Ukraine industrial leaders ask Yanukovych to postpone EU Association pact

Ukrainian business leaders representing the nation’s eastern industrial base engaged in a closed meeting with Ukrainian President Viktor Yanukovych on November 12 after released open letters to the president the prior day warning of the damage to Ukrainian industry being done by Ukraine’s EU integration drive. The leaders presented the president with four main recommendations to relieve the damage done by Russian restrictions placed on Ukrainian imports, the Kommersant-Ukraine newspaper reported on November 13. They are activating demand on the domestic market, making credit cheaper by reducing discount rates, reducing fiscal pressures on business and normalizing economic relations with Customs Union countries.

In particular, Valentyn Landyk, owner of a home appliance manufacturing firm, asked the president to postpone signing the EU Association Agreement by a year, as reported by the presidential press service. A delay would allow enterprises to better prepare by acquiring new equipment, he said. “That’s not only my large request, but a large request from industrialists,” he said, as reported by the press service. The prior day, Party of Regions MP Anatoliy Kinakh, chair of the Union of Industrials and Entrepreneurs of Ukraine, released an open letter to the president complaining about plummeting industrial production as a result of the Russian Federation denying supply certificates and access to its market to Ukrainian enterprises.

The next chance for signing the Ukraine-EU Association Agreement, if it fails this month, won’t be earlier than 2016, EU-Ukraine Parliamentary Cooperation Committee Chair Pawel Kowal told the Rzeczpospolita newspaper, which published his comments on November 12. He pointed out the membership of the European Parliament and leadership of EU institutions will change after the May 2014 elections, while Ukraine will hold a presidential election in 2015. “If the topic returns, then only in the middle of 2016,” Kowal said. “That’s a lot of lost time, not even taking into account that 2016 could be an entirely different epoch in the EU’s thinking.” He said he doesn’t know what Russian President Vladimir Putin promised Yanukovych during their three confidential meetings, but Putin’s entourage has offered cooperation in aerospace, aviation construction and the nuclear spheres.

Zenon Zawada: We view the meetings and statements involving Ukraine’s professional and entrepreneurial organizations as orchestrated by the Presidential Administration to create the necessary public relatons pretext to back out of the Ukraine-EU Association Agreement. The manufactured narrative is intended to cast Yanukovych as a leader who is concerned about the nation’s industrial base and is taking measures to “rescue” it rather than a deeply flawed leader who reneged on the agreement because of his raging fear of releasing Tymoshenko, his top political opponent.

The risks mentioned by the entrepreneurs were already apparent in August, when Yanukovych launched his drive to sign the EU agreement. It’s now apparent that Yanuokvych intended his EU push to extract concessions from the Russian government and test the EU on its commitment to Tymoshenko’s release. We see a very low likelihood Yanukovych will pardon Tymoshenko and therefore, an equally low chance the agreement will be signed. Instead, we expect the EU will call Yanukovych’s bluff on November 18 when its Foreign Ministers Council votes to reject the signing the agreement with the Ukrainian government.

It’s utterly unrealistic to expect that the Association Agreement will be postponed for a year, for all the reasons outlined by the Polish diplomat Kowal. We support his view that the agreement will be postponed for at least three years.