Brussels asserts that under the Association Agreement, Ukraine will save €500 million a year in customs duties, and it is promising an aid package of €186 million to help Kiev begin to implement institutional reforms and another €610 million after they are in place.
“But this comparatively small amount of European money won’t save the day. Ukraine’s economy is stagnating and the country stands to lose billions in trade if the Kremlin gets tough. Russia can close its borders to more Ukrainian goods. It also can introduce stringent visa requirements, demand advance payment for natural gas exports, or cut off supplies as it has done twice before,” Trudolyubov urges.
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Moreover, he claims that in the short term, the free-trade pact is likely to hurt. Introducing European industrial standards (which is part of the deal) will make most Ukrainian-manufactured goods uncompetitive, while European produce will flood into the country. And that’s on top of the likely losses in trade and credit from Russia. Moreover, an association agreement is not the same as E.U. accession.
“Economic gains will certainly be years in coming. Still, new institutions, especially in law enforcement, are exactly what Ukraine needs and an association with Brussels is the best hope for moving in that direction The Ukrainian leadership is motivated by a mixture of expediency and fear. But if it walks the walk toward E.U. integration, the change will become irreversible. Genuine reform will nurture a generation of political leaders for whom Western values won’t be just words,” the expert admits.
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