Gwynne Dyer: Ukraine puts European Union deal on hold indefinitely

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Ukraine’s president Viktor Yanukovych had much explaining to do at the summit meeting of the European Union in Vilnius, Lithuania, last Thursday (November 28). After six years of negotiation on an EU-Ukraine trade pact and political association agreement which was finally due to be signed at Vilnius, he had to explain why he wasn’t going to sign it after all.

“The economic situation in Ukraine is very hard, and we have big difficulties with Moscow,” says Yanukovych in a private conversation with Germany’s chancellor Angela Merkel that was broadcast by Lithuanian television. “I would like you to hear me. I was alone for three and a half years (since his election in 2010) in very unequal conditions with Russia...one to one.”

So Ukraine is putting the deal on hold indefinitely—and the EU promptly accused Yanukovych of being gutless. “If you blink in front of Russia, you always end up in trouble,” said the EU’s commissioner for enlargement, Stefan Fule. “Yanukovych blinked too soon.” At least 10,000 outraged Ukrainians who had reached the same conclusion came out on the streets of Kyiv in protest on the following day.

It was starting to look like a rerun of the “Orange Revolution” that had forced Yanukovych out of power after he won a fraudulent election in 2004, so early Saturday morning the riot police attacked the protesters and drove them from the square. But on Sunday the demonstrators were back on Independence Square 100,000 strong, and Yanukovych had to issue a public apology for the attack.

We’ve been here before, haven’t we? The big Russian bully threatens some ex-Soviet country that is now looking west, and the craven local ruler gives in. Pro-democracy demonstrators come out in the streets, and peace, justice, and pro-Western policies triumph. Except this time, it’s not like that.

The big Russian bully bit is still true. Moscow has already seen three of its former possessions in Europe—Lithuania, Latvia, and Estonia—join the European Union. It sees the future of the remaining six—Ukraine, Belarus, Moldova, Georgia, Armenia, and Azerbaijan—as a zero-sum game between Russia and the EU, and it plays hard ball.

Of those six, Azerbaijan and Belarus are dictatorships that have no desire or possibility of making a deal with the EU under their current rulers. The other four have been pursuing trade and association deals (which might eventually lead to EU membership), and Moscow has been trying hard to frighten them out of it and instead force them to join its “Eurasian Union”, an embryonic customs union that bears a curious resemblance to the old Soviet Union .

After secret discussions with Russia in September, Armenia cancelled its association deal with the EU (which was due to be initialled at Vilnius), and joined the Eurasian Union instead. It’s just too dependent on trade with Russia.

Georgia initialled its deal with the EU in Vilnius because it had nothing to lose: since its war with Russia in 2008 it has no trade with its giant neighbour anyway.

Moldova came under extreme pressure when Moscow stopped importing Moldovan wines, the country’s most valuable export, but the Moldovans just sucked it up and initialled the EU deal anyway. The big issue, however, was always Ukraine.

Russia has been turning the screws on Ukraine hard, because with 45 million people and a serious industrial base it is the most important of the ex-Soviet states. Ukraine’s trade in 2012 was almost equally split between Russia and the EU, but over the past year Russian-Ukrainian trade has fallen by a quarter.

“That’s a huge blow to our economy and we can’t ignore it,” Ukraine’s energy minister, Eduard Stavitsky, told the BBC. Stavitsky had asked repeatedly about getting compensation from the EU for the trade with Russia that Ukraine was losing as a punishment for its dalliance with “the West”—but “all we got were declarations that Ukraine would profit from a deal with the EU in the medium to long term.”

Unfortunately, politicians have to live in the short term, and Yanukovych’s problem (and Ukraine’s) is that the country is divided down the middle. His supporters are mostly Russian-speakers who live in the heavily industrialised eastern half of the country—and those are the people who will really suffer if Russia cuts off its trade with Ukraine.

Yanukovych would not have spent three and a half years negotiating a deal with the EU if he had no intention of ever going through with it. Why bother? He was trying to cut a deal that would satisfy the aspirations of pro-EU voters, especially in the nationalist, Ukrainian-speaking west of the country, without destroying the livelihood of his own supporters in the east.

Either the EU didn’t understand his dilemma, or it didn’t care. It demanded that he choose between east and west, and made no offer to compensate Ukraine for its big short-term losses if it signed a deal with the EU.

So Yanukovych has put the whole thing on indefinite hold, but that doesn’t mean he’ll throw in his lot with the “Eurasian Union” instead. If he can ride out the demos that are currently rocking Kyiv, then in the longer term he will probably make a cautious return to talks with the EU.

Comments (4) Add New Comment
Jon Danzig
Ukraine won independence in 1991, the same year as Latvia, another ex-Soviet Union country. But whilst Latvians were given a free vote on whether to join the European Union, no such opportunity currently seems possible for Ukrainians.

Latvia had to wait 60 years after being forced to join the Soviet Union, before the country could openly volunteer to join the European Union. How long will Ukraine have to wait?

I’ve just written an article about Latvia’s tortuous journey from one Union to another. It’s a story relevant to Ukraine, and to all people interested in the future of Europe.. and the history of how we got to where we are now.

‘Latvia: from Soviet Union to European Union’ at EU-ROPE dot COM
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Edward01ca
It might just be possible that the EU already has enough problems with the economies of Greece, Italy, Spain, and Portugal without adding another poor economy like Ukraine. There is only so much money that the EU can throw down the drain in failing economies.
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HellSlayerAndy
The Ukraine's dilemma is the same thing as Canada.
If our single trading partner doesn't want us to trade with X, then we don't.

It's ironic that in the Ukraine partisans are protesting in favour of a trade agreement while many many European partisans are actively protesting against it for many reasons...the chief one being job losses to the 'new kids' and their low wage/de-regulated slave zones.

As commenter Joe Danzig points out...Why not a referendum and why isn't that a EU demand?

Oh right...the EU, like Canada and the US, NEVER holds referendum on such questions unless it is forced to by the domestic laws of a few countries.

Even as we speak, this question is the hot button issue being worked by Conservative Cameron and his allies in the House of Lords for his re-election because he can't introduce it in the Commons because he needs the approval of his coalition partner Clegg and his lib-dems, who DON'T support a referendum. Neither does Labour. One group of Conservatives (Tories) want to re-negotiate terms and another group (UKIP) wants to get out of the existing arrangement entirely.

So why the black and white treatment when it comes to the Ukraine other than the fact our corpmedia is usually serving up corporate free trade agreements as a economic panacea when a lot of evidence suggests quite the opposite for the average voter. We know THIS because the corpormedia MUCH rather use this trade dispute as a platform to demonize Russia and avoid discussing things like the China agreement or the even more devastating secret negotiations around the TPP, which was leaked, but promptly ignored by same media.
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I Chandler
"After secret discussions with Russia in September..."

Secret discussions? Sounds like the TPP:

Congress is being kept in the dark as to the substance of the TPP negotiations, while representatives of U.S. corporations—like Halliburton, Chevron, PHRMA, Comcast, and the Motion Picture Association of America—are being consulted and made privy to details of the agreement.

United States Senator Ron Wyden complains that "More than two months after receiving the proper security credentials, my staff is still barred from viewing the details of the proposals that USTR is advancing."

http://en.wikipedia.org/wiki/Trans-Pacific_Partnership#Negotiation_secrecy
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