EU Association of Ukraine vs. Russia’s Counteractions

Vitalii Martyniuk

[tekst pierwotnie opublikowany w://text originally published in:
"Nowy Prometeusz" nr 6, październik 2014, ss. 11-22]

Geopolitical location of Ukraine between the world poles of power has forced the nation to make a choice concerning its future foreign policy direction. Previously, trying to become a bridge between different parts of Europe, Ukraine was balancing and maintained neutral position thus relying upon the international security guarantees stipulated in the 1994 Budapest Memorandum. Nevertheless, the existing world order excludes the possibility of uncertainty and Ukraine has made its choice – integration into the EU. Starting from the very beginning of Ukraine’s independence, Moscow has been reacting painfully on each Kiev’s attempt to become closer to the EU. Russia understood that its greatness could never revive without Ukraine, and without this Russia could never become a full-scale world actor. As such, the European integration of Ukraine became a red rag and a target for Moscow at the same time. As soon as Ukraine makes a step towards the EU, the Russian side used to react immediately: politically or economically. For instance, right before the launch of the EU Eastern Partnership (May 2009), in the winter of 2009 Russia initiated a “gas war” against Ukraine, as a result of which many European states found themselves on the brink of energy crises caused by the stoppage of natural gas supply from Russia (Moscow groundlessly put the blame on the Ukrainian side)1.

Despite all obstacles, Ukraine has been moving towards the signature of the Association Agreement with the EU. Russian leaders were not waiting lazily and prepared their own scenarios, which they planned to launch if the Agreement was signed. In fact Russia is currently putting into action one of such scenarios. Being under pressure from Moscow the former Ukrainian President Victor Yanukovych refused to integrate Ukraine into the EU. However, the people of Ukraine, European by spirit, expressed its strive to live in a European state and won the Revolution of Dignity. This urged the Kremlin to launch previously prepared plan directed at destroying Ukraine as a state. The results of the launch of this plan are annexation of the Crimea, destabilizing of the situation in the South-Eastern regions of Ukraine and actual war in the Donbas.

So, why the Kremlin continues to add oil into fire, even realizing that the Ukrainian people will not obey? Firstly, current unchangeable Russian leadership (Putin de facto and de jure rules Russia for the last 15 years) does not reject its plans to transform Russian Federation into “the Russian Empire”, which will look like a car without one wheel without Ukraine.

Secondly, development of democracy in Ukraine creates obstacles for Russian leaders to build authoritarian state with humble population, which could be continuously robbed and exploited.

Thirdly, further economic and technological development of Ukraine with the help of the EU will inevitably lead to reducing dependency of Ukraine on Russian mineral resources (natural gas, oil) and low-technological Russian products. Simultaneously, all Ukrainian enterprises and business will have to start using European standards of doing business and in case of Russian refusal to cooperate with them in some spheres – redirect their products to new markets. That is why Moscow continuously announces that the Association Agreement with the EU will be harmful to Ukrainian economy and cause serious losses, as long as Russia could not possibly have preferential conditions of economic cooperation with the state creating a free trade zone with the EU. In fact, the Russian producers have already been losing formidable Ukrainian market and inexpensive and so necessary Ukrainian-made spare parts for their machine producing sphere, namely
for the Russian defense industry.

Fourthly, Russian capital (it is worth remembering that Moscow rulers in fact control it) has always been trying to broaden its presence in Ukraine, but the European norms of doing business create obstacles to it. As such, Russian capital has not used to operate under transparent rules and as it is better adapted to “black” and “grey” business schemes.

Despite counteractions from Moscow, Ukraine continues its course towards the European integration, and on 27 June 2014 Ukraine signed the Association Agreement (AA) with the European Union, which was ratified by the European and Ukrainian parliaments on 16 September 2014. At the same time, Ukraine as well as the European Union will have to take into account the Russian factor in their bilateral relations, the factor that will remain an obstacle.

However, the signature of the Association Agreement opened a new page of deepening relations with the EU, which implies reaching real political and economic integration of Ukraine into the European Community. For Ukraine, this means a step forward towards further development of its political system, democracy, civil society, economy, security and other spheres. This also includes stabilization of the situation in the Eastern Europe, which will settle all problems and disputes by means of negotiations and compromises being inspired by the EU example, without expressing threats and use of arms or other forceful means, which the Russian Federation uses.

