Ukraine and The New Great Game

Ukraine doesn’t seem like the kind of place that world powers would want to tussle over. It’s as poor as Paraguay and as corrupt as Iran.

But Ukraine is also a breadbasket, a natural gas chokepoint, and a nation of 45 million people in a pivotal spot north of the Black Sea. Ukraine matters—to Russia, Europe, the U.S., and even China.

Russia, which straddles Europe and Asia, has sought a role in the rest of Europe since the reign of Peter the Great in the early 18th century. An alliance with Ukraine preserves that. “Without Ukraine, Russia ceases to be a Eurasian empire,” the American political scientist Zbigniew Brzezinski wrote in 1998. Russian President Vladimir Putin wants Ukraine to join his Eurasian Union trade bloc, not the European Union. Russia’s Black Sea naval fleet is headquartered in Sevastopol, a formerly Russian city that now belongs to Ukraine. Last year Russia’s state-controlled Gazprom (OGZPY) sold about 160 billion cubic meters of natural gas to Europe—a quarter of European demand—and half of that traveled through a maze of Ukrainian pipelines.

China looks to Ukraine as a secure source to satisfy its ravenous appetite for food and energy. It’s lending the country billions of dollars to upgrade farm irrigation and develop coal gasification.

Western nations want to keep Ukraine from becoming a failed state and to discourage Putin from retaking the nation by force. The U.S., busy with conflicts from Syria to Afghanistan, regards Ukraine as mainly the EU’s problem.

The geopolitical struggle comes down to money. Russia pledged $15 billion in loans to pull Ukraine into its nascent Eurasian Union, but after paying out $3 billion it has put further funds on hold. On Feb. 26, Secretary of State John Kerry said the U.S. was organizing a stopgap $1 billion loan guarantee—far short of the $35 billion in aid Ukraine is seeking.

Ukraine stumbled after the Orange Revolution of 2004-05; the oligarchs kept power. The rebellion that brought down Yanukovych is a second chance. “The awakening of the people is much stronger this time,” says Oleh Shamshur, a former ambassador to the U.S. For those who want a free and democratic Ukraine, says Timothy Ash, chief emerging-market economist at Standard Bank in London, “it’s now or never.”

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