National Security and Defense

Ukraine’s Foreign Policy: Losing its Balance

Editor's Note: Steven Pifer's "Ukraine’s Foreign Policy: Losing its Balance” appears in the May edition of the Ukrainian language journal “National Security and Defense,” published by the Razumkov Center in Kyiv. The English text of his submission follows. The Ukranian version can be found at Razumkov.org.

Introduction

Two years into the presidency of Victor Yanukovych, Kyiv’s foreign policy finds itself in difficult straits. Ukraine’s relations with the European Union and the West in general are deteriorating. To the east, there is no sign that Moscow will pursue anything other than a hard-nosed bargaining approach, which is unlikely to change with Vladimir Putin’s return to the presidency.

At the root of the problem lies a combination of democratic regression in Ukraine and two assumptions that President Yanukovych has apparently made regarding foreign policy: first, that Russia, following the April 2010 Kharkiv accords, would adopt a more charitable approach toward Ukraine, and second, that the European Union attaches such geopolitical importance to Ukraine that it would overlook Kyiv’s turn away from democratic values. Both assumptions have turned out to be miscalculations and are leading Ukraine’s foreign policy to lose its balance.

Ukraine’s Foreign Policy and Balance

Developing an independent foreign policy has posed one of the key challenges for Kyiv since Ukraine reemerged as an independent state following the collapse of the Soviet Union in 1991. Ukrainian presidents have generally sought to strike a balance in their foreign policy relationships between the West and Russia.

Given the large space that Russia occupies on Ukraine’s border, the long, complex history between the two countries, cultural links between Ukrainians and Russians, and economic ties that have continued since the end of the Soviet era, it is entirely natural that Ukraine seek a stable, constructive relationship with Russia. That is very much in Ukraine’s national interest.

But Russia is not the easiest of neighbors. Ukraine since 1991 has worked to develop relationships with Europe, the United States and institutions such as NATO and the European Union. Many Ukrainians find the economic prosperity and democratic values of Europe attractive. Moreover, Ukrainian presidents have been motivated in part by a calculation that stronger relations with the West would translate into greater freedom of maneuver vis-à-vis Russia.

During his first term in office, Leonid Kuchma, the country’s second president, showed himself to be an able practioner of balance. Under his “multi-vector” policy, Ukraine in 1996 secured a strategic relationship with the United States supported by the establishment of the Gore-Kuchma binational commission. In 1997, Ukraine and NATO agreed on a distinctive partnership. To a significant degree, Kuchma pursued these out of concern about Russian policy toward Ukraine, and he used Kyiv’s developing relations with the West to secure improved relations with Moscow. In May 1997, Ukraine and Russia concluded a treaty that contained the unambiguous recognition of Ukraine’s sovereignty and territorial integrity that Kyiv had long sought, and settled the remaining issues regarding basing the Russian Black Sea Fleet in Crimea. In the 1990s, a balanced foreign policy proved a success for Kuchma and Ukraine.

Yanukovych’s Engagement of Russia

Victor Yanukovych took office as Ukraine’s fourth president in February 2010. He and his senior advisers believed that bilateral relations with Russia had fallen to a dangerous low during the presidency of his predecessor, Victor Yushchenko. Ukrainian officials candidly stated that “normalizing” the relationship with Moscow had to be Yanukovych’s first foreign policy priority.

Yanukovych moved quickly to change domestic and foreign policies that had prompted the harshest Russian complaints. The Ukrainian government deemphasized efforts to promote use of the Ukrainian language, ended the campaign to have the Holodomor recognized as genocide, and toned down its relationship with Georgia. As for relations with NATO, the Yanukovych government made clear that it sought neither membership nor a membership action plan.