It seems that the Ukrainian state and its people are ready enough for drastic changes and transformations envisaged by the Association Agreement with the EU. Firstly, political will of the current Ukrainian leadership is directed at continuing the European integration process in Ukraine. This was declared at the European Council meetings by the Ukrainian Prime-minister Arseniy Yatsenyuk right after the victory of “Maidan” on 6 March 20142 and confirmed by the newly elected President of Ukraine Petro Poroshenko, in Brussels on 30 August 20143.

Secondly, all previous economic (milk, meat, pastry) and energy wars have already forced Ukrainian businessmen to look actively for other then Russian markets and new suppliers that was stimulated by clear and concrete rules of the European market. Besides, de facto military struggle with the Russian Federation and limiting actions on behalf of Ukraine, including the law on sanctions against Russia adopted by the Ukrainian Parliament on 14 August 2014, force Ukrainian manufacturers to redirect their products to other markets and search new business opportunities as well.

Thirdly, and more importantly, Ukrainian people’s support to the European integration is growing fast. During last year only, the number of supporters to European integration among the Ukrainian population has grown by 10%. According to the surveys made in May 2013, 41,7% of Ukrainian respondents supported integration of Ukraine into the EU, in December 2013 this number grew to 46,4%, and in May 2014 reached 53%4. This was largely caused by Russia itself and its aggressive actions towards Ukraine, which not only united the people of Ukraine but also changed its views. These Russian actions also caused significant changes in the views of the population in the Eastern Ukraine.

Growing people’s support creates a solid groundwork for the successful implementation of the Association Agreement, establishes conditions for achieving positive changes in Ukraine and stabilization of situation in the Eastern Europe.

Political dimension of the Agreement
The Association Agreement between Ukraine and the EU actually consists of two parts: political and economic. On 21 March 2014, the Ukrainian Prime minister Arseniy Yatsenyuk signed the political part of the Agreement that worried Russia much less than its economic part. Political dimension envisages rapprochement between Ukraine and the EU, establishing continuous political dialogue and in fact reforming the country5.

According to the Agreement, Ukraine has to use European norms of administration, rule of law, human rights, protection of ethnic minorities and basic freedoms. Ukraine will obtain possibilities to deepen its participation in policies, programs and agencies of the EU, which will help considering Ukrainian position within them.

Adapting Ukrainian administration system to European standards is expected to increase efficiency of the state agencies, decrease the level of corruption, and improve state financial administration and state and local budget planning processes, as well as to improve existing social policies6. These are changes expected by the Ukrainian people. As shown by the opinion poll conducted in May 2014 by the Ukrainian Fund “Democratic Initiatives”, Ukrainians insist on immediate anticorruption reform (63% of respondents), social services sector reform (50%), healthcare system reform (50%), reform of judiciary and prosecution (45%), law-enforcement bodies’ reform (39%)7.

Public expectations of above mentioned reforms consolidate the Ukrainian society because people on the West and on the East of Ukraine want them. Justification of these expectations as result of successful reforms can become the criteria for the Ukrainian society to assess fulfillment of the Association Agreement and in fact the overall process of integrating Ukraine into the EU. Simultaneously the process of visa liberalization for Ukrainian citizens continues. As mentioned by some politicians in the EU, signing the Association Agreement is expected to fasten this process as long as a separate chapter of the Agreement (Title III) is devoted to this issue8. The document clearly stipulates: “The Parties shall take gradual steps towards a visa-free regime in due course”9.

Arrangement of secure borders is one of the elements of the EU visa liberalization process. With regard to the current situation, the Ukrainian-Russian border is the most problematic part of the Ukrainian border, as long as nowadays Russia uses its imperfection to transport armament and human resources into the Ukrainian territory10. It would be worth deploying EUBM mission on the Eastern Ukrainian border to arrange safe, protected and secure border with Russia.

