Ukraine has plenty of accumulated problems, too. Its property boom has crashed, and its steel and chemical industries are almost at standstill. But it mainly needs relief from the political problems that have accumulated since the Orange Revolution in 2004.
Corruption in the gas industry is the factor most responsible for driving the revolution off track. The notorious intermediary RosUkrEnergo made a publically stated profit of $795 million in 2007, but its payment in kind, 20% of gas deliveries to Ukraine, was worth more like $4.35 billion. That kind of money buys influence and fuels the constant gridlock in Ukrainian politics.
Prime Minister Yulia Tymoshenko has long campaigned in public against RosUkrEnergo, but the key agreement with Mr. Putin this month was made behind closed doors. The company may diversify into the domestic market, where it now controls 75% of distribution. But removing the cancer of gas corruption is a necessary precondition for cleaning up the political system in Ukraine.
No one has emerged well from the current crisis. But all will benefit if it prompts a serious search for a radical solution.
Andrew Wilson on the recent dispute
Andrew Wilson, Senior Fellow at the European Council of Foreign Relations, wrote a piece in the Wall Street Journal on the recent crisis. Below is an except on Ukraine, here it is in full.
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