2012 will be an important but difficult year for Ukraine. While Ukraine is gearing up to jointly host with Poland the 2012 European football championships, it is also preparing for crucial parliamentary elections on 28 October, which are expected to be a fierce battle. They may also prove to be a make-or-break moment in Ukraine’s relations with the EU, which are presently in troubled waters.
In 2011 Ukraine’s relationship with the EU began to turn sour, with relations becoming consumed by the controversy surrounding former Prime Minister Yulia Tymoshenko. The EU saw her imprisonment (for abuse of power while in office) along with other members of her former cabinet as politically motivated. This was compounded by a deterioration of democratic values. Amid concern over the way the legal process was being conducted, the EU warned Ukrainian President Viktor Yanukovych that the situation could jeopardise the signature of the Association Agreement (AA), which includes a Deep and Comprehensive Free Trade Agreement (DCFTA), which the EU and Ukraine have spent the last four years negotiating. The Agreement offers an unprecedented level of integration between the EU and Ukraine and commits Kyiv to implementing a large portion of the acquis communautaire. Interestingly, while there was plenty of reason to criticise the state of the judiciary – as well as corruption as a whole – on principled and documented grounds, the EU (particularly in the early days) chose personalised ones.
After such a turbulent year, the December EU-Ukraine Summit was a low-key affair. Negotiations on the AA were officially concluded, with the Agreement submitted to the European Commission’s services on 16 January. While the agreement is expected to be initialled this spring, it is difficult to predict when it might be signed. Preparing the documents is expected to take 6-8 months, but the EU has linked the signature to improving democratic practices. This includes progress on judicial reform. The way in which the elections are conducted – including during the pre-election period – will be the ultimate litmus test.
In November 2011, Ukraine adopted a new election law introducing a similar system to those in Germany and Poland. The law abolishes voting blocs and increases the threshold for taking a seat in parliament from 3 to 5%, making it more difficult for smaller parties or ‘political projects’ to secure representation. Although the Venice Commission’s recommendation to retain a proportional system and then gradually introduce a mixed system was not adopted, Kyiv did take on board many of the Commission’s other suggestions. Importantly, the law was adopted with more than 80% support from MPs of all parties. The EU welcomed this broad political support.
However, even if Ukraine’s elections are judged to have met international standards, the Tymoshenko situation is likely to continue to influence the EU’s approach. This will be most evident in the case of a victory for the ruling Party of Regions. While there would still be every chance of the AA being signed, it may prove difficult to get it ratified by all member states, as some countries – notably Germany, which has a history of viewing its relations with Ukraine through the prism of Moscow – have seemingly made Tymoshenko’s release a precondition of ratification. It will be interesting to see whether Germany takes the same approach to signing the new agreement currently being negotiated with Moscow. Russia objects to Ukraine’s ‘European choice’ and is putting Kyiv under pressure to sign up to a Moscow-driven ‘Eurasian Union’ instead.
After a failed appeal in December, Tymoshenko’s defence lodged another appeal with the Court of Cassation on 26 January. If this fails, then a complaint will be lodged with the European Court of Human Rights (ECHR). This whole process could take several months and is unlikely to be concluded before the elections. There is still a remote possibility that Tymoshenko may be released, possibly for health reasons. However, in such a scenario it is unlikely that she would take part in the elections. Paradoxically, it may therefore prove more beneficial to have her take part, rather than sitting on the sidelines in a somewhat martyred position.
If the elections are declared fraudulent, then the EU may refuse to sign the AA. In this scenario, the finalised agreement may be left to gather dust until the political situation changes. However, relations are unlikely to become deadlocked, as some have predicted. The EU’s European Neighbourhood Policy (ENP) describes Ukraine as a “priority partner,” and unlike all the other countries in the Eastern Partnership Policy (EaP), the two partners enjoy a significant level of cooperation in numerous different sectors. Trade between the EU and Ukraine in 2011 was worth some 50 billion euros. In areas such as energy, transport, mobility and the fight against organised crime, relations continue to intensify. Ukraine signed the EU’s Energy Community Treaty and is negotiating a visa-free regime with the bloc, both of which have forced Kyiv to carry out a significant number of important reforms. Ukraine is also a key regional actor, and plays an important and constructive role in efforts to end the Transnistrian conflict, for example.
In reality, the EU actually has nothing to lose by signing the AA with Ukraine, given that it contains no concrete promise of membership and leaves it up to individual member states to decide if and when to ratify it. Ratification may take months or years, but at least it gives the EU a useful tool with which to engage Ukraine, stimulate the reform process and push the country on issues such as the rule of law and judicial reform. The AA will have a particularly positive impact on the business climate, since it provides EU and Ukrainian businesses with common rules and standards, thereby enhancing the predictability and financial security of investments in Ukraine. Clearly, the resumption of financing under the stand-by arrangement with the IMF would be a positive development. Relations were ruptured in 2011, when a $15 billion loan was frozen as a consequence of Yanukovych refusing to increase the price of household gas. Ukraine’s new finance minister, Valeriy Khoroshkskyi, has pledged to make this – along with serious economic reform – a top priority. New talks with the IMF are due to take place in the coming weeks.
Furthermore, the DCFTA only requires the AA to be ratified by the European Parliament
and Ukraine’s Rada to become operational. Making the DCFTA operational will go some way to keeping Ukraine on the EU track, will be good for business and will help to reinforce the position of the pro-European camp in its government and parliament. Moreover, as recommended in the European Parliament’s Resolution on Ukraine dated 11 November 2011, the EU may develop clear safeguard measures and a possible mechanism for the temporary suspension of the entire AA in the event that essential and fundamental principles are ignored or deliberately violated.
Amanda Paul is a policy analyst at the European Policy Centre (EPC) in Brussels.