Last month an agreement was signed in Yalta on Ukraine’s joining the Single Economic Space. This time Yalta hosted a two-day Ukraine-EU summit, which also cannot claim to either clarifying completely the present state of bilateral relations or giving any exact answer regarding Ukraine’s prospects in Europe. It was assumed that drawing up the EU-Ukraine Action Plan, which could promote Ukraine’s further integration into EU markets and economic structures, would become one of the major topics. It is still unclear what this Action Plan will look like, with its final goals and next steps also remaining a question for the immediate future. European Commission Commissar Guenter Verheugen promised that this document would be drafted in the next six months. However, one gains the impression that Ukraine, in spite of all nuances, its uneven development, and political zigzags, is gradually becoming not just a country that arouses interest but a country that could with time play a certain role in Europe, for which being an EU member is not an indispensable condition. However, Prime Minister Silvio Berlusconi of Italy, currently presiding over the European Union, stated on October 8, “There is a good chance for the EU to intensify its relationships with its neighbors in working out an action plan designed to achieve closer economic cooperation with its new neighbors after EU enlargement.” Mr. Berlusconi also defined the goal: “To pass on in the future — we cannot define the concrete date yet — to Ukraine’s full integration into the EU,” reports Interfax Ukraine. “Ukraine without doubt is a European country,” the Italian premier added. In his view, Ukraine is able to meet all EU requirements much earlier than 2011 as was stated in Leonid Kuchma’s presidential address. Mr. Berlusconi believes that all Ukraine needs to succeed is the political and popular will. According to the president, Berlusconi had “harshly criticized” him for setting too remote a goal. Berlusconi also said, “Yalta had always been a place of disunion. But today it became a place where the will to unite has been voiced.”
Certainly this could give rise to a certain skepticism: Mr. Berlusconi is known for his proposal to admit Russia, Ukraine, and Israel to the EU, causing many denials from his European colleagues and EU representatives. However, this time neither President of the European Commission Romano Prodi nor Javier Solana, EU High Representative for the Common Foreign and Security Policy, corrected him, meaning it is not improbable that in time the new EU will reach consensus on Ukraine’s prospects — though on certain conditions. The first signal has been received, although not been registered in any official document. This is perhaps the summit’s main result, one which can be viewed in various ways. Consider, for instance, the fact that the EU in general does not want Ukraine to completely move into “Russia’s sphere of influence,” as full SES membership threatens.
The summit’s communiqu О stresses the importance of developing the Eurasian oil-transport corridor, especially completing the Odesa-Brody-Plotsk pipeline, which seems to dot the i’s in the dispute over this line.
Even before the summit began, it was reported that the EU had decided to channel 8 million Euros to equip Ukraine’s north and northeastern borders with Belarus and Russia. The sum is relatively small, compared to the money spent for equipping the neighbor borders between Ukraine on the one hand and Poland, Slovakia, and Hungary on the other. However, the signal is clear enough, while Ukraine has always waited precisely for clear signals.
Another signal is the fact that, according to Ministry of Justice press service information, an agreement is soon to be signed to simplify the visa regime for holders of diplomatic passports. Ukraine has suggested starting the general discussion on visa issues from this point for the last several years, supported only by Greece. Other EU member states’ attitudes depended on many factors, from simple lack of will to fear of Moscow’s possible reaction (such an option for Russia was first considered only this year, while far from all EU countries show enthusiasm about the prospect of granting Ukraine and Russia a visa-free regime).
Much was said on the eve of the summit about it being a landmark, since the next EU-Ukraine summit is to be held under completely different conditions. The EU will by then number 25 member states; there will be changes in the internal procedures along with decision-making mechanisms and probably also in general views. Ukraine itself will also change, along with its role in Europe, especially considering its rapprochement with NATO.
As Pres. Kuchma remarked after the meeting, “We agreed that the decisions taken today are to became a starting point for the beginning of joint actions to take advantage of the new opportunities opening up in connection with the [EU] enlargement and give an appropriate response to its challenges.” Simultaneously, he admitted that consensus was not reached on every issue. At least, there were neither excessive enthusiasm in Yalta nor complaints that Ukraine is tired of waiting for concrete signals from the EU.
Obviously, Kyiv has agreed with the fact that for some time it will not be offered anything but the Enlarged Europe concept along with Russia, Belarus, and Moldova, meaning that it will have to use this concept in its own interests. This is what the EU calls a “realistic approach.”
In fact, bringing to closure the first stage of the Ukraine-EU relationship is in itself a result. About the second stage, at present nobody has any idea what it will be like.