Yanukovych met with Russian President Dmitry Medvedev in Kharkiv in April 2010, just two months after taking office. The Ukrainian side agreed to extend the Black Sea Fleet’s basing lease for an additional 25 years to 2042, satisfying a key Russian interest. In return, Russia’s Gazprom agreed to reduce the price that it charged Naftohaz for natural gas by $100 per thousand cubic meters for the remainder of the ten-year gas contract concluded in 2009. Ukrainian officials praised the deal for significantly cutting Ukraine’s energy costs. (Independent energy experts, however, questioned whether Kyiv could have negotiated a better deal, perhaps without having to extend the Black Sea Fleet’s lease. In retrospect, Yanukovych’s team failed to foresee the rise in energy prices that later devalued the discount.)

Seeking Balance

From the beginning of Yanukovych’s presidency, Ukrainian officials indicated that, while their first foreign policy priority would be improving relations with Moscow, Kyiv intended to do so in the context of a policy that pursued balance between Ukraine’s relationship with the West and that with Russia. Senior Ukrainian officials made clear that, while eschewing membership in NATO, they sought a cooperative relationship. They stressed their interest in working with the European Union to conclude an association agreement, including a deep and comprehensive free trade arrangement (FTA), as the primary vehicle for Ukraine’s integration into Europe.

Several developments in May and June 2010 gave evidence of Kyiv’s desire for balance. The Rada voted by a large majority to approve the annual plan for military exercises in Ukraine, most of which involved joint training with NATO forces. Ukrainian officials rejected the idea of joining a customs union with Russia, Belarus and Kazakhstan, which they termed to be incompatible with an FTA with the European Union. They said that Kyiv had no interest in joining the Russian-led Collective Security Treaty Organization. Western diplomats reported that the Ukrainian government was doing its homework to conclude an association agreement, working in a more serious manner than had been the case during Yushchenko’s presidency. Some diplomats opined that Yanukovych, whatever his flaws, liked the thought of being the person who brought Ukraine into Europe.

By summer 2010, reports in Kyiv suggested that senior Ukrainian officials, including at Bankova, had become disenchanted with Russia’s policies. They felt that Moscow had not responded with the kind of forthcoming approach that Kyiv had taken to solving problems in March and April. They questioned, for example, why Russia continued to pursue the South Stream gas pipeline, which would run under the Black Sea and circumvent Ukraine, when the Ukrainian gas transit system had excess capacity. South Stream, if constructed, would only take gas from pipelines flowing through Ukraine.

Yanukovych, Prime Minister Mykola Azarov and other senior officials in 2011 increasingly voiced unhappiness with Russia’s position on the gas price. They asserted that the price—even with the discount negotiated the year before in Kharkiv—was too high and unfair. Gazprom, however, showed no sign of compromising. When Naftohaz in late 2011 stated that it would import only 27 billion cubic meters of gas in 2012, Gazprom cited the “take or pay” provision in the contract and said that it obligated Ukraine to take, or in any case pay for, 41.6 billion cubic meters.

Democratic Regression and Deteriorating Relations with Europe

Yanukovych was elected president in 2010 as the result of an electoral process that domestic and Western observers found to be free, fair and competitive. Some observers credited it as the best election process in Ukraine’s history.

By 2011, however, Europe saw democracy in Ukraine as coming under increasing assault, and concern grew about the government’s authoritarian tendencies. Some of the particularly troubling examples: widespread reports of inappropriate activities by the Security Service of Ukraine; the Constitutional Court’s September 2010 decision to invalidate the constitutional changes approved by the Rada in December 2004; nationwide local elections in October 2010 that were seen to have significant flaws; and the arrest and trial of former officials who had served in the previous cabinet, including former Prime Minister Yuliya Tymoshenko. In January 2011, democratic backsliding resulted in Ukraine becoming the first post-Soviet state to lose its “free” ranking from Freedom House.

These authoritarian trends have stressed Kyiv’s relations with the European Union. The Tymoshenko case came to epitomize the problem of selective application of the law in Ukraine. Following her jailing in August 2011, some EU member-state parliamentary deputies announced that they would oppose ratification of the EU-Ukraine association agreement and FTA unless Tymoshenko was released. On the margins of a September conference in Crimea, Swedish Foreign Minister Carl Bildt, EU Commissioner for Enlargement Stefan Fuele and European Parliament member Elmar Brok met for nearly two hours with Yanukovych and cautioned him on the damage that the Tymoshenko case was doing to EU-Ukrainian relations. Following the meeting, they believed that Yanukovych understood the problem and saw a path forward. As Yanukovych himself noted during the conference, the Rada intended to examine the criminal code with a view to eliminating outdated provisions. Eliminating the provision that provided the basis for the charge against Tymoshenko appeared to offer an elegant solution to her case. At the end of September, German Chancellor Angela Merkel reiterated to Yanukovych that the trials of opposition figures would hinder EU-Ukrainian relations.

