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August 28, 2012, Tuesday

Is Ukraine looking East, saying no to the West?

Most news sources are reporting Syria as the top international political issue. But there are interesting developments going on beyond Syria, especially within Ukrainian-Russian relations.

Kiev recently celebrated the 21st anniversary of its independence and is looking towards parliamentary elections in October, which are likely to entail a struggle between pro-Russian and Western forces. After Aug. 25, when Russian President Vladimir Putin met his Ukrainian counterpart Viktor Yanukovych, Kiev announced that Ukraine is looking to the East, seeking to strengthen its cooperation with Asian economies, and wants to obtain first-hand observer status in the Shanghai Cooperation Organization (SCO). This statement is surprising if we recall two “geopolitical” clashes between pro-Russian and Westernized political forces in Ukraine during the post-Soviet period.

Take the prediction made by former US National Security Adviser Zbigniew Brzezinski in his 1997 book “The Grand Chessboard.” He writes, “Russia without Ukraine can still strive for imperial status, but it would then become a predominantly Asian imperial state.” This clearly indicates the importance of Kiev's role in Moscow's future orientation in Eurasia. Arguably, Ukraine's desire to enter NATO -- heightened after the Orange Revolution of 2004, which brought to power pro-Western democrats -- makes Brzezinski's speculation seem spot on. Secondly, the nature of the post-Soviet Russia-Ukraine relationship might be compared to that of a married couple whose honeymoon is over and who are facing the ups and downs of daily life. Even after Yanukovych became president in 2010, and promised to normalize relations with Russia -- extending the lease on the Sevastopol military base in Crimeria, where the Russian Black Sea Fleet is stationed, until 2042 --  Moscow remained dissatisfied with Yanukovych's stance, arguing that he is too selfishly focused on commercial interests.

Meanwhile, due to the imprisonment of Ukraine's jailed ex-Prime Minister Yulia Tymoshenko, EU leaders occasionally criticize Yanukovych's government, and the autocratic methods he uses to silence his opposition. In his turn, Yanukovych sometimes criticizes the EU's position. Before his meeting with Putin, in his independence ceremony speech, the Ukrainian president signaled once again that EU integration is not Ukraine's first priority, and that integration with post-Soviet countries is more important, saying, “Ukraine will never compromise on its sovereignty, even as the country continues to pursue a policy of integration into the EU.”

The issues surrounding Ukraine's ambivalence towards both the EU and rapprochement with Moscow, along with its desire to improve economic relations with Asian markets, prove tricky to untangle. For starters, why has Ukraine recently started a new drive toward rapprochement with Russia?

The first reason for this is that support for Putin, who is popular among the Russian-speaking population of Ukraine, was crucial for Yanukovych in his victory in the 2010 presidential election. Now, Yanukovych is consolidating his political power among the Russian population, passing a controversial language bill earlier this month mandating that, while Ukrainian remains the official language of the country, minority languages used in Ukraine will gain official status. Essentially, this means that about 13 of 27 Ukrainian administrative units will -- or will at least have the option to -- recognize Russian as an official language.

Secondly, in relation to the energy question, there are three aims: internal, economic and geopolitical. In terms of geopolitics, 70 percent of Russia's gas goes to Europe; this is a “card” for Kiev, against both Russia and Europe. In January 2009, Ukraine's squabbling with Moscow left several European countries without gas, and for this reason Moscow is considering new gas infrastructure that would bypass Ukraine. Kiev understands that it should not discount such a possibility. Ex-Prime Minister Tymoshenko was controversially jailed last year for abuse of office in connection with the January 2009 gas agreement; if the Ukrainian ruling party does a deal to decrease gas prices now, the country will enjoy economic advantages, as well as striking a blow against Tymoshenko, bolstering the claim that she acted against Ukrainian national interests. In this sense, the ruling party aims to neutralize the political power of Tymoshenko and former Interior Minister Y. Lutsenko, both of whom are in jail and both of whom want to participate in the October elections.

Thirdly, Ukraine wants to strengthen its economic relations with Moscow and the post-Soviet states. For this reason, in July, Ukraine adopted a new law effectively ratifying the Free Trade Zone Agreement with the Commonwealth of Independent States, an agreement which already covers most of the former Soviet Union. This could secure a 2.5 percent growth in gross domestic product and a 35 percent increase in sales volume between Ukraine and other member states. Indeed, this development promises to slow any of the reforms necessary to bring the Ukrainian national economy in line with European standards

Last but not least, Ukraine believes that with Russia's help, it can find ways to cooperate more openly with Asian economies, particularly China. Following a series of agreements over the past two years, in 2011, bilateral trade between China and the Ukraine reached $10.411 billion. China is providing technological expertise for the conversion of Ukrainian plants from gas to coal, and other projects important to the Ukrainian economy. In general, Chinese loans and joint projects are an important lifeline for the Ukrainian economy.

If we are asking whether Ukraine is turning to face the East, it might be too early to say in political terms. But economically, the answer is clearly yes -- and this is sad news for the EU. In the past, the EU has resorted to tough tactics to punish Yanukovych; namely, rescinding its offer of an Association Agreement, which would have offered Ukraine tariff-free trade. But the recent developments have minimized the EU's political leverage regarding Ukraine. The Ukrainian government is turning towards economic opportunities, which, today, means Russia and the Asian markets.

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