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Ukraine Between Two Paths of Integration

Ukraine Between Two Paths of Integration

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This policy brief discusses the choice Ukraine faces between an alignment with Russia or Europe.
This policy brief discusses the choice Ukraine faces between an alignment with Russia or Europe.

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Published by: German Marshall Fund of the United States on Oct 10, 2012
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Foreign Policy and Civil Society Program
October 2012
1744 R Street NWWashington, DC 200091 202 745 3950F 1 202 265 1662E ino@gmus.org
Summary:
Eight years afterthe Orange Revolution andless than a month before newparliamentary elections, Ukraine
still nds itself at the crossroads
of major geopolitical integrationprocesses. The uncertainty of the
situation magnies the current
crisis in relations betweenUkraine and the EU caused bydomestic political processesin Ukraine. It casts doubts onthe prospects of Ukraine’sEuropean integration in general,and, in particular on the signing and coming into force of theAssociation Agreement with theEU, which envisages creation of an important integration vehicle— the Deep and ComprehensiveFree Trade Area. On the otherhand, Russia has steppedup pressure on Ukraine tore-engage in projects aimed atthe reintegration of former Sovietspace: the Customs Union, theSingle Economic Space, and, inthe future, the Eurasian Union.Ukraine remains a prisoner of this stark choice, a choice thecurrent government has onlymade rhetorically. Moreover,relations in the Ukraine-EU-Russian Federation triangle arebeing further complicated bythe shifting and contradictoryprocesses taking place on theEuropean continent, which
underline the urgency of nding 
the answers to new challengesand threats.
Ukraine Between Two Paths of Integration
by Valeriy Chalyi 
Ukraine’s “non-compliance” withRussia’s desire to integrate the country in its grand union o Eurasian stateswill be seen by Russia as signicantly diminishing the value and compli-cating the implementation o itsintegration projects. In comparison,Ukraine’s choice o an Eurasian orien-tation is regarded as o less importanceby the EU, or at least by many o itsmembers. Yet Ukraine’s choice o apro-Russian path should not be lookedupon with indierence by the EU,as it carries the risk o transormingthe country into an unreliable EUneighbor – one governed through“managed democracy” and whose values dier rom European ones.It would also mean that the processo urther expansion o the area o democracy, reedom, and security tothe East was eectively suspended.Russia and the EU see the substanceand goals o their respective integra-tion processes o the post-Soviet areadierently. Te respective projects o Moscow and Brussels are based ondierent values and employ dierentmechanisms o cooperation. Particu-larly, the countries that are (or intendto become) members o integra-tion unions under the leadership o Russia are not required to ensure therule o law, protection o rights andreedoms o citizens, development o civil society, independence o judi-cial system, and transparency o theirelectoral processes. o put it simply,Russian-led unions, as reected intheir ounding documents, do not careabout the status o democracy in theirmember states, and do not aim at itsdevelopment.It is in this context that Ukraine has yetto determine the direction o its inte-gration. Tis choice cannot be denedby economic considerations alone. Itis in act a choice o civilizations orUkraine, the choice o the basic valuesthat will underpin country’s urtherdevelopment. Ukraine will eitheradhere to the project that is intendedto unite European states on the basis o democracy and supremacy o law, orbecome a party to the associations o the post-Soviet countries with transi-tion economies, low social standards,mainly authoritarian political regimes,and numerous challenges in the eldo democracy and human rights.Te Ukrainian law “On the Founda-tions o Domestic and Foreign Policy,”approved on July 1, 2010, states as oneo the main principles o the country’soreign policy is “to ensure integrationo Ukraine into the European political,economic, and legal area or thepurpose o becoming the member o the European Union.” Unortunately,modern Ukrainian history aboundswith examples o changes o the coun-try’s strategic course due to politicalconsiderations.Prioritization o the European integra-tion course should not be viewed as an
 
