The Ukrainian soap opera continues

Amanda Paul

Working on Ukraine is similar to watching a soap opera -- a cast of colorful characters in dramatic story lines, with Kiev moving from one crisis-ridden moment to another. Indeed, Ukraine's politicians are experts at keeping us on the edge of our seats. From an analyst's point of view, this is fascinating. As for ordinary Ukrainians, they simplylong for an uneventful, predictable state.

Despite the endless political and economic turmoil, Ukraine remains an importantcountry -- Europe's seventh most-populous country and a key gas transit state, it haswonderfully fertile soil and significant economic potential. It is a regional“backbone,” as the largest country between the EU and Russia, thus it is key forregional cohesion and stability. Ukraine's strategic location and proximity to Russia'sbreadbasket and economic heartland in the Volga region make the country key toRussia's geopolitical strength. Russia allied with Ukraine gives Moscow confidenceand strength, while a Russia without Ukraine is much weaker.Ukraine is now in the midst of a particularly dramatic episode: whether or not to signits Association Agreement, including a Deep and Comprehensive Free Trade Area(DCFTA), with the European Union at the forthcoming Vilnius Eastern Partnership(EaP) Summit on Nov. 28-29. Despite the fact that Ukraine's political elites haveconsistently stated that European integration is their top foreign policy goal, thedecision still hangs in the balance.Ukraine has not fully met the EU's criteria as spelled out in December 2012.Important reforms that could have been made earlier were not made because of a lackof political will, a failure of political parties to reach a consensus and the age-oldproblem of “vested interests.” Only since early summer has Ukraine accelerated itsefforts, and this was principally a consequence of Russian attempts to derail the deal.Important legislation related to the prosecutor general, electoral law and theimprisoned former prime minister, Yulia Tymoshenko (which the EU has labeledselective justice), expected to pass through the Ukrainian parliament last week, didnot. The process was postponed until Nov. 19. Because Ukraine is crucial to thesuccess of the EaP, the EU has continued to move these deadlines. It now seemscertain the decision will be last minute, possibly on the eve of the summit.The EU -- for right or wrong -- has made Tymoshenko the make-or-break issue.However, the chances of Tymoshenko being out of imprisonment by the time ofVilnius seem non-existent. The best we can hope for is that an agreement between

Ukraine's political elites and the EU will be reached in order to begin the process of a transfer to Germany for medical treatment, although again this hangs in the balance. The EU decision will be based on the recommendation of the European Parliament's two special envoys on Ukraine, Aleksander Kwasniewski and Pat Cox. The second problem is Russia. Ukraine needs and wants good relations with Russia, yet Moscow has been crystal clear that Ukraine will pay economically for going ahead with the EU deal. Moscow is using every type of carrot and stick, although so far not to a successful end. Generally Russian carrots tend to have bitter centers. Russia wants Ukraine to join its Eurasian Customs Union, but ultimately will settle for Ukraine ditching the DCFTA with the EU. In the medium-to-long term there is no doubt the EU agreement will be beneficial for Ukraine, as its implementation will help modernize and democratize the country, including cleaning up the rampant corruption and making Ukraine a safer place to invest. Yet this won't happen overnight, and in the short term the situation is going to be tough. Economically, Ukraine is in bad shape. The IMF recently refused Ukraine a much-needed loan again because of Kiev's failure to meet certain criteria. Combine this with trade losses relating to Russia, which will increase after Ukraine's signature, and we are looking at a very difficult short-term financial situation. This situation has also fuelled a fight between Europe and Russia the likes of which has not been seen since the Cold War. The EU does not want such a confrontation with Moscow, but unfortunately Russia's zero-sum imperialistic approach has put the two on such a collision course. Source: