Ukraine caught between EU, Russia

But despite intensifying Ukraine's cooperation with the Russia-dominated Customs Union and the "Eurasian Union" project, the Yanukovych administration remains tilted toward its Europe-over-Eurasia line by highlighting Kiev's EU aspirations and cooperating with the Eurasian Union on a non-membership basis.

In economic terms, the influences of Russia and the EU over Ukraine are almost even; Russia remains Ukraine's biggest trade partner, export market and source of energy, while the EU, together with other Western countries, is the major source of its foreign investment, a major shareholder in Ukrainian banks, and its second biggest trade partner. This is where Russia's Eurasian Union project comes into conflict with the EU's Eastern Partnership undertaking, which is further complicated because Ukraine has to choose one of the two given that both use a common tariff policy toward non-members.

Though Ukraine has been actively participating in Russia-led regional cooperation programs, it has politely, but repeatedly, declined Moscow's invitation to join the Eurasian Union. Ukraine accords priority to its ties with the EU because of the following facts:

First, the ratification of the EU-Ukraine free trade deal, as part of the Association Agreement, will help Ukrainian businesses to enter the European market. Second, a majority of Ukrainians, especially the younger generation, is in favor of Ukraine joining the EU. Third, in terms of economics, integration with the EU will give Ukraine an opportunity to boost its capital formation by attracting foreign investment. And fourth, foreign investment from the EU can expedite Ukraine's technological advancement leading to the country's industrial transformation.

Ukraine's economic relations with Russia have been volatile with disputes over the supply of gas remaining a sticking point. Although Ukraine has adopted some tangible measures to reduce its dependence on Russian energy, tensions escalated in August when Russia imposed additional customs checks on Ukraine-made goods.

Ukraine, however, did not capitulate. Instead, Russia's move could have unified Ukrainians in opposition to Moscow and prompted the Yanukovych administration to pursue its European Partnership agenda more seriously. In September, Yanukovych urged Ukrainian parliament members to support the laws necessary for signing the Association Agreement. That's why Ukraine was expected to legalize the deal with the EU at the Vilnius summit.

Some progress has been made under the Yanukovych administration to clear the path for Ukraine's entry into the EU, which included a free trade deal, action plan for visa-free procedure for Ukrainian citizens and controlling illegal emigration to the EU through Ukraine. But the progress slowed down after the EU's attitude toward Ukraine changed significantly because of a series of political issues, including the alleged gagging of the Ukrainian media by the government, local elections, and the imprisonment of former Ukrainian prime minister Yulia Tymoshenko.

The Vilnius summit may no longer be expected to see the signing of the Association Agreement because of the Russian factor. However, Ukraine can still push its case by promising to meet the EU's demands on the political, economic and democratic - especially the Tymoshenko case - fronts. This is important because Tymoshenko, after being released, could give a tough fight to Yanukovych in the 2015 presidential election.

It is also possible that some compromise could be worked out at the Vilnius summit, because the EU and Ukraine both are positive about the deal and some Eastern European nations support the move.

The author is an associate professor at the Institute of Russian, East European and Central Asian Studies, Chinese Academy of Social Sciences.

(China Daily 11/29/2013 page9)

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