14th Ukraine-EU Summit held in Brussels on November 22 brought to the Ukrainian side a long coveted prize – Action Plan on Visa Liberalization. According to the Summit’s documents, it defines technical conditions that should be fulfilled by Ukraine to ensure progress towards establishing a visa free regime for the short-stay trips of Ukrainian citizens. This process is viewed by the EU side as a long-term perspective being directly dependent upon Ukrainian Government’s ability to achieve goals set by the EU in the following fields: document security, including biometrics; illegal migration, including readmission; public order and security; external relations and fundamental rights.
Successful implementation of the Plan will be impossible without allocation of considerable financial and other resources and capacities, as well as consistency and political will on the part of Ukrainian leadership. It might be presumed that largely technical issues, such as production of new passports, or problems related to the improvement of migration management, strengthening minority rights and anti-dicrimination legislation would not create insurmountable obstacles for Ukrainian authorities, while anti-corruption and law-enforcement efficiency goals will be much more difficult to achieve. Thus, there is a visible difference of opinion between Kyiv and Brussels, when visa free travel of Ukrainian nationals to EU will become a reality: though Ukrainian officials are thinking in terms of 1.5 to 2 years, Eurocrats are extremely cautious. Quite tellingly, Action Plan does not mention any time frame (in EU speak it long term perspective usually means, at least, 8 years) and decline automaticity in decision making: it envisages rigorous evaluation of Ukraine’s progress in the fulfillment of each set of benchmarks.

A number of Ukrainian experts have noticed that Action Plan stipulates that final proposal of the European Commission to the European Parliament and the Council for the lifting of the short-stay visa obligations for Ukrainian citizens will take into account the overall relations between the EU and Ukraine. As underscored in the Summit’s Joint Press Statement, depth of these relations will depend upon implementation of reforms and further strengthening of common values. President Van Rompuy made no secret that freedom of the media and assembly, democratic values and rule of law, protection of human rights activists, as well as EU concern over recent local elections in Ukraine were important topics of discussion.

However, it appears that human rights agenda was not determining the tone and the substance of the Summit. Ability of the new Administration to ensure adoption of the relevant laws and regulations, improved delivery on the commitments taken buy Ukraine before the EU, promise of reforms, pledge not to allow natural gas delivery disruptions, confirmation of allegiance to the course of the European integration still strike a responsive chord in Brussels. President Barroso expressed his belief that negotiations on the comprehensive free trade area between Ukraine and EU might be completed by summer 2011 opening the way for signing Association Agreement. It is still to be seen whether this optimistic scenario will materialize, but common desire to speed up negotiations was present at the Summit. The Parties also signed the Protocol on Ukraine’s participation in EU programs and agencies and the document summarizing five years of Ukraine – EU energy dialogue (Ukraine-Russia-EU meeting on energy issue was held on the margins of the Summit).

EU-UKRAINE RELATIONS ON A BUMPY ROAD

If rumors and leaks are any indication of “developing story”, there is growing suspicion that the last two rounds of negotiations on the creation of the comprehensive FTA between Ukraine and EU ended in a standstill. Agricultural quotas, access of Ukrainian transport enterprises to the EU market, energy and services are mentioned as the most important outstanding issues hampering further progress of talks.

Eurocommission has defined its “red lines” and is entrenched in the position that it’s Ukraine that enters European Free Trade Area and such an arrangement should be constructed according to EU rules, while Ukrainian leadership advocates an approach based on the presumption that negotiating parties have equal rights and the final document should include concessions on both sides (such an approach is supported by Ukrainian population and practically all political parties that have closed the ranks in defense of the “national producers”). Recently Prime-Minister and Chief of the President’s Administration has voiced an idea of the two-stage agreement, starting with the issues that were agreed upon followed by the rest. The EU deemed this proposal unacceptable.

It looks like that the margin of compromise on the part of the EU is exhausted (unfortunately, this is how the EU operates under similar circumstances) and the only way to reach the final destination will be for the Ukrainian leadership to demonstrate political will and seal the deal. To our mind, eventual benefits of the FTA in terms of modernizing Ukrainian economy and increasing its competitiveness will outweigh initial pain and losses inflicted on certain sectors of Ukrainian economy. It should be also borne in mind that FTA is an integral part of the Association Agreement that will, in its turn, can seal a geopolitical choice of this country. Too much is at stake.

This being said, one cannot but notice frantic attempts of Russian leadership to sink or at least delay signing of FTA and Association Agreement. In addition to backstage politics it has noticeably reinforced public messages disseminated both through official channels and Russian think tanks and NGOs: they emphasize the benefits of the Customs Union of Russia, Belarus and Kazakhstan and FTA area within CIS as opposed to “unequal” arrangement with EU and falsely claim that Ukraine’s membership in the former two wouldn’t contradict its aim of creating FTA with EU.

