Is Ukraine drifting toward Russia and away from Europe? Several recent developments suggest it may be.

Although the pendulum has swung toward Moscow, a case can be made that a foreign policy balance will be struck in the coming months.

Having secured a significant trade-off – the long-term presence of Russia’s fleet in Ukraine’s port of Sevastopol in return for cheap gas – Russia has upped the ante.

Its leaders have bombarded Kiev with a string of additional proposals: a merger of Ukraine’s Naftohaz and Gazprom (really a take-over); a consortium to export electricity to Europe; a joint-venture to build nuclear power plants in Ukraine; and deep integration of the aerospace industry.

Cumulatively, it looks like a wholesale economic take-over of Ukraine.

Not all the ideas are unreasonable. After all, the freeze in relations during the administration of President Yushchenko (2005-20010) eliminated an important source of investment capital – essential, if Ukraine is to make a strong recovery.

Indeed, some Russian proposals would make sense – with the inclusion of third parties. But, if implemented without further ado, they could fundamentally erode Ukraine’s sovereignty.

In agreeing to Russia’s intimate involvement in the country’s economic and cultural life, President Yanukovych faces a fresh challenge: how to mould a unifying sense of national identity within his east and south Ukrainian political base, where identity is weak and susceptible to Russian influence.

A presidential committee has been set up to shape a consensus on national identity, as the 20th anniversary of independence approaches in 2011. The committee will need to engage cultural and political leaders from the opposition.

Still, the alarm over the country’s geopolitical direction needs a reality-check. The gaggle of offers and rumours surrounding deals are just that. So far, one big decision has been made: the gas-for-naval facilities deal. The president’s team argues this was necessary to trim the budget deficit and meet the conditions for a new IMF aid package of $19bn, essential for the return of western investors.

Moreover, bonhomie between Moscow and Kiev contributes to Ukraine’s European aims, say Mr Yanukovych’s advisers. An agreement on a treaty demarcating Ukraine’s borders with Russia can speed a more relaxed visa regime with the EU.

From this perspective, there is no let-up in Mr Yanukovych’s commitment to European integration – an aim he professes publicly and with great regularity, enforcing it vehemently when his officials stray off-message.

The president is ambitious. Having achieved high office, he is not inclined to become a second-rate administrator of a Russian province. Nor does he benefit from a highly polarised country and an enraged opposition, factors that resulted in the Orange Revolution of 2004.

The end of the fire sale was most apparent at the May 17-18 summit of presidents Medvedev and Yanukovych in Kiev. There, the leaders opened the door to closer co-operation on energy, aviation, and culture, but Ukraine veered away from a wholesale turnover of key industries to Russia.

President Yanukovych even struck a dissonant note by pressing for Russia’s retreat from the South Stream gas pipeline, a project that could undermine Ukraine’s role as a gas transit powerhouse.

The president wants results in his first 100 days and Russia has a strategic interest in obliging him – if at a high price.

In the coming months, Mr Yanukovych is likely to tackle the slower moving Europe agenda, including pursuit of a free trade agreement and energy sector deals that would ensure Europe’s as well as Russia’s participation.

He also is planning investment promotion efforts focused on China, east Asia, Europe, and North America.

This is not to say that there is no cause for concern. Clearly, a strong pro-Russia bloc exists inside the ruling Regions party and the government.

In addition, the absence in the new ruling coalition of politicians with a pedigree of struggle for independence means many at the helm have a tin ear to issues of national identity.

The coalition lack former members of the Communist nomenklatura who backed independence in 1991 and patriotic anti-Communist democrats. Indeed, some of its members are so pro-Russian and suffused with Soviet-nostalgia as to be incapable of articulating why Ukraine should remain independent.

While this is the situation within the government and inside the parliamentary coalition, the same cannot be said of the president’s team.

It is dominated by well educated, highly professional 30- and 40-somethings, who have spent their entire adult lives in an independent Ukraine.

They support Mr Yanukovych’s more nuanced view of Ukraine as a European state with deep and friendly relations with Russia.

For the moment, the one-sided nature of events in Kiev has raised concerns and suggests the jury is out on whether Russo-Ukrainian deal-making is more a case of “Make me an offer I can’t refuse” than “Make me an offer. I can’t refuse.”

Official Kiev continues to argue that it is the former and that a balanced approach will emerge in the months ahead. Deeds must now follow words.

Adrian Karatnycky is a senior fellow with the Atlantic Council of the U.S. and the managing partner of Myrmidon Group LLC. This article first appeared in the Financial Times.

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