Significant portion of the association process is security dimension, especially with regard to the current situation in the Eastern Ukraine. Almost all goals of the political dialogue envisaged by the Agreement have to do with providing security11. At the forefront of cooperation between Ukraine and the EU there are tasks of broadening cooperation in international security and crisis management spheres; achieving peace, security and stability in Europe; building dialogue in security and defense spheres; support to principles of independence, sovereignty, territorial integrity and inviolability of borders. Their practical performing in the process of implementation of the Association Agreement has to be directed to reforming and strengthening security sector of Ukraine, modernization and supplying new armament to the Ukrainian Armed Forces, as well as joint efforts of Ukraine and the EU to establish probably new security order all over the Europe (possibly in the OSCE framework).

Although the Association Agreement has not yet come into force, existing challenges force both Ukraine and the EU to cooperate in crises management as mentioned in the Article 10 of the Agreement12. This will become one of the first real tests to efficiency of the Association Agreement. United action of Ukraine and the EU to counteract Russian aggression, with the aim to restore territorial integrity and sovereignty of Ukraine, is an inclusive part of implementation of the Agreement. Having taken multiple obligations envisaged by the Agreement and meeting all demands of the EU, Ukraine must be sure that the other party will stick to its obligations and will show unity and consistency in accomplishing the EU Common foreign and security policy.

The armed conflict in the Eastern Ukraine erupted for reasons artificially created by one party – the Russian Federation, which is to be held responsible for the destabilizing situation in the Eastern Ukraine – in direct proximity to the European Union. The EU has already done much to settle the conflict including the imposition of three waves of sanctions, active participation in the negotiation process, providing full support and assistance to Ukraine. Acknowledgement of Russian aggression against Ukraine by the EU, stipulated in Conclusions of the Special meeting of the European Council on 30 August 201413, is a very important step in this regard. The EU also took an obligation to provide financial and material aid to Ukraine (by the end of the year Ukraine expects to receive 250 million euro grant and 510 million euro preferential loan) and continues to insist on the fast settling of the conflict.

As long as Moscow has acted aggressively and decisively towards Ukraine, counteractions must be quick and decisive. It is worth mentioning that using negotiation process as the only means to settle 2008 Russian-Georgian conflict has led to the fact that territorial integrity of Georgia has not been restored by now. Diplomatic efforts must be backed by stronger arguments because the current Russian authorities unfortunately use its forceful impact in international negotiations.

The end of Russia’s aggression policy in the Post-Soviet area would be an indication of the EU success and demonstration to European nations, which have already signed the Association Agreement with the EU, such as Moldova and Georgia, that due to integration to the EU they can achieve their important political objectives including preserving territorial integrity, stability and security.

Economic advantages of the Agreement for Ukraine
Economic part of the Agreement envisages the creation of a free-trade zone between the EU and Ukraine, which is definitely a positive step for Ukrainian economy, as long as it will allow further liberalization of Ukraine’s market. According to experts from the Institute of economic studies and political consultations, this will strengthen competition and lead to the improvement of the quality, lower prices and to some extent will slower the inflation14.

Growing volume of mutual trade between Ukraine and the EU is expected to have positive influence on Ukrainian economy, broadening share of Ukrainian goods at European markets, increase of European goods nomenclature at Ukrainian market, which is expected to stimulate Ukrainian economy to improve price policy.

For now, the volume of trade exchange between the EU and Ukraine is almost the same as between Russia and Ukraine. For instance, foreign trade of goods between Ukraine and the EU in 2013 has reached $43,81 billion (27% of the overall Ukrainian foreign trade)15, at the same time trade of goods with Russia equaled to $44,96 billion (27,7%)16.

It is worth mentioning that starting from 2012 the overall trade between Ukraine and Russia began to decrease. So, the trade grew in 2011 by 33,5% compared to 2010, but in 2012 it decreased by 7,4% and in 2013 by 12,6%. This trend was preserved in early 2014. It can be concluded that decrease of mutual trade between Ukraine and Russia is not connected to the signature of the Association Agreement with the EU, that has become a widely speculated topic among adversaries to Ukrainian European integration (first of all inside Russia). This trend began in times of V.Yanukovich presidency, two years prior to the date of the expected signing of the Association Agreement. Probably adversaries to the European integration of Ukraine try to explain decrease of the volume of trade between Russia and Ukraine and hinder economic integration of Ukraine into the EU. The latter has been partly put into existence.

