Parliament 4 June passed first draft of bill affirming Ukraine’s neutrality; if adopted, law will prevent country’s NATO accession.

In continuing sign of rapprochement between countries, Russian President Medvedev 17-18 May visited Kyiv, pledged economic support, signed agreements on security, border demarcation, statement on Transdniestria (see Moldova). Hundreds of Yanukovych supporters 11 May surrounded parliament to fend off over 2,000 anti-Yanukovych protesters. Latter rallied against perceived relinquishing of national sovereignty to Russia.

President Yanukovych and Russian President Medvedev 22 Apr signed agreement to extend lease for Russia’s Black Sea Fleet of port of Sevastopol in Crimea by 25 years after its expiration in 2017. Ukraine to get from 30 to 100% discount on natural gas purchases in return. Several thousands rallied 24 Apr in front of parliament in Kyiv against deal, describing it as “destruction of national sovereignty”. Ukrainian, Russian parliaments 27 Apr ratified agreement. At 12-13 Apr Washington DC nuclear summit President Yanukovych committed to completely removing country’s weapons-grade uranium by 2012.

After 3 March no-confidence vote in PM Tymoshenko’s govt, newly elect President Yanukovych 11 March formed new governing coalition; appointed Russian-born former Finance Minister Mykola Azarov to PM post. Yanukovych 1 March made first foreign trip to Brussels; 3 March visited Moscow.

Following polls praised as ”professional, transparent, and honest” by OSCE, international observers, election commission 14 Feb declared Viktor Yanukovych winner of 7 Feb presidential election run-off. West, including U.S., NATO and EU leaders, congratulated Yanukovych. PM Tymoshenko, losing by 3.5 percentage points, refused to concede, insisting elections fraudulent, but dropped legal challenge 20 Feb. Pro-Yanukovych block in parliament 19 Feb tabled draft resolution for no-confidence vote against govt following Tymoshenko’s refusal to step down voluntarily after president-elect 10 Feb demanded her resignation from PM post.

In 17 Jan first round of presidential election, opposition leader Viktor Yanukovych gained 35% of votes against 25% for PM Yulia Tymoshenko. Incumbent Viktor Yushchenko, brought to power in 2004 Orange Revolution, received 5.5%. Final outcome to be determined by 7 Feb run-off poll; 3rd-place finisher Serhiy Tihipko’s backing of either front-runner seen as critical for result. OSCE, Council of Europe election observation missions and western observers praised election conduct. Ending 5 month diplomatic freeze in relations, Russian President Medvedev 19 Jan announced Mikhail Zurabov to take up post of ambassador to Ukraine.

At annual EU-Ukraine summit 4 Dec, EU urged Ukraine to be more predictable energy partner, proceed with reforms. Russia late Dec played down fears over possible resumption of gas dispute with Ukraine; countries reached late-month agreement on oil transit arrangements. Russian FSB officers early Dec withdrew from Black Sea Fleet in Sevastopol, at request of Kyiv.

Russia 2 Nov warned EU president Sweden of possible disruption to Europe gas supplies due to problems with Ukrainian energy payments, urged EU assistance to help Ukraine pay bills. Ukraine 6 Nov told EU it has sufficient gas stored to ensure flows. Russian PM Putin 11 Nov warned Russia will cut Europe deliveries if Ukraine siphons off gas for its own use. Fear over Ukraine’s ability to pay bills fuelled by IMF early Nov delaying release of $3.8b loan instalment, following govt’s Oct contravention of loan agreement; EU FMs 18 Nov announced support for strict conditionality on IMF loan instalments to encourage reforms. President Yuschenko 19 Nov urged Kremlin to revise terms of Jan 2009 gas agreement; PM Tymoshenko same day told Putin Ukraine would fulfil deal.

PM Tymoshenko and Russian PM Putin struck deal 1 Sept for Ukraine to import less Russian gas than previously agreed, avoiding potential fines; successful negotiation fed speculation Moscow may back Tymoshenko in Jan presidential elections. Russian media 8 Sept reported Moscow may lend Ukraine $2b ahead of election, to be discussed at Oct meeting between Tymoshenko and Putin. Tymoshenko said Ukraine has sufficient stocks of natural gas to ensure smooth transit to Europe.