Reassessing the European Neighbourhood Policy: The Eastern Dimension. A Position Paper from Ukraine

Ukrainian-EU relations

The EU and Ukraine established contractual relations in 1994 by signing the EU-Ukraine Partnership and Cooperation Agreement (PCA), which entered into force in 1998. With the European Neighbourhood Policy (ENP), launched in 2003, both parties agreed to cooperate to facilitate Ukraine’s access to the EU’s internal market, policies and programmes. After the Orange Revolution in Ukraine, European aspirations of a new political elite in Kiev raised the level of bilateral cooperation: Based on the PCA, the Joint EU-Ukraine Action Plan was adopted in February 2005. In 2007, the EU and Ukraine opened negotiations on a new Enhanced Agreement, and after Ukraine was admitted to the WTO in May 2008, progress was made on issues related to a Deep and Comprehensive Free Trade Area (DCFTA). In 2009, the Association Agenda replaced the Action Plan. A Visa Liberalization Action Plan for Ukraine was announced at the EU-Ukraine Summit in November 2010, and in 2011 Ukraine acceded to the Energy Community Treaty.

In March 2012, the EU and Ukraine initialled the texts of the Association Agreement (AA) and the DCFTA. However, Ukraine’s progress on making major structural reforms and implementing the Association Agenda priorities remained below expectation. In December 2012, the EU reaffirmed its commitment to sign the AA as soon as Ukraine demonstrated tangible progress on addressing selective justice and in implementing the Association Agenda. Although Ukraine began to correct shortcomings before the Eastern Partnership (EaP) Summit in Vilnius, Ukrainian authorities decided to suspend preparations for signing in November 2013. This move may have contributed to the dramatic events of the political crisis in Ukraine, the ›Revolution of Dignity‹ and Russia’s military aggression toward Ukraine. Ukraine signed the AA’s political provisions on 21 March 2014 and the others on 27 June 2014. The Ukrainian Parliament ratified it on 16 September 2014, and so did the European Parliament, thereby enabling provisional application of its relevant parts on 1 November 2014 and the DCFTA section on 1 January 2016. Work on the second phase of the Visa Liberalization Action Plan began in June 2014.

During the ENP negotiations, Ukraine-EU relations were heavily influenced by the political situation. Little progress was made regarding structural democratic changes or liberalization under the EU-Ukraine Action Plan and after that, the Association Agenda. By signing the AA, Ukraine indicated its will to embark on the democratic path of value-based reforms. A more ambitious ENP policy could be an adequate response to this call, making the neighbourhood truly stable and prosperous.    

Differentiation

The European Neighbourhood Policy review begun in March 2015 triggered a major debate within the community of Ukrainian experts and state institutions. Although they are of different minds with respect to sector-specific recommendations, the experts seem to agree with the ENP’s basic principles and the EaP, that is: EaP policy should address the challenges common to EU member states and partner countries. Differentiation, conditionality, the ›more-for-more‹ principle, co-ownership and solidarity are core principles that should be applied. At the same time, it is crucial to elaborate these principles more profoundly in terms of ambitions and clear benchmarks.  The ›differentiation‹ principle must take into account the real aspirations of the partner countries, as well as their expectations of future levels of European Union ›partnership‹. Within the Eastern Partnership, two groups of countries have emerged in terms of their ambitions: the Association Agreement ›club‹ (Ukraine, Moldova and Georgia, UMG) and the ›sector partners‹ (Armenia, Azerbaijan and Belarus).

Ukraine’s effort to enhance relations with the European Union has been very painful. The AA is a mutually binding framework, which obliges Ukraine to align with European norms and standards. Some experts estimate that Ukraine will have to align its legislative base with some 350 legal acts of the EU during the AA implementation process. Yet it is difficult to compare Ukraine’s obligations with the agendas of those partners who prefer to follow their own paths to building relations with the EU. In this regard, differentiation suggests the possibility of ›different speeds‹ for partners who have different visions regarding cooperation with the EU. This approach is needed to maintain the participation of all six countries. 