Despite other nations, even post-Soviet Moldova and Georgia, Ukraine is forced to participate in trilateral consultations with Russia and the EU concerning real risks for Russian-Ukrainian relations, possibly arising from the free-trade zone between Ukraine and the EU17. Despite the conduct of several rounds of such talks, including talks on the highest level with the participation of the EU High Representative Catherine Ashton, President of Ukraine Petro Poroshenko and President of Russia Vladimir Putin18, the Russian side continues to send signals of displeasure about the Agreement between the EU and Ukraine, and this signals are even accompanied by threats on behalf of Moscow. For instance, on 29 August 2014 Russian minister of economic development Alexey Ulyukayev stated that Russia will impose protective measures, if the EU and Ukraine reject its proposal to amend the Agreement19.

It is obvious that the mentioned threats and tough position of Russia were partly effective because at the Trilateral ministerial meeting on 12 September 2014 the representatives of the EU, Ukraine and Russia took decision on “delaying until 31 December 2015 the provisional application of the DCFTA while continuing autonomous trade measures of the EU to the benefit of Ukraine during the period”20. The main reason of this decision was ability “to fully support the stabilization of Ukraine”, as mentioned in the Joint Ministerial Statement, that witnessed full desire of the EU not to jeopardize the current fragile state of seize-fire, which was reached by the Trilateral Contact Group on 5 September 2014 in Minsk21, and not to provoke Russia to further escalation of the conflict on the East of Ukraine. At the same time, this decision is not a real obstacle for the Association process of Ukraine. Firstly, according to the Article 486 of the AA, the Parties can provisionally apply this Agreement in part and firstly concerning DCFTA. If the EU took corresponding decision, the Parties might start establishing the free trade area from the first day of October 2014, taking into account that the Ukrainian Parliament ratified the Agreement on 16 September 2014, but experience of the Western Balkans showed that a period between signature of the Association and Stabilization Agreement and beginning of implementation of the Interim Trade Agreement (as part of ASA in Balkan variant) was long to 1,5-2 years. Secondly, a real process of establishing a free trade area, according to the Article 25 of the AA, may last 10 years at maximum starting from the entry into force of this Agreement, that is after ratification by the EU, which envisages ratification procedures in all 28 member-states, the European Parliament (ratified on 16 September 2014) and corresponding decision of the European Council. According to the mentioned experience of the Western Balkans states, the whole ratification procedure in the EU can last several years. Thirdly, the EU tries to save correlation between the EU-Ukraine DCFTA and the CIS FTA to stimulate development of economic cooperation in Europe and push Russia to continue economic and trade relations with Ukraine. Fourthly, nobody inhibits Ukraine to apply unilaterally those positions of the AA, which lead to improvement of its economic system.

Reform of the Ukrainian economy and its adapting to the EU standards, envisaged by the Agreement, continues and, as estimated the Ukrainian minister of economic development P.Sheremeta, will “show the export potential of the state”22. This means that after synchronizing Ukrainian legislation, technical regulation and standards with the EU criteria Ukrainian producers will have a direct access to the European market, which will increase the export volume and thus will help increase the domestic production in Ukraine. According to assessments of the Ukrainian experts, harmonization of Ukrainian standards with European ones by only 50-75% will lead to 0,8% growth of Ukrainian GDP per year23.

This process is not an easy one for Ukrainian producers, as long as negative balance in trade with Russia is $4 billion and at the same time negative balance of trade with the EU is $10,3 billion. In other words, big number of Ukrainian producers is now oriented to the traditional Russian market, operate under Russian standards and will be forced to modernize their production. Due to possible imposing of limiting sanctions by Russia, part of them will be forced to transfer to European standards and search new markets for their products, but part of them will keep possibility to operate in the Russian market.

Those Ukrainian producers who are oriented towards the Russian customers announce the need for a long period (up to 5 years) to prepare themselves before the beginning of operating within the free-trade zone with the EU. Nevertheless, the EU-Ukraine Association Agenda was adopted in June 2009 and in fact became a prototype of the future Association Agreement with the aim of fulfillment of its separate provisions24. This means that Ukrainian producers have already had the needed 5-year term to prepare them for the economic integration into the European Union and had to begin this process at that time.

