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The Ukrainian Dilemma: with Kremlin or with Brussels?

Published on , , Sofia

Ukraine today looks rather different from Ukraine of the Orange Revolution, which took a steady course towards the European Union seven years ago. The impetus of the Ukrainian society for democracy, fair and transparent governance, that received Europe’s support in 2004, has failed to accomplish genuine reforms according to public opinion in the country, as well as criticism from the EU. Until recently an example of deepening integration with the West, Ukraine, after the electoral victory of pro-Russian President Viktor Yanukovych in January 2010, seems at crossroads again.

What is the language of Ukrainian politics today -

that of Russia or that of the EU, is the question that the country still lacks an answer for. The bets in all cases are large and the facts - uncertain. On the 29th of September we will be expecting the long-awaited summit of European leaders with EU’s Eastern partners, where Ukraine is deemed being of primary importance as the country is in the last phase of negotiations for an Association Agreement and a deep and comprehensive free trade area (DCFTA) with the EU. The latest data shows that the European Union is Ukraine's largest trading partner.

On the other hand, Russia continues to assert its economic and political positions as the biggest energy supplier for the country. The fact that nearly 80% of Russian gas to Europe passes through pipelines on Ukrainian territory makes the EU-Russia-Ukraine relationship strongly entrenched from an economic perspective, and respectively, three times more complex from a political. The challenge to all three countries to establish economic and political balance is for Andreas Umland, DAAD lecturer in political science at the National University of Kiev – Mohyla Academy, a need to reach "agreement on long-term foreign policy goals and strategies."

Mr Umland states in an interview for Valdaiclub.com on the 2nd September that "as of late August 2011, these relations are in a holding pattern, as there are several options for Ukraine on the table, and no final decision has been made which one to choose – association with the EU, involvement in the Russia-led Customs Union [Russia, Belarus and Kazakhstan], or continued domestic stagnation and international isolation". According to him "neither the European nor the Russian leaders, not even the Ukrainian leadership seem to be clear about the path Ukraine will take in its foreign relations in the near future”.

Nevertheless, Ukraine’s dilemma is easy to see in the latest news from the Ukrainian political and economic life. After Yanukovych ran again and had won the January 2010 presidential elections, despite being discredited as a political figure by the revolution, the country’s foreign policy has made a remarkable upturn in its relationship with Russia, which was given a gift - an extended stay of its military base on the Crimean Peninsula until the year of 2042. At the same time the Ukrainian President was quick to reassure the EU that the European integration remains essential. However, the NATO membership goal, enshrined in the ideological platform of former Prime Minister Yulia Tymoshenko for Ukraine's participation in the common Western security system, is firmly rejected by Yanukovych.

On the one side, the deal with Russia has provided Ukraine with a 30% reduction of gas prices. And on the other, the EU is pressing the Ukrainian government to implement reforms to improve the energy efficiency of the country by using renewable energy and adopting structural changes in the industrial sector, which would make it more independent from Kremlin. The latter is, no doubt, strongly disadvantageous to Russia which is logically working to develop its strategic businesses in the "near abroad" by merging Russian with key Ukrainian companies - in the field of aviation, energy, transport and raw materials – as a way of gaining real access to Ukrainian politics.

Nevertheless, the shady deals of oligarchs, corruption and an ineffective judicial system are incompatible with Europe’s rules as a condition for obtaining a visa free regime and a trade agreement with the EU. Despite Poland’s efforts, ambitiously sought by the Polish presidency of the EU, to propose faster integration with the Eastern Partners, and most notably with Ukraine, and accelerate the process of visa liberalisation and free trade, the 27 member states of the Union are not unanimous on the issue.

At the informal [Gymnich] meeting of EU’s foreign ministers in Sopot on 2-3 September EU High Representative Cathy Ashton expressed a strong concern regarding the political situation in Ukraine. Currently, Yulia Tymoshenko, the pro-European charismatic leader of the opposition, who became famous in the 2004 Orange Revolution and is today the primary rival of President Yanukovych, is being held under arrest. According to the EU, Tymoshenko’s charge for signing an illegal gas deal with Russia in 2009 is unlawful and the trial aims to damage the political reputation of the Ukrainian opposition. French Foreign Minister Alain Juppé was determined at the meeting that in order to finalise the agreement on free trade with the EU, Ukraine must ensure a fair and transparent trial, which includes Tymoshenko’s release from custody. The Polish Foreign Minister insisted that, despite all, the political case should not delay the signing of the agreement.

