It is possible that EU-Ukraine relations could take a negative turn in the coming months.
“After recent meetings of Ukrainian high authorities’ representatives with Commissioner Štefan Füle and other EU officials, it seems that Brussels is going to prolong the May deadline for necessary reforms to Association Agreement (AA) signing till the end of this summer. Actually Polish Foreign Minister Radosław Sikorski mentioned such a possibility. That could be a compromise for the EU, which is not completely satisfied with Ukrainian progress on reforms but doesn’t want to close the window of opportunity for a prominent country in the European Eastern Neighbourhood.
For Ukraine the goal of signing the AA is quite simple – to launch the modernisation of the country by European standards, also thanks to the implementation of the Deep and Comprehensive Free Trade Agreement. But the way forward is not clear, as EU-Ukraine cooperation could follow any of these three scenarios:
European choice: Until the end of May Brussels will receive enough signs from Kyiv to launch the process of an AA signing at the Eastern Partnership summit in November. The most obvious so far has been the presidential pardon of six political figures, including ex-interior minister Yuriy Lutsenko. There can be a start of real reform of the Ukrainian economy on the basis of EU and IMF recommendations. Also there will be deep development of EU-Ukraine on energy cooperation. The European choice can become the platform for President Viktor Yanukovych during the presidential campaign in 2015. The probability of this scenario is 40%.
Stagnation and isolation: Ukraine will fail to implement and guarantee the EU recommendations for the AA before the signing in November. No real reforms will take place. As a result, the AA will not be signed, EU-Ukraine relations will seriously slow down and the soft isolation of Ukraine from the West will widen. It will mean no financial support to Ukraine and narrowing of EU-Ukraine trade, energy and economic relations. Ukraine would transform into a second Belarus, unless social and political protests spark a new “Orange Revolution”. This path can truly bring Ukraine to the status of failed state. The probability of this scenario is 30%.
Eurasian choice: Ukraine will choose Russia as its main geopolitical and economic partner that will lead to prompt integration into the Russian-backed Customs Union and Common Economic Space. The Ukrainian gas transportation system will fall under Russian control in exchange for lower gas prices. Trade will be oriented towards the Customs Union. Ukrainian big business will be taken over by Russian big capital. Ukraine’s EU integration plans will be deeply frozen while the course on Eurasian Economic Union will be pursued. This can end up with Ukraine’s joining the Collective Security Treaty Organisation (the Russian analogue of NATO) and the acceptance of more Russian troops on its territory. Moscow will financially support Ukraine in order to form full economic dependence. The probability of this scenario is 30%.
Risks for the EU
The biggest risks for EU will come from the latter two scenarios, including:
Shadow Ukrainian capital could be invested in European medium and big businesses, some of it influencing EU decisionmaking and public opinion;
A wave of Ukrainian migration would complicate EU’s problems with employment;
EU investments in Ukraine would become highly fragile;
Russia’s gas positions would get much stronger after gaining control of Ukraine’s pipeline system, resulting in more risks for the Eastern EU members;
The Eastern Partnership programme would fall out of favour;
The EU would loose access to the Ukrainian market and resources.
Advantages for EU
Despite being entangled in an unprecedented economic crisis, the EU has the chance to implement and realise successive new geopolitical waves promoting its values and norms on the East up to southern borders of Russia. Ukraine’s AA could be the new tool of European foreign policy which will allow integrating new European countries to the common economic, energy and cultural space without the promise of EU membership.
This new instrument can be tested on Ukraine and in the case of both sides’ satisfaction, can be adjusted for the other countries of the Eastern Neighbourhood (next will most probably be Moldova and Georgia). Besides, the new format of EU cooperation can be suggested for Turkey.
Conversely, if Ukraine’s AA would not be signed in 2013, this would definitely mean the failure of the Eastern European policy of the EU that could result in the rise of additional risks to Europe, plus the loss of resource and market opportunities that are so vital to the European economy. The question is still open, but time is running out.”