Europe in the World

Ukraine-EU: the next lap

21 February 2013
Vasyl Belmega (Former Programme Assistant at the EPC) and Amanda Paul (Senior Policy Analyst)



During 2012 EU-Ukraine relations reached an all-time low, with Ukraine accused of democratic backsliding and selective justice. The European Union kept high-level political dialogue to a minimum, moving to increasingly isolate Ukraine’s leadership. This included postponing a visit of President Viktor Yanukovych to Brussels and a boycott of Euro 2012 by political leaders, and for the first time in years, no EU-Ukraine summit took place. This policy failed to deliver any tangible results.  It was viewed in Kyiv as a ‘blame and shame’ policy, which further eroded trust as each side increasingly backed itself into a corner.  Today the EU seems to have modified its approach and appears to be putting greater emphasis on dialogue – focusing on solutions rather than blame – while also increasing public diplomacy. The European Commissioner for Enlargement and European Neighbourhood Policy, Stefan Füle, visited Ukraine on 7-8 February, the European Parliament’s Monitoring Mission continues to be actively engaged on the ground, and an EU-Ukraine Summit is slated for 25 February at which all thorny issues will be discussed.

It is widely hoped that the negative trend can be reversed and that Ukraine will take the necessary steps to sign an Association Agreement (AA) and Deep and Comprehensive Free Trade Agreement (DCFTA) with the EU at the November summit of the Eastern Partnership (EaP) in Vilnius. If this does not happen, it will represent a significant failure. Not only would it be the second summit at which there had been no progress, it would also seriously damage the credibility of the European Union’s EaP: firstly, in terms of the EU’s transformative power when faced with serious challenges in its neighbourhood; and secondly, without having the precedent of a signed AA, the EaP still lacks a success story.  Furthermore, while other countries such as Moldova have made good progress and seem set to shortly conclude negotiations, failure with Ukraine would have broad implications for the coherence and sustainability of the EU’s presence in the region. Because Ukraine has deep ties with both the EU and the countries of the region, it is something of a regional linchpin: crucial to stability and security.

Getting relations back on track

Ukraine needs to deliver tangible progress on three key areas: re-launching and consolidating the reform process (including judicial reform), addressing international concerns over the conduct of the 28 October parliamentary elections, and ending selective justice. In order to ‘persuade’ member states to sign the agreement, the European Commission needs clear proof that Ukraine is on the right track. These issues, which were outlined in the conclusions of the 10 December 2012 EU foreign ministers’ meeting, do not contain unfeasible ultimatums if sufficient political will is mustered.

A Progress Report is scheduled for May. While Ukraine’s leadership and opposition parties continue to declare their commitment to a ‘European choice’, question marks remain. Firstly, Ukraine’s approach towards EU-demanded reforms has been consistently piecemeal, irrelevant of who has been in power. So far, serious judicial reform has proven impossible, because various stakeholders with key interests in maintaining the current corrupt system have blocked the process. Secondly, the recent government shake-up has further weakened an already weak system of coordinating European integration. People who had previously declared a readiness to push reforms – Valeriy Khoroshkovskyi, Petro Poroshenko, Andrii Kluyev and Sergiy Tygipko – are no longer in office. Moreover, following the resignation of former First Vice-Prime Minister Khoroshkovskyi in December, none of the four newly-appointed Vice-Prime Ministers were given the European integration mandate. While new Foreign Minister Leonid Kozara and Prime Minister Mykola Azarov both have the issue in their portfolios, Ukraine really needs a dedicated minister for this job.

Thirdly, there seems to be a worrying lack of appetite for reform among the Ukrainian political elite. Since the parliamentary elections, much energy has been spent on preparations for the 2015 presidential elections, making already difficult political cooperation even trickier – especially in the opposition camp, which is not represented by a united political force. The opposition seems to be more interested in pushing for early presidential and parliamentary elections, rather than focusing on vital reforms.

