Ukraine's Viktor Yanukovych is doing the right things to mend fences with Moscow after five years of bad neighbourly relations, but going too far to secure cheaper Russian gas supplies could hurt his power base at home.
In his first six weeks a president, Yanukovych has moved quickly to patch up the relationship with Ukraine’s former Soviet master — essential if he is to lighten the burden of expensive Russian gas on his country’s struggling economy.
A pragmatist with the strong survival instincts of a post-Soviet apparatchik, Yanukovych has no intention of following the nationalist policies of his pro-Western predecessor Viktor Yushchenko, which so riled Moscow.
Playing music to Moscow’s ears, he says pursuit of NATO membership — which was close to Yushchenko’s heart — is off the agenda and has dismantled internal structures managing it.
He has suggested Russia’s Black Sea fleet may be able to stay at its base in the Ukrainian port of Sevastopol after the current lease ends in 2017. To the relief of Ukraine’s many Russian speakers, he is also improving the status of the language in regions where it is widely spoken.
But analysts say it is too early to say how far Yanukovych — tagged a pro-Moscow stooge in 2004 in the "Orange Revolution" that frustrated his first attempt at the presidency — will go in concessions to Russia.
He does not want to upset his financial backers for whom playing by European rules now and limiting Russian access to Ukrainian markets is the best way of protecting their interests.
Overt moves to accommodate Russia could play badly at home and, after an election that highlighted a sharp east-west split, invigorate a dormant opposition around rival Yulia Tymoshenko.
He has set integration into the European mainstream as a priority and he seems to believe genuinely that his country of 46 million can steer a mid-course between Russia and the West.
On touchstone issues relating to ties with Moscow — the Russian language, the Black Sea fleet and even NATO membership — he still has room for manoeuvre, analysts say.
ECONOMIC REALITY
Harsh economic reality, however, has brought urgency to the issue of Kyiv winning a cheaper price for Russian gas and replacing a January 2009 agreement which Ukraine’s new leaders say set an unfair price, even by European standards.
The global downturn savaged Ukraine’s main export areas of steel and chemicals. The economy shrank 15 percent in 2009 and the hryvnia currency lost value hugely against the dollar.
Against that background, the country struggles every month to meet a bill for Russian gas of around $700 million.
Now Prime Minister Mykola Azarov appears to be committed to a relatively tight 2010 budget, with a deficit of 6 percent of GDP, in return for a resumed $16.4 billion bailout from the International Monetary Fund whose credit is badly needed.
So Ukraine needs cheaper Russian gas. How hard a bargain will Russia push for? Prime Minister Vladimir Putin told Azarov in Moscow on March 25 that he was prepared to consider lower gas prices, but saw nothing wrong with the current 10-year deal.
A role for Russia in a three-way consortium with Europe to manage Ukraine’s gas network might not be enough in itself.
Moscow is certain to want greater access to potentially lucrative Ukrainian markets for Russian big business to allow its companies to profit from future privatisations.
But Yanukovych, for all his past pro-Moscow image, shut out Russian investment in Ukraine’s industrial east when he was governor of the Donetsk region in the late 1990s.
Reliant on backers such as steel-and-banking tycoon Rinat Akhmetov, who guard their investments from outside competition, he might not want to change that course now.
"A rapprochement with Moscow is going on but Yanukovych knows there is a defined boundary beyond which there are risks for him and the country," said Penta analyst Volodymyr Fesenko.
"Friends are friends, but political and economic sovereignty has to be preserved. The issue of sovereignty will be the main criterion of any further rapprochement," he said.
LANGUAGE QUESTION
Despite his signals to Moscow, he may shy away from a radical rollback of Yushchenko’s nationalist policies. Though by birth a Russian speaker, Yanukovych has backed off giving Russian the status of an official language along with Ukrainian.
Rights for Russian speakers may be improved — getting greater access to Russian-dubbed videos and films, for instance.
But, as his aides quickly point out, making Russian an official language would require a change to the constitution — something that could never get through the present parliament.
On the NATO issue he has scrapped a formal body overseeing eventual accession to the western alliance — a sop to Moscow — and sees a "non-bloc" future for Ukraine. But military cooperation programmes are still to go on with NATO.
What will his relations be with Georgia’s pro-Western leader, Mikheil Saakashvili, who is despised by Moscow but was a soul-mate of Yushchenko?
Some questions in relations with Russia touch on the past.
Will he repeal the hero status of World War Two Ukrainian nationalist leader Stepan Bandera — an iconic figure in western Ukraine but regarded as a terrorist by Moscow and condemned as a Nazi collaborator by Poland and Jewish rights groups?
And how will Yanukovych handle the issue of the Great Famine of 1932-33 in which several million people died and which Yushchenko, to the anger of Moscow, viewed as an attempt at genocide by Soviet dictator Josef Stalin?
"The jury is still out on Yanukovych. We can’t condemn or condone him for the moment," said one European diplomat.
