The dispute was short but bitter. As it celebrated the new year, Russian society did not notice that on the morning of Jan. 1 it had been drawn into the biggest foreign affairs conflict since the end of the Cold War. The Kremlin knew in advance that Ukraine was unable to pay for gas at Western European rates.

In a paradoxical way, from the point of view of international division of labor, Ukraine and Russia, just as in the Soviet period, make up an integral whole. After 1991, Russia, with its enormous natural resources, became a supplier of raw materials and energy for the West. But not all these resources can simply be sent straight out; indeed, from the standpoint of Europe’s economic interests, it makes more sense that part of the energy in question be consumed in its country of origin, in making labor-intensive, fuel-intensive and ecologically harmful products that can then be moved along to the West. This is Ukraine’s specialty.

Without Russia, Ukrainian industry makes no sense, while for the Russian raw materials economy Ukraine represents not only a transit corridor but also an important staging area — an advance outpost on the road to Europe. It is this, and not some mythical blood kinship or linguistic unity, that predetermines the invariable pro-Russian orientation of the eastern and southern parts of Ukraine. People speak better Russian in Kiev than in Donetsk.

But it isn’t the purity of Russian that determines policy and politics. It is economic interests. So the real blow delivered by Moscow’s policy was absorbed by the Russian-speaking regions of Ukraine. They use the larger share of imported fuel. The largest share of industry is concentrated there, as is the more urbanized population that depends more on a central supply of fuel. And Ukraine’s own fuel sources are located precisely in the west, which has a self-sustaining energy capability.

Demanding $230 for gas instead of $50 is the same as demanding Ukraine close down its economy and furlough the population. Which was understood in Moscow no worse than in Kiev. But it’s another thing altogether to see that Russian industry could not gain great advantages from the bankruptcy of its western neighbor. The Russian metallurgical industry could not win new markets for itself after a production halt in Ukraine — as it is now Russian productive capabilities are used only on a by-order basis. For the construction of new enterprises considerable investment would be necessary. Thus the interests of Russian companies that had already poured funds into Ukraine were put at risk.

The Kremlin clearly felt it could pressure Kiev via the European Union. The Putin people were fairly chortling at the prospect of watching Ukrainians and Western Europeans bump heads. But that kind of game requires real nerve and a fairly large degree of independence from the West. Moscow’s policy would only have been effective if Gazprom had categorically refused to compensate the Europeans for the fall-off in deliveries: We held up our end of things, they could have said; if the gas doesn’t go through, blame Ukraine. But having announced their intention to compensate for gas lost over Ukraine, Moscow assumed de facto responsibility for the situation. After a few days, it turned out that Russia’s attempt to have its way with its western neighbor had misfired, producing nothing. And the irritation of the Europeans was directed not at Kiev but at the Kremlin.

As you would expect, feeling pressure from the West, Moscow immediately did an about-face, covering itself with an attractive compromise. Ukraine was to have a price that gave Russia a minimal profit yet represented the maximum that the user industries could pay.

What was all this really about? Please, we can do without fairy tales about an “argument between managerial entities.” The decision to launch this war was political, just as was the decision to retreat quickly. Of course the bureaucratic incompetence of the Kremlin bosses and their devotion to market fundamentalism can’t be dismissed from the equation. But internal political considerations played no less a part than economic interests did.

The rulers of Russia are slowly and uncertainly trying to construct a new “national ideology.” This ideology needs an enemy. And Ukraine is just the kind of enemy that meets the appropriate criteria of size and ideology for contemporary Russia’s capabilities. Enmity with Ukraine reemphasizes the destruction of the Soviet Union (not only in a formal political sense, but in economic and cultural terms) — which is the general strategic goal of both the post-Soviet elite in Moscow and the imperial leadership in Washington.

Ten days have not yet passed since Kyiv and Moscow had finally come to an agreement regarding natural gas prices, when a subject to a new controversy emerged-a lighthouse in the Crimea. Actually there is nothing special about the lighthouse itself. It shines the same way both for Russian and Ukrainian ships. From Russia’s Black Sea Fleet functionaries’ point of view however it constitutes an integral part of the Fleet’s cartography service, while for the Ukrainian authorities it is a state property, which had illegally been taken away from them by foreigners.