Fourthly, Ukraine's economic situation is alarming. Prospects for growth are slim, external debt is high and currency reserves are decreasing. A much-needed IMF loan remains a distant prospect, with Kyiv still failing to meet the criteria laid down, including raising household gas prices. Meanwhile, Russia continues to pressure Ukraine into joining its own integration projects, the Customs Union/Eurasian Union. Moscow is ready to pay for that with cheaper gas, which could significantly reduce the burden on the Ukrainian economy. However, joining the Customs Union (CU) is not compatible with an EU DCFTA. Not wanting antagonise its big neighbour, Ukraine tried to cut a pragmatic deal with Russia which would have allowed Kyiv to partially join the CU, so as to not to lose the DCFTA. Moscow refused.

However, it seems unlikely that Ukraine would join the CU, even if its leadership strongly desired it. To do so would mean an irrevocable 180° turn in Ukraine’s consensus-based foreign integration strategy, handing over part of its sovereignty to Moscow and triggering a new political crisis in the country.    Furthermore, without a constitutional majority in the Rada, and with the opposition and civil society strongly opposed, it would be almost impossible for Ukraine to make this step. However, given Ukraine’s economic weight, without Kyiv on board it seems unlikely that the Eurasian Union would fly. Hence Moscow will continue to harness every means at its disposal to shift opinion in the country.

The road ahead

While members of the Rada are presently drafting a statement in favour of EU integration, it is not more words that are needed but decisive actions. Unfortunately recent decisions, such as the new criminal processes against Yulia Tymoshenko, are not conducive to this end.

The optimal outcome for 2013 would be for Ukraine to make enough progress to sign the AA and DCFTA, which would bring to an end the current stalemate, anchor Ukraine to the EU to a much greater degree, and potentially give the EU greater leverage on the country. Thereafter, it would be up to individual member states and the European Parliament to decide whether or not to ratify, based on Ukraine’s performance. It seems improbable that the EU would move ahead with signature if Ukraine had not met the criteria, as it would undermine the ‘more for more’ principle, which is the basis of Brussels’s Neighbourhood Policy. Should Kyiv fail to meet the EU criteria, it may mark the end of the AA and DCFTA in their current form, bringing the risk of stagnation in Ukraine-EU relations until the 2015 Ukrainian presidential elections, with the EU also preoccupied with institutional changes including a new Parliament and Commission.

While the ball is principally in Ukraine’s court, issues that are of concern to Kyiv should also be addressed.  These include questions related to commitments and obligations made by the EU related to the energy field under a 2005 Memorandum of Understanding and a Joint Declaration of 2009, which refer to solidarity and assistance in helping Ukraine to diversify its energy sources and suppliers. For example, the support that some member states have given to Russia’s South Stream pipeline, a competitor for transiting gas to Europe, and a perceived lack of support for Ukraine in its difficult gas talks with Russia have left Kyiv disappointed.

The EU must continue to use every available tool and mechanism to influence and facilitate the processes of democratisation and modernisation. This can include further supporting Europeanisation in different sectors which are important for the implementation of the Association Agreement, and acting as speedily as possible on visa liberalisation for Ukrainian citizens: once Ukraine has delivered the necessary reforms. There is a lot at stake.  With some 76% of Ukrainians supporting a stronger EU role in the country, the EU should not shy away from the challenges that Ukraine presents today but instead embrace them, not least for the sake of Ukrainian society.

Amanda Paul is a Policy Analyst and Vasyl Belmega is a Programme Assistant at the European Policy Centre (EPC).

Disclaimer: The views expressed in this Commentary are the sole responsibility of the authors.

Ukraine-EU: The next lap

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Head of Europe in the World programme and Senior Fellow

Giovanni Grevi
g.grevi@epc.eu

Researcher in EU energy and climate policy, Institute of European Studies, Free University of Brussels

Marco Giuli
marco.giuli@vub.be

Senior Policy Analysts

Paul Ivan
p.ivan@epc.eu
Amanda Paul
a.paul@epc.eu

Junior Policy Analyst

Ivano di Carlo
i.dicarlo@epc.eu