How Russia and EU Can Build a Greater Europe
Published: December 3, 2013 (Issue # 1788)
Ukrainian President Viktor Yanukovych's decision to not sign the Association Agreement with the European Union should motivate the EU to adopt new tactics regarding Russia. Above all, the EU should stop isolating Russia and work a lot harder to include it as an integral part of Europe.
Initially, Yanukovych saw the Association Agreement as a good way to establish friendly relations with Europe and increase his chances for re-election in 2015. Indeed, Ukraine's economy would have benefited as a transit nation for EU goods destined for the Russian market.
But President Vladimir Putin burst that bubble by making it clear to Yanukovych that Moscow would not permit Ukraine to act as a transit country because it would destroy several key sectors of Russia's economy, including automobile, aviation and agriculture. That would also have led to major economic losses in Ukraine's southern and eastern regions, ensuring electoral defeat for Yanukovych in 2015.
At the same time, however, I believe Yanukovych and Ukrainian Prime Minister Mykola Azarov when they said they would have signed the agreement if the EU had offered to pay Kiev 50 billion euros ($68 billion). This amount would have compensated Ukraine for losses it would have sustained from Russia's punitive measures, as well as the crushing, one-sided conditions that the EU agreement itself would have placed on the country.
In reality, Yanukovych would have probably signed if he was offered 20 billion euros, but the EU only offered 1 billion euros plus aid from the International Monetary Fund that required Ukraine to adopt strict economic reforms. In weighing the Russian and EU offers, he only had one concern: Which one would better increase his chances of being re-elected in the presidential election.
Brussels' logic in this affair is also clear. The EU aims to surround itself with dependent countries possessing resources that the EU can use for its own needs. The EU has successfully concluded such agreements with countries located in the southern parts of the union. What's more, those countries are so underdeveloped that the prospect of deindustrialization does not frighten them. But Russia is offering the countries on the EU's eastern flank more promising projects involving a common market and joint development of advanced technologies. That, plus the fact that the process of deindustrialization is already underway in those countries explains why the same EU policy met with resistance in the East.
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