Eyes on Ukraine

18 Nov 2009

Shane Fitzgerald

The topic of a recent session of the Oireachtas Joint Committee on European Affairs was developments in Ukraine. The committee welcomed the presentation by the Ukrainian Ambassador, H.E. Mr. Borys Bazylevskyi, which discussed European integration, energy security, the proposed EU-Ukraine free trade area and bilateral relations with Ireland. The Ambassador described how Ukraine has, in the 18 years since independence, managed the transition from being part of the Soviet Union to being an independent state with a market economy. 

Ukraine is now at a sensitive junction in the development of its international relations. By collaborating with the EU on a programme to upgrade its gas transmission system while also working to develop pragmatic economic and political relations with Russia, it is trying to both bolster its geostrategic strength and avoid a repeat of the gas crisis of January 2009. Meanwhile, according to the German Council on Foreign Relations, Russia, China and the IMF have been competing to provide economic support to Ukraine during the financial crisis, each cognisant of the political influence that could be won by becoming friendly creditor to this increasingly important state. 

Ukraine is undoubtedly the most important of the partner states in the EU’s ‘eastern partnership’. Europe gets a quarter of its natural gas from Russia and 80 per cent of that gas flows through Ukraine. Dependency on Russian gas varies between Member States, with the Eastern European countries especially vulnerable to supply shocks. Bulgaria, for example, suffered a two week disruption to its supply during last January’s crisis.

Though Europe and Russia are now trying to diversify natural gas supply routes with the rival South Stream and Nabucco pipeline projects, as a recent FT article notes, “gas is far from the whole story. With 46m people, a 1,400km border with four EU nations and frequent tensions with Russia that have nothing to do with gas, Ukraine is pivotal to the security of the EU's eastern flank.”

The country is also at a crucial crossroads in its domestic politics. A three-way presidential battle at elections on January 17 2010 (between the current President, Viktor Yushchenko, Prime Minister, Yulia Tymoshenko, and the former Prime Minister, Viktor Yanukovych) will be watched closely for portents of the nation’s future direction.

IMF Managing Director, Dominique Strauss Kahn, recently said he was “very worried” by Mr Yuschenko’s decision to sign into law 20 per cent minimum wage and pension increases (costing an estimated 7 per cent of economic output in 2010) even as the economy is kept afloat with billions of dollars of IMF aid. The fear is that Ukraine will now struggle to pay its Russian gas bills, resulting in another European energy crisis this winter (energy security will be high on the agenda at the EU-Russia Summit taking place in Stockholm today).

In this context, there are strong arguments for a review of European policy towards Ukraine. A June 2009 report by the European Council on Foreign Relations criticises the EU’s eastern partnership programme as an inadequate policy (“enlargement-lite”), noting that the six partner countries (Belarus, Ukraine, Moldova, Georgia, Armenia and Azerbaijan) “are in the middle of the worst economic and political disarray they have faced since achieving independence” and warning of “an emerging contest between the EU and Russia over the political rules that are to govern the neighbourhood.”

Russia sees Ukraine as a central part of its “sphere of privileged interest” in the region and is determined to maximise its influence over policy there. In a remarkable open letter and video message to his Ukrainian counterpart in August 2009, Dmitri Medvedev seemed to be effectively asserting a Russian veto over Ukraine’s future foreign policy and strategic direction.

Meanwhile, the European Commission President, José Manuel Barroso, has stated that the future of Ukraine is in the EU, though the Commissioner for Enlargement, Olli Rehn, tempers this rhetoric by insisting that the EU´s “absorption capacity” is already stretched to its limits.

Ukraine’s ambassador to the EU, Andry Veselovsky, has said that, regardless of who wins the presidency in 2010, his country should apply for EU membership soon. This is calculated to elicit an official response from the EU in late 2011, during what is presumed to be a sympathetic Polish Presidency of the European Council. Negotiations on an association agreement continue, with agreement on all sections (except the section dealing with the EU-Ukraine free-trade area) expected to be completed by the end of the year. Without that agreement, and with little immediate enthusiasm for accession either domestically or from the EU (according to recent polls, only 20-34 per cent of Ukrainians support accession, while support from Europe remains equivocal), a premature accession bid is likely to backfire.

At the sixth annual Yalta European Strategy (YES) Summit in September 2009, Prime Minister Tymoshenko rejected as false the dichotomies between East and West; Russia and Europe; “mother” and “father”. As post-Soviet Ukraine outgrows its inevitably difficult teenage years, it is the responsibility of all concerned to help it mature into a healthy and independent adulthood.

As an independent forum, the Institute does not express any opinions of its own. The views expressed in the article are the sole responsibility of the author.