# EODE THINK TANK/ GEOPOLITICS/ BATTLE FOR EURASIA: EU FAILURE IN UKRAINE

LM - EODE TT - GEOPOL ukraine russia-ue battlefield (2013 07 24) ENGL

Karel HUYBRECHTS & Luc MICHEL

Report for EODE Think Tank /

with RT – RIA Novosti – EODE Press Office / 2013 11 23 /

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 Ukraine is for years a geopolitical battlefield between Russia and USA – NATO – where EU foreign policy, completly under US and NATO influence, is a tool for Washington to destabilise Moscow. In this battle, Moscow has win the last round. Europe in shock as Ukraine kills integration plan this November 21, 2013, says 'mission is over' …

 EU Experts say “Ukraine hopes to act as a bridge between Russia and the EU”, but Russia has made it clear there will be no bridge if Ukraine formalizes its relationship with the EU, and they would have to give up their "exclusive relationship" with Russia. An EU envoy has been in Kiev all of November preparing conditions for Ukraine to enter the EU trade association at the Eastern Partnership Summit in Vilnius. Without sucess!

 I / THE EU-UKRAINE BIG DEAL FAIL …

 The EU is utterly disappointed by Ukraine’s decision to align itself closer to Russia and halt its preparations for signing a European trade and political agreement, effectively killing the country’s chances to eventually join the bloc. “This is a disappointment not just for the EU but, we believe, for the people of Ukraine,” (sic) EU foreign policy chief Catherine Ashton said in a statement, claiming that “the most ambitious” pact ever offered to a partner by the EU would have helped the country’s economy. 

 The decree signed by Prime Minister Mykola Azarov's government on Thursday orders the “halt of the process of preparing the Association Agreement between Ukraine and the European Union.”  The decision was taken to “ensure the national security of Ukraine” and “restore lost trade volumes with the Russian Federation” after considering the effects on trade relations with Moscow, legislators said. 

 The EU envoy at the negotiations, Polish politician Aleksander Kwasniewski confirmed that the deal would not go ahead saying the “mission is over… The accord will not be signed in Vilnius.” 

 Many European politicians as well as Ukraine’s own opposition have already slammed Kiev’s decision.  Swedish Foreign Minister Carl Bildt critcized Ukraine's decision, saying the “Ukraine government suddenly bows deeply to the Kremlin” due to the Russian “politics of brutal pressure.”  A “deep disappointment at the unilateral decision” was also voiced in a statement by EU envoys Aleksander Kwasniewski and Pat Cox, who highlighted what they call a “dramatically increased pressure from Russia in recent weeks.” British Foreign Secretary William Hague in the meantime called the decision a “missed opportunity.” 

 Not all European countries however have adopted such a critical approach. It was Ukraine's “sovereign right to make a decision which path she wants to follow,” German Foreign Minister Guido Westerwelle said.

 TYMOSHENKO PRISON DEADLINE

 Before the failure of UE was the Ukraine parliament's earlier refusal to pass a bill that would see jailed former Prime Minister Yulia Tymoshenko allowed to travel abroad for treatment  – a key EU deal condition for the summit that was scheduled in Vilnius, Lithuania, this week. The deadline for Ukraine to meet all criteria necessary to join the EU trade association was initially set for November 18, and then was later moved to November 21.

 Initially, the signing of the Association Agreement between Ukraine and EU was scheduled to take place at the Vilnius summit on November 28, but on November 21 the parliament rejected a bill that would allow jailed former Prime Minister Yulia Tymoshenko to travel abroad for treatment. Europe is unlikely to approve the deal as long as she remains in prison.

 Tymoshenko was jailed in 2011 for a gas deal she brokered with Gazprom in 2009, a charge seen as politically motivated by the EU. The European Union considers Tymoshenko, the ‘Gaz princess of the Nineties, sentenced to seven years for overstepping her authority during her term in office, “a political prisoner”. Releasing her was one of major conditions for Ukraine to be granted a free trade deal. “A confusion between politics and economy” says Putin.

 The bill would allow a long-term transfer of Tymoshenko outside of Ukraine due to health reasons, which would constitute a de facto release.

 The ruling party ‘of the regions’ accused opposition parties, including the BYUT-Batkinvshchina Party of Tymoshenko, of derailing the work in Ukrainian Parliement on this bill, saying they bombarded the working groups with amendments and gave them no time to review them. “There is a growing suspicion that you’ve been playing a show for the voters, while imagining yourselves candidates at the next presidential election, and you don’t even intend to solve the Tymoshenko issue,” Regions’ parliamentary faction leader Aleksandr Efremov lashed out.

