Ukraine: Why Europe Has the Most Leverage

Return to part I.

During the Cold War, in West Germany, there was a saying that the key to German unity is deposited in Moscow.

Something similar can be said about the future of all-European unity too. The Europeanization of post-Soviet Eastern Europe will only happen once Russia, for one reason or another, will – be made, or decide to – allow it.

The EU needs to realize and finally adequately respond to the reality that the recent problems in its Eastern neighborhood have a lot to do with Moscow’s interference.

To be sure, they are not exclusively made in Russia. Local actors Viktor Yanukovych, Alexander Lukashenko (of Belarus), Serzh Sagsyan (of Armenia) and their other counterparts are no angels. Their fiefdoms are rather peculiar crossings of state-capitalism with neo-patrimonialism.

Yet, to large degree, Yanukovych behaves the way he does because he has few other options. Whoever succeeds him as Ukraine’s leader will face similar challenges. Even if Ukraine’s next leader is much more supportive of Europeanization, she/he will have to deal with Russia’s probable and powerful resistance to Ukraine’s integration with the EU.

Moscow’s strategy

By threatening to take “protective measures” if Kiev signs the Association Agreement with Brussels, in 2013, Moscow dramatically increased the expected costs for Ukraine to pursue European integration.

De facto, the Kremlin has taken hostage hundreds of thousands of – especially, Eastern – Ukrainian industrial employees of companies that produce for the Russian market machinery, consumer goods, and equipment. Moscow’s plain message is: You can do whatever you want, but if you go west, we will close our markets and take “protective measures.”

Russia experimented with such measures in August 2013, with a 5-day ban on imports from Ukraine. There is now pure fear of further Kremlin retaliation among many Ukrainian workers, managers and engineers as well as their families who altogether make up millions of Ukrainian citizens.

This threat – both, its reality and perception – is today a, if not the, main source of legitimacy of Yanukovych’s faltering regime, and its wavering foreign policy.

The EU’s unused potential to respond

The odd part in the sad story of Eastern complications for Brussels’s Ukraine policy is that Russia’s largest foreign economic partner by far is… the EU.

About half of Russia’s international trade happens with the Union’s member states, and three fourth of the foreign investment she receives come from them. German, Dutch, French, Italian etc. payments for Russian raw materials, in particular gas, oil and coal, are filling the Kremlin’s budget as well as fueling the Russian economy every month.

The financially intensive, highly reputable and presumably efficacious Western economic engagement with Russia, to considerable degree, is what allows Putin’s regime to exist and act as it does.

The European economy, on the other hand, relies much less on Russian imports and exports, as they make up only small sections of the large foreign trade of the EU member countries.

Who is dependent on whom?

In the one area where there appears to be some dependency – Russian natural gas deliveries to Europe – the reliance is mutual, if not disadvantageous to Moscow. That is because Russia has currently few other ways to transport its natural gas elsewhere.

Russia has the largest conventional gas reserves in the world, but most of its pipelines head West and the various potential export alternatives are yet far from being able to substitute the large European market. For the time being, the Kremlin needs reliable Western disbursements for Russian gas deliveries to pay salaries, rents and stipends.

And Russia’s largest company Gazprom needs the stable income from its European trade to keep itself afloat. The nature and context of the Russian-European gas business is today such that it creates for Europe, at worst, interdependence, rather than dependence on Russia. Indeed, if anything, it probably creates Russian dependence on the EU market.

Against this background, the Kremlin’s sabotage of Brussels Eastern partnership policies amounts to a bizarre case of mutual misperception in international diplomacy.

Russia is playing hard ball with an entity on which it itself has to rely in whole number of areas such as raw materials exports, foreign investment, trans-border cooperation, scientific research etc.

Misplaced response

And in return, instead of using its considerable leverage regarding Russia to make the Association Agreement with Kiev happen, Brussels is trying to influence the Ukrainian leadership, which is already between a rock and a hard place.

Rather than addressing the crux of the issue, it bemuses itself commenting on the Euromaidan (pro-Western demonstrations), while voicing mantras about the peacefulness of protests, observation of human rights, respect for the sovereign choice of each country, need for compromise and dialogue etc.

