Margarita M. Balmaceda
Explaining the Management of Energy Dependency in Ukraine : Possibilities and Limits of a Domestic-Centered Perspective

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Mannheimer Zentrum für Europäische Sozialforschung: Arbeitspapiere; 79
ISSN: 1437-8574

This paper explores the issue of policy choices in the context of post-Soviet transformation processes and, in particular, why have various post-Soviet bloc states dealt with their economic dependency on Russia in different ways. The question is analyzed through an examination of the of the management of energy dependency on Russia, one of the most crucial issues in the domestic and foreign policy situation of the East Central European transformation states. Using Ukraine in the 1995-2004 period as case study, the connection between, on the one hand, ways of managing energy dependency and, on the other, the domestic system of power is analyzed. The basic hypotheses is that the nature of the political system/arrangements in various Central-East European countries will affect the management of energy dependency in general and, more concretely, the management of energy relations with the largest partner (Russia). The link between the domestic system of power and the management of energy dependency is analyzed through a discussion of the following issues: (1) what the continued prevalence of non-transparent markets in countries such as Ukraine means for Russia's ability to play a role in these markets; (2) through the issue of a country's ability to decide upon and implement a coherent, proactive energy policy; (3) through the issue of where are energy policy decisions made: in the open, democratic political realm, or in informal deals between regime and interest articulators; (4) through the issue of how political leaders are constrained by domestic political factors in their energy negotiations with Russia; (5) through the issue of interest groups and how states and regimes help mediate between them; and, (6) through the issue of the profits and rents that can be made out of a situation of dependency and how are they extracted, accessed, and distributed. Through the analysis of these factors, insights are provided into larger theoretical issues concerning the relationship be-tween institutions, economic policy and foreign relations in transition countries in general.