 PRO WESTERN OPPOSITION CALL TO IMPEACH

 Arseniy Yatsenyuk Ukrainian opposition leader and a former Minister of Economy called for President Viktor Yanukovych to step down. "If Yanukovych is refusing to sign the agreement, then it is not only state treason but also grounds for the impeachment of the president and the dismissal of the government," he said in parliament. 

 People have begun flocking to Kiev’s main Square and home of 2004 Orange revolution. Around 1500 protesters with banners gathered in the Maidan Square to voice their opposition to the government’s decision, local media reports. A number of MPs have also joined the protests, more are planned for this Sunday. Police have cordoned off the presidential administration building as more security vans arrive at the scene. 

 EU INTEGRATION ROADBLOCK

 After the cabinet's decision, EU Enlargement Commissioner Stefan Fuele canceled his Friday trip to Kiev. President Yanukovych, however said that despite “difficulties” his country would continue towards European integration.

 Russia welcomed Ukraine's decision to actively develop ties with Moscow, while President Putin said he wasn't completely against Ukraine's association with EU. But trilateral trade talks should take place before Ukraine signs an agreement with the EU. “We favor this, but only before decisions are made,” Putin said.“How can we hold negotiations on issues that have already been agreed upon and endorsed?”

 POLISH MEP PAWEL ZALEWSKI:

“EU’S ‘RIDICULOUS’ PLAN TO HELP UKRAINE”

 The European Union has actually done nothing to convince Ukrainian leaders that association with the EU would actually solve its economic crisis, Polish MEP Pawel Zalewski stated earlier this week. As compared to hundreds of billions of euros channeled into Greek, Spanish and Portuguese economies, he said, one billion offered to Ukraine was inadequate and "ridiculous." "It's a ridiculous amount compared to the resources allocated to rescue Southern Europe from bankruptcy," Zalewski said as cited by PR Newswire. 

 In the meantime Russia has the “means and willingness” to offer Ukraine what the EU lacks, which is money, Eric Kraus, Managing Director of Anyatta Capital told RT, adding that Ukraine is a “vital part” of the European Russian speaking space. “The European Union offers a lot of words,” Kraus said, implying that nothing tangible would have come out of the deal. “What they don’t offer is what Ukraine needs – and that’s money.”

 “Ukraine is not vital to the EU,” Kraus explained. “It is a part of a geopolitical chess game and they’d like to take that piece. They are not going to spend a lot of money for it. They can’t, they’ve got Portugal, they’ve got Greece. Pretty soon they’ve got France.”

 The financial analyst also explained the economic problems that Ukraine is facing.“The problem is that Ukraine is in dire economic strains. Ukraine is 2-6 months from default. They cannot raise money in markets. They are running a deficit. They are having a lot of trouble keeping the currency stable.”

 II / PUTIN VICTORIOUS IN UKRAINE BATTLE :

TOWARDS MOSCOW’S EURASIATIC CUSTOMS UNION

 “If there is no deal in November, Putin will have won a resounding psychological victory …,” expert Dmitry Trenin told RT a few days ago.

 Ukraine’s sizable economy (worth about $155 billion a year) and resource-rich land have both Moscow and Brussels eager to strike exclusive trade deals. If Kiev chooses to pursue EU membership, it will foil Putin’s long-term ambition to create a trade bloc to rival the EU – that Luc MICHEL has theorised in 2006 as “the Second Europe” -, which so far includes Belarus and Kazakhstan. Armenia has also expressed its intentions to join Russia’s trade orbit. 

 Russia has warned Ukraine that a step west toward joining the European Union would be "trade suicide" and result in billions in lost trade revenue – and that joining the Russia-led Customs Union is more beneficial. 

 Both deals are appealing to Ukraine. On one hand, by siding with Russia, Ukraine continues to foster good relations with its neighbor, which imports nearly 25 percent of Ukraine’s exports. On the other hand, moving west to Europe would save Ukrainian exporters nearly $490 million over 10 years, as 95 percent of goods would have zero customs duties, according to the European Commission.

 Europe has been courting Ukraine into an associate trade membership for the past four years, which has created a geopolitical battle with Russia. USA and NATO being the real mentors of the EU foreign policy.

 All sides have employed much political brinkmanship in the period leading up to the trade deal. Ukraine threatened to stop buying Russian gas, and Moscow stoked speculation there would be another gas war between the two neighbors, which would leave Ukraine without enough heat to last the winter.