This defect in the EU-Ukraine-Russia economic triangle seems to have its roots in diplomatic comfort and intellectual laziness – rather than any prohibitive organizational and economic strictures.

The EU could exploit its economic strength to threaten Russia with retaliation, if Moscow punishes Kiev for an association with the EU. But it does not want to. Such a confrontation might create complications for the cozy EU-Russian business relationship in which a whole number of prominent European companies and public figures are involved.

No need to be timid

The EU remains timid although a warning concerning the Kremlin’s Ukraine policies may eventually cost only very little. Probably, Russia would not want to threaten her already shaky economic and budgetary stability through a trade war with Europe.

Still, for the EU countries, it is uncomfortable to risk a falling-out with Russia. They do not wish to consider a re-structuring of their energy supplies for the unlikely case that real sanctions against Russia would indeed become necessary.

Sanctions will probably never happen because a mere indication of their possibility should be enough for the Kremlin to rethink its position.

However, the EU – it thinks – should not work this way, but rather through persuasion, mediation and compromise-seeking.

Time for action from the EU

As Brussels remains reticent, Russia continues bluffing that it can shape the post-Soviet space. In fact, Moscow has neither a sustainable economic model nor the administrative capacity to do so. Under insufficient leadership of a Russia that over-stretches its limited resources, the post-Soviet space will remain a source of instability.

It is thus in Brussels’s own interest to overcome its current shyness and use the EU’s considerable economic leverage for pressuring Moscow to accept the Association Agreements with Moldova, Georgia and above all Ukraine. The risks of not doing so may be closer and more immediate than some think.

A decision by Yanukovych to join formally or informally Russia’s Customs or Eurasian Union would not be accepted by many Ukrainians, especially in the Western regions. The principled rejection that a new Russian hegemony would encounter in such places as Galicia, Volyn or the city of Kiev could, in a worst case scenario, tear the country apart, in a civil war.

Already before the Association Agreement debacle, Kiev’s foreign affairs community had been becoming increasingly impatient with the EU. They felt that Ukrainian affairs have not been dealt with attentively by their counterparts in Central and Western Europe.

Has the EU been snubbing Ukraine?

Ukraine cannot get even a long-term, conditional EU membership perspective from Brussels. Yet, as is being once more confirmed by the Euromaidan protests, Ukraine is a manifestly European country. Kiev has already been allowing EU citizens’ visa-free travel to Ukraine for several years.

Most Ukrainians, however, are still required to go through a long, costly and denigrating application process to get even a short-term Schengen visa. Ukrainian applicants are frequently treated like potential criminals by West European consulates, and their visa requests are sometimes rejected, on dubious grounds.

Moreover, Germany has built with Russia’s Gazprom an expensive under-water gas pipeline through the Baltic Sea. The main purpose of that pipeline for Moscow is to circumvent the – now underutilized – Ukrainian gas transportation system. Its de facto effect is also to give Kremlin more leverage when pressuring Kiev.

Several EU countries have, furthermore, recently agreed to cooperate with Russia in building an even more expensive similar pipeline through the Black Sea. The completion of this project would make Russia largely independent from the Ukrainian gas transportation system.

Missed opportunities

Over the last years, precious time, trust and opportunities have been lost by the EU because of its inconsistent dealings with the fragile post-Soviet neighborhood.

As the Euromaidan protests draw more and more attention to both the opportunities and risks in post-communist Europe: Will Brussels, Berlin, Paris etc. finally get real about their so-called Eastern Partnership?

More principally: Will the EU start seeing itself as a partner – and not merely as teacher – of the Ukrainians, Georgians or Moldovans? Does Europe’s offer of an Association Agreement actually mean what its title says? Or does the offer still only imply the partner countries’ obligations to the EU, but not vice versa?

When will the EU make its own “European choice” – a suggestion that it constantly makes to its Eastern partners? When will Brussels finally start implementing European values in its Eastern neighborhood not through pretentious lecturing, but via coherent policies, adequate diplomacy, and, if necessary, real actions, on the ground?