With Brussels’ announcement on April 20 that it will be pursuing legal measures against Russian giant Gazprom in relation to its dominant position on the European market, it appears that Moscow’s relationship with Europe is about to get significantly rockier. Despite assurances from the EU Commission that it is treating Gazprom like any company in Europe, the geopolitical implications of their most recent move will likely be seen by Moscow as a direct “provocation”. Haven’t we all heard this before?
Even after several rounds of US and EU sanctions were imposed on Russia following its annexation of Crimea and the escalation of the fighting in eastern Ukraine, Putin has stubbornly clung to his policies, while European leaders have continued to wag their fingers and draw lines in the sand. What was initially a measure meant to force Russia out of Ukraine has now become a temporary show of force directly linked to Russia’s willingness to fulfill the Minsk II agreements. The deal includes provisions for the removal of heavy weapons for both sides, granting autonomy to separatist regions, organizing local elections and a de-freeze of government finances for the self-proclaimed republics, all paving the way for an eventual return of Ukraine’s full sovereignty over its territory. But with sporadic fighting continuing and Ukraine hesitating to fulfill political obligations, some fear a deadlock in the peace process and a return to previous levels of violence.
European Union leaders have started to press Poroshenko to implement the political clauses of the Minsk Agreements. In a recent visit of the Ukrainian president to Paris, Francois Hollande said that, “The only line of conduct is the full implementation of the Minsk accord”, urging Kyiv to quit dragging its feet over the constitutional reforms demanded by the ceasefire.
For his part, Putin seems optimistic about the future of his country. Speaking in a 4-hour Chavez-tinted call in to the nation, he admitted that while “it is highly unlikely that the sanctions will be lifted anytime soon, because it’s a politicized issue” he still expected the economy to return to strong growth within two years. While sanctions have an important function in starving the Russian economy of much needed investment, they should not be seen as a cure-all solution. Indeed, only a strong Ukrainian state would act as the best guarantee to counter Russian aggression.
Reforming Ukraine
The Euromaidan movement brought about a whole new group of reformers to the country, who seem determined to become a model for change in a nation that has failed modernize in its 14 years of independence.
Aivaras Abromavicius, Ukraine’s Lithuanian-born economy minister has been focusing on several efforts to ensure the country moves towards a stable and prosperous future. He has cut staff in his own department in half, increased tax collection efforts and aims to sell the “two dozen-or-so decent assets which the state still owns, ports, electricity firms, airplane manufacturers, and vodka makers.” Meanwhile President Poroshenko has flirted with the idea of de-centralization, which would grant local authorities a significant degree of power over their own budget, and would largely cut the wide scale corruption associated with a bureaucracy inherited from the Soviet days. The government has also embarked on the widest de-oligarchisation campaigns ever mounted by Kyiv, which aims to break monopolies, reverse shady privatizations and crack down on rent seeking behavior.
Another strong initiative has come from a group of European policymakers gathered by Ukrainian business tycoon Dmitry Firtash under the banner of the Agency for the Modernization of Ukraine (AMU). With a lofty goal of attracting $300 billion in investment for the country along the lines of the Marshall Plan, the AMU relies on the backing of several senior figures such as Włodzimierz Cimoszewicz, Laurence Parisot, Bernard Kouchner, Lord Macdonald, Peer Steinbrück, Günter Verheugen, and Rupert Scholz. The talking shop has outlined its overarching theses in a series of Vienna-based conferences: a political solution to the Ukraine crisis via the Minsk agreements; credit lines for Ukraine from the EU and Russia (with both creditors having equal rights); a common economic space from Lisbon to Vladivostok negotiated by the EU and the Eurasian Union; a non-aligned military status for Ukraine; modernization of Ukraine’s gas transportation system led by a trilateral consortium (EU, Russia, Ukraine); and the federalization of Ukraine. The first policy recommendations are expected to be published in autumn.
Evidently, there are many plans on the table to reform Ukraine, and both Kyiv and international actors need to place more emphasis on instigating reforms and spend less time playing a political game of chess with Putin. So far, the initial signs are encouraging as the government has been willing to enact reforms considered impossible before. Straddled between Europe and Russia, Ukraine will never get a clean break and become a powerful nation in its own right if it fails to reform. Abromavicius admits that “fixing Ukraine is just as important as stopping Russian aggression”, but in reality the two can go hand in hand, and a prosperous and stable Ukraine can deal the final blow to Russia’s own political establishment.
