Cheney backs Ukraine Nato bid

Dick Cheney, the US vice-president, expressed strong US backing for Ukraine on Friday as he visited Kiev in show of support in the wake of last month’s conflict between Russia and Georgia.

Ukraine sided with the US over Georgia and is wary of Russia’s intentions in the region. Like Georgia, Ukraine is an aspiring member of Nato, in the face of Russian opposition.

After a meeting with Ukraine’s president, Viktor Yushchenko, Mr Cheney pledged the US would support Ukraine’s efforts to join Nato, saying that Russian opposition to further eastward expansion of the bloc should not influence this decision. He said “no outside country gets a veto’’ adding that the commitment made in April “stands today”.

Stopping off in Kiev after visiting Georgia and its energy-rich neighbour, Azerbaijan, Mr Cheney discussed energy diversification and regional stability

The US has backed existing and planned energy transit routes for oil and gas in the region to bypass Russia, including projects in Ukraine, which is itself deeply vulnerable to energy imports from Russia. Next year Moscow is expected to impose a fourth stiff natural gas price rise on Kiev in as many years.

Ukraine’s efforts to break from Moscow’s grip have been hampered by domestic crises sparked by relentless political rivalries.

Mr Cheney’s visit was clouded by the latest moves in the escalating power struggle between the country’s pro-western president and prime minister.

Standing alongside Mr Cheney, Ukraine’s president called for fresh talks to preserve his party’s coalition with Yulio Tymoshenko, the prime minister. He stressed, however, that any compromise deal would need to include the passage of a resolution in parliament upholding Georgia’s “territorial integrity.”

On Wednesday, Mr Yushchenko’s party backed out of a coalition with his erstwhile ally accusing her of betrayal and softness in support for Georgia.

The Ukrainian president has accused Ms Tymoshenko’s party of dragging its feet on a parliament resolution on the issue. She has voiced solidarity with Georgia, but her party wants the resolution to be discussed in a parliament commission before a vote.

While Ukraine’s economy has done well this year, economists are concerned that its impressive 8-year growth spurt could be dented by this, its third political crisis in as many years. Ukraine’s small and illiquid stock market has been sinking for months along with global peers.

Alexander Valchyshen, head of research at Investment Capital Ukraine, a private asset management and investment banking firm, said the country’s economy in the next few months will experience a “cooling connected with the global economic situation.”

“Factors in play could weaken the local currency, but we don’t expect a tumble. Commodity prices are falling, including Ukraine’s main export, steel. The prospect of higher natural gas import prices next year will possibly further increase Kiev’s current account deficit. In light of this, the political crisis poses a risk of curtailing foreign direct investments, which have been strong thus far this year with some $7bn coming in,” he said.