BRUSSELS, Belgium -- EU officials are casting a wary eye at Ukraine as it prepares for watershed presidential elections in January that look likely to spark a lurch back towards the Russian sphere five years after the former Soviet republic was supposedly set free by the "Orange Revolution".
The cautious approach in Brussels is again raising questions about the EU's apparent lack of a strategic vision – and political courage – in its dealing with its eastern neighbours.Fierce rivalry between President Viktor Yushchenko, who is standing for re-election, and his prime minister and principal opponent, Yulia Tymoshenko, is feeding worries about the recession-ravaged country's political and economic stability.Yushchenko's decision this month to approve a 20% increase in wages and pensions, characterised by critics as a crude pre-election bribe, led the IMF to freeze the fourth instalment of a $16.4bn bailout package. That in turn increased credit market fears of a sovereign default.Tymoshenko, a famously combative millionaire currently leading in the polls, accused the president of deliberately sabotaging the IMF agreement to starve her government of cash and undermine her presidential bid.But she in turn has been accused of sucking up to the Russians, in the shape of the prime minister, Vladimir Putin, who as Russia's then president opposed the Orange Revolution and is an inveterate Yushchenko foe.After late-night talks with Tymoshenko in the Crimean resort of Yalta last week, Putin said he had agreed to waive various penalties and amend Russia's natural gas supply contract with Ukraine to avoid a repeat of last January's dispute, which led to serious gas shortages in eastern and central Europe."It would be very good to meet the new year without any shocks," Putin said, adding that transit fees next year would rise by 60% – a change potentially worth billions of dollars to Ukraine. Tymoshenko's response was unctuous. "You, as a strong country, are meeting us halfway," she said.The deal was seen as both a none-too-subtle attempt to show that she, unlike Yushchenko, could do business with Moscow, and as blatant electoral interference by Putin.Ukraine's shenanigans have even led football's ruling body, UEFA, to seek assurances that preparations and financing for the Euro 2012 championship, to be hosted jointly by Poland and Ukraine, will not be affected by the elections. UEFA is also worried that visa-free travel arrangements with the EU have yet to be agreed.All this is watched with trepidation in Brussels, where José Manuel Barroso, the European commission president, recently telephoned Yushchenko to reportedly express concern over the way the IMF bailout and Europe's gas supplies have become political footballs.According to euobserver.com, commission plans to offer €500m in economic aid are under review "because of Kiev's unwillingness to curb public spending or to clean up waste and corruption at its national gas company, Naftogaz". About 80% of EU natural gas supplies from Russia transit Ukraine.Such is the animosity between the rival camps that EU officials fret that the election, which is also contested by the pro-Russian former prime minister Viktor Yanukovich, could end in stalemate and possibly violent recriminations, as happened in 2004 when Yanukovich was initially declared the winner and then unseated.These strains and stresses lend an air of crisis to the EU-Ukraine summit on 4 December, which is shaping up as the first big test for the untried diplomatic skills of the EU's new foreign policy chief, Lady Ashton.Officials say the EU aims to give Ukraine a "stern warning" that substantive political and financial reform is a prerequisite for progress on issues such as visas and future association and trade agreements.But full EU membership, on which Yushchenko set his heart, is now a receding prospect. Impatience with Ukraine across the EU is growing, with France and Germany, for example, delaying its accession to the EU's energy community treaty.More significantly, last year's Russian invasion of Georgia, and Moscow's accompanying claims of Ukrainian support for Tbilisi, have driven home the message in Brussels that forging closer, structural ties with Ukraine could have severe, negative consequences for EU-Russian relations.Given the much reduced appetite for further EU enlargement, it seems certain that the high watermark of EU-Ukraine ties has already passed. It's no consolation for Yushchenko that much the same applies to Georgia, Belarus and Turkey.And for many in Europe who hoped for better, braver things along the EU's post-Soviet eastern frontier, it's galling to conclude that, in a sense, Putin has won.