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    Central Asia
     Dec 4, '13


Ukraine's Russian gambit all about cash
By Mikhail A Molchanov

After Ukraine's pro-European protesters took to the streets to denounce the government's backtracking on the European Union Association Agreement, things went south for both the protesters and the government.

While protesters were beaten up by the police, the government endured a siege of both the Cabinet of Minsters and the president's offices. The enraged crowd occupied municipal offices of the City of Kiev. Protesters demand resignation of President Viktor Yanukovych and his government and the signing of the treaty with the European Union. Russia's President Vladimir Putin says it was all orchestrated from the West.

Only few days back, it seems Ukraine was well on its way to



Europe, leaving Russia and its Customs Union out in the cold. The EU Vilnius summit was meant to bring Ukraine into the European Union fold, thus humiliating Russia and its designs for the rival regional association.

However, the Vilnius summit ended with disappointing results. Ukraine had suddenly announced that it was putting the process on the back burner until "effective sales markets for the Ukrainian goods can be found". Parallel to that, Ukraine's diplomats gave another reason for ending the talks - "national security".

That was a code word for Russia's pressure. In July, Moscow had subjected Ukrainian exports to new customs procedures, which lengthened the clearance time 10-fold and more. By mid-August, 900 freight train cars and 1,000 cargo trucks were stuck on the border. Trade losses averaged 20-25% of the total sales value. Ukraine could have lost up to US$2.5 billion in trade by the end of the year if the draconian customs measures had been kept in place.

Putin's adviser on regional integration matters, Sergei Glaziev, declared that that was a taste of things to come should Ukraine continue steering way from the Russia-led Customs Union.

"We are preparing to tighten the customs regime just in case Ukraine takes the suicidal step of signing an agreement of association with the EU," he said. However, were Ukraine to backtrack on its European commitments, Moscow would drop the price of its gas twofold or more. As Ukraine pays more for its gas than anyone else in Europe, Moscow was confident that its offer would not pass unnoticed.

Immediately after the decision to delay the signing of the EU Association Agreement, mass protests erupted. Last Sunday, more than 300,000 protesters took to the streets in Kiev alone. A repetition of the "orange revolution" of 2004 seemed to be in the offing. Protesters adopted a resolution demanding the resignation of President Yanukovych.

Meanwhile, the pro-government demonstrations were also gaining strength. A meeting of 20,000 people was called by the Party of the Regions on Friday. Prime Minister Mykola Azarov opined that, in addition to anti-government demonstrations, "there was a lot of events to support the decision of the government".

The general public is split in half. If in July pro-Western sympathizers were in the majority (55%), an October poll saw their numbers shrunk by 5%. Support of membership in the Customs Union is almost as high as that of the association with the EU.

This may all change, however, should the government's opportunism come to be perceived as incompetence. "Once again, I say that the decision was forced, we had no other choice, and the time, of course, will prove us true," Azarov said.

Perhaps. Ukraine's East may still believe that the government's actions were dictated by its concern over the well-being of the people. Ukraine's West, however, want nothing less than the downfall of the government, which it perceives as being too cozy to the Kremlin.

In truth, the benefits that Ukraine might gain from the Association Agreement with the EU, apart from freedom of the movement for Ukraine's potential labor migrants, are few.

It is unrealistic to believe that the EU will come up with anything similar to a pre-accession package that East Central Europeans used to enjoy. It is naive to lobby for market-access guarantees. An association agreement with Europe would bring little more than free trade and free travel - enough to make labor migrants happy, but hardly enough to guarantee jobs domestically.

The EU insists on Ukraine's progress on the issue of selective justice, which the detention of former prime minister Yulia Tymoshenko best exemplifies. Yet, the prospect of Tymoshenko's release horrifies Yanukovych. There is no one else more capable to present a unified opposition to him and his government. Besides, the rule of law is not the first priority of Ukraine's elite.

European-style laws ensure transparent business practices, which might be applauded by many. Unfortunately for Ukraine's oligarchs, these practices also would weaken the political bases of their control of the country's economy.

Speaking at the Vilnius summit, Yanukovych reaffirmed Ukraine's commitment to sign the EU document. However, he failed to convince European leaders. While many expected an idealistic "leap of faith", Kiev demanded at least 20 billion euros (US$27 billion) a year in financial aid. [Yanukovich is now visiting China, where is due to stay until December 6, seeking loans and investment to head off a debt crisis, according to Reuters.]

Still slow on reforms, Ukraine insisted on EU help in softening International Monetary Fund loan terms. Yanukovych, who himself comes from Ukraine's Russian-speaking east, also proposed bringing Russia on board in Ukraine's negotiations with Brussels.

Overall, the message that the government sent to the EU was not that different from the one heard before: what we need is money, not the human rights sermon. If a hefty handout from Europe was not guaranteed, Ukraine would throw its lot in with Eurasia, specifically, the Eurasian Union built by Russia, Kazakhstan, and Belarus as a geopolitical alternative to the European Union.

For Ukraine's elite, this tug-of-war between Europe and Eurasia is really not about values, nor is it about identity. In the end, it's all about money.

Mikhail A Molchanov, of St Thomas University, Canada is the author of Political Culture and National Identity in Russian-Ukrainian Relations (Texas A&M University Press, 2002).

(Copyright 2013 Mikhail A Molchanov)






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