Swords and Sustenance

The economic dependence on Russia that Ukraine and Belarus inherited from Soviet planners in 1991 was enormous. The two new states depended on Russian markets, in which Ukrainian and Belarusian producers sold goods that were uncompetitive in the rest of the world. Ukraine and Belarus also depended on Russia for crucial imports. Energy was the most important of all. Ukraine and Belarus relied heavily, in particular, on Russian oil and gas. In 1992 Russia supplied 89 percent of Ukraine’s oil and 56 percent of its gas; Belarus relied on Russia for 91 percent of its oil and all of its gas.2 Every winter since December 1991 Ukrainian and Belarusian households have worried that an end to Russian gas imports would mean unbearable cold. Ukrainian and Belarusian industrial firms, energyinefficient behemoths designed by Stalinist planners, required massive amounts of Russian oil and gas. The cost of energy dependence was obvious to policy makers in both states: reduced political autonomy. The price, however, was negotiable. Even after 1991, the Russian government managed the prices of oil and gas exports to the other four-