 THE FEAR OF THE GAS DIVORCE

 Over the last decade Ukraine and Russia have both been trying to sever their complicated gas relationship. Gazprom has been building a maze of pipelines to circumvent Ukraine to deliver gas to Europe, and Ukraine has been wooing foreign companies in joint ventures in shale and offshore reserves.

 After Naftogas, Ukraine’s state-owned oil and gas company, said it was cutting ties with Gazprom, Yanukovych contradicted the statement saying he “hoped for a compromise” with Russia. Former Ukraine Prime Minister Yulia Timoshenko signed a ‘pre-pay’ contract with Gazprom in 2009 and was later jailed on charges of abuse of power.

 Since the pre-pay contract was established, Ukraine has complained about expensive gas prices, which average around $400 per 1,000 cubic meters, one of the highest in Europe. Ukraine currently imports more than half of its gas from Russia, but both countries are making efforts to cut down on business.

 Russia and Ukraine waged two gas wars over prices in the winters of 2006 and 2009 (which lasted 3 weeks) over a claim that Ukraine was late in paying.

 KIEV DEBT AND DOWNGRADES

 Ukraine’s depreciating currency reserves and massive deficit have brought it close to economic collapse, and an IMF bailout of between $10 billion and $15 billion could be needed in the near future. Russia holds a significant portion of Ukraine’s sovereign national debt.

 The at-risk currency has prompted the big three rating agencies to downgrade their outlook on Ukraine. Fitch downgraded Ukraine’s long-term foreign local currency issuer default rating to ‘B-‘ from ‘B’ following S&P’s downgrade of its debt rating  to ‘B-‘ – the same junk level as Greece and Cyprus. Moody’s cut its rating to Caa1 from B3 in September putting them at “very high default risk.”

 Ukraine’s government reserves are so depleted they may no longer be able to keep national energy company Naftogaz afloat, and may be forced to find a foreign buyer. Note that US money manager Franklin Templeton picked up $5 billion of Ukraine’s international debt, nearly a fifth, in August.

 WHAT WAS BEHIND UKRAINE-EU TRADE DEAL ?

 Activists of Ukrainian movement "For European Future" hold EU flag with the Ukraine national emblem during their rally at Independence Square in Kiev on October 30, 2013. (AFP Photo / Sergei Supinski)

 So Kiev refuse to sign the EU Association Agreement, a free trade agreement that could be the way for eventual membership in the union. However it faced strong resistance from Russia, which wants Ukraine to be part of the Moscow-led Customs Union along with Belarus and Kazakhstan.

 Ukrainians themselves are also split in their opinion over their country’s strategic course. Ukraine should follow the road of Poland and become a free and independent nation. At least in the pro Western west of the country – which was the nucleus of Ukrainian anti-russian nationalism and also collaboration with the Nazi IIId Reich in second World War – the Lwów (Lviv), Wołyń and Stanisławów (Ivano- Frankovsk) regions, people support the agreement.

 The split on EU big deal was underlined at a meeting of leaders from Ukraine’s major industries and unions with President Viktor Yanukovych. At the closed-door session they voiced their concern that “Ukraine’s battered economy is not ready to be opened up to its strong Western neighbor”. 

 Valentin Landyk, President of the Nord Group holding, asked the government to take several measures, which would raise the competitiveness of the Ukrainian economy before integrating with the EU, Kommersant Ukraine business daily reports. Those included boosting domestic demand, making credit cheaper, lowering taxes and normalizing trade relation with the Customs Union members. Yanukovych ordered his government to review the concerns.

 The refuse of Kiew two days ago marked the endgame. "Right from the start Yanukovych did not want to sign anything with the European Union," Tymoshenko ally Yatsenyuk wrote bitterly on Twitter. "He played and outplayed even himself."

 Luc MICHEL & Karel HUYBRECHT

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Pics :

Special EU envoys Aleksander Kwasniewski (L) and Pat Cox react after voting in the parliament in Kiev on November 21, 2013 (AFP Photo /Sergei Supinsky).

Protesters hold Ukrainian and European Union flags during a rally to support euro integration in central Kiev November 21, 2013 (Reuters / Gleb Garanich).

Activists of Ukrainian movement "For European Future" hold EU flag with the Ukraine national emblem during their rally at Independence Square in Kiev on October 30, 2013 (AFP Photo / Sergei Supinski).

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