So, it’s a moment of truth as to the policy of European integration of Ukraine, though some degree of flexibility on the part of the European Union wouldn’t hurt. Anyway, earlier both parties have committed themselves to complete negotiations by the end of 2011. Andriy Kluyev, first vice–Prime Minister of Ukraine, who visited Brussels on February 2 was confident that 16th round of negotiations will contribute to resolving outstanding issues. He also said that Ukrainian side is willing to finalize agreement already during the first half of the year.

In the course of his meeting with S.Fule, Member of the European Commission responsible for enlargement and European neighborhood policy, Ukrainian official got a clear signal that EC would like to see not only economic, but also democratic development of Ukraine. He underscored importance of the reform of election law, judicial reform and some other steps aimed at democratization of the country. It cannot be excluded that only the progress in FTA negotiations won’t be enough to complete Association Agreement and issues of human rights and fundamental freedoms will merit further discussions.

Strains in EU-Ukraine relations in February were exacerbated by the controversy involving amendments to the procedure of government procurement passed by the Verkhovna Rada earlier in January: they included energy products and services of water supply into the list of products and services that can be bought waiving regular tender procedures. EU retaliated by suspending programs of budget support to the state bodies of Ukraine in the fields of energy and transport.

Fortunately, the problem was settled to mutual satisfaction as Ukrainian Government has agreed to remove energy products from the list while securing EU agreement to the use – in their regard – of the “simplified procedures”. When in Brussels Mr.Kluyev signed Memorandum between the Government of Ukraine and European Commission that will allow Ukraine to receive EU assistance worth 470.05 million euro that is to be spent for the purposes of good governance and rule of law, facilitation of coming into force of the future Association Agreement, including FTA, and sustainable development (energy, environment, transport and regional development).

UKRAINE-EU RELATIONS CLOSE TO THE CRUCIAL JUNCTURE: IS ASSOCIATION AGREEMENT REALLY AROUND THE CORNER?


The topic of European integration within the context of the on-going negotiations on FTA and Association Agreement per se continues to occupy one of the central places in Ukraine’s domestic political discussions. As we have mentioned earlier, new impetus to this debate was given by the forceful attempts of the Russian leadership to lure this country into the Russia-dominated Customs Union and derail Kyiv’s attempts to reach a new qualitative stage in its relationship with the European Union – first and foremost via comprehensive FTA that is opening the door for Ukraine’s “real time” economic integration into the European market.

So far, President Yanykovych and the rest of the Ukrainian ruling class were able to hold their ground: in all their public pronouncements and during the latest official contacts they stressed that Ukraine is ready to develop its cooperation with the Customs Union only on the basis of the “3+1” formula. This position is being considered in the Custom’s Union member states as a rejection of the membership offer. What has been noticeable of late – appearance of the more coherent message about incompatibility of FTA with the full-fledged participation in the Custom’s Union delivered by a number of Ukraine’s officials. This has been accompanied by the numerous assertions of Kyiv’s desire to finalize Association Agreement negotiations by the end of 2011. Same political line was confirmed during our contacts with the high-ranking representatives of the Yanukovych Administration.

There’s a quasi-consensus in Ukraine among those close to negotiations or monitoring them that outstanding issues on the table of negotiating are not insurmountable. It appears that they boil down to rather limited number of problems in three areas: agriculture, energy and transportation.

In agricultural sector disagreements center on some aspects of geographical denominations (progress was achieved, but, according to available information, Ukraine is not ready to include into coverage several brands of Ukrainian wines and cognac as a category), quotas for Ukrainian agricultural exports, price formation making many Ukrainian products less competitive and export duties introduced in some cases by Ukrainian authorities. In energy sector negotiators allegedly spar over the disputes settlement procedures, which are directly related to the transit of Russian energy sources through the territory of Ukraine, regime of non-residents’ investment into exploitation of Ukraine’s national resources and what was termed by Ukrainian leader “trade aspects of energy”. Kyiv demands that its enterprises be allowed to operate on the European market of automobile transportation. However, in spite of this insistence we feel that Ukrainian experts are aware that Brussels was not going to change its negative position on this issue as it didn’t differ from the position taken by EU during previous negotiations with accession countries. In addition to that list, in his Annual Address to the Parliament President Yanukovych mentioned instruments of trade protection (anti-dumping measures) and impact upon trade of social and environmental protection policies.

In any case, positions of the both sides seem to be well defined and margin for maneuver and further compromise are extremely limited: looks like the negotiations are at the stage of major trade-offs. In our opinion, Ukrainian government, if it aspires to wrap-up negotiations soon enough will have to make several concessions, as at this stage EU shows no appetite to modify its approach to the outstanding issues. The “silver bullet” may be furnished by an agreement on the “political message ” – traditionally the most contentious part of all EU-Ukraine principal documents. Readiness on the part of EU to agree to the language acknowledging, even in the most general and “blurred” form Ukraine’s membership perspective might facilitate the process of “ironing-out” of other differences and will be a potent weapon in countering rhetoric of the opponents of Ukraine’s pro-European choice within the country and abroad. To move the process forward next official round of negotiations in June should produce tangible results.