Opening for Russia As Kiev Completes Free-Trade Talks

KIEV, Ukraine -- Ukraine has signed a free-trade agreement with the Commonwealth of Independent States (CIS) and completed its free-trade talks with the European Union.

Unlike membership of the Customs Union (Russia, Belarus and Kazakhstan), which Moscow keeps inviting Kiev to join, the CIS free-trade accord does not formally hinder Ukraine's official EU integration strategy.

At the same time, Russia could use the accord as a means to draw Ukraine closer to its sphere of influence.

Although the free-trade accord prepared with the EU is more comprehensive than the CIS agreement, it is not clear when it will be signed because it is part of a broader association agreement, talks on which have been complicated by the imprisonment of former prime minister Yulia Tymoshenko.

This leaves an opportunity for Moscow.

On October 18, Ukrainian Prime Minister Mykola Azarov signed a CIS free-trade accord along with representatives of Russia, Belarus, Kazakhstan, Armenia, Tajikistan, Moldova and Kyrgyzstan.

Azarov said he hoped the accord, unlike the 1994 still-born CIS free-trade accord, would come into effect in 2012.

Ukraine has long insisted on free trade with the CIS but the accord was signed on Russian conditions.

Oil, gas, sugar and alcohol - the goods free trade in which would have benefited Ukraine - will be exempt from the agreement.

Nevertheless, the agreement favors Ukrainian metals, confectionery and machines, which are among the country's main export items.

Azarov estimated that the accord, when it comes into effect, would add some 2% to Ukraine's annual gross domestic product (GDP) growth.

Ukraine's opposition has rejected the accord, arguing that it was signed on Russian conditions and that it could slow Ukraine's integration with the EU.

However, Azarov insisted that the CIS free-trade accord would in no way affect Kiev's free-trade talks with the EU and he noted that it did not oblige Ukraine to join the Customs Union.

Yanukovych also stressed that the CIS accord "in no way implies any hindrance in matters of Ukraine's European integration".

European Commission trade spokesman John Clancy said the commission did not see how the accord could affect Ukraine's relations with the EU.

However, Deputy Prime Minister Serhy Tyhypko admitted in an interview with Ekho Moskvy on October 28 that the CIS free-trade accord brought Ukraine closer to the Customs Union.

A breakthrough in the trade talks with the EU was reached almost simultaneously.

On October 20, Ukrainian First Deputy Prime Minister Andry Klyuyev and European Commission trade commissioner Karel De Gucht announced that they reached agreement on all parameters of an EU-Ukraine free-trade deal.

This should facilitate the completion of the technical talks on an association deal comprising the free-trade agreement by the end of 2011, according to De Gucht.

He added that everything will now depend on the political resolve to complete the association talks.

The problem with the Ukraine-EU free-trade talks is that they are part of the wider association talks so there can be no free trade without an association agreement.

However, there are signs that Ukraine and the EU will not even initial the association agreement this year.

First, the October 25 round of the association talks, which had been widely expected to be the last round before the association agreement signing in December 2011, was a failure.

EU external action service director Miroslav Lajcak said another round of talks would be needed.

Ukraine has insisted that the agreement should mention the possibility of EU membership in the future.

Lajcak said this was one of the main stumbling blocks. Lajcak also said Ukraine should speed up the reforms of justice and public administration.

Moreover, Kiev's failure to admit that Tymoshenko's imprisonment was a mistake and President Viktor Yanukovych's reluctance to correct it prompted the EU to focus its attention on the situation with criminal justice in Ukraine and the broader issue of democracy.

On October 25, the European Parliament adopted an unusually harsh resolution on Ukraine, saying that although it welcomed the conclusion of the free-trade talks, a failure to review Tymoshenko's conviction would jeopardize the conclusion of the association agreement.

The European Parliament also expressed alarm over the situation with media freedom and urged Ukraine to adhere to the recommendations by the OSCE (Organization for Security and Co-operation in Europe) and Venice Commission (aka the European Commission for Democracy through Law) on the electoral legislation.

The authorities have drafted a new election bill, which provides for replacing the current proportional with a mixed system of elections, but the European bodies urged a revision of the bill as the new system is likely to make it very easy for the ruling party to win the parliamentary election next year.

Kiev has pretended that nothing has happened.

Yanukovych said he would continue to insist that the association and free-trade agreement to be signed with the EU in December should mention the possibility of full membership of the EU in the future.

He dismissed the European Parliament's resolution as emotional, and in a recent telegram to EU President Herman Van Rompuy, he said the association talks should be completed successfully at the Ukraine-EU summit scheduled for December 19.

