2. The Association Agreement: Ukraine’s Demand for Integration
The AA had rather inconspicuous – and inauspicious – origins.10 In the early 2000s, Ukraine had persistently sought a new agreement to replace the EU–Ukraine Partnership and Cooperation Agreement that was then in effect. The EU had agreed to open negotiations in 2007, and these negotiations – including those for the DCFTA – concluded in 2011. The signing of the AA was repeatedly postponed, however, amid EU concern over a general deterioration of democratic standards under Viktor Yanukovych’s 2010–14 presidency and specifically the ‘selective justice’ applied to his political opponents (especially the former prime minister, Yulia Tymoshenko). The EU made signing the AA contingent on enacting specific democratic reforms, something that was anathema to the president, whose government was intent on monopolizing power and associated with the embezzlement of state funds.
Russia was keen to exploit this predicament. It conducted a campaign in 2012–13 to pull Ukraine into its own Eurasian integration project and away from the EU.11 It engaged in a trade war with Ukraine in the summer of 2013 and threatened to cut economic ties if Kyiv concluded the AA; at that point trade with Russia accounted for about one-third of Ukraine’s external trade. As Yanukovych’s position worsened owing to a recession in late 2013, Russia offered Ukraine a financial package and lower energy prices. Despite the strings attached, the offer was too enticing for Yanukovych to resist. Against huge public expectations, he did not sign the AA at the Eastern Partnership summit in Vilnius in November 2013. His U-turn triggered mass protests in Ukraine. These quickly evolved into the so-called ‘Revolution of Dignity’ and eventually resulted in his regime disintegrating in February 2014.
Ukraine’s new leadership spurned Russian overtures and proceeded to foster closer ties with the EU. Russia retaliated with punitive measures, including illegally annexing Crimea, initiating a ‘limited’ war in Donbas and applying various economic sanctions.12 These actions exposed the weakness of the state and plunged Ukraine into severe economic decline in 2014 and 2015. Despite all these challenges, the country’s new leadership signed the AA in June 2014.
Russian militancy13 presents particular foreign policy challenges for the EU in its Eastern Neighbourhood. The EU has sought to address this, in dealings with the countries of the Eastern Partnership (EaP),14 by using its transformative power to compensate for its lack of geopolitical clout – as Richard Youngs summarizes:
The EU has declined to offer EaP states full protection or assume responsibility for their security and territorial integrity. It has offered neither the prospect of EU accession, nor major new benefits short of membership. Overall, European financial support to EaP partners has increased, but not dramatically. If the EU has not fully retreated from the region, neither have its efforts sufficed to gain significantly more strategic influence over EaP states.
[However], the EU has been both more insistent that its geopolitical advantage lies in its focus on democratic reforms in EaP partners and less rigid in the tactics through which it pursues that focus. The reform-oriented dimension of EU policies is now framed and calibrated more instrumentally as a tool of purposive power – sometimes enhanced for this use, at other times set aside where this is judged to be geopolitically optimal.15
Ukraine is a key country in which the EU has stepped up its support for reforms, with EU assistance acquiring particular salience as ‘a tool of purposive power’. But as the term implies, this means that assistance does need to be used purposefully and effectively.
The AA-DCFTA and rebuilding the state
The crisis in Ukraine’s state institutions has been evident since the collapse of the USSR in 1991. The post-Soviet countries in general, and Ukraine in particular, represent a curious and unprecedented case of the retreat of the state, marked by a precipitous decline, even in comparison to the Soviet era, in the capacity of government to deliver public goods for citizens. In Ukraine, the problems caused by that hugely reduced capacity pervade national, regional and local state structures. This is, at least in part, a Soviet legacy. As real power was vested in the Communist Party, state institutions never developed autonomous policymaking capacity; therefore, when Ukraine became independent state officials literally did not know how to design and implement public policies. This led to a collapse in the state’s ability to function once the communist system had been so abruptly abandoned.
The catastrophic economic decline that followed the collapse of the Soviet Union led to comprehensive state capture and rent extraction in Ukraine (in other words, the extensive siphoning of resources from the state into private hands). The state institutions remained intact but mostly failed to carry out their formal functions. Informal networks and practices filled the vacuum, resulting in the emergence of fiefdoms controlled by powerful, newly enriched oligarchs as well as various coteries of state officials-cum-business people. As these various actors began to control (often via proxies) state institutions in order to better influence policy, it became impossible to distinguish between state and business interests. Predictably, these actors blocked reforms that were unfavourable to their interests. This prevalence of ‘early winners’, combined with the presence of unmotivated and poorly paid civil servants, made it extremely difficult to implement the reforms needed to ensure that the Ukrainian state worked for society as a whole rather than for a few insiders.
Given this context, many Ukrainians continued to pursue what they believed was the main hope for reform in Ukraine: closer ties with the EU. The Ukrainian officials who negotiated the AA between 2007 and 2011 aimed to open up the country to external influence and thereby force their leadership to implement long-overdue reforms. Negotiators had a mandate from the top to take on commitments commensurate with EU membership aspirations – an aspiration first enunciated by President Leonid Kuchma in 1998 and endorsed by his successors.16 Ukraine’s leaders, however, paid little attention to the content of the proposed agreement, apart from a few selected issues that mattered to their close entourage. Once Yanukovych came to power in 2010 his close associate, Andriy Kluyev, swiftly concluded the negotiations. The president, meanwhile, accelerated the hollowing out of state institutions and the plundering of state resources. The events of 2014 vividly exposed the fragile nature of state institutions and the weakness of the economy, showing that Ukraine was in no position at that time to implement the agreement.
Implementation of the agreement will require the state to be rebuilt. Ukraine will need to eliminate or diminish the influence of vested interests that permeate every aspect of the state apparatus. This is why the EU’s assistance needs to focus on state institutions. As one EU official in Ukraine observed in 2016:
The government apparatus is probably too big for the purposes the country needs it to serve. And it is certainly not up to delivering the kind of public service quality that Ukraine requires. We could compare the government’s central administration to a company with 220,000–230,000 employees. It is all but bankrupt, but we need this company regardless because it has, so to say, a monopoly on the product it delivers. So we have to reorganize it.17
10 Ukraine demanded a new agreement with the EU for several years before the negotiations started in 2007. Subsequently, the offer of a new agreement was made to other Eastern Partnership countries. Moldova and Georgia signed their agreements in November 2014.
11 Dragneva, R. and Wolczuk, K. (2015), Ukraine between the EU and Russia: The Integration Challenge, Basingstoke, UK: Palgrave Macmillan.
12 Ibid.
13 Ibid. See also Ash et al. (2017), The Struggle for Ukraine.
14 Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine.
15 Youngs, R. (2017), ‘Is “hybrid geopolitics” the next EU foreign policy doctrine?’, EUROPP Policy Brief, LSE European Institute, London: London School of Economics, http://blogs.lse.ac.uk/europpblog/2017/06/19/is-hybrid-geopolitics-the-next-eu-foreign-policy-doctrine/ (accessed 12 Jun. 2018).
16 On Ukraine’s negotiations with the EU, see Dragneva, R. and K. Wolczuk (2014), ‘The EU-Ukraine Association Agreement and the Challenges of Inter-Regionalism’, Review of Central and East European Law 39(3–4).
17 EU in Ukraine Cooperation News (2016), ‘EU Diplomat: Ukraine’s Public Administration Needs New Talent’, 1 November 2016, https://euukrainecoop.com/2016/11/01/public-administration/ (accessed 12 Jun. 2018).