Russia in a Reconnecting Eurasia by Safranchuk Ivan;

Author:Safranchuk, Ivan;
Language: eng
Format: epub
ISBN: 4677087
Publisher: Center for Strategic & International Studies

The Crisis over Ukraine

Facing infighting with his one-time allies in the Orange Revolution, Ukrainian president Yushchenko became intensely unpopular and chose not to run for reelection in 2010. He was succeeded as president by the loser of the Orange Revolution, Viktor Yanukovych. When he took office in February 2010, Yanukovych’s top priority was to get a gas discount from Russia.

A year before, in January 2009, Prime Minister Yulia Tymoshenko had signed a long-term contract with Russia, which committed Ukraine to paying European and oil-linked prices for gas beginning in 2010. The deal was connected in part to Tymoshenko’s rivalry with President Yushchenko and some oligarchs close to him, whom she wanted to push out as middlemen in the gas trade. But rising oil prices meant that oil-linked gas prices increased dramatically from the beginning of 2010, exactly the moment when Yanukovych took office.

Russia agreed to provide a discount only in exchange for signing a 25-year lease for the Russian Black Sea Fleet at the naval base in Sevastopol (on the Crimean Peninsula). Yanukovych anticipated facing domestic blowback from signing such an agreement and tried to alter the terms just hours before the signing. Finally, because of the need for reduced gas prices to keep the economy running, he agreed to Russia’s terms and signed the agreement in Kharkiv on April 21. Almost immediately, Yanukovych faced a blast of criticism (up to an accusation of national treachery) from the opposition, notably Tymoshenko’s party.

Despite this Kharkiv agreement, Yanukovych and Prime Minister Mykola (Nikolay) Azarov remained fully committed to getting the AA with Brussels. In late 2011, the AA was ready and awaited final approval. The two sides initialed it in March 2012, and it was ready for signing by the summer. The EU, however, postponed the signing, imposing political conditions that included the freeing of Tymoshenko, who had been arrested on corruption charges in 2011.34

Ukraine waited through most of 2012 with the AA ready, but in the autumn it renewed contacts with the CU, signing a memorandum on trade cooperation. This could be seen as Yanukovych attempting to pressure the European Union by demonstrating that the CU is an alternative. Probably Brussels viewed his approaches to the CU in such terms, and preferred to stay firm on its demand for Tymoshenko’s release. However, it is also possible that Azarov’s cabinet had seriously begun to reconsider the value of the proposed AA, not merely seeking to improve its bargaining position. Azarov made the calculation that Ukraine would need $160 billion over 10 years to modernize local industries to compete successfully with EU producers and take full advantage of the AA.35

By early 2013, the Ukrainian position was fully shaped. Kyiv wanted cooperation both with the CU and the European Union. Brussels argued that the DCFTA was not compatible with Ukraine’s full membership in the CU. The Europeans agreed that the DCFTA would be compatible with Ukraine-CU cooperation (with Ukraine being an observer in the CU or taking any other status except membership) and Ukraine’s participation in the CIS free-trade agreement.

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