Ukraine’s track record of massive corruption in energy is a sadly familiar story. Billions of dollars have been siphoned off annually into political largesse and party war chests. Successive administrations have proclaimed reform even as insiders fought over energy franchises. Unless corrected, the energy sector will continue to corrupt Ukrainian politics and make the country vulnerable to external threats.
Ukraine’s energy sector is also crucial to its neighbours. Although its advantages in energy transit have been eroded, Ukraine still transports nearly half of Russia’s gas exports to Europe, at least until additional bypass pipelines – Nord Stream 2 and Turkish Stream – can be built. Russia has steadfastly built new pipelines to bypass Ukraine, and employed transit deals to compromise its leaders and to demonstrate to European customers that Ukraine is an unreliable transit partner.