At the end of September, at the EU’s Eastern Partnership summit, there are more details to come out on the development of Ukraine's dilemma, which could soon become a dilemma of the European leaders whether to give a quicker blessing for the association of Ukraine in the free trade area with the EU in December 2011 or to further delay ratifying the treaty.

22 September 2011 06:13
Thank you for the article! One thing can be improved" "the European Union is Ukraine largest trading partner". "Ukraine's" would sound better. Sorry to write it here. Please delete this commentary if need be.
Best regards,
Iurii Medentsii
Adelina Marini
22 September 2011 07:09
Thanks for the feedback, will have it corrected :)
22 September 2011 16:23
"the European Union is Ukraine largest trading partner" - Unfortunately, it isn't so. Russia is still Ukraine's largest trading partner, EU holds 2-nd position
22 September 2011 17:34
Yanukovych is not pro-Russian anymore (and was he ever?) because of the current gas dispute.
And, most important, there's no dilemma at all.
Ukraine chooses EU, this is what Yanukovych has told so many times in so many interviews, that it's hard to imagine someone who writes a long article and doesn't even notice the president's opinion.
Irena Mihaylova
22 September 2011 19:51
Dear Kitty,
I have taken data from the European Commission's website at http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/countries/ukraine/index_en.htm and their statistics http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113459.pdf where Russia is pointed as second largest trading partner.

Dear Sam,
the article states that for Yanukovych 'EU integration remains essential', however Ukraine's president has a certain political past and has often been called 'pro-Moscow' by the media, including the BBC News. The 'dilemma' is somewhere between official declarations and deeds...

Thank you for posting a comment and challenging the subject. euinside is happy to host different opinions.
22 September 2011 20:40
Thank you for your answer.

But I can also point you at the decision of Ukrainian parliament (about 4-5 months ago) supported by vast majority of political parties where the EU is chosen.
I can also point you at a number of quotes from the prime minister, ministers and probably everyone where the EU is mentioned as the only choice. There are quotes which are as clear as possible: "The EU, and NOT Russian Trade Union".
Now after all been said and done I read about the "dilemma". So the question is, what should Yanukovych and others in Ukraine do to prove you that there's no dilemma if words don't help? Is there some goal that most media ("including the BBC News") try to reach by mentioning the non-existing dilemma?
Adelina Marini
22 September 2011 20:55
Dear Sam, I don't want to disappoint you but in Bulgaria too there were Parliament's decisions, Government decisions and whatever but the truth is that we are as far from the EU as we were 20 years ago. So, whether Yanukovich is pro-European is a fact that still needs to be checked out. And most of all, people in Ukraine need to believe Yanukovich. I myself don't and I have my reasons.
22 September 2011 21:32
Dear Adelina,So after that maybe you should write an article that Bulgaria has a dilemma between EU and something else?
23 September 2011 07:46
Well, Sam, we are constantly writing about this dilemma :)) It's indeed very difficult to change the mindset.
24 September 2011 11:58
Irena and Sam!
Let me introduce something different. Do you really believe that Ukraine will able to be fully integrated into the EU? Look at the case of Greece or Bulgaria, or ...
Do you really believe that Ukraine wants to be with (read UNDER) Russia? No, the Ukrainian case is to be  independent with adapted legislation to deal with both Russia and the EU.
What about security for Ukraine, yes? Guaranties for the country are already given by the US, Russia, the UK and others - in 1994 on the "non-nuclear status".
Still I do not understand why Ukraine has not initiated negotiations on its neutrality yet.
V Hristensen
27 September 2011 23:19
The Ukraine is country impoverished by years of incompetent rule by the Ukraine oligarchs and the orange "democrats" alike. Both groups did devastate the standard of living of the Ukraine people for personal profit, so now Ukraine average personal income is well below the World average. Ukraine needs long term sability to dig itself out of the hole, so  there is no dilemma whatsoever where Ukraine actually belongs considering the facts : 

The Russia wealth is rising - Russia GDP il larger than the one of UK or France, Russia is debt free, Russia possesses the third largest FOREX reserve in the World, Russia controls 34% of all known natural resources, but most important Russia is the most lucrative market in Eurasia and EU cant have enough of it. This is why EU are in a hurry to bring Russia into the WTO before the inevitable Putin election as Russia President in 2012 and there is push for expanded EU-Russia cooperation by the EU.

The EU is disintegrating as we speak - the EU is incapable to deal with the default of such third tier economy like Greece, let alone with default by significant economies like Spain or Italy. The EU bureaucrats already spent over 100 BN euro to bail out Greece for no success and now pour good money over bad for the same outcome - Greece will default inevitably, it is just mater of time. Default by Spain or Italy will bring the end of the EU.