The Party of Regions in October, however, chose not to annul the relevant article from the criminal code. Just a few days later, the court convicted Tymoshenko. Brussels and many EU member-states condemned the verdict, and EU officials postponed a planned Yanukovych visit to Brussels. In November, Lithuanian President Dalia Grybauskaite and Polish President Bronislaw Komorowski each met with Yanukovych and warned again that Tymoshenko’s imprisonment would undermine EU-Ukraine relations.

Given the lack of Ukrainian responsiveness to EU concerns regarding Tymoshenko, a number of EU countries reportedly argued in favor of canceling the planned December EU-Ukraine summit in Kyiv. As it was, the summit went forward, stripped of any ceremony. European Council President Herman Van Rompuy and EU Commission Head Jose Manuel Barrosso met briefly with Yanukovych, did not sign the association agreement, and told the press that signature would depend on political developments in Ukraine, particularly Tymoshenko’s situation.

The Risk to Kyiv

EU-Ukraine relations developed in a positive and business-like direction during the second half of 2010. That changed in 2011. By March 2012, they were, in the most charitable assessment, at a standstill and, in blunter evaluations, deteriorating. The March 4 New York Times published an article entitled “Ukraine’s Slide” authored by Bildt, British Foreign Minister William Hague, Czech Foreign Minister Karel Schwarzenberg, Polish Foreign Minister Radoslaw Sikorski and German Foreign Minister Guido Westerwelle. The article noted that “developments in Ukraine in the last two years have caused us to question Kyiv’s intentions with respect to the fundamental values that underpin both the [association] agreement and our relations in a broader sense,” and described the basis for “our growing concerns regarding the state of democracy in Ukraine.” Such a letter, signed by five foreign ministers representing a cross section of views within the European Union, should worry Kyiv.

In a March 20 response, Ukrainian Foreign Minister Konstantin Gryshchenko wrote that “Ukraine is committed to European values.” In an interview published in the April 2 Dziennik Gazeta Prawna, Yanukovych asserted that his government would “conduct the necessary reforms to strengthen democracy and the rule of law based on our shared values.” The problem for Yanukovych and his government is that no one in Europe believes this.

Although the association agreement was initialed in a low-key meeting in Brussels on March 30, it faces major hurdles. As Van Rompuy indicated in December, the European Union does not intend to move forward with signature and ratification of the agreement and FTA until political circumstances in Ukraine change. There is no consensus among EU member-states to sign. The association agreement and FTA must be approved by each of the 27 EU member-states, and a number of member-state parliamentarians have made clear that they would oppose ratification until the internal democratic situation in Ukraine improves.

This endangers Yanukovych’s professed goal of having a balanced foreign policy—at a time when the frustration of senior Ukrainian officials with Russia is readily apparent. The two countries’ interests diverge on important issues. Take gas: why should Gazprom agree to cut what it argues is a price established by a valid contract? Instead, reports emerged in March that Gazprom was switching the route of gas in-transit to Europe from the Ukrainian pipeline system to the pipelines through Belarus, over which Gazprom had recently acquired control.

Yanukovych’s Miscalculations

Kyiv has slipped into this uncomfortable position due to two apparent miscalculations by Yanukovych. First, he appears to have assumed that, if he extended the Black Sea Fleet lease and ended Ukrainian policies that troubled Russia, Moscow would reciprocate and offer Kyiv more than just the April 2010 discount on the price of gas. This assumption has turned out to be wrong. The Russians continue to take a hard-nosed bargaining approach with Kyiv and seek things that will be very difficult for Yanukovych to give. Gazprom wants control over the pipeline system that crisscrosses Ukraine, while the Russian government wants Kyiv to join the customs union.

