Archive for May 20th, 2011

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Russian pressure and Ukrainian will

May 20, 2011

As many of you will know I am not anti-Russian. I lived in Moscow for a few years and thoroughly enjoyed the city and the people. As a follower of foreign policy, it is hard to argue that Russian foreign policy is not effective for the most part, even when it is not as obvious in its methods as certain other nations.

As always, things are not black and white. Although I am not anti-Russian, of course living permanently in Ukraine now, I am pro-Ukrainian. Not in a nationalist way but in a patriotic way (and there is a distinct difference between blind nationalism and patriotic appreciation). I am as patriotic to Ukraine as can be as closely associated with a British citizen. Odessa is my home and looks likely to be my home until I die. Despite the fact I will always be British, what happens to Ukraine is exceptionally important to me.

Now of course the world headlines are always full of the bad press associated to the political circus generated by one side or another. At present Ms Tymohenko is pulling the usual “too sick to attend the PGO’s office” stunt that has been used by many politicians in Ukraine over the decades when seeking to avoid difficult issues or gain public sympathy. In her case she is also running down the procedural clock as set by law.

The circus, when and if it goes to court will not only be Ukraine v Tymoshenko but now the reputations of several major international players on either side of the evidence line. Whatever the ruling 50% of the people will say it is wrong and 50% will say it is right.

However, having discussed the current state of Ukraine, as well as the headline grabbing personalities within, over the past week with diplomats, seasoned commentators and assorted mandarins, one thing becomes apparent whilst not openly discussed by Ukraine watchers that often.

The pressure from Russia to scupper the DCFTA, and AA between the EU and Ukraine is growing at a considerable pace. Of course western media portray Yanukovych and Party of Regions as pro-Russia, which is again untrue. They may not be vocally anti-Russia but they are certainly not about to watch their interests be taken from them by returning to the role of Russian little brother and unconditional subservience to Moscow.

This is apparent in the overt and covert feeding frenzy amongst th oligarchy that it is better to grab what you can now before falling in line with the EU than it is to turn east and watch your assets be taken from you by shenanigans in the Kremlin.

There are those who will point to the extension of the Russian Black Sea Fleet in Crimea as Yanukovych being pro-Russia, however, if the RSBF left Sevestopol the local economy, and that of Crimea in a large part, would be ruined overnight. Ukraine quite simply does not have the money to save the Crimean economy through subsidy and whilst parts of Crimea are exceptionally beautiful, the infrastructure there is exceptionally poor for the most part.

It should also be noted that Russia continues to build an alternative home for the RSBF as a contingency for a change of Ukrainian government and any anticipated request to leave Sevestopol or, indeed, to pull out when it is ready and leave the Crimean economy in dire straits with little to no notice. Another potential headache for government of Crimea and for the government of Ukraine should it do so given the current economic situation. It is however very unlikely Russia would leave Sevestopol.

However, Russian pressure is being mounted not through military threats but through trade. Whilst Russian currently still relies on Ukraine for the majority of its gas reaching the EU nations, that is not going to be the case forever unless Ukraine concedes over certain issues.

The price of gas that Russia sells to Ukraine is a never ending issue given the extremely high energy inefficiency of Ukraine and dependence on Russia not only for the gas itself but the transport fees to the EU. Thus far Ukraine has managed to stand its own against Russian pressure over gas but this position will undoubtedly be weakened when Nord Stream comes on line. If Southstream goes on line as well, Ukraine will have very little bargaining power with Russia over the gas prices it pays.

With this knowledge, Ukraine made a significant statement by refusing to join the Russian led Customs Union last month despite the offered $6 billion savings by Mr Putin. These savings were dependent upon joining the Russian Customs Union effectively ending any chance of the DCFTA with the EU. No DCFTA inherently meant no AA with the EU and no Visa-free regime either. Yanukovych’s offer to act as a +1 with the Customs Union along the WTO guidelines was about the only possible olive branch he could present to sooth Russian feelings whilst driving onwards towards the EU.

The Ukrainian course has been, in effect, set. That course is towards the EU.

Pressure though will continue to mount from Russia through both carrot and stick during the coming months as Ukraine and the EU get closer and closer to negotiations ending and signatures being placed on dotted lines. It is really going to become a test of will and nerve for the current Ukrainian leadership as bigger carrots and far bigger sticks are brought into play.

I am not a proponent of more speed. More haste and less speed, getting the right deal for the EU and Ukraine is essential to go forward. Any amendments to any agreements are unlikely to be swift, if they happen at all, when dealing with a 27 (soon to be 28) headed entity like the EU.

It is good to see that things are still progressing with a solid momentum between the EU and Ukraine, however it is telling that the Ukrainian President is continually in the press stating that Ukraine must press onwards towards an end of year deadline for negotiation completion.

There are of course domestic time lines involved in his desire to get the negotiations finished. There is a parliamentary election in October 2012 and major steps towards the EU will not do any harm to a government behind so many unpopular reforms, however the longer the negotiations take to complete, the longer the window of opportunity for Russia to manage to put its national interests, manifested by a spanner in the EU works for Ukraine, continues.

Presently, as far as foreign policy goes, I think Yanukovych has it about right given the exceptionally difficult situation. It will take the EU to remain consistent and supporting of Ukraine to see this through, and without any changing of goal posts, for the EU to claim a significant geopolitical victory.

Whilst I don’t think that Yanukovych would seek full membership of the EU (and neither do I think it would be given even if Ukraine was a democratic Utopia), he is certainly laying the foundation for future Presidents to seek such an alliance should the prevailing winds allow it.

The only real question is whether he has withstand the mounting Russian pressure long enough for the EU to sign and ratify any concluded negotiations.

Politics, like comedy, is all about timing. The timing of this agreement being ratified as soon as possible next year is critical, not only for Yanukovych and the parliamentary elections of October 2012, but also for the EU as there is a Russian presidential election in March 2012 that will probably lead to an emboldened and even more assertive President Putin in Russia. The pressure on Ukraine is likely to only increase as Russian interests are accommodated where they can be but Ukrainian interests with the EU are given precedence.