EU-Ukraine relations: A geopolitical test

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The European Union and Ukraine have been long-negotiating an Association Agreement tied with an unprecedentedly far-reaching free trade deal. At stake is not only the economic partnership, but also the country's political future, caught between historic ties with Moscow and uncertain prospects of prosperity and 'Europeanisation' with Brussels.

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Overview

The European Union and Ukraine held a summit on 19 December where they were expected to sign a long-awaited Association Agreement after over 20 rounds of negotiations. The parties ultimately failed to reach a deal and the country's geostrategic direction, attracted by the EU but also under intense pressure to join a Russia-led alliance, remains in doubt.

There have periodically been marked tensions between the two parties during the negotiations, with disagreements over political prisoners and granting Ukraine an explicit prospect for EU membership. These difficulties were apparent during a 12 December three-hour pre-summit meeting between EU Commissioner for Enlargement and Neighbourhood Policy Štefan Füle and Ukrainian President Viktor Yanukovich.

For the European Union, Ukraine represents by far the largest country of its 'Eastern Partnership' with former Soviet republics and its biggest recipient of EU aid with some €470 million earmarked for the 2011-2013 period. In this framework, Ukraine is also the country most advanced in putting in place a solid legal base for its EU relations.

The EU has also significant economic interests in the country, with considerable imports of natural gas via Ukraine, trade valued at some €40 billion, and opportunities to invest in the country's vast agricultural potential.

Ukraine has become something of a case study of the EU's ability to influence and democratise neighbouring countries on the continent. Yanukovich came under fire from EU leaders due to the deterioration of the rule of law and in particular the trial and sentencing of former Prime Minister Yulia Tymoshenko on charges of abusing her office.

There is also a geopolitical dimension as many member states, notably Poland, believe Ukraine represents a key test as to whether the EU can attract former Soviet states and reduce the influence of Moscow.

Relations with the EU are also critically important to the authorities in Kyiv, as they represent opportunities for trade and investment, possibilities for travel and work for Ukrainian citizens, and financial assistance to modernise the country's ageing, inefficient and sometimes unsafe energy infrastructure. Young Ukrainians are hugely in favour of the country's closer EU integration.

The Ukrainian government has clearly bet on closer ties as the means of escaping economic instability and underperformance. While the Ukrainian economy has returned to growth since the 2008 economic crisis, it remains vulnerable due to its dependence on foreign capital, a fact highlighted by a recent breakdown of talks with the International Monetary Fund.

The Association Agreement includes a so-called Deep and Comprehensive Free Trade Area (DCFTA), the first of its kind, which would not only further liberalise economic relations with the EU – which already represents a third of the country's international trade – but would require Ukraine to pass legislation approximating EU trade rules. The latter represents a significant commitment on Kyiv's part as it includes areas as wide-ranging as intellectual property, competition and state aid, technical barriers to trade and health.

These closer ties also risk harming the country's relations with Russia as they exclude the possibility of Ukraine joining the Moscow-led Customs Union as well as Russian Prime Minister Vladimir Putin's ambitious plans for a 'Eurasian Union' encompassing many of the former Soviet states.

This is why the initialling of the Association Agreement could be the beginning of a decisive shift in the country's geopolitical orientation after centuries of association with, and rule from, Moscow. Yanukovich has pushed for the inclusion of a specific clause addressing prospects for Ukraine's membership of the EU in the text of the agreement.

Notwithstanding the risks he has taken and the commitments made, it is unclear if Yanukovich will be rewarded on 19 December. With EU leaders struggling with the immediate threat of the eurozone debt crisis and certain member states suffering from 'enlargement fatigue', there may be little appetite to grant even a symbolic assurance of its joining the 'European family'. Germany is reportedly among the countries most sceptical of making overtures to Ukraine under the present economic and political circumstances.

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