NATO's Door Remains Open To Ukraine

BRUSSELS, Belgium -- The North Atlantic Treaty Organization (NATO) has said it will remain open to Ukraine after the country's decision to shelve its membership bid.
Secretary General Anders Fogh Rasmussen said NATO's doors "remain open," despite the Ukrainian parliament's approval of a bill preventing the country from joining NATO. The move was widely seen as further evidence the new government in Kyiv is overturning the previous government's pro-Western policies.

The draft law is expected to be signed by Ukrainian President Victor Yanukovych in the weeks to come. The bill excludes the goal of integration into Euro-Atlantic security and NATO membership.

NATO Secretary General Anders Fogh Rasmussen said NATO would take no decision to reverse the Bucharest agreement, welcoming membership for both Ukraine and Georgia.

"The Bucharest decision still stands. We have no intention to change that decision….our door remains open," Rasmussen said.

But the NATO chief also stressed the organization is voluntary.

"It's for each individual country in Europe to decide its alliance affiliation, which means that it's also for Ukraine to decide how its relationship with NATO should develop in the coming years," Rasmussen added.

Ukraine's decision to shelve its plans to join NATO was crafted by the president himself. The parliamentary bill commits Ukraine to "a non-bloc policy which means non-participation in military-political alliances."

But NATO Secretary General Anders Fogh Rasmussen said that does not mean NATO's cooperation with Ukraine is over. He confirmed the Ukrainian Defense Minister would be participating in an upcoming NATO-Ukraine meeting.

"Our cooperation with Ukraine will continue within the existing framework and then it's for Ukraine to decide how this relationship and partnership should develop in the coming years."

Earlier this week, officials from the Parliamentary Assembly of the Council of Europe expressed concern about media censorship and physical attacks on journalists in Ukraine - charges Viktor Yanukovych's government denies.

In Brussels, NATO officials publicly insist Ukraine makes its own decisions, and is welcome to join the alliance should it change its mind. But there is still lingering concern that Ukraine is drifting away from Europe, in an effort to get closer to Moscow.

Ukraine PM Exorcises Predecessor Tymoshenko's Ghost

KIEV, Ukraine -- The glamorous Orange Revolution princess and former premier Yulia Tymoshenko may now be in opposition but her ghosts are still haunting the government offices in Ukraine.
Or so her successor insists, who said Friday he had had to ask an Orthodox priest to exorcise Tymoshenko's spirit from his office.

"It was very hard to breathe in there," Ukraine's Russian-speaking premier Mykola Azarov told reporters on a visit to the eastern city of Dnipropetrovsk.

"After exorcism it has become easier to breathe and I entered the office," the Interfax news agency quoted Azarov as saying.

The ritual was performed by a priest from the Kiev-based ancient Caves Monastery, one of Ukraine's top landmarks.

Azarov, an unassuming career bureaucrat, also said the current cabinet didn't have any women because the situation in Ukraine was too tough for any woman to handle.

"At present the situation in the country is rather difficult, and people who can work 16-18 hours a day ... have been taken into the government."

"Conducting reforms is not women's business," Azarov said.

Tymoshenko lost February's presidential election to Viktor Yanukovych, who came to power on pledges to improve ties with Russia. She has since moved into opposition.

