Uncertain World: Russia and Ukraine on the Verge of a Decisive Choice

Fyodor Lukyanov  

Russian-Ukrainian relations are again at the center of attention. Nothing has happened between Moscow and Kiev in the three years since the signing of the Kharkiv agreement, under which Ukraine extended Russia’s lease of a naval base in Sevastopol used by its Black Sea Fleet in exchange for a reduced price on Russian gas. Attempts to improve cooperation have quickly ground to a halt. The enmity created by Viktor Yushchenko’s term as president of Ukraine has not resurfaced – both sides drew lessons from the crises of the second half of the 2000s. But while relations have become more intensive (in terms of the number of meetings), they lack substance.

As always, the impetus came from outside. As we rapidly approach November, when Ukraine and the European Union may sign an agreement on a free-trade zone at the Eastern Partnership summit in Vilnius, the “decisive geopolitical choice” facing Russia’s neighbor to the south has returned to the top of the agenda. Russian President Vladimir Putin’s visit to Kiev and Moscow’s demonstrative decision to block Ukrainian imports last week show that the Kremlin is very sensitive about this issue. But the customs war was just a rehearsal for Ukraine’s European choice. Moscow has clearly signaled how it will conduct relations with Kiev if the agreement with the EU goes forward.

Let’s leave aside the cunning tactics and propaganda tug-of-war that is typical of Russian-Ukrainian relations and get to the heart of the Moscow discussion. It is much less politicized now and much less so than in Ukraine. Obviously, any discussion of Ukraine in Russia is largely geopolitical in nature, but now the discussion has at least acquired some new elements. Everyone acknowledges that Kiev’s accession to the Customs Union of Russia, Belarus and Kazakhstan would put it on an entirely different scale, making it a large international association with a fairly big market and at least the potential for a diversified economy. In this context Ukraine’s entry into the Customs Union is important not only geopolitically but economically, so here the views of the old “imperial” guards and the young technocrats who support integration coincide. But this is where their agreement ends.

Traditionalists consider Ukraine’s potential membership in the Customs Union as important in itself, no matter the price. Technocrats focus on the details. What can the Ukrainian economy contribute to the common money box? Many analysts are skeptical that Ukrainian membership could restore former production chains linking the two countries due to the collapse of their components.

Second, will the Customs Union – which largely copies the European integration model – still be able to function effectively following the entry of a large state that is most likely to adopt an obstructionist position on the overwhelming majority of issues? In other words, there is a risk that Ukraine’s accession to the Customs Union would undermine the very idea of integration. Therefore, it is necessary to at least establish a smoothly working mechanism before thinking about inviting such major states to join.

By and large, it would be pointless to invite less important countries. The real candidates for Customs Union membership, Kyrgyzstan and Tajikistan, are part of the Eurasian Economic Community, the foundation on which the Customs Union was built. Bishkek has already applied for membership. Some think this move was independent whereas others insist it was strongly recommended by Moscow. While Kyrgyzstan’s membership would have some geopolitical significance, economically it is likely to create more problems. There is serious resistance in Russia’s domestic politics to the idea of expanding ties with Central Asian states. Such attitudes are particularly strong in large cities that have seen a mighty wave of immigration from the region. Meanwhile, members of the Eurasian Union will enjoy unrestricted labor migration, making it impossible to impose a ban on new guest workers from the Fergana Valley or Badakhshan, which is widely discussed in Russia today.

Moldova and Armenia are also mentioned in the context of integration. The idea evokes heated debates in these countries, just as it does in Ukraine. However, realistically speaking, Armenia is an isolated country beset with enormous geopolitical problems, making integration into any union simply impossible. As for Moldova, it would only make sense to discuss its accession to the Customs Union in the event that Ukraine joins. Right now this discussion is purely theoretical.

There is a consensus on one point: Ukraine’s decision to sign the agreement with the EU would undoubtedly change the terms of economic cooperation with Russia. For traditionalists this is the price of strategic disloyalty; for technocrats this is natural protection against the goods that will arrive on the Russian market, or rather the Customs Union market, once they are ousted from the Ukrainian market by European competitors. In general, the purpose of any integration association is preferential treatment for members, and that includes the European integration project. This is why Moscow believes it is justified in erecting more barriers to Ukrainian products if it opts for the EU.

The European Union and its allies have, for more than a decade, attempted to pull Ukraine out of the traditional Russian sphere of influence.  This geopolitical tug-of-war has taken many forms including economic disputes, political wrangling, and social conflict which calls into question not only how Ukraine views itself on the world stage, but how ordinary Ukrainians see themselves.

Probably the main difference in Russia’s thinking now is that it has started to calculate costs. What is the price of its ambitions? It is worth the cost? What is the bottom line? This does not rule out the old approach. After all, the rhetoric of the traditionalists is still louder. But the actual policy is much more calculated. In Ukraine everything is the other way round. Its “decisive choice” is a strictly political matter. Figures are of no consequence.

It will be hard for Kiev to get out of this predicament. Any decision is fraught with political or economic crisis. Obviously, Russia will impose consequences if the agreement is signed. But it is also clear that things will not be as simple as suggested last week – as a WTO member, Russia will not be able to simply halt imports. But it is bound to deny Ukraine any preferential treatment. This will be a heavy blow, and the half-open European market will only be able to compensate for the losses sustained by Ukrainian producers on a very small scale. The Ukrainian government is the resultant force of groups with major business interests that will insist that it resolve this issue. But it is unclear what the government will be able to do. 

By backing out of the agreement with the EU, Ukraine runs the risk of creating a political crisis. It will be portrayed as a surrender to Russia and the rejection of an “independent future,” which only the EU can provide in Ukraine’s thinking (even if it comes at the price of dependence on Europe). Europe will perceive such a move as an insult and will start pursuing an overtly hostile policy toward Kiev, further aggravating the domestic situation.

Ukraine’s traditional strategy amounts to avoiding decisions and constant maneuvering. Yushchenko’s departure from this line and his attempt to turn the wheel sharply to one side ended in political disaster. However, it seems now that Ukraine will finally have to make a choice.

Fyodor Lukyanov is Editor-in-Chief of the Russia in Global Affairs journal – the most authoritative source of expertise on Russian foreign policy and global developments. He is also a frequent commentator on international affairs and contributes to various media in the United States, Europe and China, including academic journals Social Research, Europe-Asia Studies, Columbia Journal of International Affairs. Mr. Lukyanov is a senior member of the Council on Foreign and Defense Policy and a member of the Presidential Council on Human Rights and Civic Society Institutions. He holds a degree from Moscow State University.