›More for More‹

The ›more for more‹ principle should be oriented to setting clear benchmarks and indicators for countries who demonstrate good progress to become engaged in more ambitious phases of the partnership, with an invitation to participate in the enlargement policy one of the ›carrots‹. To this end, the ENP review could be based on the understanding that each partner country has the sovereign right to choose the depth and ultimate aim of its relations with the EU, in line with Article 49 of the Treaty on European Union. The EU must offer the UMG Associate Countries the possibility of increased practical integration in the spirit of ›everything except institutions‹. At the same time, in order to implement the reform programmes in each of their AAs, these countries need expert and financial assistance from the EU.

The ›solidarity‹ principle must in turn serve to generate a common response to the common challenges we face in the region – from economic crises to Russia’s military aggression. At the moment, the level of political association and economic integration in the AA creates a framework for Ukraine to implement reforms, provided that all parts of the document are fully implemented, including the DCFTA provisions. The implementation process, which requires EU support, should receive emphasis.

Policy Focus 

The areas of joint interest identified in the Consultation Paper cover most of the domains where our countries already interact or could cooperate. When it comes to Ukraine, we can clearly distinguish the priorities for active bilateral engagement. The new ENP must help Ukrainian authorities with the AA implementation process, using the methodology already tested on candidates for EU membership. The EU and Ukraine should also forge ahead with infrastructure connections and enhanced mobility – with a visa-free regime as its indispensable part. In this vein, more attention should be accorded to the following areas:

Strengthening Ukraine’s Institutional Capacity to Implement the Association Agreement

EU support for public administration reform in line with the European Principles of Public Administration and the European Charter of Local Self-Government should be oriented toward: implementing an effective system for policy-making, preparation, adoption and execution of government decisions on the basis of policy analysis at all levels of the public administration; setting up and ensuring the effective functioning of politically neutral, professional civil servants; introducing E-governance at all levels of public administration; improving the quality of administrative services for Ukrainian citizens; adopting and implementing laws that introduce decentralization reforms and  build self-government capacity; absorbing the capacity development of central and local authorities to deal with the state budget and international technical assistance resources; and providing more assistance for implementing comprehensive anti-corruption reforms.

Energy Security

Other EU support should include: paying special attention to the possibilities of cooperating within the EU Energy Union initiative with Ukraine to create the crucial infrastructure; recognizing Ukraine as part of the general energy market through application of relevant EU energy legislation to minimize Russia’s ability to use its energy resources to exert pressure; creating a multilateral mechanism for early notification within the Ukrainian transit pipeline system, using telemetric control of the basic streams of energy resources (oil and gas first) and coordinating a mutual-aid procedure if deliveries are halted; enhancing transparency of the energy sector, introducing international financial reporting for all energy companies and improving access to statistical data; shifting the gas purchases point for European and Ukrainian energy companies from Ukraine’s western border to its eastern; and aligning energy legislation and practice with the ›Third Energy Package‹.  Energy savings and efficiency, as well as market regulation of the energy sphere, are crucial for Ukraine.

Information Cooperation

EU support is needed to: build the capacity of independent media, especially efficient business models; revise the current approach to constructing the EU’s image in Ukraine, expand tools to involve various target groups in society and strengthen the information presence as a way of popularizing EU values and ideas; create alternative Russian-language television channels; activate platforms for European consumers about Ukraine and other EaP countries and offer a range of media products on the political, economic, and social situation in partner countries; and introduce European practices of mass media regulation and establish cooperation between national regulators.

Mobility and People-to-People Contacts

EU support is also needed:  for a visa-free regime for Ukrainian citizens’ brief visits to the EU;  to fully integrate the country into the EU’s educational and research programs – ERASMUS +, Creative Europe and  Horizon 2020; to develop capacity-building programs for Ukrainian civil society; and strengthen capacity and broaden the scope of action in organizations for internally displaced persons in Ukraine and facilitate the delivery of international humanitarian assistance.

