THE Union Jack looked incongruous when raised over the demonstrations in Kiev yesterday. Equally surprising were the people beneath it — not British tourists, expatriates or activists, but young Ukrainian software developers.

Yet this band of protesters, hunched against the driving snow in Independence Square, highlighted the political and economic crossroads at which this country of 48 million people stands, and the implications for the outside world.

“People in the United Kingdom probably don’t know what Ukraine is, but when we become a properly independent nation everyone in Europe will know who we are,” said Valery Verbovetsky, 27, head of a British-Ukrainian joint venture.

To him, the disputed presidential election represents a choice between a future in a European country with a competitive business environment and transparent, accountable government, or four more years in a post-Soviet mire of corruption and authoritarian rule. For his colleague, Vlad Isakov, it is a stark choice between Russia and the West. “The EU should realise that Russia is building a new empire on its borders and should help us not to be part of it,” he said.

These two young businessmen, like most of those in Independence Square, represent a new face of Ukraine: Western-minded and determined to shake off their Soviet past.

For 15 years Ukraine has languished, caught between its communist past and a future as the economic powerhouse of Eastern Europe. Since winning independence from the Soviet Union in 1991, and giving up its nuclear weapons, it has rarely attracted media attention except for occasional reports about internet brides or illegal sales of radioactive material.

Behind the scenes, a Cold War-style battle for Ukraine has been waged for some time. Western governments have poured money into pro-democracy organisations that back the opposition leader, Viktor Yushchenko, while Kremlin spin-doctors have directed the campaign of the Prime Minister, Viktor Yanukovych.

The ideological differences may not be as extreme as during the Cold War, but they have intensified since President Putin began rolling back democracy in Russia. Now the West is acknowledging the strategic importance and economic potential of this country sandwiched between Russia and the expanded European Union. Politicians and diplomats on both sides are talking in earnest again about the dividing line between the democratic world and the historically despotic East. That line now cuts through Ukraine, separating the Ukrainian-speaking West, which backs Mr Yushchenko, from the Russian-speaking East, which backs the Prime Minister. “This country is at a crossroads,” said Oleksandr Volkov, a Ukrainian MP and former aide to the outgoing president, Leonid Kuchma. “The outcome will affect the whole new world order.”

Where the line ends up depends on whether the Government sends police and troops to clear the protesters from the streets, or accepts their demands for the election results to be declared invalid. A reformed Ukraine, with its abundant natural resources and well-educated people, could become an economic powerhouse in Eastern Europe. For Mr Putin losing Ukraine would be a huge personal embarrassment.

Most Russians still view Ukraine as a part of their country. Kiev was the capital of the first Russian state — Kiev Rus — and breadbasket of the Soviet Union. Today it hosts the Russian fleet in the Black Sea port of Sevastopol, and transports Russian gas to Western markets through its pipelines.

Mr Yushchenko, who advocates joining the EU and Nato, would have little interest in promoting the economic union between Ukraine, Belarus and Kazakhstan that his rival supports.

Over recent years Mr Putin has looked on helplessly as the United States established military bases in Central Asia and conducted military campaigns in Afghanistan and Iraq. In the past year alone, a pro-Western leader seized power in Georgia in the “rose” revolution, the EU expanded up to Russia’s western borders, and Nato planes were stationed in Lithuania.

“The Ukrainian election means more for us than for the West,” Konstantin Zatulin, director of the Institute of CIS Countries in Moscow, said. The CIS (Commonwealth of Independent States) was set up when the Soviet Union collapsed. “The West will lose practically nothing if its candidate doesn’t win. However, for us, it can mean a reappraisal of values and significant expenses.”

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