Monday, August 29, 2016


Want To Understand Russia-Ukraine Relations? Follow The Money

Russia's Vladimir Putin Right) meets with Ukrainian President Viktor Yanukovych in March -- despite expectations, relations have not become as close as many predicted.
Russia's Vladimir Putin Right) meets with Ukrainian President Viktor Yanukovych in March -- despite expectations, relations have not become as close as many predicted.
By Robert Coalson
When Viktor Yanukovych became president of Ukraine in January 2010, it seemed inevitable that Kyiv would drift increasingly into Moscow's orbit.

And it has -- but only to a degree.

Just three months after Yanukovych took office, he and then-Russian President Dmitry Medvedev signed an agreement that allows the Russian Black Sea Fleet to keep its base in Crimea until at least 2042.

Kyiv also renounced its previous ambition to join NATO. And in August 2012, Ukraine passed a law granting so-called regional languages -- most importantly, Russian -- official status, a symbolic move that Moscow had long been urging.

But Yanukovych appears unwilling -- or unable -- to deliver on one of the Kremlin's key demands: that it join a Moscow-led customs union that unites Russia, Belarus, and Kazakhstan. Moscow has pushed the project as the foundation of what would essentially be an alternative European Union for former Soviet states.

Yanukovych and many of the oligarchs who support him are unwilling to shut the door completely on further integration with the EU, even though relations with the West have been virtually put on hold over the perceived politically motivated prosecution of former Prime Minister Yulia Tymoshenko, Yanukovych's main political rival.

Many Ukrainian oligarchs, analyst say, are also fearful of being dominated by Russian commercial and political interests.

When Putin pushed the Commonwealth of Independent States Customs Union proposal at a summit in Yalta in July, Yanukovych was polite, but coy. "Any integration only brings about advantages. We are offered to join this [customs union] integration process," he said. "First of all, we are very grateful for the invitation. It is very good. When it comes to the future, we shall see."

Elsewhere Yanukovych has said Ukraine might join the customs union, but it would have to amend its constitution before it could do so.

In A Pickle

The main carrot -- and stick -- at Moscow's disposal in this standoff is, of course, natural-gas prices. Ukrainian Prime Minister Mykola Azarov said earlier this month that Moscow had "put forward conditions: join the customs union and tomorrow you will receive gas at $160" per 1,000 cubic meters. Currently, Ukraine pays $420 per 1,000 cubic meters.

Andrew Wilson, a senior fellow at the European Council on Foreign Relations, says that although some Ukrainian oligarchs -- particularly those in the energy sector -- favor closer ties with Russia, others see their economic interests to the west.

"Clearly there are those [Ukrainian oligarchs] who trade with Europe or who already have assets in Europe or who are listed on European stock exchanges who want to keep the relationship [with the EU] at least open or at least prevent any further deterioration in that relationship," Wilson notes.

And those oligarchs are pushing Yanukovych not to give in to Russia on this point. "Structurally, there were always things that were going to get in the way of the [Moscow-Kyiv] relationship," Wilson says. "Yanukovych stands all fours on his defense of the local oligarchs -- some of whom are Russian partners; the so-called gas lobby has seen its power increase under Yanukovych. But most are rivals with Russian interests and Yanukovych is first and foremost an oligarch-pickled president."

The Cold War Continues

There was a time when, outwardly at least, Moscow seemed willing to tolerate close ties between former Soviet states and the EU, while merely insisting that they refrain from joining NATO. However, Wilson says, that changed with the EU's 2009 Eastern Partnership initiative. That Poland-sponsored scheme potentially envisaged strategic relations and free-trade agreements with Armenia, Azerbaijan, Belarus, Georgia, Moldova, and Ukraine.

And that was too much for Moscow, which viewed the effort as a Western effort to encroach on what Russia considers its sphere of influence. The EU program "didn't turn out to be what Russia really feared -- Russia tends to interpret these things through its own modus operandi -- but the Eastern Partnership wasn't really a geopolitical move to take over these countries," Wilson says.

Russian political analyst Sergei Markov, a former State Duma deputy from the ruling United Russia party, says Moscow considers ties between Ukrainian oligarchs and the West a major obstacle to improved relations with Kyiv.

"In Ukraine the oligarchic groups are too strong and their influence on the authorities is quite strong. And they, first of all, also receive their instructions from the West, where most of their bank accounts and real-estate holdings are located," Markov says. "They even own their Ukraine properties through offshore companies. And they are afraid to disagree with their Western bosses and so they also are working so that relations between Ukraine and Russia are not good."