Foreign Policy and Civil Society Program
2
exclusion o establishment o mutually benecial partner-ships and neighborly relations with the Russian Federation.Ukraines choice o European civilization should be theselection o undamental values and a strategic develop-mental model, and not the result o geopolitics and theconsequent division o Europe. Furthermore, Ukrainesinterest is to see Russia also moving towards Europeandemocratic values and standards, as well as expandingand strengthening integration relationship with the EU,even i this is a distant perspective. Tis would best ensureUkraines security, as well as its economic and social devel-opment.Ukraine is now caught in a triangular relationship withBrussels and Moscow that is characterized by:
•Unpredictability:
Political relations in the Brussels –Kyiv — Moscow “triangle” are complicated and dicultto predict.
Tis applies to all sides o this “geometric”construction. Relations between Kyiv and Brussels arenow in a critical state, mainly due to internal policy developments in Ukraine. Tis endangers the entirebody o Ukraine-EU cooperation.Ukraine-Russia relations are asymmetric and unequal.Te potential leverage o Ukraine’s concessions in rela-tions with Russia shrinks, while Moscow’s pressure todraw Kyiv in the Customs Union and other Russianintegration projects continues to grow.Te dialogue between Moscow and Brussels is compli-cated by a number o problems: geopolitical compe-tition, the critical attitude o the EU to the state o democracy in Russia, dierences in opinions aboutcontinental security, and the settlement o “rozen”conicts. Relations in the energy sector also continue tobe tense.
•UnexploitedEconomicPotential:
Economic interac-tion between the EU, Ukraine, and Russia does notcorrespond to the parties’ potential.
Te main obstacleor development o ecient economic relations in theEU-Ukraine-Russia ormat (and especially betweenUkraine and the EU) is the inadequacy o Ukrainianand Russian regulation o economic activity (non-protection o ownership rights, lack o independenceo the judiciary, spread o corruption, and burden-some and inecient state regulation o the economy).Without relevant institutional changes, the possibilitiesor international economic interaction will continue tobe limited.I it were to integrate into the Customs Union, Ukrainecould obtain a ew short-term economic benets. Yetthis choice would seriously endanger the country’sstrategic goal o changing its development model to thato innovative economic development. Eventually, thecountry would bear the burden o the likely negativeeconomic, nancial, and political eects o Eurasianintegration. On the other hand, rmly establishing thepriority o the European integration trajectory (accom-panied by equal and transparent relations with Russia)promises Ukraine no instant economic benets. Yet thischoice brings the country strategic victories: by imple-menting European values, norms, and rules, Ukrainewill undamentally enhance its institutional attractive-ness and get real chances or the national economy torestructure on a modern innovative basis (since theinnovative potential o the EU is much higher than thato Russia).
•ProblematicDialogueonEnergy:
Te parties’dialogue on energy is asymmetric and wrought withconicts. Te Russian energy policy toward Ukrainestands out or its consistent toughness. Russian leader-ship uses Ukraine’s energy dependence to keep it withinits sphere o inuence. Afer the signing o the “Kharkiv Agreements,” the space or Ukraine’s traditional policy o maneuvering between energy spaces o the EU andRussia shrank substantially.Te Ukrainian authorities have chosen the path o political concessions rather than seeking the legalsettlement o the commercial dispute on the problemo gas pricing. Tis only serves the narrow interests o business structures close to Ukrainian authorities, whoare interested in the preservation o opaque schemesin relations with Gazprom. It is also a reection o the
Ukraine’s interest is to see Russiaalso moving towards Europeandemocratic values and standards.
 
Foreign Policy and Civil Society Program
3
The energy policies of both Russiaand Ukraine are inconsistent withthe principles of EU energy marketreform.
authorities’ inability to place Ukraines energy policieswithin the context o the declared goal o Ukraine’sEuropean integration.Te energy policies o both Russia and Ukraine areinconsistent with the principles o EU energy marketreorm, since administrative methods o state manage-ment prevail in both countries, giving rise to corruptionand unair competition. Tis hampers proper coordi-nation among the “elements” o the European energy equation (the EU, Russia, and Ukraine), and conse-quently enhances the risk actors or European energy security.Joining the Energy Community has given Ukrainean opportunity or ull accession to the EU commonenergy space. Te next step, regulatory-legal compat-ibility o the gas markets o Ukraine and the EU, wouldpromote air competition, ensure the saety o the gassupply, and strengthen Ukraine’s position in negotia-tions with Russia. It is up to Ukrainian government totake this next step, i they so chose.
•PotentialforDevelopmentofCooperationintheSecuritySector:
Ukraines security policy in general,and vis a vis Europe in particular, is characterized by inconsistency. Te security decit Ukraine perceives islargely due to its inability to ensure adequate deensethrough its own orces, and a lack o reliable oreignsecurity guarantees. Te non-bloc policy has providedUkraine with no security guarantees, and has notprotected it rom being dragged into the Russian sphereo inuence.Ukraine-EU cooperation contributes to the enhance-ment o security, stability, and democratic values on anational, regional, and global scale. Further develop-ment o partnership between Brussels and Kyiv in thesecurity sector poses no threat to the interests o otherstates and international organizations, and should besought.Cooperation with Russia in the security sector is impor-tant or Ukraine, especially in those sectors (trainingo troops, deense industry cooperation) where Russiatends to abide by European standards. However, oneshould be aware o the considerable dierences betweenthe two countries, caused by the dierent scales o geopolitical interests and political, nancial, andeconomic resources available to pursue those interests.
•ProblematicSocio-CulturalRelations:
Humani-tarian, socio-cultural, and individual contacts betweenUkraine and the EU are rather limited and unstable, inparticular due to the language barriers and rigid visaprocedures in the Schengen area.Te socio-cultural aspects o Ukrainian-Russian rela-tions are overly politicized and concentrate mainly onsubjects sensitive or both countries: dierent interpre-tation o some historic events and gures, the grantingocial status to the Russian language in Ukraine, etc.Humanitarian and socio-cultural aspects o theEU-Russian relations are complicated by dierentperceptions o democracy, the rule o law, human rights,and reedoms by both parties. Tis aects not only bilateral relations but also relations in the “triangle,”where Ukraine has been subject to opposite inuencesin choice o its values.Based on this, we can imagine three scenarios or Ukraine’surther drif” within the East-West coordinates:
•Conservationofthe
status quo,
where Ukrainecontinues to pursue a non-bloc policy, remaining in thegrey” zone between the two integration groups (theEU and the Customs Union) and two collective secu-rity systems (NAO and CSO). However, the window o time Ukraine can indulge in remaining “non-bloc”shortens. Growth o Russian pressure urther reducesthe Ukrainian authorities’ possibilities or maneuver,and, in the absence o a strategic decision, pushes themto hasty and unreasonable decisions. In the absence o reliable security guarantees, risks to Ukraine’s sover-eignty will soon occur.

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