Ukraine and the EU - The Economist

Political brutal pressure made in Russia.

One can always count on Ukrainian governments to renege and surprise.

And so it did this time. On November 21st, one week before the European Union summit in Vilnius during which Ukraine was supposed to sign an association agreement, its government suspended talks with the EU. 

The suspense and excitement were replaced by deep disappointment. As one Ukrainian paper put it the government managed to snatch defeat from the jaws of victory (again). A character in Maxim Gorky’s play “On the Lower Depth” says about a mate who strangles himself: “What a song he’d spoiled”. This was the closest Ukraine had ever come to crossing the border between Russia and the West. 

The official version of Ukraine’s turn around is that it could not withstand Russia’s pressure. The government cited the “benefit of Ukraine’s national security” as the reason for “resuming active dialogue with Russia and other countries of the customs union of Belarus and Kazakhstan…. aimed at restoring the lost production output and trade and economic relations.” Carl Bildt, the Swedish foreign minister and the co-author of the whole project, tweeted upon learning the news: “Ukraine government suddenly bows deeply to the Kremlin. Politics of brutal pressure evidently works”. 

Disappointed as they were with Viktor Yanukovych, the president of Ukraine, the EU accepted his version of events. 

After all, Russia’s restrictions have already reduced Ukrainian trade by 25% and more was in store. Mr Yanukovych estimated the potential economic loss from Russian sanctions to be in the order of $15 billion. This is at a time when the Ukrainian economy is already shrinking, and its budget hole is growing with no access to international capital markets. Ukraine is broke and beggars can’t be choosers. Unless, of course, the beggar is Ukraine.

It was not new that Ukraine was under economic pressure from Russia. The Kremlin first imposed sanctions against Ukraine back in August, but this only consolidated the Ukrainian pro-EU front and even its oligarchs, who stood to lose most from the sanctions. Yet, they pushed Mr Yanukovich to sign the agreement with the EU, which they saw, not least, as an insurance policy against his insatiable business appetite. So the question is what swayed Mr Yanukovych’s decision towards Russia at the last minute? Or did he ever intend signing an agreement with the EU? 

Mr Yanukovych, who was a pariah for the West back in 2004 when he tried to rig presidential elections, never saw the EU as his natural habitat. Ukraine’s convergence with Brussels was not a strategic choice based on the long-term interests of his country, but one based on mercurial and short-term interests of Mr Yanukovych and his family, which, unlike Ukraine’s economy, seems to go from strength to strength. Everything that Mr Yanukovych does is guided by the presidential election in March 2015. His rating has been going down steadily and to stay in power, he either needs to rig and repress (which is difficult to do if Ukraine is associated with Europe) or to bribe voters with cash, which he does not have. 

His favourite option would have been to get money from Russia as a price for putting EU integration on hold. On November 9th, Mr Yanukovych flew secretly to Moscow for a four-hour meeting with Vladimir Putin, Russia’s president, trying to persuade him to do just that. Yet, Mr Putin does not care much for Mr Yanukovych, whom he mistrusts and treats with contempt. What he does care about is not losing Ukraine to Europe. So he purportedly offered Mr Yanukovych an alternative deal: in exchange of money and cheaper gas, he promised to turn a blind eye to any election rigging and to refrain from supporting an alternative candidate at the next election.

There was only one condition: Mr Yanukovych should sign on the dotted line of the customs union, wrecking an agreement with the EU permanently. Mr Yanukovych resisted. In the past ten days he continued to negotiate with the EU until November 21st, already dubbed in Ukraine as “Black Thursday”. It is still not clear what happened and who blinked first: did Mr Yanukovych 13realise that he had no option but to go along with the customs union, or did Mr Putin realise that the game was getting too risky and dropped his demand for the customs union and settled for Ukraine simply turning away from the EU? 

Mr Yanukovych’s turnaround may not be all bad news for the EU or such good news for Russia or Mr Yanukovych himself. Several months of intense negotiations and extreme goodwill on the part of the EU, have created strong expectations from the Ukrainian public, the vast majority of which supports closer links with the EU and only 15% of which supports a union with Russia. Those hopes, at least for now, are bashed. Mr Yanukovych, who only a few days ago was seen as a man who could take Ukraine into Europe, is now seen as a thug who robbed his country of a historic chance. 

Given the structural weakness of the Ukrainian economy as well as Russia’s own economic stagnation, a short-term injection of cash will not solve Ukraine’s problems. Economically and politically things are likely to get worse not better. But now, this will be blamed on Russia and Mr Yanukovych. Ukraine’s opposition have just received the perfect platform for attacking the president. Arseniy Yatseniuk, one of the opposition leaders, is already saying that Mr Yanukovych’s betrayal of national interests is sufficient ground for impeachment. 

Ordinary Ukrainians have already come out on Maidan, Kiev’s main square and the stage of the 2004 revolution, to protest against Mr Yanukovych’s decision. The fact that this is happening on the eve of the 9th anniversary of the Orange Revolution (in which Mr Yanukovych played the main villain) only makes it more poignant.

Nine years ago, the Orange Revolution swept Yulia Tymoshenko and Viktor Yushchenko to power. At the time it was seen as Ukraine’s break-away from the Russian sphere of influence and a decisive move towards Europe. Jubilant crowds waved orange and EU flags together. The promise of that revolution was spectacularly squandered by Viktor Yushchenko, who is now advising Mr Yanukovich to keep Yulia Tymoshenko in jail, and by Ms Tymoshenko herself. 

The orange flags are gone, but the European and national Ukrainian flags are once again flying together. Maidan has already been renamed EuroMaidan. Mr Yanukovych’s turn towards Russia seems to distance Ukraine from Europe, but it could, in fact, achieve the opposite. If all else fails, one can always count on Ukrainian politicians to renege and surprise.