When Ukrainians celebrated New Year 2005 in Kiev in a delirious sea of orange and anthems of the revolution, the future looked bright. A peaceful popular uprising had finally forced the corrupt old guard out of the presidency. In their place, a personable former banker with a team of young, bright-eyed liberals, nationalists and idealists promised that finally Ukrainians would get their chance to earn a good living legally, be proud of being Ukrainian, and join Europe.

In fact the Orange Revolution – sparked by gross state-sponsored fraud in the November 2004 presidential elections between then-President Kuchma’s chosen successor Viktor Yanukovich and former National Bank head Viktor Yushchenko – split the country in two, with western, Ukrainian-speaking citizens backing Yushchenko, and Russian-speakers from the industrial east supporting Yanukovich. Threats of secession from the disgruntled east have since quietened down, but the rift refuses to close, a reminder of Ukraine’s complicated, bloody history in which parts of its territory have been variously part of Russia, Poland and Romania.

Apart from a brief period in 1917, Ukraine was never an independent state until 1991. Domination by Russia has shaped the country, displacing Ukrainian language and culture through colonization, neglect and repression. In Soviet times, an engineered famine killed millions, but it was a second disaster, at the Chernobyl nuclear power plant in 1986, and the subsequent state cover-up, that contributed to the break-up of the Soviet Union and strengthened demands for independence.

The following decade was a third disaster for the majority of Ukrainians. Chronic cronyism marked a succession of governments dominated by former communist apparatchiks. A few got extremely rich disposing of the country’s natural assets while wages in the public sector were barely above the poverty line and welfare services collapsed. Thanks largely to its geopolitical position between Russia and Europe, Ukraine was receiving one of the highest amounts of US government aid in the world, as well as IMF loans, yet Ukraine’s once-proud title of ‘the bread basket of Europe’ was soon replaced by ‘Europe’s basket case’.

Today Kiev is a flurry of building, as monuments to Ukrainian heroes grace gleaming new housing estates and shopping malls. Even before Yushchenko’s election affirmed Ukraine’s new Western democratic and free-market credentials, the economy was looking up enough to be one of the fastest growing in Europe in 2004. But the benefits are taking a long time to trickle down; outside the capital, small towns are collapsing quietly into hopelessness. Most of the population is still living on less than $100 a month.

Ukraine is still treading a fine line between Russia and Europe, between wild capitalism and older Socialist values. The signals from the new Government so far are decidedly mixed. At the same time as state pensions and wages were increased by up to 50 per cent, imposition of price controls provoked some Russian-owned petrol stations to ration fuel. The national bank meanwhile devalued the hryvna against the dollar, dismaying thousands with savings in US currency. Foreign investors are alarmed by promises to investigate the murky privatization sales under the former regime, of which not only relatives and supporters of the former Government but also some foreign companies took advantage. Members of Yushchenko’s team have even dared to suggest that renationalization may not be such a bad idea, provoking outraged cries of ‘state capitalism’.

Alongside tackling corruption, integration into Europe (and therefore weaker links with Russia) was Yushchenko’s key campaign platform, but the West seems unenthusiastic about that one, snubbing any suggestion of easing EU visa restrictions. Meanwhile an estimated five million Ukrainians are working abroad, the vast majority illegally in the EU. Whether that’s testimony to a desire to join ‘civilized Europe’, or simply desperation to escape what are still impossibly hard conditions at home, is moot.