The Fall of Ukraine

Dimitri Avaliani

The refusal of the government of Ukraine to sign the Association Agreement with the European Union came as a great shock to both Ukrainian society and the EU. Even more surprising was the timing of the decision, which was just one week before the agreement was to be signed at the Eastern Partnership Summit in Vilnius.

Leading up to the event on 21 November, the Ukrainian parliament turned down the bill that would have enabled the jailed former Prime Minister Yulia Tymoshenko to receive medical treatment abroad. This was the EU’s key requisite to signing the Association Agreement. To this end, European leaders conducted tense negotiations with Kyiv. The incarceration of Tymoshenko was viewed as the only impeding factor on the path towards Ukraine’s European integration and European leaders believed that her release was just as achievable as the April 2013 release of jailed former Interior Minister Yuriy Lutsenko. President Viktor Yanukovych pardoned Lutsenko as a result of European pressure.

On the same day, a written statement from the Ukrainian government informed society about the cabinet’s decision to suspend preparations for signing the Association Agreement. The government declared the restoration of economic ties with Russia and other countries of the Commonwealth of Independent States as the priority. Kyiv proposed that Moscow and Brussels should engage in trilateral negotiations to discuss Ukraine’s European integration.

Russian President Vladimir Putin made a statement on Russia’s readiness to conduct trilateral negotiations before the Ukrainian government made its decision public.

The parliamentary opposition accused the government and President Yanukovych individually of treason.

Ukrainian Prime Minister Mykola Azarov, for his part, explained the halt of negotiations on association as a “tactical decision”, prompted by the country’s economic interests and added that it did not mean a total rejection of the path towards European integration. He even expressed his readiness to step down if his arguments regarding the suspension of European integration prove unfounded.
The government’s decision caused extreme indignation among the parliamentary opposition, which, in recent times, focused primarily on Tymoshenko’s release and signing the Association Agreement. Arseniy Yatsenyuk, leader of the parliamentary faction titled Fatherland, demanded the impeachment of Viktor Yanukovych.

The incarcerated Yulia Tymoshenko called on the president to reverse the decision immediately and sign the agreement. Tymoshenko declared that she would prefer the agreement to be signed without her release, and that she would convey this message to European leaders.

“This is a disappointment not just for the EU but, we believe, for the people of Ukraine,” EU High Representative for Foreign Affairs and Security Policy Catherine Ashton stated about the decision of the Ukrainian government. According to her, signing the unprecedented agreement with Kyiv would have sent a clear signal to investors worldwide, as well as to international financial institutions, that Ukraine was serious about its modernization and was becoming a reliable participant in international markets. The US State Department also made a statement about its “disappointment” with the Ukraine’s decision.

Swedish Foreign Minister Carl Bildt said that the Ukrainian government suddenly bowed deeply to the Kremlin and that the Kremlin’s “politics of brutal pressure” worked.

Linas Linkevicius, the Foreign Minister of Lithuania (which holds the Presidency of the Council of the European Union currently) noted that Brussels will not accept Ukraine’s proposal concerning the involvement of a third party, in this case Russia, in negotiations pertaining to the association with Ukraine. Jovita Neliupšiene, foreign policy aide to Lithuania’s President, declared that Ukraine said no to the agreement because of blackmail from Russia. According to Neliupšiene, President Yanukovych told this to his Lithuanian colleague during a phone call.

For his part, Russian President Vladimir Putin accused the EU of pressuring and blackmailing Ukraine. He declared that Brussels threatened Ukraine with mass political demonstrations and protests.

Citizens indeed took to the street in Kyiv and other cities of Ukraine, protesting against their government’s decision. Protesters started assembling in the main square of Kyiv as early as the evening of 21 November and by 24 November more than 100,000 people were in the streets. This represented the largest protest since the Orange Revolution of 2004.

The suspension of European integration has further complicated Ukraine’s economic challenges in the form of an increasing budget deficit. According to an assessment from Fitch Ratings, a global rating agency, Ukraine’s solvency will no longer improve. The agency downgraded Ukraine’s sovereign rating from B to B- in November. This means that the country will find it difficult to borrow foreign currency to refinance its heavy external debt payments. According to the experts’ view, Ukraine will, however, necessarily come to face a need for external assistance.

As the Ukrainian newspaper, Ukrainskaya Pravda, wrote based on its own sources, the key topic of Yanukovych’s negotiations with the EU was precisely financial issues. After signing the Association Agreement, Ukraine would receive 610 million euros, an additional 2 billion euros in the form of microfinance assistance until the end of this year plus 3 billion euros in 2014. Moreover, Kyiv hoped that Washington would assist by helping Ukraine to receive a 15 billion USD loan from the International Monetary Fund. According to the newspaper’s sources, Yanukovych demanded that these issues be settled before the Vilnius Summit, politely reminding Brussels that Ukraine will face an approximate cost of 160 billion USD if it were to sign the Association Agreement. These additional costs would be a result of Russia’s retaliatory sanctions. Prime Minister Azarov said in his address to the Ukrainian parliament that Kyiv did not receive a pledge of compensation from the EU regarding these damages.

The EU’s Commissioner for Enlargement and Neighbourhood Policy, Stefan Füle, dismissed Azarov’s statement as untrue. He said that the assistance to Ukraine was to be increased after signing the Association Agreement.

