BRUSSELS, December 14, 2013 — The Ukrainian government’s surprising decision to suspend negotiations with the European Union two weeks ago has plunged the country into uncertainty, with protestors occupying the City Hall and main square of the country’s capital city Kiev. While the protests have sparked a bout of idealism for both Ukrainians and outside observers, there is no quick fix for the geopolitical ‘tug of war’ that Ukraine has too often been subject to.
It all started when Ukrainian President Viktor Yanukovych suddenly announced that he would not sign an Association Agreement with the European Union at a high-profile summit in Vilnius, Lithuania at the end of November. The decision came as a surprise to many both inside and outside of Ukraine, as Yanukovych had previously been one of the Agreement’s most fervent advocates. He repeatedly declared his desire to build links with Europe so as to break free from Russia’s suffocating grasp. In a September address to the United Nations General Assembly, the Ukrainian President, often referred to as pro-Russian in the press, even referred to his country’s European aspirations as “the defining vector of our development.”
According to Ukrainian Prime Minister Mykola Azarov, the U-turn was due to “purely economic” concerns. Yanukovych echoed this in an address to the Ukrainian public, stating, “I would have been wrong if I hadn’t done everything necessary for people not to lose their jobs, receive salaries, pensions and scholarships.”
While many may be reluctant to take Ukraine’s political elite at their word, there is no question that economic considerations weighed heavily in the decision to suspend negotiations with the EU. Having abandoned its charm offensive before it began, Russia spent the months preceding the Vilnius Summit building up the pressure on Ukraine to back down from the Association Agreement.
The Ukrainian economy is heavily dependent on Russia, where a quarter of Ukraine’s exports end up, and, most of all, on Russian energy resources. Trade between the two countries fell by 25% as sanctions on Ukrainian products were enacted and Ukraine was forced to pay higher gas prices than any other country in Europe.
The Ukrainian economy was in sorry shape even before Russia’s ‘trade war’ took its toll. The country owes at least $17 billion in debt and Russian gas payments that must be paid within the next year and the growth forecast for the near future is 0%. If the protestors currently occupying Kiev’s Independence Square, or ‘Maidan’, succeed in forcing Yanukovych and the current government to stand down, the opposition will still be faced by the same economic reality.
Both Yanukovych’s Party of Regions and the opposition recognize that Ukraine’s future lies with Europe. The problem is that most of the benefits of building links with the EU through signing the Association Agreement are long-term, whereas the immediate economic benefits of not signing the agreement were clear. According a source at The Economist, suspending negotiations with the EU has resulted in Russia granting Ukraine a $5 billion aid package and dramatically lower gas prices, from $420 to $200 per 1000 cubic meters. Had Ukraine signed the agreement, there is no reason to think that Russia would not have further raised gas prices or imposed trade sanctions against its smaller neighbor.
Moreover, while the dominant narrative in the media is that the European Union has “lost Ukraine to Russia”, many neglect that Yanukovych has not committed his country to joining Russia’s ‘Eurasian Union’ either, which was designed to act as a geopolitical counterweight to the EU and has been denounced by former US Secretary of State Hilary Clinton as a new Soviet Union.
Ukraine is a country that will always have strong links to both Russia and Europe as it hosts both a staunchly nationalist and pro-West population (as evidenced in photos from the protests in Kiev) and a significant Russian-speaking minority in the east of the county. More than being permanently sold into the service of their former Soviet masters, Ukraine will most likely continue to play its traditional role as a bridge between East and West. Kiev’s engagement with Brussels is far from over but Moscow is and will always be integral to the country’s future.