Russia, announced that his goal was to make his country "a proud member of the European Union." EU membership represents "the key to prosperity," he added.

      The Ukrainian president also emphasized his desire to  free his country of energy dependence " Our current exploration of shale and offshore reserves will diversify energy supplies and help avert future crises.."

      While his government has put on trial an Orange leader and former Prime Minister Yulia Tymoshenko, Yanukovych claimed that his country was aligned with the democratic values of the EU: " Ukraine's partnership with the West extends beyond economic and strategic interests. It also includes a shared culture of values and a commitment to democracy, human rights and international peace."

      He promised to fight corruption which remains a major impediment to EU membership. "Replacing the remnants of Soviet corruption with transparency across all areas—including government administration, business and the judiciary—remains a challenge. No person should be immune from the consequences of his actions regardless of political standing or social stature. Without accountability, Ukraine's transformation will be unattainable. Without the rule of law, Ukrainian citizens will have their daily lives complicated".

      As a preliminary to the EU membership process, Ukraine will hold talks for an association agreements and the creation of a free trade zone.