As Ukranian President Yanukovich sidesteps an Association Agreement with the European Union, violence and civil unrest has the streets of Kiev clogged with pro-E.U. protestors and riot police. The violence erupted a week ago when the Yanukovich administration announced it would not sign the Agreement and the people took to the streets to voice their disappointment in the decision.
An Association Agreement with the E.U. would have meant greater freedoms for the people and greater economic opportunity for the whole country. It also would have meant the release of Yanukovich's political rival, Yulia Tymoshenko who many believe is in prison on trumped up charges to keep her off ballots.
But a move away from the E.U. is almost certianly a move toward Russia's fledgling Customs Union and will help secure natural gas supplies from Gazprom. The Ukraine is third in the line of nations who supply nitrogen to the United States behind Canada and Trinidad. Even if Yanukovich's E.U. snub leads to a renegotiated natgas contract with Russia, the social impacts are more likely to influence the price of Ukranian nitrogen.
Most of the natural gas used in Ukranian nitrogen production is sourced from outside Russia so prices may stay consistent throughout this episode, but if a full blown civil war ensues, nitrogen production could be a casualty of war. If political and social upheaval are weighty enough to slow the wheels of production at Ukranian facilities, output will fall in a hurry. That could lead to nitrogen shortages and lend greater pricing influence to China, who is having nitrogen production difcficultites of its own.
It remains to be seen if Yanukovich will sign on with Russia's Customs Union, but many believe that is the next step for the regime. That would put Ukraine in league with Russia, Belarus and Kasakstahn rather than England, Germany and other, more democratic nations.
A closer walk with Russia could lead to lower natural gas bills for Ukraine which remain a source of contention between the two countries. But the people of Ukraine are anxious for a more democratic society and increased violence is a real possability if Yanukovich signs on with Russia's Cutsoms Union. Meanwhile, 7% of the nitrogen consumed in the U.S. by growers hangs in the balance.
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