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Article by Serhiy Solodky, first deputy director of the Institute of World Policy for easternpartnership.orgTwenty years since regaining independence, Ukraine has to make a difficult choice. Russia’s leaders are trying to lure this country into a Customs Union. At the same time, Ukraine seems closer than ever before to making a real step towards European integration. Which decision will Kyiv ultimately make? What will the year 2011 mean in Ukraine’s history: will it mark the beginning of a real rapprochement between Ukraine and the European Union, or will this year be remembered as the date when this country entered the zone of Russia’s absolute political influence?

Story of EU-Ukraine negotiations

The Ukrainian government first announced its desire to integrate with the EU in 1994, when these parties signed their first serious document, the Partnership and Co-operation Agreement (PCA). Year after year, Ukrainian leaders emphasised the significance of a fundamental path in Ukraine’s foreign policy aimed at full EU membership. However, no great progress has been made in this area. The governments of many EU member states are not even ready to grant Ukraine a membership perspective. The European Parliament is as yet the only advocate of Ukraine’s accession ambitions in the European Union.

However, the EU member states’ political unwillingness to accept this country of 46 million people into their ranks is not the only cause of Ukraine’s failures in the context of European integration; the main problem is with the disparity between Ukraine’s declarations and its actions. Kyiv has still not carried out important economic reforms; according to surveys conducted by Transparency International, Ukraine is ranked 134th out of 178 countries in terms of its corruption level, and the average wage in this country is as low as 2300 hryvnias (US$258).

Nevertheless, in 2007, the European Union decided to start negotiations with Ukraine regarding the Association Agreement, a document which is seen in Kyiv as a launch pad towards EU membership. This concerns not only political but also economic issues. The agreement provides for the establishment of a deep and comprehensive free trade area (DCFTA) between Ukraine and the EU. After four years of tough talks, the two parties have managed to make many compromises, although the two delegations are still unable to agree on some issues. As of April 2011, eighteen rounds of negotiations concerning the preparation of the Association Agreement have been held. It took the parties sixteen tough sessions of negotiations on the free trade zone. The Ukrainian president set a deadline for his country’s delegation to finish the talks this year. Thus the final document may be signed during the EU-Ukraine summit which is due to be held in December 2011 in Kyiv.

Of course, there is risk that the EU bureaucracy will not be able to close all the procedural issues related to the document’s translation in time, although this is not so important. Ukrainian diplomats have stated that they are ready to close the talks this year, irrespective of how that will be defined: the mere fact of ending the negotiation process, initialling a draft agreement, or the final signature of the document. Ukrainian diplomats state there is a ‘99.9% possibility’ of ending the negotiations on the Association Agreement this year. During the most recent round of the talks, Ukraine made concessions on major points of dispute; for example, Ukraine undertook to stop production of goods named ‘cognac’ or ‘champagne’. The size of Ukrainian grain export quotas (which Ukraine would like to increase) has not been decided on as yet. Another issue which needs to be resolved concerns possible compensation from the Ukrainian budget if Ukrainian companies cut supplies of oil or gas to EU member states (the Ukrainian government has rejected this requirement, claiming that no such solution is used by any other country). These issues are expected to be settled in May or June.

Russia enters the game

However, this success for the negotiation process seems to be causing restlessness among the Russian leadership. Signals from Moscow that Ukraine should be in no hurry to establish the free trade zone with the EU appear almost weekly in the mass media. Furthermore, the Russian deputy prime minister, Igor Shuvalov, has made two visits recently, trying to convince the Ukrainian government to orient its foreign policy into a different direction, and join the Customs Union with Russia, Kazakhstan and Belarus (Kyrgyzstan also decided to join this Customs Union on 11 April). All these efforts were crowned by Prime Minister Putin’s visit to Kyiv on 12 April. He had already made statements regarding the negotiations between Ukraine and the EU before, and he firmly stated that as soon as Ukraine joins the free trade zone, Russia would have to “reinforce its borders”. This sounded like nothing so much as blackmail.

Such behaviour by Russia proves that Moscow is ready to take any measures to prevent Ukrainians from realising their sovereign choice. Russia has already applied aggressive diplomatic methods before, when the possibility of Ukraine and Georgia adopting an Action Plan for NATO membership was being considered. Today the Kremlin has decided to prevent Kyiv coming closer to the EU.

Russia’s pressure on Ukraine is reminiscent of ‘stick-and-carrot’ tactics. Firstly, Russia threatens that it will impose economic barriers against Ukrainian manufacturers in the case of Ukraine’s integration with the EU. Then, Moscow offers Kyiv a ‘carrot’ in the form of the figures mentioned by Putin during his visit to Kyiv. He said, “according to some experts’ calculations, if Ukraine follows this way, it will gain directly – pursuant to the data we have – between US$6.5 and 9 billion annually.” Putin also indicated that Ukraine’s GDP will grow by 1.5-2% if it participates in the Customs Union. The Russian proposals seem quite tempting.