If Russian officials were the ones to initiate the row on the New Year’s Eve, now the Ukrainians are taking over. They had captured the lighthouse in Yalta and wouldn’t give it back. Clear enough that the Russian Fleet was in combat readiness and placed guards on other facilities: the Ukrainians, unsatisfied with the lighthouse alone, might take away something else.

Heavy artillery had been introduced into the game. Fortunately, only diplomatic one for now. Ukrainian foreign minister Borys Tarasyuk in his Saturday speech had stated that this was mostly about the restitution process for all the lighthouses on the Crimean territory: “Russia has been illegally utilizing all hydrographic navigational service facilities. In this case we are witnessing a legitimate process which derives directly from the Ukrainian legislature”, said the minister. “There is no legal ground for Russia to claim that these facilities are of any relation to the Black Sea Fleet”.

The Russians didn’t keep them waiting. Aid to the Russian Navy’s Commander-in-Chief Igor Dygalo said that the Russian fleet would allow no capture of other facilities of the Fleet’s hydrographic service. “With regard to this the security on these objects is reinforced. In case of any attempt of trespassing security will be subjected to additional reinforcement as is stated in the Security Service Regulations”.

Shortly speaking, the two parties are positive to go on with their row. Kyiv thinks that Moscow has to pay ransom for the gas deal in the form of the Crimean estate. Moscow strongly believes that gas heaters are one thing and Yalta lighthouses are another. On formal terms at least, they are right.

By a weird coincidence the same week President Viktor Yushchenko promised to do away with the political reform. As we know, in the dramatic presidential elections times the Verkhovna Rada and the Supreme Court of Ukraine supported the claim to do re-voting, but in return Yushchenko promised to carry out a political reform in spring of 2006. This reform meant to delegate power over to the Parliament. At that point Yushchenko’s supporters were strongly convinced about having approval of the majority of the electorate which would even grow stronger when they (Yushchenko and his team) would come to power. They were wrong. Bummer! Not only was the population disappointed with the results of the “orange revolution”, but the “orange block” split itself. Now Yushchenko will either have to make peace with Yuliya Tymoshenko, or negotiate with his recent enemy Viktor Yanukovitch. The second option, by the way, given the existing force ratio and mutual interests, is likely to happen, but that’s the hell of a humiliation, though! Besides, there is a bunch of minor actors messing around-socialists, the Verkhovna Rada speaker Volodymyr Lytvyn, and god knows who is to be in the next Parliament! And then will come constant bargaining, and looking behind. Life turns into a nightmare.

In plain terms, the President had simply decided to let down all his partners on this treaty. The only thing needed is some political reasoning.

To let go the power in the middle of the external political crisis is impossible. But the crisis wouldn’t occur! So the fight is put on a special order.

One way to avoid political reform, according to Yushchenko, is to organize the national referendum. What if the citizens would suddenly vote against the President? How would Kyiv’s political elite act if the population’s reaction to another episode of the epic but less and less thrilling “Moscow and Kyiv battle” series will differ from the expected one? In the gas case the public support is more or less predictable, Moscow itself didn’t look attractive enough. The whole ‘lighthouse affair’ is kind of cheesy, though. It is even less mobilizing for the masses than the unfortunate dam case in Tuzla.

Russian authorities do not yet have such problems. No one calls for the political reform, and, generally speaking, there is no one but Presidential Administration to advance new ideas. However, carrying out stable policy within the Administration is not easier than forming coalitions in Ukraine.

To fight with the neighbor, however, Moscow is willing anytime. Nationalism does need an enemy and Yushchenko is glad to be of service for the Kremlin in this role. To refuse such an offer would mean committing a sin! I love to hate you!

So, if there is someone Yushchenko can surely rely on and confer his plans to, it is the Kremlin.