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Ukraine revolution one year on: Change for the better?

Sergei Supinsky | AFP | Getty Images

Friday marks one year since protests first erupted in Kiev's Independence Square, an event that snowballed into the biggest upheaval Ukraine – together with the West -- has seen since the collapse of the Soviet Union.

In the course of that year, Ukraine has had three governments, engaged in a deadly conflict with neighboring Russia and gone limping to international lenders to rescue its economy from collapse.

On many levels: financially; militarily, and socially, life in the former Soviet Union country appears to have changed for the worse. Yet there are some grounds for optimism.

Here, we take a look at what has changed – and why some hopes for its future may be justified.


The Russian question

Russia has clung to its Soviet sphere of influence with tenacity in the decades since the former USSR was disbanded. After Maidan protestors overthrew the Russian-approved President Viktor Yanukovych in February 2014, Russian has made no secret of trying to influence Ukraine -- and block Kiev from making closer ties with the European Union (EU) or the North Atlantic Treaty Organization (NATO).

The annexation of Crimea in March, after citizens voted to join the Russian Federation, was followed by Russian support for separatists in the eastern Ukrainian regions of Donetsk and Luhansk. The conflict has so far led to more than 4,000 deaths in eastern Ukraine – and the downing of Malaysia Airlines flight MH17 over Ukraine in July.

Russia itself is hurting economically, following Western-imposed sanctions and declining values of the oil price and ruble, but has stuck to its support for the separatists.

Yet the Kiev government has remained staunch in its commitment to closer ties with Europe. As President Petro Poroshenko, a candy tycoon who came to power in May, said on Twitter Wednesday: "There is no alternative to European integration."


Power shifts

Ukraine's 2004-5 revolution, known as the Orange Revolution, foundered on the inability of Ukrainian regions and politicians to unite. Watchers of the country have taken heart from its two successful free and fair elections, and the formation of relatively moderate, pro-European parties in October's elections. However, its politicians have yet to form a government, and the potential for future divisions between Poroshenko and Prime Minister Arseniy Yatsenyuk, who is seen as more anti-Russia, have already been flagged.

Economic woes

Ukraine's economy has been little short of a disaster in the past year. Its currency, the hyvrnia, is worth around half what it was a year ago, and inflation has soared to 20 percent, meaning that ordinary Ukrainians are struggling to afford basics like food. The economy (as measured in gross domestic product) is expected to shrink by 7 percent this year and another 2 percent in 2015, before a minor bounce-back of 2.5 percent in 2016, according to UBS economists.

Even with the help of a $17 billion loan program from the International Monetary Fund, it will be difficult to rescue from basket case territory.

Ukraine has also lost its supply of cheap gas from Russia, which has hiked its prices to its neighbor to $268.50 per 1,000 cubic meters. This is particularly worrying because of the aging, inefficient Soviet-era infrastructure Ukraine uses for transporting its most popular energy source, which makes gas more expensive still.


How to build a better Ukraine

The powers that be in Ukraine should focus on replacing the creaking gas transport infrastructure and tackling the problems in the banking system, Liza Ermolenko, emerging markets economist at Capital Economics, argued.

"There will be a lot of pain, but in the long term, if the government carries out the reform program, things could be more positive," she told CNBC.

There is also optimism about the appetite for reform in the country.

"I have never seen Ukrainians so united as this year behind the notion of Ukrainian statehood and independence," Tim Ash, head of emerging markets research at Standard Bank, told CNBC.