Some flavour and mystery have been added to the recent events by some factors which caused serious anxiety among many observers in both Ukraine and the EU. The first negative signal came from an interview given by Valery Muntiyan, the Ukrainian government’s envoy for co-operation with Russia, who supported Ukraine’s joining the Customs Union and – as it turned out – had already taken part in consultations in this area. However, no-one in Ukraine can understand what kind of position this ‘envoy’ has. No-one can say who allowed this man to act on behalf of the country’s government. It seems that Muntiyan was presenting his own point of view, which has nothing in common with the real priorities of Ukraine’s foreign policy. Muntiyan’s dismissal could easily resolve this situation. However, the Ukrainian leadership is unlikely to take this measure, unwilling to get involved in another dispute with Russia.

The second reason for anxiety was President Viktor Yanukovych’s address to the Ukrainian parliament on 7 April. He promised that Ukraine would co-operate with the Customs Union in a ‘3+1’ format. Many felt surprised and anxious at this news, although it contained nothing new. The presidents of Ukraine, Russia, Belarus and Kazakhstan had already decided in 2003 to establish a so-called Common Economic Space (the Customs Union is in fact being created as part of this project). At that time Kyiv took a tough stance, stating that Ukraine would only participate in implementing those provisions of the Agreement on the Common Economic Space which did not breach the country’s constitution and the international agreements it was a party to. Ukrainian diplomats have explained that this is precisely the essence of the ‘3+1’ format. Obviously, the Ukrainian president did not want to create any conflicts with the Russian leadership, and therefore decided to choose exactly this variant. Ukraine has apparently not rejected co-operation with the Customs Union, but it will not agree to adopt solutions which will contradict either its constitution or agreements concluded with the European Union. Russia has given Kyiv to understand that Ukraine’s merely partial participation in the Customs Union will not satisfy it; Moscow wants Ukraine to be a full member of this union.

Will Ukraine conclude agreements with the EU?

The main point is that Ukraine is making efforts to end the negotiations with the European Union this year, but at the same time wants to avoid conflicts with Russia. Will it manage to do so? It is obvious that the Ukrainian president is inclined to sign the Association Agreement with the EU. He has been encouraged to do so by at least two factors.

Firstly, this move is important to him for reasons of policy and prestige; in this way Yanukovych could at least partly lose his brand as a ‘pro-Russian’ politician, and additionally, he could go down in the country’s history as the man who laid the solid foundations for Ukraine’s further integration with the EU. However, there is also another motive, albeit not so attractive, which is still being seriously considered by the Presidential Administration. If Ukraine joins the Customs Union, the negotiations with the EU on the free trade zone will be automatically broken off; four years of complicated and painstaking work would then come to nothing. One can only imagine how disappointing his could be to those European politicians who had put their trust in Ukraine and Ukrainian leaders. This would be comparable to cutting off diplomatic relations. One could only speculate about the consequences President Yanukovych would have to face if he was the one to blame for breaking off the negotiations. The most likely scenario would be tacit isolation and unwillingness to deal with unpredictable Ukrainian politicians. This gives rise to the third motive; if the EU applies such tacit isolation, Yanukovych may fall into the Kremlin’s trap, as he could be deprived of any room for manoeuvre in foreign politics and become merely a puppet in the hands of the Russian political elite.

The Ukrainian leaders are aware of these risks, and therefore have made numerous concessions during their recent negotiations with the European Union. There are many grounds to believe that the negotiations will really be concluded this year. However, the question remains whether Russia will stop or continue putting more pressure on Ukraine. It appears that Ukraine needs backing from the influential member states of the European Union like never before. It would be very unfair if Ukraine did not receive support from any European country on its way to a united Europe. Three countries could play a great part in this context: Poland, France and Germany. These countries have major influence within the EU, and their leaders have good relations with the Russian government. Angela Merkel, Nicolas Sarkozy and Bronisław Komorowski (or Donald Tusk) could at least hold informal talks with the Russian government and offer protection to Ukraine.

Finally, now seems to be the right time to consider including a provision in the Association Agreement regarding ‘the prospects of Ukraine’s EU membership’, which Kyiv has strongly desired for a long time. This provision would remove many questions from the agenda, and would make the Ukrainian leadership more accountable. Some of the benefits of putting Ukraine on the agenda of EU enlargement are presented below.

– The Ukrainian government would have to meet stricter requirements regarding compliance with democratic standards, and carry out a wide range of reforms. This issue is gaining in significance as parliamentary elections are due to be held in Ukraine next year. Aside from that, Ukraine needs political reforms which should protect it from moving towards authoritarianism.

– This would offer serious argumentation against those Eurosceptics in Ukraine and Russia who say that Ukraine should not head towards the EU because it is not welcome there, while it is welcome in Russia. There are several politicians in Ukraine who could persuade President Yanukovych to join the Customs Union and reap the economic benefits in the near future. Increasing social tension may be an additional factor tempting the Ukrainian government to make this move.

– Russia will finally realise the pointlessness of putting pressure on Ukraine, which will prevent many possible conflicts between Ukraine and Russia, as well as between Russia and the EU.

– The perspective of EU membership will put a full stop to the long-lived discussion about the direction in which Ukraine is heading.

Poland, which will assume the presidency of the EU Council on 1 July 2011, may play a special role in this respect. The Ukraine/EU summit, when the signing of the Association Agreement (or the closing of the negotiations) is expected to be announced, will be held during Poland’s presidency. This document would be much more significant if it contained provisions regarding Ukraine’s future membership of the EU. Ukraine could not dream of a better present on its twentieth birthday.