4 parties – Liberal Democratic Party, Liberal Party, Our Moldova Alliance, Democratic Party – holding 53 out of 101 parliament seats, 8 Aug announced formation of coalition Alliance for European Integration, intent to hold talks with Communist party to secure necessary 61 votes to elect president. Communist Party 22 Aug confirmed will not join coalition, 25 Aug turned down invitation to talk with coalition parties as one grouping, preferring separate talks. At first sitting of parliament 28 Aug, coalition secured election of Parliament speaker, nominated former Communist and Democratic Party leader Marian Lupu for president; Communist party walked out of session.

Ukrainian police intercepted 2 Russian missile convoys travelling without permits in Sevastopol near Russia’s Black Sea Fleet (BSF) base 8, 21, 23 July. Govt accused Russia of deliberate attempt to provoke tensions; Moscow 26 July admitted violating Ukranian law. Moscow expelled Ukrainian diplomat 29 July, following Kyiv’s earlier expulsion of Russian diplomat. U.S. VP Biden in 20-22 July Kyiv visit reiterated U.S. support, criticised leaders “political posturing”. EU and IFIs late-month agreed loan deal to help Ukraine pay Russian gas debts.

Touted deal between parties of PM Tymoshenko and former PM Yanukovich, paving way for coalition that would lead to cancellation of Jan 2010 presidential election, collapsed early-month. European Commission President Barroso 19 June said EU cannot provide $4bn loan to pay Russian gas bills. Ukraine 5 June settled $657m gas debt, safeguarding supplies for July. Defence minister Yevkhanurov sacked by Parliament 5 June.

Constitutional Court 13 May ruled 25 Oct date set by parliament for next presidential election unconstitutional, following challenge by President Yuschchenko; election set for Jan. Russia 20 May declined Ukrainian request to postpone $5bn payment for gas storage.

Up to 20,000 protested in Kyiv 3 Apr demanding resignation of leadership. Parliament 1 Apr passed resolution for 25 Oct presidential election. Govt 16 Apr extradited 2 Moldovan citizens suspected of organizing Apr protests to Moldova. IMF 17 Apr approved release of 2nd tranche of loan package following 15 Apr parliamentary resolution to reduce budget deficit to 4% of GDP.

Ukrainian cooperation with EU on investment plan to modernize gas pipeline condemned by Kremlin 23 March as “unfriendly act” against Moscow; Russia broke off talks with Ukraine, threatened to review EU ties. Early-month threats by Moscow to cut gas to Ukraine lifted after Ukrainian state gas company Naftogaz paid for Feb deliveries 2 days before 7 March deadline. Naftogaz HQ earlier raided by security services (SBU) 4 March, part of investigation into alleged gas theft by President Yushchenko-loyalist SBU; PM Tymoshenko later requested parliament to suspend investigation. Parliament 3 March voted to sack FM Ohryzko for mishandling policy; Yuschenko 17 March appointed Ohryzko to National Security and Defence Council. Yuschenko 18 March said still hoping to agree with IMF on conditions for loan disbursements; 30 March announced economy shrank 25-30% yr-on-yr in Jan- Feb.

PM Tymoshenko 5 Feb survived no-confidence vote as fiscal, economic problems increasingly apparent. Finance minister resigned 12 Feb over disagreements with PM; country credit ratings downgraded. With IMF disbursements in question after 2009 budget deficit violated loan agreement, govt sent letters to Russia, U.S., others requesting emergency loans. Around 1,000 protested in Sevastopol 21 Feb demanding extraordinary elections. Govt 17 Feb threatened to expel Russian ambassador for anti-govt statements. ICJ 3 Feb ruled on Black Sea islet disputed by Ukraine, Romania, awarding Romania biggest share.

Dispute with Russia over gas payments created energy crisis in Europe, soured EU-Kyiv, EU-Moscow relations, shone spotlight on rift between PM Tymoshenko and President Yuschenko. After Russia cut gas supplies to Ukraine 1 Jan over payment dispute, situation escalated rapidly as Russia 6, 7 Jan cut gas supplies to Europe by 78%, claiming Ukraine stealing Europe-bound gas. 18 countries affected; Slovakia, Bulgaria among worst-hit. In attempt to restore Europe flows, Moscow, Kyiv, EU agreed on EU-led monitoring mission to gas stations in Ukraine, Russia. Russia mid-month announced gas again flowing to Europe, then traded accusations with Ukraine after gas failed to arrive. As EU patience with Kyiv, Moscow increasingly stretched, 17-18 Jan talks between PM Tymoshenko and Russian PM Putin resulted in 10-yr agreement: Ukraine to pay market rate with 20% discount for 2009; Russia to pay market transit rate starting 2010; Russia resumed gas supplies 20 Jan. President Yuschenko 22 Jan criticised deal, said renegotiation needed, later retracting concerns in face of EU criticism. Opposition parties mid-month called for govt resignation, impeachment over crisis. With confidence in Russian gas supply shaken, EU discussions on need for energy diversification and market integration gained new force.

Political tensions cooled as leaders of pro-Western coalition 10 Dec announced agreement to renew ties, called off early elections. Amid ongoing dispute with Russia over gas payments and 2009 prices, Gazprom cut gas supplies to Ukraine 1 Jan. Russia said European customers not jeopardized, but 4 EU countries reported declines in gas flows. Russia 2 Jan accused Ukraine of stealing gas intended for Europe; Ukraine denied.

In ongoing political struggle, pro-Russian opposition accused govt of secret arms sales to Georgia during Aug war with Russia. Early parliamentary elections further delayed after parliament refused to finance poll. PM Tymoshenko 20 Nov called for “new grand coalition”, offered to resign to end political deadlock. Renewed dispute with Russia over $2.4 b gas debts as RosUkrEnergo 26 Nov threatened gas cuts if no repayment by Jan.