So indeed Ukraine have no dilemma - the Customs Union will bring prosperity to the Ukraine people. They already lived through five years of "western style democratic" orange rule and in result the Ukraine economy got devastated worst not only amongst Europe but also amongst the CIS economies by incompetence, infighting and  corruption inherent to the "democrats". That is why the Ukraine people kicked the orange "western democrats" out of office during the blue revolution of 2009.

Ukraine follows the Russia example - Russia "DERMOcrapic" rule of drunkard Yeltsin and his US HIID advisors brought the Russia economy to default and created the Russia oligarchy who robed the Russia people wealth and funneled stolen riches abroad. After Russia elected the patriotic leader Putin who curtailed the western access to the vital Russia assets, the Russia GDP and the Russia people personal income  grew 10 folds and now Russia both have the cake and eats it.
V Hristensen
27 September 2011 23:58
"Until recently an example of deepening integration with the West, Ukraine, after the electoral victory of pro-Russian President Viktor Yanukovych in January 2010, seems at crossroads again."
Two factual errors in one sentence :D

1. The orange Ukraine push to "integrate" with the EU and NATO got very cold shoulder by the EU. 
2. Yanukovich is not "pro-russian" Yanukovych represents the interests of the Ukraine oligarchy.

He did some deals with Russia to assure lower gas prices in return for extending the stay of the Russia BSF, and got 20% discount because Russia did levy the export tax on the Ukraine gas. There was a lot of harping coming from the NATzO corner because countries who house foreign military base are not allowed to join NATzO, hence all the brahaha about Yanukovych being "pro-Russian"

In reality this deal was necessary for Ukraine to secure IMF loan tranche denied by the IMF to the previous  orange government (if the squabble between Yuschenko and Timoshenko can be called government) because lower gas prices are need for Ukraine to fulfill the IMF requirement for the Ukraine government to stop subsidies for the domestic gas consumers.
If the gas prices are to high, equalizing the import and the domestic consumer prices will bring serious hardship to the Ukraine people and serious trouble to the Ukraine government.
Now the IMF refuses to free the second tranche of the loan till Ukraine fulfill the domestic gas price liberalization.
This is why Yanukovych now days is busy to renegotiate the 2009 PM Timoshenko PM Putin deal - he needs a scapegoat in order to break the deal and this is why Timoshenko is going to end up in jail, not that the thieving oligarch do not deserve it (she ended on the Interpol most wanted list fer her thievery in 2004 and only her "fiery retorics" to join the scam called "orange revolution" saved her from prosecution). 
V Hristensen
28 September 2011 02:07
"Yanukovych is not pro-Russian anymore (and was he ever?) because of the current gas dispute.
And, most important, there's no dilemma at all.

Ukraine chooses EU, this is what Yanukovych has told so many times in so many interviews, that it's hard to imagine someone who writes a long article and doesn't even notice the president's opinion."

Of course he is not "pro-Russian", or rather he is as much "pro-Russian as he is "pro-EU"

Yanukovych follows his teacher Kuchma policies to play both Russia and the EU cards and select the better options. His words are oriented towards different set of ears - the claim that Ukraine wants to join the EU doesn't mean Ukraine is not going to join the Customs Union, and as mater of fact the Ukraine odds to join the Customs Union are by a factor of three higher than joining the EU - because Russia offers better deal both in short and long term - Russia market is big and Ukraine still can sell it's industrial crap over-there and there is a lot money to be made by the military industrial complex and the Ukraine oligarchs. Then Ukraine  got energy supplies on domestic Russia prices what makes the IMF required reforms easy to implement.

The EU - Ukraine free trade is going to destroy the Ukraine domestic production which is not competitive and unlike Russia, the Ukraine market is not much important for the EU, so Ukraine have no leverage to force the EU to contribute to the modernization of the Ukraine economy. The Ukraine people are not going to be happy.
Russia is considered to be important trade partner to the EU and have leverage upon the EU economy. 
Main export partners (2010)
United States, 17,9%; China, 8,4%; Switzerland, 7,8%; Russia, 6,4%; Turkey, 4,5% etc.
Main import partners (2010)
China, 18,8%; United States, 11,3%; Russia, 10,5%, Switzerland, 5,6%; Norway, 5,3% etc.
This means that Ukraine as a member of the Customs Union will have a lot more leverage upon the EU than if Ukraine succumbs to the "free trade" scam.

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