Don’t pay him any attention
‘Cause you had your turn, and now you gonna learn
What it really feels like to miss me
‘Cause if you liked it, then you should have put a ring on it
The good times, smoke-threaded, it’s-11:30-and-the-club-is-jumpin’ wakeup call from Beyonce Knowles is the perfect lead-in to what I’d like to talk about today: the lengthy courtship spat between Russia, Ukraine and the EU is about to end, and it’s make-your-mind-up time. The EU is offering an association agreement, provided Ukraine meets certain requirements and jumps through certain hoops – one of which is freeing Yulia Tymoshenko, although both national and international analysts are divided on how serious they are about it and whether they will sign the agreement even if Ukraine refuses to do it – while Russia is offering membership in the customs union and in what it hopes will eventually become a muscular Eurasian Union. Ukraine is in the position of maiden to whom two energetic suitors are paying courtship, and Yanukovich plainly relishes both the drama and his own role in it. But which path will Ukraine choose?
It’s plain those in the west who fancy themselves new-world-order mechanics, or at least the conservatives in the USA, believe it’s a done deal and that Ukraine will sign on to EU Association. The usual malicious glee is evident in this exultant victory boogie, as is liberal use of all the popular reasons Russia cannot succeed at anything it tries; neglect of human rights, selective justice and omnivorous corruption (thanks, Mike). It should be fairly evident that whether or not Ukraine does join the EU makes no difference at all to the United States; America simply wants to see Russia’s plans fall apart, for the enjoyment it gets from it. Oh, and for the diplomatic thrills of one-upmanship in its proxy war with the Kremlin. Remember that next time an article vibrating with angst is written on how uncooperative Moscow is with American objectives, and how Russia is always the spoiler.
Well, how do Ukrainians feel about it? As of this summer, support for joining the EU was said to be up. According to the authors, support for EU association is at a healthy 59%. However, to get that percentage they incorporated all the groups that said yes, but. The largest group (37%) says yes, within the next 5 years. The next-largest (12%) says yes, in the next 5-10 years. Next, 7% say yes, in 10-20 years. The last “yes” group (3%) says yes, but not before 20 years. That’s against 24% that say absolutely not.
I need hardly point out that 10 years is an eternity in politics. If you add those who said yes, but not before 10 years and beyond to the “No” vote, it would almost equal the vote of the most enthusiastic “yes” group. And 17% are undecided. For something which will have such far-reaching effects on the country’s future, an arguably shaky just-over-half support is hardly indicative of the kind of commitment that promises to throw the weight of the electorate behind the leader. In fact, it suggests such a decision will be divisive. However, it should be remembered that going with the customs union and Russia would be divisive as well, and either way, the president is going to have some soothing to do. Because a largish group is going to be disappointed no matter which way it goes – and if that group is largish enough, the president might not be around long enough to smooth things over; a wise politician would look askance at that 17% undecided.
I think the EU Association agreement is a bad idea, myself, and I’ll tell you why as we go along, but I’m not Ukrainian and don’t live there, so that’s for Ukrainians to decide. But before we leave the survey, let’s look at what else it tells us. One, the survey group is relatively small; 1000 people, drawn from cities with more than 50,000 people and from the 18 to 65 age group. Two, after they just got finished telling us support was up, they point out that two years ago it was at 74%. Considering how the questions are phrased it is a bit of a shell game, and we don’t know if that 74% included all the people who said sure, but later, okay? But what I’d like you to do as we go through this is try to see it as if you were Yanukovich – because he’s weighing not only which would be the best road for Ukraine, but which choice is most likely to keep him in power, and the latter may well mean more to him than the former.
Therefore, Yanukovich is quite likely to see this rise in support as a possible blip or anomaly, since it was nearly 20% higher two years ago. But let’s look now at why Ukrainians who want to join the EU want to join the EU. What’s the biggest reason? Because it will strengthen the economy – a whopping 42% of the “yes” vote, over only 14% who said yes because it would strengthen democratic values. Clearly, from all the potential benefits which matter to Ukrainians, the respondents chose economic benefit by a wide margin.
