Orysia Lutsevych
Manager, Ukraine Forum, Russia and Eurasia Programme

Ukraine’s reversal on signing the Association Agreement with the EU owes a lot to short-term thinking and Russian power games. But the EU can act now to ensure this is a temporary rather than a permanent setback.

The absence of Ukraine from the signatories of the Association Agreement is the headline news of the Eastern Partnership’s Vilnius summit. The most common interpretation of why Ukraine is not signing today points to the power games between Russia and the West.

Last week the Ukrainian Cabinet of Ministers adopted a resolution that put on hold the country’s Association Agreement, which was supposed to be signed at the summit on 28-29 November. It took almost five years to negotiate the deal, the particulars of which were finalized in December 2012. To back out now is a truly significant change in course.

Ukrainian Prime Minister Mykola Azarov explained this decision by saying that ’the agreement is on hold until the sharp decline in the industrial production with the CIS (Commonwealth of Independent States) is compensated by the European market’. Ukraine has thus put on hold enhanced access to a European market of 360 million consumers in the name of economic health. 

An analysis of the Russian and the European offers demonstrates the fundamental differences in the approaches. The Russian offer reportedly included the lowering of gas prices twofold, access to the Russian market for large Ukrainian industrial groups, $20 billion of financial support with no strings attached and, potentially, political support for President Viktor Yanukovych in the presidential elections scheduled for 2015. 

The Russian carrot also came with a stick. Since August 2013, the Russian authorities have blackmailed the Ukrainian government by blocking most of its exports to the Russian market. In 2013 trade between Ukraine and Russia decreased by 25 per cent. This gave an advanced taste of possible trade sanctions the Russian authorities could apply to Ukraine if the Association Agreement with the EU were signed.

The European offer was one of modernization, of the political, judicial and economic environment. It demanded reforms, including enhanced rule of law, improved democratic standards, respect for human rights and inclusive economic development. Prospective visa-free travel to the EU was also on a table. The EU free trade deal with Ukraine, according to EU foreign policy chief Catherine Ashton, was ‘the most ambitious agreement ever offered to a partner country’. But it could only bear fruit over the medium to long term. The Russian offer pays off now.   

From this perspective Ukraine’s failure to sign in Vilnius should not come as a big surprise. Nor is it down to a failure on the part of Europe. But the Ukrainian leadership did not merely reject the Association Agreement due to the short-term economic difficulties caused by Putin. It has rejected the European model of development.

President Yanukovych is also an oligarch and does not think he requires a European dream to modernize his country. His vision is to keep the country afloat, amass more personal wealth and stay in power beyond 2015. This is why we witness the continued absence of the rule of law, growing corruption, raids against national and foreign companies and a recent law that may forbid the leading opposition candidate, Vitaly Klychko, running for president.

The Eastern Partnership shows that the EU can truly be a game-changer and spread its values and standards, but only in countries that already have substantial reform and change-oriented elites in power. In such a case their knowledge and financial support can galvanize political and civic energy to deliver a result. Moldova and Georgia are signing the Association Agreement and are leading the way in political and economic transformation. Belarus, Armenia, Azerbaijan and now Ukraine  are following the Russian model and thus cannot advance with Europe. 

The big question remains whether the Ukrainian government will be able to hold on to the Russian model. Approximately 100,000 protesters on the streets of Kyiv and across other large Ukrainian cities may shatter Yanukovych’s U-turn. These Ukrainians see their future as part of European civilization. For them, only closer integration with the EU can deliver change. The challenge for the EU now is how to capitalize on people’s aspirations and engage with the citizens of Ukraine.

Notably, the EU should step-up its people-to-people programmes. This is very important at a time when opinion polls show increasing support for EU − 47 per cent of Ukrainians see a better life for their children in a Ukraine closer integrated with the EU. Only 31 per cent believe that closer integration with Russia can deliver better living standards. The new EU engagement plan must include large-scale professional exchanges with EU member states, increased funding for student scholarships, and specialized programmes for small businesses, local government, cultural endeavours and youth. 

The EU should also start planning today on how it will not only observe the 2015 presidential elections in Ukraine but show decisive action to ensure that these elections reflect the will of the people. It is important for European leaders to send a clear message to the Ukrainian people that democracy and a European future is possible.

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