Trade

In April 2014, Ukraine was granted autonomous trade preferences (ATPs), meaning that the EU unilaterally shifted or scaled down its tariffs for Ukrainian producers. However, this did not positively influence the bilateral trade balance for Ukraine. Compared with the previous year, Ukrainian exports to the EU increased by only 2.6 per cent in 2014. To create more sustainable economic and social development in Ukraine, the EU assistance should focus on: implementing the DCFTA provisions; reducing the regulatory burden for businesses and improving the tax administration’s efficiency; increasing transparency and competitiveness in public procurement by adhering to the EU Public Procurement Directives; developing emergency mechanisms to preserve economic stability through possible temporary resource support for Ukraine or temporary concessionary terms of access to the EU market for critical goods (beyond the ATP regime) in case of an extended trade blockade by Russia; campaigning to raise the Ukrainian business community’s awareness of working conditions underthe new economic realities; creating platforms to communicate with European partners, getting advice on joining industrial chains and providing access to cheaper credit resources for small and medium-sized enterprises (SMEs); introducing the DCFTA Facility, the joint financial tool of the European Commission and the European Bank for Reconstruction and Development (EBRD); developing a comprehensive strategy to attract investors from EU countries by taking advantage of the DCFTA regime; and allowing Ukraine to benefit from internal EU structural funds, such as participating in the Connecting Europe Facility (CEF).

The Regional Dimension

The Neighbours’ Neighbour

The EaP initiative envisaged Russia’s participation from the very beginning, but the Russian Federation has ruled out such an option and demonstrated no interest in taking part. Instead, the Kremlin used the partner countries’ deeper relations with the EU as a pretext to exert pressure in various ways.  Whilst designing ENP policy, the EU could elaborate instruments to motivate Russia to engage. However, Russia should first be forced to comply with EU demands to withdraw from Ukraine and restore its territorial integrity. The same principle should be applied in relations with the Eurasian Economic Union (EEU), a political project of the Kremlin. The EU should not make concessions to Russia regarding exceptions to the Third Energy Package in terms of transportation routes to the EU member states for Russian energy carriers, which could create additional risks of energy security for partner countries. The joint feasibility study on how the DCFTAs with Ukraine, Moldova and Georgia might impact the Russian economy is an example of what can be done in a trilateral format to prevent the Russian Federation from exerting further pressure and waging trade wars. 

Security

The EU actively participated in negotiations for a political solution to the Russian-fuelled conflict in eastern Ukraine (in Geneva in April 2014, Milan in October 2014, and Minsk in August 2014 and February 2015). Diplomatic efforts should be accompanied by extra efforts in the field of security. The EU should review its policy on regional presence in peacekeeping operations under the Common Security and Defence Policy (CSDP) and expand the mandate to the Eastern neighbourhood. Effective military-technical cooperation should be developed between the EU and Ukraine, creating industrial clusters to incorporate Ukraine’s military potential into joint military production. Cooperation using ENP instruments in the framework of the Common Foreign and Security Policy (CFSP) and the CSDP should be enhanced to prevent threats from escalated conflict, organized crime and terrorism.

Multilateralism

It should be acknowledged that the multilateral track was part of the EaP policy’s ›added value‹ – and its weakest chain. The partner countries’ political differences and levels of European aspiration appear to indicate that all the EaP multilateral institutions were ineffective, making separation from the ›AA Club‹ quite natural. A multilateral sub-track must be provided with the relevant institutional base for dealing with the EU and the more comprehensive agenda that will follow. A multilateral track for six countries needs additional instruments to underpin the projects of common interest. More attention should be paid to creating communication platforms for economic cooperation between the EaP partner countries who have signed the DCFTA and those who have joined the Customs Union and the EEU. The political and economic base of such a format could strengthen contacts in the EaP region. Additional resources should be allocated to a special fund to support cooperation projects involving three or more partner countries.

By Hennadiy Maksak, Polissya Foundation for International and Regional Studies, Ukraine

This paper is a part of publication “Reassessing the European Neighbourhood Policy: The Eastern Dimension”,

Friedrich-Ebert-Stiftung (FES)