This is one in a series of post cards from Reuters reporters across Europe, Middle East and Africa

Ukraine’s famous instability, verbose politicians and haphazard legislation present the investor – and the journalist – many red herrings. While talk of impeachment of President Viktor Yushchenko ring alarm bells, constitutionally it is nonsense. As CDSs go off the rails, Ukraine’s sovereign debt repayments are small and manageable. As Prime Minister Yulia Tymoshenko calls for the central bank governor’s blood, he is still at the helm. And while Yushchenko and Tymoshenko fight like Itchy and Scratchy, the country – to the amazement of some – has yet to collapse. 

Investors inside Ukraine have long known this and with good lawyers have managed to get on with business as the economy driven by steel and grain exports boomed at 7 percent annually since 2000. They follow political events constantly but are less quick to judge, because often their significance appears later or in fact does not exist. Those outside Ukraine overestimate the consistency of its politics. None of the three major parties – Tymoshenko’s, Yushchenko’s or opposition leader Yanukovich’s can be branded liberal, conservative, socialist, pro or anti Russian. Populism and pragmatism – usually at the last minute — are the key policies.

Now a deep economic recession is upon the former Soviet republic and presidential and parliamentary elections will decide the fate of the country. So what to expect? Not revolutions certainly, but as the country gears up to the polls, expect patience to wear thin amongst the population. Expect a dirty campaign allowing for new faces to appear that will get nowhere in the elections but be included in top jobs because of their fresh credentials. Expect continual constitutional change that may settle the question of who has real power — the president or prime minister.  Expect Tymoshenko to put up a fierce fight and Yushchenko to wither away. And expect Russia’s heavy gaze on this all.  

Police officers rest in a central park in Kiev April 23, 2009. REUTERS/Konstantin Chernichkin (UKRAINE SOCIETY IMAGE OF THE DAY TOP PICTURE)

Could it be that the gas dispute between Moscow and Kiev broke out because Russian Prime Minister Vladimir Putin felt personally slighted by his Ukrainian opposite number, Yulia Tymoshenko?
It may seem far-fetched that two countries would risk leaving half of Europe without gas over something so apparently petty. But a look at the sequence of events that led up to this crisis suggests there just might be something in it.

Rewind back to Oct. 2, and Tymoshenko is meeting Putin at his Novo-Ogaryovo residence outside Moscow. It is a lodge in forested parkland where, as a rule, he only invites people on whom he wants to make a good impression.

The portents were not good. Tymoshenko, often called the “Gas Princess” for the gas business she used to run in eastern Ukraine, has been a driving force behind Kiev’s push to integrate with the West and once wrote an article in a U.S. journal saying Russia had “imperial designs” on its neighbours.

Yet Putin and Tymoshenko seemed to hit it off. The Ukrainian Prime Minister, dressed in a designer outfit and looking much younger than her 47 years (she has since turned 48), radiated charm as she sat opposite her Russian colleague. Putin, the gruff former KGB spy, smiled and cracked jokes at a press briefing with Tymoshenko afterwards. And later that same evening, Putin took Tymoshenko to Gorki, where his boss Dmitry Medvedev has his own out-of-town residence, and they talked late into the night.

Most importantly, the visit ended with a deal on gas: Russia said it would not charge Ukraine market prices for gas straight away, and they agreed a memorandum which would serve as the basis for a new gas contract for 2009.

Now fast forward to December last year and – at least from the Russian perspective – Tymoshenko was going back on her word. The Russian theory goes that Tymoshenko, watching world prices for oil plummet and knowing that gas prices would eventually follow suit, decided that Ukraine should pay less for its gas than she had agreed back in October at Novo-Ogaryovo.

It should be noted that neither side ever made public what was agreed in October so it is impossible to judge if anyone has welched on the deal, and in fact Ukraine says it is Russia that is now failing to honour that agreement.

Either way, the indications from Russian officials are that Putin felt Tymoshenko had betrayed him, and was angry about it. Angry enough to start a gas war? It was probably not the only reason. It is impossible to dismiss the fact that there is a business dispute at play here. And then there is Russia’s well-known dislike for Ukraine’s pro-Western policies. But the theory is at least worth adding to the mix. We already know Putin is a man who takes politics personally. He did, after all, threaten to hang Georgian President Mikheil Saakashvili up by his genitals.

He was a suave central banker and she a “gas princess”, a young politician desperate to make her mark. In 1998 Yulia  Tymoshenko, now Ukraine’s prime minister, said she knew her destiny lay with Viktor Yushchenko, who went on to become president.

“We understood that we are a team,” she said at that time.

It’s an assertion Yushchenko disputes — a clash of views that has defined this partnership since they overturned a Soviet-style leadership in the 2004 “Orange Revolution” and vowed a modern, Western future for Ukraine’s 47 million people.

Then they stood shoulder-to-shoulder — her revolutionary speeches firing up crowd after crowd, his more academic approach comforting those who feared she was reckless in her pursuit of power.

Now barely on speaking terms, their bickering over policy and outlook could force the former Soviet republic into the third parliamentary election in as many years.

But was their partnership only ever a marriage of convenience?

In 1999, the tough former businesswoman, dubbed the gas princess because of her success in the cut-throat world of post-Soviet energy dealings, became deputy prime minister for energy in Yushchenko’s government. She was dropped in 2001 and former President Leonid Kuchma launched a corruption case against her.

Some Ukrainian media say it was Yushchenko, fearful for his political future, who agreed to let her go, opening the way for corruption charges she says were fabricated by Kuchma.

Since then, many think the pair’s jealousies and mistrust of each other have made them squander the chance to steady Ukraine on a path towards Western integration and reform.

She lasted less than a year as Yushchenko’s first prime minister, sacked after they fell out over policy, particularly her calls for a broad review of 1990s privatisations.

Now sporting her trademark peasant braid, she is back as prime minister. Many analysts say Yushchenko is desperate to challenge her lead in the opinion polls, which suggest she would win a presidential election and gain seats in any vote for parliament.

Accusing her of dangerous populism that threatens to wreck the economy, Yushchenko has come out fighting. His office has accused her of being a traitor for not openly supporting Georgia after its brief war with Russia over South Ossetia.

He says she has driven the economy to the brink, with inflation reaching a record 30 percent earlier this year. His office says she is selling Ukraine out to the Russians to ensure Moscow’s support for the election.

But she denies all charges and is trying to convince her doubters that she can be pragmatic.

She has called for Yushchenko’s Our Ukraine party to return to the ruling coalition after he said the government had collapsed — a departure from her usual fiery stance which is bound to antagonise Yushchenko even further.

This battle of wills looks set to run.