Implementation of the EU-Ukraine Association Agreement will have positive consequences for the Ukrainian population. As the experts from the Institute of economic studies and political consultations estimate, the Agreement will lead to increase revenues of citizens, lowering prices due to growing proposal and competition, improving quality of goods and services in the market. The last one is closely connected to harmonizing Ukrainian legislature with the European in spheres of food products security and technical regulation. However, prices for some other products may increase (first of all it concerns goods which are protected by copyright legislation, i.e. computer software, movies, medicament etc.), and law quality workers will be forced either to increase their professional level or to search new job opportunities25.

The Agreement envisages increase of cooperation between Ukraine and the EU on regional policy issues that is aimed at support to development of economically backward territories, and in rural areas policies. The success of such cooperation will mean improving life conditions, decrease of unemployment and growing welfare of separate regions.

Consequences of the Agreement for the Eastern European region
No doubt that signing of the Association Agreements with Ukraine, Moldova, and Georgia is to some extent demonstration that the idea of the EU Eastern Partnership appears to be not only another form of cooperation but a real effective project of the EU to spread European values in the Eastern European region, and as it was mentioned by the European Commission President Jose Manuel Barroso, a signal of effectiveness of the EU policy in the East26. In other words, this puts into action the main idea of the EU Eastern Partnership: strengthening democratic processes in states of the Eastern Europe and Southern Caucasus, assisting them in modernization and establishing the rule of law, adopting European standards and creating frameworks for further rapprochement of the Eastern partners with the EU. In future these processes will have to provide political and economic stability in the Eastern European states, which is needed nowadays.

Government administrating procedures, reformed in accordance with the EU standards, straight and understood by the Eastern European peoples, will allow these states not to change their foreign and domestic policy vectors depending on results of every election. This will help stabilizing situation both in every state and the whole region.

By signing the Association Agreement each state, including Ukraine, has shown that their foreign policy is unchanged and aimed at integrating into the EU. This foreign policy vector is considered unfavorable by Russia, which tries to preserve its influence in the post-Soviet space by using the dirtiest methods of destabilizing the situation. Among the six nations of the Eastern Partnership only Belarus has no conflict situation on its territory. This is reached due to support of Russian initiatives in the post-Soviet space by the Belarus leadership (CIS, Customs union, EurAsEC). All other nations have either active or frozen conflicts directly caused by Russia’s actions: Ukraine has Donbas and Crimea, Moldova has Transnistria, Georgia has Abkhazia and Southern Ossetia, Armenia and Azerbaijan have Nagorno-Karabakh. By keeping these regions unstable and by threatening to quickly destabilize the situation there, Russia still manages to preserve its influence in the Eastern Europe.

In case of Ukraine, Russia did not create conflict zones on its territory just immediately after the USSR collapse because it managed to influence Ukrainian political leadership and effectively use economic means of influence (gas, milk and other wars). At the same time Moscow strengthened gradually economic, information, political and even military influence in the Ukrainian Crimea, a base for the Russian Black Sea Fleet, simultaneously trying to tie Ukrainian Donbas to Russia with the use of ideology and economic means. For this Russia used various tools: religious proximity; nostalgic sentiments about careless Soviet past; inclusion of these territories into the Russian Empire (historical factor); Russian language and “the need to protect it”; demonstration of better life within Russia (in Moscow and Saint-Petersburg, while hiding miserable state of other Russian regions); stable political system (which role was played by authoritarian regime in the RF), and some other factors. All these were supported by a large number of Russian politicians, political scientists, political technologists and the Russian mass media. When it became clear that Ukraine can ultimately move away from Russia, Moscow used its influence in the Crimea and Donbas trying to transform these regions into zones of instability and hinder Ukraine’s movement towards the EU. That is why signing the Association Agreement with Ukraine, as well as with Georgia and Moldova became shocking news for Russia.

Despite internal disputes within the EU on ways of settling the conflict in the Eastern Ukraine, today the EU shows readiness to cooperate actively with Ukraine in the security sphere that is envisaged in the Association Agreement. For instance Article 9 of the Agreement “Regional stability” stipulates: “The parties shall intensify their joint efforts to promote stability, security and democratic development in their common neighborhood, and in particular to work together for the peaceful settlement of regional conflicts”27. Without doubt this article in the text of the Agreement took into account the conflicts existing at that moment, first of all in Transnistria, Abkhazia, Southern Ossetia and Nagorno-Karabakh. However it should also encompass the conflict continuing in the Donbas.