Moreover, he adds, Ukrainian oligarchs are afraid of competition from their Russian counterparts. "They are afraid that Russian oligarchs will be able to rely on the Russian state and bring them a serious defeat on their own home territory," Markov says.

Ultimately, though, he sees the stalling of relations between Moscow and Kyiv in traditional, East-West geopolitical terms. "We can't say that Ukraine's foreign policy is independent today," Markov says. "It is extremely dependent on the United States, on countries of the European Union -- that is, on NATO countries -- which are doing everything possible to not allow an improvement of relations between Russian and Ukraine."

But Kyiv-based political analyst Yuriy Ruban says relations have boiled down to a virtual ultimatum. Moscow will not discuss anything else with Kyiv until Ukraine joins the customs union. And that demand, he says, is driven by Russia's desire to dominate Ukraine politically and economically.

"The very existence of Ukraine as an independent country is viewed -- to use Vladimir Putin's words -- as 'the biggest geopolitical catastrophe of the 20th century.' Russian policy is oriented toward rebuilding the 'Russia world,'" Ruban says. "In addition to the ideological dimension, there are also completely pragmatic interests that include major Russian capital, which now holds power and seeks new markets."

RFE/RL Ukrainian Service correspondent Iryna Stelmakh contributed to this report from Kyiv
This forum has been closed.
Comment Sorting
by: Alex from: LA
October 22, 2012 20:32
You the same applies to US and Saudi Arabia.

by: Eugenio from: Vienna
October 23, 2012 07:40
The example of Ukraine could be illustrative for those who (like Andrew from Auckland) like talking about Georgia and the path the latter will take in its foreign policy orientation once Mischa is ousted.
What will happen in Georgia is what has happened in Ukraine in the last 2,5 years: As Yanoukowitsch first came to power in the Spring of 2010, the smart Western media went out of their way to make the claim that "his election will only reinforce the country's pro-NATO and pro-EU orientation". (you might just look up in the archive of "articles" published by the RFE/RL in March/April 2010).
Then in late Summer 2011 Yanoukowitsch did what most people in Ukraine wanted him to: he put Julia in a prison cell. And this is when the tonality of reporting on the country in the Western media has changed. Even the most "optimistic" of them noticed that Ukraine under Yanoukowitsch has NOT REALLY followed the pro-NATO and pro-EU line. (And why should the latter surprise anyone given that the EU is going bankrupt and NATO is getting militarily defeated in one country (Afghanistan) after the other (Iraq)).
Then in the Summer of 2012 came the "boycot" of the EU leaders (like Frau Merkel) of the soccer championship in Ukraine (I mean, like any of the fans wanted to see Frau Merkel among the invited persons :-)).
And finally today - 5 days before the coming parliamentary elections in the country - Yanoukowitsch (just as anyone else) finds it only normal to go to MOSCOW and negotiate all sorts of contracts with Vladimir PUTIN, given that Russia is the only country a partnership with which is going to give Ukraine a prospective of economic growth and social development.
Such places as Berlin, Brussels or Washington D.C. are off the agenda of the Ukrainian president for good.
And the same thing will happen with the newly elected leaderships of SERBIA and GEORGIA in the years to come.
In Response

by: Anonymous
October 23, 2012 09:38
And why do you think that 'most people in Ukraine wanted' Yanoukowitsch to put Julia to jail?
In Response

by: Eugenio from: Vienna
October 24, 2012 08:35
Dear Anonymous, you are asking why I "think that 'most people in Ukraine wanted' Yanoukowitsch to put Julia to jail". I think so, because many people in Ukraine - where I went to spend my summer vacations in 2009, 2010, 2011 and 2012 - told me so. I mean, not that the people there are so delighted by the country's today's leadership, but pretty much everyone I spoke to kind of tends to say that putting Julia behind the bars sets a good precedent that MIGHT discipline the ENTIRE political class of the country.
In Response

by: Anonymous
October 23, 2012 09:45
Hm, no, that's not what the Western press was saying when he was elected.

Yanukovych's most pressing task remains at home: to pull Ukraine out of its devastating economic crisis. He's keen to restart talks with the International Monetary Fund, which last year froze a $16.4 billion bailout.

