June 28, 2013
Speaking at the end of the meeting of the EU-Ukraine Cooperation Council in Luxembourg on June 24, European Enlargement Commissioner Štefan Füle warned Ukraine that “time is running preciously short” for the government in Kiev to meet all European Union conditions in time to sign a free trade and association agreement in November. “Ukraine has made good progress in some areas,” Füle said, but added that “more needs to be done for Ukraine to achieve tangible progress on all the benchmarks,” including “increased determination and reinforced action”—an obvious reference to the case of Yulia Tymoshenko.
While stressing that closer links with the EU remain its priority, in recent weeks the Ukrainian government has also probed the possibilities of strengthening its ties with the Customs Union formed in 2010 by Russia, Belarus and Kazakhstan. Moscow would like to see Ukraine in the “Common Economic Space,” but it is reluctant to grant it a half-way status that would fall short of full membership. Kiev would prefer that option in order not to sever its EU connection.
The dilemma has received scant attention in the Western media. Considering its size and strategic importance, it is curious how underreported Ukraine remains 22 years after independence. The second largest country in Europe—the true link (and a key energy corridor) between Russia and the Old Continent’s heartland west of the Carpathian Mountains—has just under fifty million people, a rich agricultural base, and a long Black Sea shoreline which includes the all-important naval bases in the Crimea. Its geopolitical significance cannot be overstated.
Kiev’s current quandary is real, but it should not overshadow Ukraine’s promise as a pivotal player in the development of regional cooperation with its EU neighbors to the West, former CIS countries to the north and east, and emerging regional powers further afield. On my recent visits to Ukraine—most recently as an election observer last October – I was struck by the tendency of some local analysts to focus on the role of their country as an object of geopolitical rivalry of others, and to neglect its potential as a significant actor in its own right.
That potential is real. The importance of food as a key strategic commodity will continue to grow in the decades ahead, and Ukraine has an enormous, still untapped capability to become a global-scale producer. In 2012 Ukrainian agricultural sector raised $2bn in capital investments, which is 11 percent higher than in 2011 but still short of what is needed to unleash its potential. If and when Ukraine’s farmers gain reliable and affordable access to finance, they will be able to compete with, and perhaps out-produce, their peers in the American Midwest or Canada. Cooperation with key EU agricultural producers, such as France, is proceeding apace and should continue regardless of what happens in Vilnius next November. The same applies to Kiev’s cooperation with the EU in the energy sector in 2013—an important step in making Ukraine’s role as a key energy conduit more stable, predictable and transparent.
Bilateral cooperation can flourish even in the absence of speedy integrations, as recent experience suggests. Ukraine’s merchandise trade deficit narrowed to $608.5 million in April, which is markedly less than a year ago. Exports increased 4.7% year-on-year, while imports declined 8.1%. Most of its minerals, steel, coal, petroleum products and grains go to other former Soviet republics, but Germany and Poland have been gaining importance in recent years. Trade with Hungary, Sweden, and other smaller EU members has also recorded significant increases. Outside the EU and the former Soviet Union, Ukraine’s key partners are Turkey (second-largest overall, after Russia) and China. Ukraine will sign an agreement on a free tradearea (FTA) with Turkey in October, and its trade with China is expected to double to $20bn in the next few years.
Regardless of its hoped-for integrations, Ukraine can and should project more resolutely its “soft power” in the region. Its rich cultural heritage and still underdeveloped tourist industry are by no means the only assets. The 2012 UEFA European Football Championship, commonly referred to as Euro 2012—jointly hosted by Poland and Ukraine—was an expensive but useful step in the right direction. There are still too few foreign students, researchers and guest-lecturers in Kiev, Kharkov, Lvov or Odessa, considering the quality of their institutions of higher learning.
The perennial issue of Ukraine’s geopolitical strategy—should it lean to the East or to the West—is on the whole somewhat artificial. Experts note that recent trends in the country’s foreign trade have created preconditions for growth even if it joins neither the European Union nor the Moscow-led customs union. It is noteworthy that even some EU leaders take the view that Ukraine should follow a two-track approach.
Stability in Europe and the continent’s long-term integration devoid of the Cold War, zero-sum-game mentality, requires a new paradigm in Kiev. It should be based on further diversification of political and economic options, which is not incompatible with Ukraine’s quest for optimal forms of association with its eastern and western neighbors.