Ukraine’s Brinksmanship with Russia and European Union

Ukrainian President Viktor Yanukovych is playing a dangerous game, but it is one forced on him by a European Union that pushes Ukraine away even as it claims it wants closer ties.

The policy of every major party in Ukraine — except from time to time Yulia Tymoshenko’s Batkivshchyna, when they can be bothered to create a foreign policy — is increasing ties with the European Union, and engaging but not allying with Russia. In theory, this should be an approach favored by Brussels. In practice, it is a constant ping-pong volley between the two powers between which Ukraine is nestled, with the EU withholding further integration until Ukraine suspends the execution of its laws, and Russia determined to enlarge its revanchist empire through its so-called Customs Union.

This brinksmanship became obvious when Yanukovych canceled a meeting with Putin earlier this week at which the two had been expected to sign an agreement that would have brought Ukraine closer to the Customs Union, yet another in a series of high-level meetings between the two countries that have yielded precious little. Yanukovych’s stated reason was that the documents the parties were to sign needed more work, but it is by now apparent that what he really wants is to provide the EU time to counter-offer.

The EU has recently made some favorable noises about moving forward with Ukraine’s Association Agreement (essentially the first major step in accession to the EU). However, German opposition — born of the German left’s broad problems with Ukraine’s treatment of Tymoshenko, a general German reluctance to allow any more Member States, and fear of angering Russia — remains strong, and so the multinational bloc is intermittently demanding that Ukraine show progress on absolving Yulia Tymoshenko of her criminal acts and on reversing its “rollback” on democracy (Eurocrat for “imprisoning Yulia Tymoshenko”) before any further ties with the EU can be made.

Unfortunately, Yanukovych cannot play this game indefinitely. The natural gas agreement Tymoshenko negotiated has locked Ukraine into a disastrously high price for natural gas even as its export-based economy suffers the effect of the apparently permanent European malaise. Ukraine is facing a series of economic crises brought on by external events and the Tymoshenko gas deal’s primary and secondary effects, and so must open more markets to its products soon, or suffer.

It is reasonably clear that Putin understands Yanukovych’s game. Over time, the demands Putin has made for unwinding the disastrous gas deal Tymoshenko negotiated with Putin have ratcheted up to the point at which Ukraine would now be forced to enter the Customs Union, turn over its entire natural gas pipe operation to Russia’s state-owned Gazprom, and other minor concessions. On the other side, he is threatening to bypass Ukraine’s pipe network altogether through two alternative delivery routes, one of which remains only a threat for now.

It is also reasonably clear that the West does not understand the stakes. Europe appears to believe that its relative desirability is such that Ukraine will simply wait until the end of time — or destroy its own rule of law by freeing Tymoshenko outside of a normal appeals process — to enter. The United States is little better. Former U.S. Ambassador to Ukraine Steven Pifer both summarized State Department received wisdom and offered perhaps the most obtuse comment on the matter to the Kyiv Post earlier this month. “The Customs Union will kill EU free trade: Do you want a Customs Union with a $2 trillion a year economy or do you want to go to the largest economy in the world, (representing) some $15 trillion to $16 trillion a year?”

Of course the Customs Union would kill EU free trade. Yanukovych may be many things, but he is clearly not a fool. One might, however, question whether free trade with a “$2 trillion a year economy” is better than an eternally-promised but never-experienced trade agreement with “the largest economy in the world, (representing) some $15 trillion to $16 trillion a year.”

Very soon, Ukraine must answer that question. It remains to be seen if the European Union even knows that the question has been raised.

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