Decision Time

22 January 2013, 16:02

The events of 2012 showed that for objective reasons, the geopolitical tightrope will not be long-lasting. In the first years of Yanukovych’s presidency, its policy of “multilateralism” and neutrality, first and foremost, meant the actual rejection of European and Euro-Atlantic integration, thus pleasing the Kremlin to a certain extent. Russia didn’t hide the fact that it is waiting for Ukraine to join the Customs Union as soon as possible and even set a deadline of a year to eighteen months. In truth though, they are prepared to wait even longer. In the EU, after Ukraine disregarded its position concerning political prisoners and, for this reason, the EU did not sign the Association and Free Trade Area Agreements with Ukraine in the autumn of 2011, they expected that Yanukovych would not take the risk, and that the oligarchs would not allow him to submit to the domination of the Kremlin and that it would be possible to pressure him into executing the demands that had been set forth, and in the meantime, break off relations with Kyiv.

However, the result of the parliamentary election in Ukraine confirmed that the Yanukovych era is coming to an end and that his chances of maintaining power after 2015 are not high. At the same time, the Kremlin does not see anyone among top Ukrainian politicians, who could compete with the current guarantor and opposition candidates during the presidential election, and make Ukraine part of the Eurasian Union – essentially, the new USSR. So the formerly announced date of the final creation of this entity – 2015 – became symbolic in yet another sense: the indicated year could become decisive, in respect to drawing Ukraine into it. All of this forced the Kremlin to take action, to the extent that the threat of entry into the Customs Union – in full or in part, has become more urgent than ever before.

In early December, some representatives of the ruling conglomerate began to publicly discuss loopholes in legislation, which could give formal grounds to start the process of joining the Customs Union, in spite of the priority set forth in the law on the foundation of domestic and foreign policy – European integration. On the eve of the meeting between Yanukovych and Putin, scheduled for 18 December, one of the lobbyists for eastern integration in the Cabinet of Ministers of Ukraine, Valery Muntyan, provided information that Ukraine could sign the declaration on joining the Eurasian Economic Community (EurAsEC) and begin the procedure for the coordination of part of the agreement of the Customs Union in exchange for a reduction in the price of gas for Ukraine to the levels paid by Belarus. However, the meeting did not take place. Instead, the European factor suddenly presented itself. EU representatives agreed to conduct a bilateral summit in February without any preliminary conditions and sign the Association Agreement by autumn 2013, on condition of at least some progress in the execution of prior demands regarding political prisoners and conducting necessary reforms. Clearly, this position of European officials mobilized part of the ruling camp to counteract membership in the Customs Union, thus even reducing the possibility of the ratification by the Ukrainian parliament of the agreements signed in Moscow.

Currently, the situation surrounding Ukraine fits into the context of the intensification of trade and economic confrontation between Russia and the EU. The idea of creating a free trade zone between them has existed for many years. It is potentially favourable for the European Union, since facilitating access to the Russian market will allow the accumulation of its own production sales volumes there. However, the Kremlin is now bringing forth the rejection by the EU of the standards of the Third Energy Package as a condition for facilitating the access of European commodities onto the Russian market, since they are creating obstacles for the Russian Federation’s energy expansion on the European market and in the use of gas diplomacy for strengthening its influence in the most potentially vulnerable countries. Tension manifested itself during the EU – Russia Summit on 21 December. In essence, this summit did not result in any progress on the most contentious issues. On the eve of the summit, Karel De Gucht, the EU Commissioner for Trade, stated that Moscow is overestimating customs duties on European cars, is banning the export of live animals from the EU and is generally making the export of hundreds of products extremely expensive. Based on the results of the Summit, José Manuel Barroso, the President of the European Commission, stated that the EU does not intend to make exceptions for Russia regarding the Third Energy Package, since “our regime is not discriminatory and anticipates greater market liberalization. We welcome your companies on our market, however, they have to comply with our rules.”

With this in view, immediately after the cancellation of the meeting between Yanukovych and Putin, both Russia and the EU signaled the necessity of making a clear choice between the EU and the Customs Union. More specifically, Elmar Brok, Chairman of the European Parliament Committee on Foreign Affairs, noted: “…the position of European institutions is clear; that Ukraine cannot simultaneously be a member of the Customs Union and the EU and it cannot have a free trade zone with two organizations. One conflicts with the other. The time has come for Ukraine to make a choice as to what will be in its interests in the long term, not taking into account that, which is only favourable today”. In his turn, Mikhail Zurabov, the Ambassador of the Russian Federation in Ukraine, noted that “there are no reserves of strength, which could give us the opportunity for a long-term analysis of the current situation and find a solution… if it is to happen based on a decision that has been made, then it should take place in the first six months of next year”.

Russians have good cause for haste, as with Ukraine signing of the Association and Free Trade Area Agreements in autumn 2013 will make it impossible to drag Kyiv into the Customs Union. Moreover, the inevitable reformatting of the Verkhovna Rada so that it’s under the control of presidential candidates on the eve of the 2015 election could make it unrealistic to drag the decision on joining the Customs Union through parliament. There has already been a polarization of the ruling conglomerate: a division into categorical opponents and supporters of such integration.

So in 2013, the polarization of Ukrainian politicians in general and more specifically parliament on this issue  will intensify, regardless of the government – opposition line or EU – Customs Union line, which will be accompanied by increasing pressure from Russia and the intensification of pro-Kremlin projects in Ukraine. Should Kyiv refuse to join the Customs Union, the Kremlin could resort to direct interference in the internal political situation in Ukraine without conditionality, using provocation to prevent the signing of the Association and Free Trade Area Agreements with the EU. 

The above-mentioned Ambassador Mikhail Zurabov clearly indicated that “the issue of the GTS does not depend on the Customs Union”, in other words, it could become a separate object for bargaining. Moreover, Russia is currently considering the establishment of a bilateral, rather than a three-sided consortium, in effect a joint venture, in which it will be able to take control of the pipeline within a short period of time. Having lost the opportunity to win over Ukraine in its entirety, the Kremlin could, at the very least, count on taking control of its strategic assets, which in the future will probably give it the opportunity to replay the situation so that the results are in its favour.

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