The prospects for western investors in Ukraine, particularly the energy sector, appear to be getting worse under the coalition government led by Victor Yanukovych that took office in early August. The development of the Black Sea offshore oil and gas prospects, one of the more promising deep offshore areas in the world, now seems threatened by a "resource nationalism" that could just be a cover for transfers to new oligarchs.

Governments should push for the best deals possible for nationally owned resources. Norwegian and Dutch negotiators are known for their pitilessness (and honesty) in dealing with oil companies; not a bad model for Ukraine to have followed. However, Yuri Boyko, Ukraine's minister for fuel and energy, has been insisting that Ukrainian state-connected companies should take the lead in developing the Black Sea. If we were talking about companies with the technology and integrity of, say, Norway's Statoil, that would be realistic. But given the technological backwardness and shadowy control and ownership structures of the Ukrainian concerns, the new government leaders seem to have something else in mind.