The EU’s relationship with Ukraine: fling or partnership?

Brussels and Kyiv have been at loggerheads for over a year and the recent EU-Ukraine summit has not broken the deadlock. Will the fling between the EU and Ukraine that is now a decade old end bitterly or will it finally mature into a real partnership?  

Brussels and Kyiv have been at loggerheads for over a year and the recent EU-Ukraine summit has not broken the deadlock. Will the fling between the EU and Ukraine that is now a decade old end bitterly or will it finally mature into a real partnership? Ukrainian society, rather than the country's political elite, gives some grounds for a cautious optimism.

Looking at the political steps the Ukrainian government took last year, it is hard to avoid the impression that Kyiv is trying to “de-friend” rather than befriend the EU. It has ignored most of Europe's demands: top opposition figures, including the former prime minister Yuliya Tymoshenko, remain behind bars as a result of politicised trials, numerous EU appeals to release them notwithstanding. In the run-up to the October parliamentary elections, the ruling Party of Regions tried to influence the process to favour its own candidates – despite the EU repeatedly stating that the elections would be a test case of country's democratic credentials. Lately, Ukraine government officials have also started to talk up the prospects of joining the Russia-backed Customs Union – a move that what would make the EU's current offer of deeper trade relations with Ukraine essentially worthless. No wonder that the Ukrainian government is losing even its staunchest advocates among EU member states. An EU diplomat recently complained: “We can't be more Ukrainian than the Ukrainians – and we can't help them if they don't want to be helped”. 

However, the perception that Kyiv is set on de-friending the EU is detached from the local reality. The ruling elite in Ukraine has two simple aims: to consolidate power and to proceed with the EU integration process as quickly as possible. The trouble is that the methods it uses to achieve the former make the latter impossible. With little good news coming from Ukraine these days and the EU's focus on its own internal matters, it is no wonder that those in the EU already suffering from “Ukraine fatigue” are now calling for Europe to let Ukraine go. In short, rather than becoming the poster child of the EU's Eastern Partnership policy, Ukraine has become a liability for Europe.

Should have put a ring on it

Those wanting to see quick progress in Ukraine's association with the EU should keep in mind that a more ambitious relationship between the EU and Kyiv only started after the country became the Union's direct neighbour in 2004. Incidentally, this was just a few months before the country's “orange revolution”, which was celebrated in the West as a democratic uprising. Yet in the following nine years, there was little clarity about whether the post-revolutionary governments in Kyiv saw the relationship with the EU as a long-term commitment or a flirtation, despite their numerous political declarations of their ambition to become an EU member state. Ironically, this ambiguity about the relationship worked well for the EU too: it allowed Brussels, which was unwilling and unprepared to offer a membership perspective to Ukraine, to remain non-committal to Kyiv. In other words, one partner has not made up its mind about how serious it wants the relationship to be and the other did not try to upgrade their relations by proposing a long-lasting union that would have made the choice easier. 

What the EU at last offered to Ukraine instead was an Association Agreement (AA), which included a Deep and Comprehensive Free Trade Agreement (DFCTA). This boils down to two things. First, it is a promise of an easier and more intensive trade leading in the long-term to about 2-8 percent annual boost in Ukraine's GDP growth – without full integration to the EU. Second, it created the possibility of visa-free travel – but not just yet. This offer is likely to bring benefits to Ukraine in the mid- and long-term, but in a country where “long-term” usually means no more than six months, such promises are simply too distant. Moreover, although Brussels and Kyiv have over the past nine years invested in the mutual relationship, the general public in Ukraine has noticed few tangible achievements. For many in Ukraine, the AA – Brussels' best technical response to Kyiv's political declarations – is too little, too late. In addition, during the past year, the EU has attached more political conditions to its package in response to the troubling political developments in Ukraine. Besides meeting all the technical prerequisites, Kyiv is now expected to address cases of selective justice and problems related to the recent elections and to adopt key economic reforms. Even if it meets all these conditions, it still won’t get the ultimate reward – that is, EU membership – in return.

The family affair: more for me

However, the current administration is neither interested in, nor capable of, meeting most of the EU's current political conditions. Today, just as before, the government is mostly a facade for various oligarchs to pursue their own goals. The trouble is that, instead of carefully balancing and navigating among other oligarchs' interests as his predecessors have done, President Yanukovych and his family are trying to become oligarchs themselves. Although Ukraine remains the worst European country to do business in (as shown in the World Bank Survey), the economic fortunes of the president and his circle have been skyrocketing. The president's son is now rumoured to be one of the country's richest people. According to numerous reports, the scale and the style of corporate raids of the “family's men” have been pushing already harsh business conditions to almost unbearable limits, even by local standards. Meanwhile, anecdotal evidence of rent seeking by government-related businesses seems to be exceeding even the usual stereotypes about Ukraine's notorious corruption. The country's most influential family is targeting several sectors: from construction and local services in Donetsk, it has expanded to customs, agriculture and even energy, whilst keeping close control over key government agencies (and increasing budgets of law enforcement agencies). While the EU keeps repeating the mantra of “more for more” to its eastern neighbours (i.e. more rewards will be provided to those who undertake more reform steps, the family seems to be following the principle of “more for me” in managing the state and economy.