This does not mean that any progress is impossible in this direction. In this case, Italy can serve a graphic illustration. President Kuchma and Prime Minister Berlusconi’s joint statement reads that Italy “will support the implementation of Ukraine’s long-term strategic goal to completely integrate into the EU” and confirms its readiness to support Ukraine’s entering the WTO, calling upon it to proceed with its efforts to adjust its legislation to EU standards. In addition, Italy highly appreciates Ukraine’s seconding its candidacy for UN Security Council nonpermanent membership in 2007-2008. The joint communiquО on the summit’s results also states, “Ukraine took into account the EU position that the initiative should be considered separately from the issue of its possible EU membership, which is regulated by Article 49 of the Treaty on European Union.”
Pres. Kuchma said that Ukraine invited Italy to take part in the gas consortium, which can also be viewed as one of the first steps exceeding the limits of their traditional cooperation. The Kuchma-Berlusconi joint statement also reads that Ukraine and Italy confirm their intent to take concrete actions to simplify companies’ access to both countries’ markets and to deepen their cooperation in the energy sphere, including gas transport and the construction of electric power stations, as well as in agriculture, the food industry, aerospace, machine building, and metallurgy. The interest shown by Italian firms in constructing the Kyiv-Odesa highway is most telling: the example of Italy’s successive investment could become a positive signal for other investors.
EU representatives have long been saying that they have relatively little interest in Ukraine’s domestic policy battles, and one can hardly expect from the EU such attention in Ukrainian elections as it demonstrated in the US ones. Still, the elections must be held in compliance with democratic standards, the Europeans warned over a year before the election day. Thus, one cannot draw a direct connection between these first still unclear signals to Ukraine with any expectations of change in its elite. Maybe there is no time left for either side, or otherwise Europe will really become divided.
On the eve of the Yalta summit, the Ministry of the Economy sent Brussels an integration plan that called for signing a free trade area treaty at the final stage. However, current EU Council President and Prime Minister of Italy Silvio Berlusconi just briefly mentioned this document at the concluding press conference, saying it was still under study. In fact, the Ministry of the Economy seriously expected the European Union to make its comments on the integration plan precisely in Yalta.
Also unsolved remains the problem of higher EU quotas for Ukrainian imports in the light of the union’s enlargement. On May 1, ten Central European countries will have the EU customs regime imposed on them, and if the quotas remain unchanged, Ukrainian producers will simply lose these lucrative markets. Deputy Minister of the Economy, Valery Piatnytsky, announced it was planned to begin consultations on this subject before the end of this year. But the fact that no one ever mentioned the quotas in Yalta indicates either the failure of the government officials in charge of the economy (the summit was attended by both Mykola Azarov and Valery Khoroshkovsky) or the deliberate silence of Brussels.
The summit’s final statement also said nothing about the European Union’s attitude toward the prospective recognition of Ukraine as a market-economy country. Without this status, this country’s goods are all but doomed to prohibitive customs duties should antidumping investigations be launched. President Leonid Kuchma noted at the concluding press conference that the solution of this problem was the No. 1 task for Ukraine. Yet, the very fact that this is not reflected in the summit’s main document is quite telling. Mr. Berlusconi in turn said bluntly that our economy would get market status only if Ukrainian law is amended.
Which laws are in question is explicitly clear from the Yalta joint statement. “Acknowledging the importance of creating a positive investment climate in Ukraine, we are confident that decisive progress towards removing discrimination in the automobile sector can be achieved soon,” the document says. That this document was signed by not only Silvio Berlusconi and European Commission President Romano Prodi but also Pres. Kuchma means it is highly probable that the privileges now enjoyed by the Zaporizhzhia and Lutsk plants could be lifted. “We encouraged the Ukrainian government to ensure non-discriminatory treatment of foreign investors and agreed to continue our efforts to remove the remaining trade restrictions,” the statement continues. It is easy to make out that by “restrictions” the European Union means above all the export duty on metal scrap successfully lobbied by domestic steel makers. On the eve of the summit, Brussels again demanded that Ukraine lift this duty and replace it with a quota, as World Trade Organization rules require.
Nor has Ukraine yet received guarantees about a simplified cross-border regime for its transport companies. If the EU trucking rules come into force as soon as May 1 in the new member states, many Ukrainian companies will simply lose prospective contracts. The Ministry of the Economy believes that failure to solve this problem might cut Ukrainian exports to the Baltic countries by 20% after they enter the European Union. The same also threatens the agrarian market, which risks losing more than $60 million in export earnings.
Undoubtedly, Messrs. Berlusconi’s and Prodi’s statements on Ukrainian EU membership should be considered a positive sign of the Yalta summit. Yet, this country could face the problems caused six months later, while the Baltic states have already begun to denounce free trade treaties with Ukraine well ahead of the deadline. These risks should force the cabinet to exert immediate pressure on Brussels, rather than boast of its successes, in order to negotiate a transition period to cushion the negative consequences of EU enlargement for Ukraine’s domestic producers.
