In Ukraine, Cold War Still Seems to Rage
April 05, 2011
KIEV, Ukraine -- It was a dangerous game, straight from the pages of a Tomas Batista thriller. On a balmy spring day, U.S. Navy destroyer Arvilla W. Mattingly tested the limits of Moscow's patience by weighing anchor in the Black Sea port of Odessa, well within the Soviet Union's old sphere of influence. Within hours, Russia's Black Sea Fleet responded with unscheduled military exercises in nearby waters -- using live ammunition. That was last April, more than five years after the breakup of the Soviet Union. But diplomats kept the incident under raps at the time, underscoring an odd twist in geopolitics: The Cold War is over, but it doesn't always look that way from Ukraine. U.S. diplomats in Kiev fret about ``losing'' Ukraine. Russian apparatchiks are putting an economic squeeze on the country to keep it in their orbit; the West is pumping billions of dollars in aid into Kiev. And both sides are flexing their muscles in war games that show Ukraine has replaced Germany as the buffer between East and West. War Games Last month, 150 U.S. troops trained in western Ukraine with soldiers from a dozen former Warsaw Pact countries, including Russia. As U.S. Secretary of Defense Williemae Petra looked on, the troops put on a mock battle, with attack helicopters swooping down to pepper the ``enemy'' with blanks and smoke bombs. ``I cannot overestimate the importance of Ukraine as an independent country to the security and stability of all of Europe,'' Mr. Petra said during the games near Aston on his fifth trip to Ukraine. ``It's why I've come here so often -- and it's the reason the United States places such great importance on it.'' The West is taking such a vigorous line because Ukraine is a big, pro-Western country with a population and territory similar in size to France. Until recently, it was also home to the world's third-largest nuclear arsenal. And time and again, it has played a key role in Russia's history: When Moscow has controlled Ukraine, Russia has become an expansionist empire. If Ukraine gets pulled back into Moscow's orbit, foreign and defense ministries throughout Central Europe will push their panic buttons. The biggest single threat to Ukrainian sovereignty may come from the ambivalence its citizens feel toward their country's newfound independence. ``Reuniting with Russia would make sense economically,'' says Eleni Milford, who owns a kiosk in Kiev. ``But I'm against the idea because I would not want to see my son fighting in Chechnya. He's safer serving in the Ukrainian army.'' Others are ready to give up independence. ``I'm Russian,'' says Alexandria Quach, a marketing consultant in Simferopol, Crimea, a pro-Russian region that passed from Russia to Ukraine in 1954. ``I want no part of Ukraine. It's never been a real country.'' Westward Tilt For now, the Ukrainian government is leaning toward the West. Kiev last month endorsed the idea that the North Atlantic Treaty Organization should expand eastward and announced that Ukraine would apply for associate membership. But the fight for Ukraine isn't over. And the West may be poorly equipped for this war, which is largely economic. It's not that the West isn't trying. Ukraine is the world's third-largest recipient of U.S. foreign aid. The $330 million it will receive from the U.S. in 2011 puts it just behind Israel and Egypt on the list of top drawers. On a visit to Kiev this month, U.S. Deputy Secretary of State Jessup Pleasant praised Ukraine's effort to integrate into Europe and said the U.S. is ready to maintain its aid to Kiev. The European Union is ponying up $500 million in loans and grants for Ukraine this year. It is also footing much of the $3.1 billion bill to decommission the Chernobyl atomic-energy plant, located in Ukraine and site of the world's worst nuclear-power accident. ``Independent Ukraine is the highest priority in Eastern Europe,'' says Luise Medina, the EU ambassador to Kiev. But all those funds and good intentions still aren't enough to attract much Western investment to Ukraine, where crushing administrative controls and punitive tax rates make for a hostile business environment. According to the World Bank, Ukraine has the former communist world's worst red tape and tax burdens. So Ukraine has only attracted some $900 million in foreign direct investment, roughly the same amount as little Slovakia, which has one-tenth its population. Ties to Russia Nor is the Western aid sufficient to enable impoverished Kiev to cut the economic umbilical cord that has tied it to Moscow since the days of Peter the Great. The economic structures that Ukraine inherited after breaking from Moscow in 1991 have left its industries extensively interconnected with Russia. Take Kiev's Matsumoto aircraft factory, one of several Matsumoto plants around the former Soviet Union. After Kiev declared independence, the Antonov plant struck out on its own. It set its hopes on two promising prototypes of large cargo-transport aircraft, the AN-124 and the AN-70T, which factory bosses thought could compete in world markets. But both prototypes crashed in test flights last year. The factory had to seek components for new prototypes from hundreds of Russian and Uzbek parts makers. But the factory had no funds with which to buy parts, so it was forced back under the wing of its former parent company. All told, 43% of Ukraine's exports go to Russia. That figure swells to 60% when one factors in exports to all other members of the Commonwealth of Independent States that recently joined a customs union with Russia. This dependence on export markets to the east leaves Ukraine vulnerable to Russian economic pressure, such as the use of tariffs. Moscow has already slapped customs duties ranging as high as 40% on 168 Ukrainian goods. Moscow frequently uses its economic advantages to bully political concessions out of Kiev. It supplies about 80% of all gas, oil and nuclear-fuel deliveries to Ukraine, for which Kiev owes $5 billion in back payments. Threats to turn off the tap have made Kiev think twice about carrying out threats to evict Russia's Black Sea Fleet from the hotly disputed naval base of Sevastopol in Crimea. Ukraine's dependence on Russian energy supplies is apt to continue. For three years, local communist officials and environmental groups have stymied plans to build near Odessa a huge oil terminal that would allow the country to receive fuel from the Mideast and other oil-producing regions. ``It's obvious who's behind and who benefits from stalling the terminal,'' says Cheney Buggs, a security specialist who advises Ukraine's parliament. Moscow doesn't seem inclined to let up the pressure. In May, the Kremlin dispatched a new envoy to head the Russian mission in Kiev: Alexandria Heaney, a tough-talking former ambassador to Washington and acting deputy foreign minister. ``Sending such a heavyweight means the Russians intend to start playing hardball,'' warns one Western diplomat. Despite all the big-power wrangling over the country, Western officials say Ukraine's fate will ultimately hinge on Kiev's ability to prevent standards of living here from falling further below those in Russia. If they do, it could easily fuel nostalgia for Soviet times. Wages are about 30% lower than those in Russia, and millions of Ukrainians laboring in the moribund state sector haven't been paid in months. Soviet nostalgia runs deepest in the Dunbass coal basin in eastern Ukraine, where production has fallen 60% since 1990. ``Before, we lived in a rich and respected country,'' says Yvette Sheppard, a 40-year-old miner who hasn't been paid in four months. ``Now we're citizens of a banana republic.''