EU Running On Empty In Ukraine

BRUSSELS, Belgium -- Ukrainian politics is like Mexican telenovelas. The characters are the same for years and years: charming but cunning Tymoshenko, dull but pragmatic Yanukovych, idealistic but weak Yushchenko, plus the whole plethora of old faces from Litvin to Tihipko. Yatsenyuk is the only new face, campaigning with smart khaki billboards, but with surprisingly old-fashioned views.
However, the 2010 election campaign is different from the past elections in Ukraine. The change is not in personalities, but in subtleties of their rhetoric.These are the first elections in a decade when none of the main contenders comes forth with a strong pro-EU message. Until now all political parties that mattered made European integration part of their party programmes. Failing to do that meant less popularity among the Ukrainian population, buying into everything European, from evroremont (expensive and well-done apartment renovation) to evrogroby (lacquered wooden coffins).The start of the 2010 campaign suggests that the idea is slowly losing its appeal. The EU, absorbed by its institutional and now economic crises, has too little on offer for Ukraine. The popular support for European integration has decreased from 65 percent in 2002 to 43 percent in 2008. As a result, many Ukrainian politicians appear sceptical, if not outright critical, of the EU. The idea of the "third way," highlighting Ukraine's exceptionalism, is instead making its headway.Who stands for the EU in Ukraine?Just a year ago, Arseniy Yatsenyuk - a presidential candidate and leader of the newly created Front for Change - was the embodiment of hopes for a new generation of politicians: young, modern and European. And he became indeed the first to prove that the winds were changing in Ukraine. But in rather surprising ways.With the help of his PR-technologists, Yatsenyuk has revealed his quixotic plan. Ukraine, according to Yatsenyuk, should reject both European integration and integration with Russia as "pseudo-policies." Instead of being pushed and pulled by others into unrealistic projects, Kyiv, according to Yatsenyuk, should become the capital of an "Eastern European Space," comprising everything in-between Uzhgorod on Ukraine's border with the EU to Petropavlovsk-Kamchatsky in Russia's Far East.Geography suggested that the Eastern European Space was simply another edition of Slavic brotherhood with a Ukrainian spin. The pro-European electorate, who deserted Yatsenuk, seems to have run out of options.Yulia Tymoshenko and Viktor Yanukovych are the most probable candidates for the second round. Both are moderately pro-European in their rhetoric, but much less so in their deeds. Yanukovych is openly backed by the Russian "United Russia" party. His electoral manifesto does not contain a single word on European integration, and some of his influential aids threw their support behind the Single Economic Space with Russia.Tymoshenko pushed away the pro-European electorate with her controversial slip of the tongue that the Ukrainians "are craving a dictatorship." Yushchenko is the most pro-European, but his record in office hardly strengthens the popularity of the idea.Reforms not rhetoricTheir real failure is not in rhetoric, but in insufficient reforms, however. For example, the grand project of the EU and Ukraine – that of modernisation of Ukraine's gas transit system - has stumbled over the corrupt interests of power elites. Now the EU is threatening to halt the disbursement of money it promised in July 2009, as Ukraine does not seem committed enough to pursuing energy sector reform.The politicians of smaller calibre have surprisingly similar insights on Ukrainian foreign policy. Both Vladimir Lytvin and Serhiy Tihipko argued in favour of a self-sufficient Ukraine. Anatoly Gritsenko, known as a pro-European politician, argued that "In five years we would be knocking on the doors of neither the EU, nor NATO, nor the Tashkent agreement nor the Single Economic Space. Internal efficiency is our priority. And a strong army."The same trend can be observed among the Ukrainian bureaucrats. An Ukrainian official, involved in the negotiations over a new Association Agreement with the EU, aptly described his growing disillusion: "There are two types of people, who work on the European integration in Ukraine: enthusiasts and idiots. If before, there were more enthusiasts, than idiots; now there are more idiots than enthusiasts." In fact, new dismissive if not derogatory terms like euro-romanticism and euro-idiotism are entering routine discourse.What is left? There are few candidates who can credibly promote the idea of European integration in Ukraine. And even fewer are successful in this. However, European integration remains the main and perhaps only idea that can unite Ukraine's divided society, and set Ukrainian politicians on a path to modernisation. This adds urgency to the EU task.It is time for the EU to understand that promoting EU values abroad is not about some magic magnetism, it is hard work. Perhaps with the Lisbon Treaty ratified, the EU will be able to mobilise itself for more ambitious policies in the neighbourhood. Unless the EU presents a success story, be it in Moldova, Georgia or Ukraine, it may find even fewer believers in European ideas a few years down the road in the post-Soviet space.

The West May Soon Witness Major Integration on Post-Soviet Space

South Ossetia can become a part of the Unified State of Russia and Belarus, Eduard Kokoity, the President of South Ossetia, said in an interview with Itogy magazine August 31. “Tskhinvali is willing to build unified relations with Russia so that the Ossetians living in the south and in the north did not have any borders between them. We want to become a part of the Unified State with Russia,” the president said.
“Russia does not want somebody else’s territory, and we understand that. But we want to build a union with Russia – similar to Russia’s union with Belarus. The forms of association can be different,” the president said.
Eduard Kokoity added that he was not speaking about the unification of South and North Ossetias.
South Ossetia and Russia already discuss the issues of dual citizenship, which the Constitution of South Ossetia stipulates. In addition, Kokoity said, Russia and South Ossetia cooperate in a number of other spheres, including the mutual defense of South Ossetian territories, which Georgia previously occupied. Russia also helps the republic to recreate the nation’s economy, which was seriously damaged as a result of the war with Georgia in 2008. Moscow assigned 10 billion rubles during 2008-2009. A third of the amount – 3.5 billion – was used for construction works, whereas the rest was invested in communication, medicine and education, Kokoity said.
Georgia’s officials responded to Kokoity’s remarks very quickly. David Jalaganiya, a senior official with the nation’s Foreign Ministry, said that the president of South Ossetia had a very vivid imagination.
Alexander Rar, a well-known German scientist of politics, believes that such an initiative – to join the Unified State of Russia and Belarus – would be the best option for both South Ossetia and Abkhazia. However, he added, the West would definitely criticize such a step. Russia will be able to avoid accusations of annexing Georgia’s territories because the Unified State per se has not been created yet. Russia will therefore be able to make it all look like a form of integration on the post-Soviet space.
Indeed, if Moscow gives a green light to Kokoity’s plan, such a form of relations would give an opportunity to South Ossetia, and probably Abkhazia, to preserve their independence and win Russia’s protection