There is little reason to expect Moscow to adopt a softer approach, particularly at a time when the Russians see that Ukraine’s relations with the European Union and the West in general are in trouble. Does anyone believe that negotiations will become easier for Kyiv when Putin—who reportedly does not particularly like Yanukovych—is back in the Russian presidency?

Yanukovych’s second miscalculation relates to how the European Union regards Ukraine. He seems to have believed that Europe would overlook—or at most react passively to—his policies of democratic regression, and he greatly overestimates the geopolitical value that the European Union attaches to Ukraine. He appears to believe that Ukraine matters more to the European Union than the European Union should matter to Ukraine, and that the European Union will turn a blind eye to Ukraine’s democratic backsliding out of fear that, if the European Union does not embrace Ukraine, the country will fall back into Moscow’s orbit.

Yanukovych’s judgment on this also is wrong. He may have made this miscalculation in part due to Western statements rejecting the notion of a Russian sphere of influence. But for EU officials, as well as most member-states, the issue is less about geopolitics than values. Europe is clearly distressed by what is happening in Ukraine, and that extends beyond the treatment of Tymoshenko (who appears likely to face further criminal charges). For many EU member-states, values are the same as EU interests when it comes to Ukraine, because they see a truly democratic Ukrainian state as a better, more stable and more transparent partner. Following the March 30 initialing of the association agreement, Brok stated:

“The association agreement can only be signed and ratified once the Ukrainian government has created the necessary preconditions. This is the policy of all European institutions, and the European Parliament in particular. These preconditions include the compliance with basic rules for democracy and the rule of law. This includes putting an end to the persecution and imprisonment of opposition politicians, which is unacceptable and not in accordance with the rule of law. The opposition must have the right to take part in the election campaign with its leadership, under the same conditions in relation to the electoral law and the media.”

Where there once was consensus in EU councils on working with Ukraine, the country now is increasingly viewed as a nuisance rather than an asset. This comes at an inopportune moment for Kyiv. Perhaps more so than at any time in the past 20 years, problems in the European Union, such as the eurozone crisis, are leading member-states to believe that the EU’s attention must be focused inward. Some member-states do not want to see Ukraine draw closer to the European Union. For those states, democratic regression offers a reason to justify slowing the pace of EU engagement with Kyiv. And Kyiv’s traditional advocates in the European Union—such as Poland, Lithuania and Sweden—show signs of tiring of the effort to support Ukraine.

All of this bodes poorly for Kyiv’s ability to pursue its foreign policy. Instead of striking a balance of solid links with both Europe and Russia, Yanukovych’s policies are producing the opposite.

Some analysts in the West question whether Yanukovych understands this. It is difficult to believe that he does not. EU leaders and senior officials have explained the problem directly to him. Other analysts question whether he cares, suggesting that he is so preoccupied with amassing political and economic power at home that he pays little attention to foreign policy and the costs of democratic backsliding. That does not seem consistent with the image of someone ever eager to meet with EU leaders and Barack Obama. And he may not have the luxury of not caring.

As Ukraine’s relations with the European Union and the broader West deteriorate, Yanukovych will find his isolation growing and Kyiv’s position vis-à-vis Moscow weaker. That will have consequences for what happens in Ukraine, including to the Ukrainian economy, which is accumulating energy debts that may prove difficult to sustain. For example, the European Union and the United States have at times in the past encouraged the International Monetary Fund to take a lenient approach when Kyiv failed to fulfill the conditions of its IMF program. There is little sentiment in the West for that now.

At some point, Yanukovych will have to face the fact that he can have an authoritarian political structure, difficult relations with Europe and the West, and a greatly weakened hand in dealing with Russia, or he can return to a more democratic approach and have a stronger relationship with Europe and the West and a balanced foreign policy. If he believes that he can find a way to have an authoritarian system at home while achieving a balanced foreign policy, he risks making yet another miscalculation.