Euromaidan: Can’t Ukraine and Russia just get along?

(Moscow News – moscownews.com – Anna Arutunyan – December 11, 2013) With thousands still protesting in Kiev’s streets after Ukraine suspended plans to sign a trade association agreement with the European Union, beleaguered Ukrainian President Viktor Yanukovych is still mulling whom to side with for closer economic cooperation – Russia or Europe. Here are six things Russian President Vladimir Putin should do to effectively deal with Russia’s western neighbor, according to some leading experts:

1) Stop with the gas pressure

This is one thing that both pro-Western and pro-Kremlin analysts tend to agree on. Russia currently supplies 60 percent of Ukraine’s gas, charging about $400 per thousand cubic meters (more than it charges any other European country). With Ukraine’s economy in free-fall, it’s run up a $2 billion debt for gas supplies, and there’s no clear settlement plan in sight. While Putin was widely believed to have offered cheaper prices on condition of Ukraine joining Russia’s Customs Union, that leverage is not as useful for Russia as it appears, analysts say.

“One thing the Kremlin needs to do is rethink its gas agreement [with Ukraine],” said Fyodor Lukyanov, editor of the Russia in Global Affairs journal and chairman of the Council on Foreign and Defense Policy. “The agreement is untenable. Ukraine doesn’t have the money to pay. Using this situation to rack up debt and then try to force it out of [Ukraine] means that we could find ourselves in a new gas crisis not with Ukraine, but with Europe.”

2) Tone down the rhetoric

“The Russians, if they are clever, should refrain from geopolitics and rhetoric, which is now getting stronger in the press,” said Alexander Rahr, director of the German-Russian Forum.

“Preventing Ukraine’s departure to the West is not a victory. It should be described differently. Ukraine is a divided country, and it will remain like this for a couple of more decades. So Russia should sincerely talk about economic cooperation [instead].”

3) Ask if Russia needs this influence

Signing the association agreement with the EU would have made it impossible for Ukraine to join Russia’s existing Customs Union with Belarus and Kazakhstan, as well as the proposed Eurasian Union, an economic association that would include former Soviet states and would rival the EU.

Politics and symbolism aside, experts question whether including Ukraine, with its volatile economy, is such a good idea after all.

“Does [Putin] really need influence over Ukraine?” Lukyanov said. “It’s a big question whether Russia needs to accept Ukraine into the Customs Union, and a bigger question on whether Ukraine needs to be forced into it. Ukraine could bring such a level of complexity to relations within the union that this fragile association could begin to fall apart.”

“Symbolically, [having Ukraine in the Eurasian Union] looks good, but to what extent it facilitates Russia’s development and the strengthening of its economy, which is stagnating, that’s not clear,” said Maria Lipman, an analyst with the Carnegie Moscow Center.

4) Aim for free trade

So far, both the European Union and Russia have been making things difficult for Yanukovych by turning his choices into a zero-sum game, experts say. If Yanukovych sides with Europe, Russia will retaliate by closing its markets, and vice versa.

“There is no reason why this should be a zero-sum game,” said Samuel Greene, director of the Russia Institute at King’s College in London.

“If there were a trade agreement with the Eurasian Union and the European Union, then that might allow for association between members of the Eurasian Union and the European Union. But currently that’s not a strategy that either side seems to be interested in pursuing.”

Moscow needs serious talks with Brussels, not Kiev, according to Rahr.

“Russia will never sign the association agreement, but some kind of free-trade agreement would be in Russia’s interests,” Rahr said. “It’s not in Russia’s interests to depart toward China. They need an agreement with the European Union. And they will get it, I’m sure, if they start to negotiate.”

5) Angle for gas infrastructure

Russia has long coveted Ukraine’s gas transportation system, with Russia proposing that its gas monopoly, Gazprom, take over the dilapidated infrastructure currently controlled by Ukraine’s Naftogaz. This could actually be good for both Russia and Ukraine, according to Rahr.

“I don’t think the privatization of the Ukrainian gas transportation system is something that will be a catastrophe for Ukraine,” he said. “Why should the Ukrainian government keep this kind of infrastructure under its own control? I think it’s a mistake. It needs restructuring, modernization. It needs millions of dollars, and Ukraine needs foreign investment for its modernization. And Russia is one of the main investors.”

6) Don’t do anything drastic

With protesters still in the streets demanding for Yanukovych’s ouster, and with Ukraine’s government still in talks with the EU about eventually signing the association agreement, the best approach for Russia may be just to wait and see – which is what Ukraine is doing. “The situation is changing so quickly that there is really nothing left to do,” said Mikhail Pogrebinsky, head of the Kiev Center for Political Research and Conflictology.

“In the long term, [Russia] needs to involve Ukraine in cooperation in a number of spheres,” he said. “First of all, you need [political] will. Only once the situation stabilizes will it be possible to talk of that.”