Now, scroll down a little, to where respondents were asked about their attitudes as Ukrainians to a sample of other countries. What??? Only 10% said relations with the EU were “friendly”, and 24% said “cooperative”. To the same question regarding Russia, twice as many (20%) said “friendly”, while significantly more (34%) said “cooperative”. Remember, you’re Yanukovich. Obviously, even many of those who favour joining the EU believe it will be possible to continue a friendly and cooperative relationship with Russia afterward. Interesting.
Anyway, the greatest part by far of Ukrainians who are eager for the EU Association agreement to be signed feel that way because they believe it will result in economic benefits for Ukraine. Will it?
I’m having a hard time seeing how. According to Euronews, more than 60% of Ukraine’s trade is with “the former Soviet market”, with Russia, Belarus and Kazakhstan the most important. Would Europe pick up an extra 60% of Ukraine’s exports to ensure they did not experience a loss, if Russia shut its doors? I would have to say I doubt it. So does The Kyiv Post, in this article for European Dialogue; it suggests Russia has the advantage despite Mykola Azarov’s insistence that Ukraine will sign the EU Association Agreement, and points out that “many of Ukraine’s main exports – particularly in heavy industry such as steel and chemicals – would suffer as a result of the more competitive and higher quality EU goods.” Almost 35% of Ukraine’s GDP comes from the industrial sector, and another 9.3% is agricultural exports, which are heavily subsidized in Europe to protect local markets.
Interestingly, the Kyiv Post article also suggests Ukraine is looking to sell part interest in struggling NaftoGaz, and is not interested in a Russian offer to merge NaftoGaz and Gazprom. Ukraine would rather see a consortium of Russia, Ukraine and the EU, with the EU footing half the bill for Ukraine’s modernization of the delivery system. I don’t know under what pink sky Azarov thinks that will ever happen, but the Kyiv Post goes quickly to the point that Ukraine is just a transit point and Russia owns the gas, which it could shut off any time it likes. I’m curious why that does not seem to have occurred to Azarov, or what would happen to Ukraine if Moscow elected to shut down its end of the pipelines and expedite delivery through Belarus instead. I note an earlier dispute between Russia and Belarus resulted in Russia taking control of Belarus’s pipeline, so Moscow already has the conduit it needs. I also note Lukashenko did the same dance with Russia as Ukraine is doing now, playing off Moscow against the west, and that the deal fell apart when the west insisted Lukashenko release political prisoners. It remains to be seen if either Ukraine or the west learned anything from that.
It would seem not, because Lithuania currently holds the presidency of the EU, and Lithuanian president Dalia Grybauskaite has continued to insist that failure by Yanukovich to release Yulia Tymoshenk will be a deal-breaker. Consequently, some analysts believe Yanukovich is just buying time and using the possibility of an agreement with the EU in an attempt to wring concessions from Moscow.
I have maintained for some time that what Ukraine needs is jobs. Ukraine’s GDP growth is falling and is currently in negative territory, inflation has slipped into deflation and its foreign exchange reserves – never large – are sliding. Its trade balance, already in deficit, has more than doubled its exposure and its current account deficit is four times the national average. Although Yanukovich is plainly trying – both exports and imports are up slightly, and the country seems to have gotten its external debt load under control at least for the moment, after an alarming climb – Ukraine is demonstrably a country in trouble. And if young Ukrainians are thinking the EU is extending a lifeline which promises good, high-paying jobs for the exodus of skilled workers out of the country, they should think again. Many of the EU countries have unemployment rates at least as high as Ukraine’s, and some are far higher. Not all the EU countries are enthusiastic about taking on a large, poor country whose population would expect to be immediately brought up to EU standards, and nobody has any money for big loans except Germany, which is not only sick to death of bailing out the entire EU, but is one of the countries most opposed to taking on Ukraine in an association agreement. The UK, the most disproportionately vocal EU member, is labouring under the yoke of a grinding austerity budget.