This greed may yet backfire: if Ukraine continues to be run as a “family affair”, the balance among various other business groups may be upset. In fact, this is already happening to some extent: the new government has no members linked to oligarchs who entertain political ambitions. On the other hand, businessmen took notice that, after Tymoshenko's trial, they could no longer take it for granted that their personal positions would stay unaffected. To remain in power without provoking a backlash from disaffected oligarchs, the family may adopt more Putin-style measures or at least keep open the option of introducing such measures.  

Missing: middle ground and a middle class

The EU's policy is of course not to fight the oligarchs, but it should try to find a middle ground in the Ukrainian politics. However, Brussels and Kyiv are running on two different political calendars. The former hopes that at least some progress in political conditions will be achieved by the time of the Vilnius Summit between the EU and Eastern Partnership countries in November 2013. The political leadership in Kyiv, on the other hand, is focused on consolidating its power base at home and eliminating potential challengers in the run-up to the 2015 presidential elections. And while it was Yanukovych's administration that concluded the AA and DCFTA negotiations with the EU, the EU's current demands are simply too much from the ruling elites' viewpoint. Brussels is essentially asking Yanukovych to undo the steps he took to consolidate power and introduce measures that will hit the living standards of majority of Ukrainians with an immediate effect – and this just two years before the 2015 elections. In this situation, perhaps even the membership promise, the much-cherished wedding ring that so many Ukrainians hoped for, would not be enough to change the current ruling elite's mind. They are simply too busy with their own affairs. 

The stakes for the Vilnius Summit appear to be high. Today, Ukraine is the only one of the six Eastern Partnership countries that has fulfilled all technical criteria to sign an AA in Vilnius. If the EU would take such a step without Kyiv meeting any of the political clauses, it is likely to significantly weaken its own values-based approach toward the rest of the region. It no longer seems possible for the EU to “escape forward” – in other words to sign the Association Agreement with more countries (such as Georgia and Moldova) and add a clear political roadmap for Moldova's European integration. Even if these agreements are initialled, technical reasons will prevent them being signed by November.

The EU's own political calendar is therefore putting it under pressure. Not signing the agreements would mean that the Vilnius Summit will have no major outcomes and would most likely lead to an even deeper freeze in relations with Kyiv. This self-inflicted pressure is compounded by calls by a number of Ukrainian experts and NGOs for the EU to sign the agreement despite the lack of progress on political conditions. On the other hand, if the EU signed the AA/DCFTA Yanukovych and his entourage would claim it as their own success, which would in turn further reduce the EU's political clout in Kyiv. Moreover, the government would be unlikely to do much to implement the agreements in practice. There is seemingly no quick fix for the EU and no middle way out of the current stalemate.

Some in Europe hope that if not the official Kyiv, then at least ordinary Ukrainians will see that the EU's offer is better than what Ukraine currently has or what it might get from Russia: economic analysesshow that in the long-term, the country is likely to grow more prosperous as it gets closer to the EU's market rather than to the Moscow-led Customs Union. After all, with few exceptions, opinion polls point to existence of a pro-European majority in Ukraine: confident supporters of EU have been outnumbering EU opponents by 2.5 times for the past five years. This despite the fact thatlessthan a quarter of Ukrainians have ever visited the EU, the United States or Canada.

The EU has also struggled to reach out to and engage with Ukraine's middle class – a mainly pro-European constituency (and elsewhere in the world seen as one of the pillars of democracy). It has been hit harder by the economic crisis than othersections of society and has virtually no representation in parliament or in mainstream politics. Another key pillar of a democratic state, state and non-state institutions, also remain weak, transitional and marred by rampant rent seeking. Civil society, often seen by the EU as vanguard of democracy, is no exception. As a recent Chatham House report (written by Orysia Lutsevych, herself a Ukrainian) put it: “Ukraine's civil society remains quite uncivil”. According to the report's findings, NGOs are usually closer to their donors than to those for whose benefit they profess to work. As a result, few citizens trust them or see them as advocates of their interests.

