The relationship between the European Union and Ukraine was for a long period of time mostly shaped by the European Neighborhood Policy. Between 2009 and 2011, an Association agreement was negotiated. This agreement aims at economic integration, including a deep free trade area, but it will not be ratified until Ukraine deals with concerns over a “stark deterioration of democracy.”

At the same time, on the Eastern front, Kyiv is also having consultations on the subject of the removal of trade barriers. Ukraine is taking a closer look at the possible benefits of Kyiv joining a Russia-led Customs Union (CU). However, since the establishment of the CU, the share of trade turnover of all participating countries has not changed. Figures remain unchanged from 2005 claims a study conducted for 3.2 million rubles that was ordered by the Ministry of Economic Development of Russia. Moreover, according to provided data, the dynamics of the main indicators of the CU and Ukraine in 2009-2011 show that the integration effect is maximal for Russia and minimal for the Ukraine.

Nevertheless, according to the Russian Ministry, the technical regulation system of the Customs Union could improve trade not only with the member states of the CU, but also greatly simplify harmonization with the European Union. This is a very controversial statement, especially taking into account multiple assertions by western diplomats, that it would not be possible.

One of the critics is the current Chairman of the European Parliament Committee on Foreign Affairs, Elmar Brok, who stressed that Ukraine should decide whether to join the Customs Union or the European Union. “The position of European institutions is clear. Ukraine cannot have a free trade zone with the Customs Union and the EU simultaneously,” he said.

The European Union thinks that Ukraine is just bluffing about their intentions of joining the CU. A full membership in the union would require a change to the Constitution, which is impossible without the support of the opposition. So the “bluffing” part may indeed be true, but only to a certain extent.

Unfortunately, the Ukrainian government lacks the strategic view of the country’s development that has been clearly shown many times by now. Even though Yanukovych, the President of Ukraine, is reluctant to join the Customs Union and make Ukraine a Russian vassal once more, the unfavorable economic situation and increasing Moscow pressure may tip the scales. Which path to take has yet to be decided, but it is equally true for the European Union.

Image Courtesy : World Economic Forum

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About the author

Vitalij Dubens'kyj
Journalist, analyst, ex-trader, interpreter and entrepreneur. Seeking for right people and opportunities. Kyiv. Ukraine