RFE/RL had a very amusing article – a pictographic presentation, actually – on the subject, demonstrating in pictures for the slow-to-grasp-complex-issues what juicy wonderfulness awaited them in the new lotus-land of EU Association. New, easy doing-business practices with increased benefits for the small businessman. A cooperative relationship in which Ukraine’s opinion will be solicited and weighed, instead of its current authoritarian model, in which Yanukovich simply bellows orders. The welcome mat of absolute trust will be out. A police force will protect the people instead of extorting and ripping them off. No more VIP status for the wealthy; I had to chuckle a little at that one, as the wealthy are treated with a special deference everywhere else in the EU and in fact the world, and I’m sure wealthy Ukrainians are not overly worried by it. More rights for women, and greater female representation in decision-making bodies. Minority rights will improve. Ukrainians will live longer. Pensions will get bigger, so that when Ukrainians get old they can retire instead of working until they die. Better health care, less pollution, more green, more sports clubs so Ukrainians will get off their lazy asses and get fitter, and the rule of law that Ukrainians can trust.
None of this is entirely new to us; we’ve discussed Ukraine’s situation before. But the time to make a decision is upon her in just a little more than a month, and Yanukovich is playing an increasingly dangerous game by continuing – either through words or actions – to encourage both camps. This risks an explosion of unrest once the decision is announced. Moreover, the most recent discussion on the subject here birthed an interesting recommendation – Russia should abandon its efforts, and just let Ukraine go. Plainly, the economic benefits touted would have to come from somewhere, and although there is a lot of information flying around – some of it patently foolish, such as Swedish Foreign Minister Carl Bildt’s crackpot assertion Ukraine could face a 40% drop in GDP if it joins the Customs Union (when Ukraine’s exports to the EU total 12% of its GDP), all sides agree more than a quarter of Ukraine’s exports go to Russia. Ukraine’s export market last year accounted for $71.5 Billion of an overall GDP of $180 Billion. That’s a little less than half of GDP, so I make it about $18 Billion Ukraine would lose if Russia slammed the door shut as it has threatened to do. Could the EU offset the loss? I suppose they could, but would they? Why? It’d be as likely as not to happen again next year and the year after that. Ukraine does not sell Russia anything that Russia cannot make or grow for itself. By way of contrast, Russia ships gas Ukraine doesn’t have through Ukraine by pipelines which could easily be rerouted to cut Ukraine out of the picture.
Moreover, as the same commenter who posited that Russia should let Ukraine go ahead and learn a bitter lesson pointed out, Turkey and Egypt have EU Association agreements. Has that happy state of affairs wiped out corruption in those countries? Ha, ha; no. Although GDP in Egypt was up by about $20 Billion, GDP per capita rose only slightly, the balance of trade was in deficit, exports fell sharply and unemployment rose. Corruption in Turkey appears to have diminished little despite lots of government rhetoric, and critics point out that anti-corruption raids are targeted only at businesses controlled by opposition figures, although the economy has done very well.
I’m still not sure how I feel about it – on the one hand, Yanukovich’s prima-donna dithering is annoying, but on the other, it would be a pity if Ukrainians suffered because he made the wrong choice, and some appear bound to both suffer and to believe he made the wrong choice no matter which path he chooses. I suppose we might even spare a moment of pity for him, because he faces an election in 2015, and I for one am confident that if he lets Tymoshenko out of prison, her back problems will clear up as if by magic and she will be getting together a political effort against him – politics is all she seems to know how to do. And despite the EU’s certain knowledge that Tymoshenko is to fiscal policy what a javelin is to needlepoint embroidery, I believe most of its leaders would be delighted with a Tymoshenko presidency, because she knows how to talk that liberal reform bullshit they love so well. Nobody really cares about results.
Both choices are fraught with risk, and Ukraine is going to be expensive to fix regardless who pays for it. All things considered, Russia has more to lose, especially if the EU experience did not prove as bitter as it looks like it would be, since western interests would seize on the strategic advantage. But what if the EU spends a fortune on trying to whip Ukraine into shape, and fails? They’re out a big investment with nothing to show for it, a big investment the EU can’t afford.
All parties would be wise to heed the gospel of St. Jerome, and let the scars of others teach them caution.