But as he also recalibrates Kyiv's foreign policy, both Russia and the West are waiting to find out just how far east he believes the balance lies for Ukraine's national interests.
In Response

by: Eugenio from: Vienna
October 24, 2012 08:44
Well, Anonymous, yes, that's exactly what the Western media said about Yan. when he was elected President in 2010. Particularly delighted was this media to underline 1000 times that his first foreign visit as the country's president was not to Moscow, but to Brussels. But, as you could notice if you looked up some 2-year old articles, this "optimistic" tonality changed after Julia was imprisoned in the Summer of 2011.
Then, you are saying: "to pull Ukraine out of its devastating economic crisis". Anonymous, I am afraid you mixed Ukraine up with Greece, Spain, Portugal, Italy, Hungary or some other EU and NATO member state stuck in a real devastating economic crisis. The last time I saw the forcasts of the IMF (the institution that you are mentioning yourself) a few months ago, the IMF forcast for Ukraine's economic growth this years was to reach 3 % of the GDP - a figure that ANY EU member state may just dream of (GERMANY, for example, is likely to enter into a RECESSION in the fourth quarter of this year).
Source on the Ukraine's economic growth (April 2012):
In Response

by: Toni from: Krakow
October 24, 2012 09:56
Dear Eugenio: the growth of 3% is not "a figure that ANY EU member state may just dream of". Poland has a growth over 3%, without any "dream". Secondly, based on the influx of Ukrainians working in Poland, and other countries, I do not think, those hard-working people came here to enjoy "devastating economic crisis". I know, everything with EU or NATO stigma is bad for you, but your opinion "that Russia is the only country a partnership with which is going to give Ukraine a prospective of economic growth and social development" is ridiculous. Russia without its gas is ZERO (did you see any Russian export product other than oli, gas, or weappons?). And, unfortunately (or fortunately) gas starts to be the normal commodity and the market of gas will be free: That means, everybody (including Ukraine) will be able in future to buy it on the free spot market (for example liquid) for 1/4 if the present price.
In Response

by: Eugenio from: Vienna
October 24, 2012 13:46
Dear Toni from Krakau, you are wrong on one account, and your statements on two other accounts do not happen to make any sense or, at the very list, need to be documented somehow, otherwise they are just empty claims (something this web-site is kind of famous for).
First of all, you are wrong as far as the growth rate of POLAND in 2012 is concerned: according to the Warsaw Voice it is NOT 3 %, it is 2,4 % this year (see the reference below). And let's not forget that a number of EU memeber states are in a recession for quite a while: Greece, Italy, Spain, Portugal and such countries as Germany and Austria are expected to enter a RECESSION in th forth quarter of this year (something that Austrian media were reporting on the other day). So, just as I was saying: the Ukrainian growth rate is HIGHER THAN THAT OF ANY EU member state, without exceptions.
Talking about LABOR MIGRATION, Toni from Krakau: there are just so many more MIGRANT WORKERS from POLAND here in Austria than there are from ANY other country, including Ukraine. Did "those hard-working Polish people come here to" escape from the high rate of economic growth in Poland?
Your point that does not make sense is that "Russia without its gas is ZERO". Well, maybe, but Russia DOES HAVE GAS. And WITH ITS GAS, Toni from Krakau, Russia's economy is much more than zero: according to some forecasts that I read some time ago, Russia, Brasil, India and China will ALL be part of the SIX BIGGEST ECONOMIES globally by the year 2020 (8 years from now, Toni :-)!).
And your final "point" kind of makes one wonder whether you are ok. You are saying: "gas starts to be the normal commodity and the market of gas will be free". I mean, it's the first time I hear about NORMAL and ABNORMAL commodities. Could you please develop the concept of a "normal commodity" a little bit. In what sense will the "gas market be free"??? Free of what, Toni :-)?
Reference on Poland:

by: Dave from: London
October 24, 2012 14:33
Ukraine won't join the customs union, because the groups of criminal businessmen around Yanukovych don't want to be prized out of the trough by groups of criminal businessmen from Russia; nor to they want to be subordinated to the Kremlin, like their counterparts in Russia under Putin II. Nor is there any need to pick Tymoshenko out for special praise/censure: she is just a defeated leader of one of the criminal business groups, who happens to use the tools of Ukrainian nationalism as her means of ripping off Ukrainians, where the "Donetsk Fellas" around Yanukovych use a handy fake pro-Russian stance to continue to rip off ethnic Russians in the east.
In Response

by: Mike from: Kyiv
October 25, 2012 07:38
Spot on.

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