New Challenges on Dnepr

As predicted here, the political crisis in Ukraine ended with a de facto-coalition between Our Ukraine and the Party of Regions.

This afternoon, an official ceremony of signing of what is called Universal Of National Unity took place in Kiev, in which President of Ukraine Victor Yushchenko, speaker Oleksand Moroz, Prime Minister Yuri Yekhanurov and leaders of the other parliamentary factions took part.

The document was signed by Socialist party leader Vasyl Tsushko, Our Ukraine leader Roman Bezsmertny and Party of Regions leader Victor Yanukovich.

it certainly took a long time to reach this result - and the details of the agreements signed are still somewhat unclear.

Whether this will result in a sufficiently strong government remains to be seen. There is reason to be particularly concerned over the position of the Socialists and the small Communists - they are the true reform-blockers.

That there will be a strong opposition with Yulia Timoshenko is beyond doubt. She might well set her sights on challenging Yushenko in the next presidential election, although that position holds less powers now than in the past.

Does this means that all the gains of the Orange Revolution are gone?

Certainly not.

Ukraine is still a free and open - somewhat disorganized - democracy in contrast to what we see emerging in Russia. The elections that were held in March were free and fair.

And there is a certain value in a coalition that bridges the political gap that does exists between the East and the West of the country. It might well be that President Yushenko sees this as his possibility of becoming true President of all of the country.

There now seems to be a joint commitment to work towards closer integration with the rest of Europe in general and the European Union in particular.

It will now be up to the EU to test how far that commitment can carry them. The proposal that is on the table for "deep free trade" between the EU and Ukraine should certainly be explored.

Whether this arrangement will mean that Ukraine's moves towards NATO will be delayed is too early to tell. Mr Yanokovich has been eager to send signals to the West that he is not as opposed as he might have sounded, but that remains to be seen.

Reports talk about an agreement to have a referendum on the NATO issue. When that should be held would be an open question, and it would certainly require very major effort to turn public opinion around on this issue.

Absolute key will be whether the government can get back on track in terms of economic reforms. That's what's really needed after the debacle of the Timoshenko government last year and the long political crisis this year.

But economic growth has started to pick up markedly in the last few months, and that's a good signal that the economic slowdown might have been overcome.

Very important would be to send a signal on early resolution of the outstanding issues concerning membership of the WTO. It's here the role of the Socialists and Communists could be dangereous. Let's see.

Relations with Russia will are unlikely to be straightforward immediately. The issue of gas prices for next year remains to be sorted out, as well as the details on the ownership and managment of Ukraine's important gas distribution and transit infrastructure.

There is every reason to continue to follow and support developments in Kiev, Donetsk, Lvov and Odessa.

It's a key country for the future of the entire East of Europe.