This does not mean that there is no active civil society in Ukraine: numerous civil initiatives try and often succeed in having an impact on the government's policy or on public discourse. Small entrepreneurs now regularly organise protests in the streets of Kyiv; the civic campaign “Chesno” continues to raises public awareness of the need for greater transparency and accountability. Importantly, civil society is free to operate in Ukraine: as anyone who saw Darth Vader walking into the Odessa's city government building to claim a plot of land for his spaceship could see, Ukraine is not about to turn into another Belarus anytime soon.

Ukrainian society has also demonstrated resilience in the last parliamentary elections: the Party of Regions was unable to form an absolute majority, despite the changes in the electoral law that were meant to achieve this very goal. However, this resilience comes with a price tag: as a reaction to the methods of the ruling class and dissatisfaction with the opposition's passivity, many citizens voted for the extreme nationalist party Svoboda. An ugly all-Ukrainian political fight could unfold in the run-up to the 2015 presidential elections. 

Fixing expectations, not the policy

The dysfunctional relationship between the EU and Ukraine is somewhat understandable: neither side had realistic expectations from the other. The EU seems to have overestimated in the eagerness among Ukraine's political class for reform and closer association with Europe. On the other hand, Ukraine believed that the EU was serious about integration. A maturing of the relationship would require an upgrade from a “love affair” to a serious partnership. This does not imply fixing the Eastern Partnership policy as such, but expectations do need to be adjusted on both sides. When talking to Kyiv, Europe needs to take the broader context into account.

First, the current ruling elite has chosen to consolidate its domestic power base by applying the “Donetsk rules” to the entire country. This is why Ukraine's democratic credentials are now being called into question. But the EU should not seek to punish the entire country: it should keep in mind that Yanukovych was elected democratically by a society that continues to show its resilience in numerous, if not always political, ways.

Second, what is unfolding in Ukraine is a political fight that might become a full-blown political crisis: the balance between various business groups, once seen as almost natural part of Ukraine's politics, has been upset. This is linked mostly to the family's greed rather than any structural reforms aimed at dismantling the economy's oligarchic structure (there were very few such steps recently). If they stay on the current course, the Yanukovych family will most likely further alienate all strata of society. In the 2004 “orange revolution”, both citizens and (some) oligarchs mobilised to resist the attempt for an unfair government takeover. In the upcoming months, Ukrainian society may resist Yanukovych's attempts to grab even more political and economic power in some way. This does not mean that another “orange revolution” is in the making: for now, the opposition remains fragmented, the clashes with oligarchs are mostly taking place away from the political spotlight, and there is no real political alternative to the current regime (unless a radical one is accepted). At the same time, local elites have become strong (that is, rich) enough to be able to protect their own interests against European – or Russian – pressure. As a result, external factors will have less, not more influence on the domestic situation.

Third, despite the possible further reduction of the EU's influence, Europe still has many allies in Ukraine. Society's resilience is manifested in many ways, be it through protest voting, civic initiatives or appeals to authorities. Most Ukrainians are more supportive of the EU than their government – and even approve of the EU's demands to Kyiv. The country also remains the EU's biggest market in the Eastern Partnership region – and it is in the interest of both to facilitate trade relations to the greatest possible extent. The EU may and should continue to demand that Kyiv fulfils political pre-conditions before the trade pact is signed, but it should be prepared to receive a “no” answer from the current government. In this case, Kyiv might actually warm up to a deal with Russia. If this happens, continuing engagement with Yanukovych would be a farce: a simulation of a relationship that no longer exists. In this case, the AA should simply be frozen rather than rushed through – especially as it would be obvious that Kyiv has no intention to implement it. This would not be the end of the world – though it would mean that relations between Ukraine and the EU would not improve until after the 2015 presidential elections at the earliest. 

Ukrainian society is growing increasingly disappointed and is opting for radical solutions. Instead of devoting even more efforts to persuading the ruling elite and the family to deliver on the EU's demands, the most realistic and promising step for Europe to take is to try to strengthen its position as an honest broker. It should avoid taking sides or “protecting” the opposition as it did in Belarus. Whether or not the AA is signed, the most important step the EU can take in Ukraine today is to give a helping hand to initiatives that benefit the middle class and strengthen institutions (both state and non-state) and democratic accountability. At the same time, the EU should have no hopes of transforming Ukraine into a fully functioning democracy overnight. The growing support for the extreme nationalists and the Svoboda party should be a warning sign that the country is in political crisis that is likely to deepen as the 2015 presidential election approaches.

Jana Kobzova is a policy fellow and programme coordinator at the European Council on Foreign Relations. Balazs Jarabik is an associate fellow at FRIDE and the Central European Policy Institute.

The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.


ECFR Alumni · Associate Fellow

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