Ukraine president declines signing of EU Association Agreement

Ukrainian President Viktor Yanukovych declined on November 29 to sign the Ukraine-EU Association Agreement at the Eastern Partnership summit in Vilnius. The EU leadership was not able to convince Yanukovych to sign, said Lithuanian President Dalia Grybauskaite, the Interfax-Ukrayina news agency reported on November 29. “For the most part, the president of Ukraine didn’t talk about the agreement and not about its signing, but about economic problems currently in Ukraine that need to be resolved. And he wanted to resolve these problems together with the EU and Russia,” she said, noting that Yanukovych was proposing holding trilateral negotiations. The EU has already declined that proposal, Grybauskaite said.

With its decision, the Ukrainian government has chosen “the road to nowhere,” she said. German Chancellor Angela Merkel told German reporters on November 28 she doesn’t expect Yanukovych will sign the Association Agreement on November 29, although the door remains open.

EU Enlargement Commissioner Stefan Fule dismissed Ukraine’s estimate of EUR 160 bln that will be necessary from the EU as aid to implement the Association Agreement, modernize the economy and compensate for lost trade. “That sum – even if to spread it over ten years – will account for 10 percent of Ukraine’s GDP per year,” Fule said. “That deeply contradicts the experience of countries that entered into the EU, for whom general losses amounted to a total of a few percentage points of GDP per year.” The Institute of Economics and Prognosis of the National Academy of Sciences of Ukraine said it reached its estimate based on the experience of Poland, Hungary, Slovakia and the Czech Republic.

The next opportunity to sign the Association Agreement will be at the next Ukraine-EU summit at the end of February, news reports said, which will occur before elections for the European Parliament and the Ukrainian presidency.

Zenon Zawada: It’s highly unlikely Yanukovych reached his decision without at least a tentative agreement from Russian President Vladimir Putin on some form of financial aid for 2014. Therefore, the most significant conclusion that can be drawn from Yanukovych’s decision to decline the Association Agreement is that he was most concerned during this negotiating process with securing adequate resources for the 2015 presidential election campaign. Now that he has secured some resources (nobody knows exactly what), all his efforts and resources will be directed towards winning the March 2015 vote. In that context, he determined the Association Agreement would be more of a drawback than a benefit.

We are already noticing the new cycle of hopeful speculation surfacing that Yanukovych will sign at the next opportunity, in late February, when he could use the agreement as an instrument to gain popularity for his election campaign. And while some observers have claimed that the imprisonment of former Prime Minister Yulia Tymoshenko ceased to be an issue during the Vilnius summit (which is not the case), we are confident that the issue won’t disappear next year but remain just as relevant for the EU leadership. By then, Tymoshenko could very well have a ruling of the European Court for Human Rights that is expected to determine that she was illegally incarcerated, requiring her release.

It’s not realistic to think the EU will relax its demand with such a ruling – requiring Tymoshenko’s release from prison – hanging in the air. Therefore, we don’t think the likelihood for signing the agreement in late February will be any greater than it was at the beginning of this month. All the main obstacles that undermined the pact this time will be just as relevant next year, including an aggressive Russian foreign policy determined to include Ukraine in the launch of its Eurasian Economic Union in 2015. We can expect the Russian government to use all the economic levers at its disposal, just as it did this summer. We believe the agreement has been postponed to 2016, at minimum.

In declining the Association Agreement, Yanukovych has breathed new life to a stagnant Ukrainian opposition, which firmly supports signing the agreement and embraces full EU integration. Yet his political advisors will be aiming to split the opposition between the three major parties during the election campaign in a divide-and-conquer approach. It will be exploiting rifts between the pro-Western liberals (as exemplified by the Fatherland and UDAR parties) and the nationalists (Freedom party), as well as the ambitions of the two opposition leaders, Arseniy Yatsenyuk (of Fatherland) and Vitali Klitschko (of UDAR).