EU’s neighbourhood policy has to include Russia

In 2003 the EU put in place a neighbourhood policy in preparation for its enlargement in 2004 to include ten additional members extending its new border eastwards. It was realised that by including those countries accepted as members into the EU, a new dividing line across the European continent could emerge between countries that as communist and then transition economies had previously had fairly close relations. The neighbourhood policy was designed to mitigate the new border by means of trade policies and a reasonably open visa regime and also to promote some of the political, legal and economic reforms which had been set as criteria for EU accession. It was not applied to Russia which would not have agreed to being monitored for progress towards standards set by the EU.

In theory pre-existing policies towards southern Mediterranean countries were incorporated into the neighbourhood policy but in practice they have remained different and this post is about the eastern neighbourhood and specifically Ukraine. Armenia, Azerbaijan and Georgia are important but do not border the EU. Belarus has been permanently under the grip of its dictator, Aleksander Lukashenko, who has not been interested in closer relations with the EU except on his own terms. Moldova is a small, albeit complicated, country.

With the Orange Revolution of 2004 which saw the election of Viktor Yevtushenko, who favoured liberalising reforms, as president defeating Viktor Yanukovych who resisted such changes. However President Yevtushenko was not a successful president and Yanukovych, after serving a period as prime minister,r was elected president six years later. Nevertheless Yanukovych did seem amenable to negotiating with the EU on its proposed Deep and Comprehensive Free Trade Agreement in 2013 and the outline of such an agreement was concluded in late 2013. Unfortunately this coincided with an attempt by President Putin to expand and deepen a Eurasian economic  and customs union between former Soviet countries, of which Ukraine was intended to be a key part. Both the EU and Russia considered that Ukraine had to choose rather than pursue a balanced policy of deepening economic relations with both its neighbours and Putin put pressure on Yanukovych to abandon the EU agreement in favour of the Eurasian economic customs union. Doing so angered much of civil society and led to the occupation of central Kiev by protestors and after violent confrontations in March 2014 Yanukovych fled to Russia. This was a deep humiliation to President Putin and Russia, which led to the reaction that has followed.

EU policy stumbled partly due to bad luck but also a flawed strategy

The ensuing conflict was to some extent bad luck as the unexpectedly strong support by much of the Ukrainian public for the EU agreement coincided with precisely opposite plans by President Putin. But there was also a flaw in the EU strategy. It had rightly looked at how to tackle the impact of EU enlargement on the EU’s new neighbours as a consequence of the enlargement but then failed to prepare for the impact of closer relations with the new neighbour Ukraine with that country’s own neighbour, Russia. It is possible that the democratic will of the majority of the Ukrainian people would have anyway brought it into conflict with Russi, and a minority of its population who feel themselves Russians, but the EU did not by any means do as much as it could have to make its agreement compatible with ongoing close economic relations between Ukraine, especially eastern Ukraine, with Russia. For example, the agreement provided for symmetrical opening of the Ukraine market to EU companies in relation to EU markets to Ukrainian companies, despite the much greater strength of the EU economy. This not only would be very tough for Ukrainian companies in trying to hold onto domestic markets but also make it more difficult for Russian companies to compete.

This is not to excuse the Russian response, which was effectively to annexe Crimea and then provoke a rebellion helped by Russian troops in the Donetsk and Lugansk regions of eastern Ukraine. However, the Russia led by Putin is the reality that the EU has to deal with and it now has to deal with a Ukraine whose territorial integrity has been violated and the best prospect in the medium term would seem to be that the Minsk agreement of February 2015 holds, and that the ongoing reduced level conflict since then reduces further rather than flares up again. For that to happen requires Ukraine to observe its side of the agreement as near perfectly as possible despite the fact that the other side is not doing so, so as not to provide any excuse for a major new conflict, and that it the government leans over backward to conciliate any sections of the population in the territory under its control that might be tempted to sympathise with the rebels. Rightly the EU is now including a Russian representative in ongoing discussions on the proposed trade agreement between Ukraine and the EU, whose implementation has been postponed.

At the same time, the EU should do much more through debt write-offs[1] and economic support to enable the government of Ukraine to put in place the reforms needed to create the kind of country that the electorate voted for in the 2014 elections, one where all, including powerful oligarchs, are equal before the law, there is a level playing field new businesses to grow and where trade with both the EU and wider world economy can expand.



[1] Writing in the Financial Times on May 18th, the former US Treasury secretary, Lawrence Summers, argued that the case for a debt reduction was as strong as any he had encountered in the last 25 years.