Ukraine's case illustrates the Eastern Partnership weakness
The stinginess of the EU towards Ukraine has brought in the collapse of the EU’s Eastern partnership summit in Vilnius and augurs for little success of this initiative, writes Alexander Okhrimenko.
Alexander Okhrimenko is president of the Ukrainian Analytical Center.
After the Vilnius summit the European Union Eastern Partnership Program (EaP) turned out to be in deadlock. The complex reason of such result lies not only in Ukraine's refusal to sign the Association Agreement (AA), but in the imbalance of political offers and economic support of the Eastern Partnership member states.
Already now the EU leaders have recognized that the political component of the Eastern Partnership has outweighed the economic component and, in fact, led to the rigid reaction of Russia. Moscow didn't make everyone wait long and showed its answer by strengthening pressure upon those countries of the EaP which were actively preparing documents for the AA signing. The first to leave was Armenia whose president Serzh Sargsyan declared in Moscow that Armenia suspends preparation to the AA with the EU and decides to soon join the Customs Union (CU) with Russia, Belarus and Kazakhstan. The EU's reaction to Armenia's demarche was limited to regrets.
After that, Ukraine found itself in the state of de facto the "trade war" with Russia, when the majority of its goods exported to the Russian Federation were blocked for various reasons on the border with Russia. The summer of 2013 for Ukraine passed under the sign of total blocking of the Ukrainian goods to Russia. Within a year the Ukrainian export to the Russian Federation fell to 25% which made up billions of dollars. The EU once again came down to political statements about support, leaving Kyiv without particular support. Should we then get surprised by the results of the Vilnius summit after that?
Which financial advantages were offered by the EU to the EaP member-states and whether they managed to at least partially become compensators of risks from the deterioration of relations with Russia? The European Union finances projects in the Eastern Partnership countries from the general budget by the articles "The European Neighborhood Policy Instrument" and "European Instrument for Democracy and Human Rights Support". According to the adopted financial plan of the EU for the period from 2014 to 2020, the total volume of these articles will make up about €17 billion. If we stretch it in time and the quantity of countries, then we'll get the assistance to 6 countries for 7 years.
According to Commission spokesperson Peter Stano, the total amount of funds for the period until 2020 will be similar to the sums allocated in 2010-2013: to Ukraine – €526 million, Moldova – €366,6 million, Georgia – €239,9 million, Armenia – €186,8 million, Azerbaijan – €82,5 million, Belarus – €73,1 million. The final decision on the distribution of means will be made in the mid-2014. As Ukraine moves away from the EU after the Vilnius summit, the sum of the assistance for it on the side of the European Union will be significantly reduced. Thus, the maximum which Kyiv will be able to count on within the EaP is about €1 billion for 7 years in case the internal situation in the country doesn't aggravate. This sum of the assistance isn't crucial and won't be able to compensate any of large financial risks for Ukraine the part of which will for sure arise. Thus, from the point of view of simple mathematics, the financial assistance to Ukraine in the EaP program is extremely weak. If to consider the pressure factor from Russia as well, the Ukrainian power had a narrow field for maneuver on the eve of the Vilnius summit.
Within the assistance to Ukraine provided by the EU in the EaP framework the largest article of expenditure (€87 million) goes to the support of the introduction of Ukraine's Energy Strategy. But even this sum is extremely insignificant for the tangible effect in the question of reforming of the Ukrainian energy. For example, according to calculations of the academician Valeriy Geets, in order to save 1 billion euros on energy carriers consumption in Ukraine, it is necessary to invest €2,5 billion.
If we take calculations of the European party, for example, of the deputy director general of the European Commission for trade Peter Balas, to transfer Ukraine's economy to the European standards, Ukraine needs at least €1-2 billion a year. But in no way €1 billion per 7 years, as the financing plan in the Eastern Partnership framework foresees.
Anyways, the situation with financing even before the Vilnius summit could be resolved by the European and international banks, and the IMF. But the lack of clear arrangements from their side, and also Russia's financial counterproposal about the possible €15 billion credit led to the known completion of the Vilnius summit of the EaP.
Predicting the further development of the EaP program, we should note that the risk of financial weakness remains extremely topical. After Ukraine the strengthening of the Russian pressure should be expected upon Moldova and Georgia. Is the European Union ready to strengthen volumes of financial help to these countries for at least partial compensation of financial losses? As Greece and Italy will have presidency in the EU in 2014, there is a great risk of Europe's reorientation exclusively to the internal problems, including of financial and economic character.
In such situation, the Eastern Partnership will transform its format from political and economic into strictly declarative, and the program itself risks to receive the status of one of the loud failures of the EU foreign policy initiatives. I want to believe that euro-officials in Brussels understand this risk.