At the heart of Communist concerns is surprisingly not an ideological affinity or the historic cultural and economic attachment with Russia, but a simple cost-benefit analysis. Ukraine may be a country historically torn between East and West, a place where fierce nationalism co-exists with a Russophone minority, but lawmakers are frankly candid about how they see things.
The Communist Party (KPU) is echoing a more widespread concern that Ukraine may find itself being duped by a deal that, by opening up a domestic market of 46 million consumers and an industry that can’t compete with its European counterparts, only benefits Europe. In an interview with Euractiv, Aleksandr Golyb, a KPU Member of Parliament worries that « the EU will acquire additional markets, which cannot compete…[and] would gain access to Ukrainian raw materials and to Ukrainian workers ».
Adding to the perceived « costs » of having their domestic market flooded with cheaper and higher quality EU goods, the KPU also worries that the country will pay a steep price for snubbing Russia. The Russian government has made clear that it considers signing a deal with the EU incompatible with membership in Russia’s own trade bloc, the Eurasian Customs Union. While the EU is Ukraine’s most important trading partner, the country sends 25% of its exports, worth some $18 billion in 2012, to its eastern neighbour.
The Kremlin has been uncategorical about the ramifications of rapprochement with Europe. In mid-August, Russia temporarily placed strict restrictions on Ukrainian exports into the country. According to Sergei Glazyev, a top Putin advisor, the move was a taste of what would happen should Ukraine decide to make the « suicidal step » of signing the association agreement with the EU.
The question of oil also hangs over the country’s head like the sword of Damocles. Armenia capitulated to Russia in early September, signalling that it planned to abandon talks with the EU and join the Russian-led trade bloc after Moscow threatened to increase the country’s energy bill by 60%. This month, Russia also offered a ‘gas discount’ of some 35% to Ukraine to beef up reserves, no doubt an allusion to how much less the country could be paying if it bows to Putin.
Finally, there is the question of the long game. Golyb worries that « we [Ukrainians] have little reason to believe that signing an association agreement would bring Ukraine closer to fully-fledged EU membership », adding that Prime Minister Mykola Azarov had said last October that Ukraine would have to come up with €165 billion over the next ten years to upgrade its economy to meet EU standards. Meanwhile, Russia is offering full and immediate membership of its Customs Union, and Putin won’t demand the same level of laborious reform as the EU.
It is true that the Russian sales pitch has the advantage of being straightforward, making the costs and benefits much easier to calculate for Ukrainians, but the EU could likely offer a far better deal in the long-term. The snag is that taking up Europe on its offer may prove more painful in the short-term.
Opening up the Ukrainian economy to European imports will no doubt be painful. EU market access inevitably comes with tougher competition in domestic markets and higher standards for selling products abroad, but it has the distinct advantage of tending to induce reform. In the long run, these forces are profoundly good for economies.
Europe also comes with a host of political, social and judicial reforms in form of the acquis communitaire. This can be a lot to digest, but it will help ensure more stable and transparent political and judicial processes. An association agreement may in no way be an assurance that the country will one day see itself offered membership in the enlargement-fatigued Union but, nonetheless, closer cooperation with Europe will at least rest on the basis of mutual respect and equality, something Putin has not shown he can offer.
It is the mismatch of long and short-term benefits that Putin is relying on to sway Ukraine away from Europe and that the shortsighted Communist leaders do not seem to understand. Luckily, the government is intent on making the right choice, but it will need to make sure that average Ukrainians understand where the benefits of this deal lie, lest a vocal minority sow doubt.