At the time that the Ukrainian government made its decision to suspend preparations for the Association Agreement, no one was aware of a meeting that occurred between Yanukovych and Putin on 9 November. However, the leader of the opposition, Arseniy Yatsenyuk, claimed that Moscow promised 20 billion USD to the Ukrainian President. In Yatsenyuk’s view, part of this sum will be misappropriated whilst another part will be used for next presidential election in February 2015. The Ukrainian media also notes that Russia may sign a new contract for natural gas supply at a cheaper price.

Ukrainian experts reckon that Putin no longer demands from Yanukovych that the country join the Customs Union and is content with Yanukovych rejecting the Association Agreement.
It is hard to believe that Putin has so easily let go of his plan to drag Ukraine into the Customs Union and the Eurasian Union, which he has been trying to achieve thorough manipulating price on natural gas and declaring trade wars on Ukraine. The Kremlin stepped up its activity in this regard, particularly during the run-up to the Vilnius Summit. In September, Russia succeeded in convincing Armenia to join the Customs Union, which automatically led to the termination of Armenia’s negotiations with the EU on the Association Agreement.

In 2010, the then new government of Ukraine took a number of steps to meet Russia’s interests, including rejecting a plan to integrate the country into NATO and extending the stay of the Russian naval fleet in the country for an additional 25 years. In response, however, Ukraine received new demands instead of benefits. Consequently, Moscow might not be content with thwarting the Association Agreement alone.

The meeting of Vladimir Putin and Viktor Yanukovych at the economic council of the Eurasian Union, Minsk 2013.
In her address to the Ukrainian President, Yulia Tymoshenko warned him that after the democratic world turns its back on Ukraine and the country is left alone in dealing with Russia, the Kremlin, instead of assisting Kyiv, will demand that it make decisions that will only harm the country’s national interests. As she said, this will not only be a deadly blow to Ukraine, but also to the Yanukovych regime.

This assumption is partially supported by a statement from Konstantin Zatulin, a Russian political analyst who is close to government circles. Zatulin believes that Russia should assist Ukraine only if the country joins the Customs Union as “a form of guarantee.”

As regards Ukraine’s future, after the halt in the European integration process, Brussels declared that the European door “remains open” for Ukraine. Stefan Füle noted that the next opportunity for Ukraine to sign the Association Agreement will emerge at the next EU-Ukraine summit, which will be held in the first half of 2014.

This opportunity will be offered to Ukraine once again next autumn when Georgia and Moldova are expected to sign the Association Agreement with the EU.

However, according to the newspaper, Ukrainskaya Pravda, sources in Brussels assert that the prospects of the country’s European integration have been postponed for a long time. It is possible that Yanukovych has “determined the fate of Eastern Europe for the next 20 or 25 years.”

There is, however, an opinion in Ukraine that the country’s government intends to sign the agreement and the decision to suspend this process served as a bargaining chip with Brussels. In Volodymyr Zastava’s opinion, a Ukrainian political analyst, this move was the country’s last attempt to exert pressure on the EU in order to secure an increase in financial assistance and put the issue of Tymoshenko’s release off the agenda.

A Ukrainian political commentator, Vitaly Portnikov, believes that Yanukovych plotted the thwarting of the agreement with Putin well in advance, but Yanukovych “freaked out” – he could have waited for the Vilnius Summit at which the signing of the Association Agreement would have probably been frustrated due to his refusal to release Tymoshenko, and could have then blamed the EU. But Yanukovych feared that the EU would be willing to sign the agreement anyway. “Now, it has turned out that Yanukovych defied his own political objectives and in turn deprived Ukrainians of the dream which he himself publicly supported,” Portnikov told the newspaper. Moreover, as the political commentator reckons, having admitted that he bowed to Russia’s blackmail, Yanukovych even fails to offer his electorate the friendship with the thuggish neighbor and again names European integration as a priority.

This will all have an influence on the outcome of the 2015 presidential election, which will probably prove difficult for Yanukovych.

It is believed in Ukraine that the decision to frustrate the Association Agreement will adversely affect prospects for Yanukovych – over the past few years, he and his party have portrayed themselves as staunch advocates of European integration, something which the majority of country’s population supported.

The government’s unexpected rejection of the European path will strengthen the political opposition and consolidate the pro-European electorate around it. On the other hand, turning his back on the West and receiving support from Moscow will give a free hand to Yanukovych both in rigging the presidential election and heightening control on the judiciary and media.
The Economist writes that during the next presidential election, Yanukovych will need to either rig the elections and repress or bribe voters with cash which he does not currently have.
A Russian commentator, Yulia Latynina, thinks that Yanukovych “will make friends with those who will help him win [presidential] elections. Russia, however, can do much more harm than the European Union.”

At the same time, commentators assume that Putin does not care much whether Yanukovych wins the next presidential election or not. Moreover, politicians supporting Ukraine’s membership in the Customs Union have recently stepped up their activity. A Ukrainian oligarch, Viktor Medvedchuk, is leading an information campaign against the Association Agreement and the leader of Communist Party, Petro Symonenko, is putting forward an initiative to hold a referendum on the issue of joining the Customs Union.

The “drop-out” of the largest state from the format of the Eastern Partnership changes the scale of the partnership itself. It may adversely affect the EU’s attention and interest towards two other candidates for the Association Agreement - Georgia and Moldova. Weeks before the Vilnius Summit, the EU expressed its political will to protect Russia’s neighboring countries from the pressure of the Kremlin, but the case Ukraine shows this will was proven to be insufficient.

On 23 November, German Chancellor Angela Merkel declared that she intends to talk with Putin about Russian pressure in order to ensure that the process of European integration of post Soviet countries is conducted without confrontation. The worst scenario of such talks would be Russia obtaining an informal right to veto European integration of certain neighboring countries.


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