The EU and its member-states put much effort to settle this conflict, but positions of some European states can lead to relatively moderate position of the EU, while aggression from the Russian side against Ukraine grows. In this case stability, security, and democratic development can be threatened, thus causing the appearance of new source of tension within the common neighborhood which contradicts basic principles of the EU Common foreign and security policy.

This situation currently is favorable only to one party – Russia, which uses all possible means, from military intervention in the Eastern European states to economic blackmailing of the EU member-states, to reach its goals.

So, the Association Agreement between the EU and Ukraine is directed at political and economic development of the nation, stabilizing the situation within the state and in the overall Eastern European region. However unwillingness of Russia to lose control over this region and Moscow’s actions, directed at fueling existing and creating new conflicts zones, tend to further destabilize the situation. Russia tries to reach it in order to show inability of the EU to guarantee peace and stability and in order to hinder further spread of the EU values upon the whole Eastern European region.

Vitalii Martyniuk – Vice-president of the Center for Global Studies “Strategy XXI”, Foreign policy expert of the Ukrainian Centre for Independent Political Research. Specialist on EU energy policies, EU Foreign Policy and EU-Ukraine relations.

1 V.Martyniuk, Ukraine and the EU in the Gas Post-Confl ict Situation: Three Development Options, Research Update, Vol. 15, 3/563, UCIPR, Kyiv, 2009, www.ucipr.kiev.ua

2 Statement of the Heads of State or Government on Ukraine, Brussels, 6 March 2014, www.consilium.europa.eu/uedocs/cms_data/docs/pressdata/en/ec/141372.pdf

3 www.president.gov.ua/en/news/31119.html

4 www.razumkov.org.ua/ukr/poll.php?poll_id=865

5 Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, Article 1

6 http://tsn.ua/politika/scho-dast-pidpisannya-ugodi-pro-asociaciyu-ukrayini-z-yevrosoyuzom-356568.html

7 European integration of Ukraine: experience of neighbors and prospects of consolidation of society, Ilko Kucheriv Democratic Initiatives Foundation, www.dif.org.ua

8 Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, Title III

9 Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, Article 19

10 Андрій Дихтяренко ≪Олексій Данилов: Війна в Україні закінчиться розвалом Росії≫, 07.08.14, ≪Обозреватель≫

11 Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, Article 4

12 Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, Article 10

13 Conclusions, Special meeting of the European Council, 30 August 2014, p.3.

14 http://www.eurointegration.com.ua/articles/2014/06/27/7023743/

15 www.ukrstat.gov.ua

16 www.russia.mfa.gov.ua/ua/ukraine-ru/trade

17 http://www.eeas.europa.eu/delegations/ukraine/press_corner/all_news/news/2014/2014_07_14_01_en.htm

18 www.europa.eu/rapid/press-release_MEX-14-0825_en.htm

19 www.ria.ru/economy/20140829/1021874602.html#ixzz3BIROVD2j

20 Joint Ministerial Statement on the Implementation of the EU-Ukraine AA/DCFTA, Brussels, 12 September 2014; www.europa.eu/rapid/press-release_STATEMENT-14-276_en.htm

21 Protocol on the results of consultations of the Trilateral Contact Group, signed in Minsk, 5 September 2014; www.osce.org/home/123257

22 www.me.gov.ua/News/Detail?id=1714bбс0-6cfd-4f37-8239-2cб19b42a18a

23 www.me.gov.ua/News/Detail?id=1714bбс0-6cfd-4f37-8239-2cб19b42a18a

24 Association Agenda Ukraine-EU, MFA Ukraine www.mfa.gov.ua/ua/about-ukraine/european-integration/ua-eu

25 http://www.eurointegration.com.ua/articles/2014/06/27/7023743/

26 http://www.center.gov.ua/ua/publication/content/812.htm

27 Association Agreement between the European Union and the European Atomic Energy Community and their Member States, of the one part, and Ukraine, of the other part, Article 9.