Who Needs European Integration in Ukraine?

The views of the author are his own and do not necessarily represent those of the Kennan Institute. Yaroslav Pylynskyi, Office Director, Kennan Institute Kyiv 

The West has yet another opportunity to learn more about Ukraine. Although it’s not under the best circumstances, we hope that someday the opportunities will change in their quality, not just increase in quantity, and the word “Ukraine” will evoke, in the minds of EU citizens, something specific and positive rather than vague and negative.

Taking advantage of the current interest in Ukraine, I would like to offer some history for as an introduction. Without knowing the history, it is hard to understand why the Ukrainian people surprised both the Western world and national policymakers once again with their determined support of European integration. Democracy has always been an integral part of life of Ukrainian communities since the Middle Ages. We should remember that village residents elected not only a Viyt (from the German, Vogt), but also a priest for the local church community, as well as a teacher who taught all the children in the community. It is also interesting that this German-origin word referring to the city or village-elected mayor is directly connected to the prevalence of the Magdeburg Law in Ukraine since the 14th century – a system of local self-government that at that time was widespread throughout the Central and Eastern Europe. The easternmost city in Ukraine that followed this democratic legal system since 1664 was Glukhiv, 300 kilometers northeast of Kyiv. Thus, the traditions of managing local self-government and living according to the law rather than the will of a master were inherent to the majority of the Ukrainian population for centuries.

That is why today’s manifestations in support of European integration, taking place in almost all big cities in Ukraine from East to West, are entirely natural and logical for those who understand that, for ages, Ukrainians have considered themselves a part of the cultural and legal landscape that is currently called the European Union. For everyone else, this reaction on the background of the feigned social apathy of the last three years is surprising.

However, we should not forget that this apathy, or rather inactivity, of most people was connected to the fact that those in Ukrainian society who sympathize with Europe (according to sociological surveys, over 60% of the population) basically accepted the growing deterioration of life in Ukraine hoping that, after signing the Association Agreement, the President and the Government would be obliged to reform the state according to European standards.

Instead, the Ukrainian authorities, headed by President Yanukovych, conducted their own rather simple game based on the principle “who will give more,” while trying to cheat all. In order to better understand the current power dynamic in Ukraine, it is worth recalling the tale that was widespread during the presidential elections of 2010, especially among business circles: in essence, the contest between Yulia Tymoshenko and Viktor Yanukovych for presidency was the contest between a dairymaid and a butcher, where the first was willing to acquire a cow (the country) to milk it for a long time, while the second – to kill it and sell the meat. Such a collision was beautifully depicted at the end of the 1990s by the famous American economist and Wilson Center fellow, Mancur Olson, in his book Power and Prosperity: Outgrowing Communist and Capitalist Dictatorships, where he compared the authorities in post-communist countries with stationary and roving bandits.

One of the main problems of Ukraine is weak economic policy. Over the last three years, President Yanukovych repeatedly refused any attempts to restrain deterioration of the economic situation. The Ukrainian government keeps an artificially overstated exchange rate of the national currency, which leads to a significant deficit. Ukraine’s economy also suffers from the decline of exchange reserves, excessive exchange control, and high interest rates that make both foreign and domestic investment almost impossible. Additionaly, Ukraine has almost no access to international financial markets. The general budgeted deficit makes up 8% of the GDP, which is predicted to decrease by 1.5% this year, while the industrial production has already decreased by 5.4%.

Most likely, the main goal of the current economic policy is to transfer financial resources and companies to the so-called “Yanukovych family” – a group of young businessmen that quickly buy up private and state companies for next to nothing. They are the only “sanctioned” buyers in the key industries, and the worse the economic situation is, the cheaper these companies are.

If we accept this assertion as the most probable motive of the president’s behavior, his tactics over the last few months become clear. Indeed, he was not really planning to sign the Association Agreement with the EU, but was essentially playing poker with both the EU and Russia, trying to bargain for the highest possible stakes for himself.

Until recently, bargaining with Russia was not so much about entering the Customs Union, as about refusing to sign the Association with Europe. It is critical to understand that for most Russian leaders and citizens, the loss of Ukraine is not considered from a pragmatic and economic viewpoint, but from an irrational, emotional one. This attitude is hardly understandable for Europeans and Americans, who mostly think in the categories of community, region (state), and nation in contrast to Russians who think in the categories of empire. For Russians, symbolic trophies like bowing to their imperial might are much more important than any economic advantages or losses.

However, last week Yanukovych probably felt that bluffing with Russia might fail and thus decided to stop the Euro-integration seemingly on his terms. To paraphrase the first President of Ukraine, Leonid Kravchuk, Russia has never fulfilled its obligations or stuck to its agreements. Thus, it is not clear whether, or if so, why, Yanukovych believes Russia this time.

Another widespread theory is that, until recently, Yanukovych blackmailed the Europeans in an attempt to bargain for guaranties for his post-presidency retirement. However, if this was the goal of negotiations with the EU, it could be realized only if the agreement was signed and considered a payment for compliancy, flexibility, and the introduction in Ukraine of a legal field favorable for European business. Thus, judging by the course of events, this goal remained unfulfilled, since Yanukovych apparently cheated many honorable European officials that are hardly likely to deal with him again.

Finally, I would like to stress again that in this story, both the Government and the President of Ukraine proved that conversations about values that many believe to be idle talk are indeed a very important component of any negotiation process. Although values were mentioned from time to time over the last few months by Ukrainian and European officials, they were mostly limited to the problem of Tymoshenko. This problem served as a smokescreen to hide deeper problems of raiding, the absence of independent courts, money laundering, and tax evasion by oligarchs in Ukraine.

That is why for Ukrainians, who always have been and always will be Europeans culturally and mentally, it is important that their pursuit to live, as Immanuel Kant wrote, in a civilized way, according to the law, was effectively supported in the part of the world that has consciously lived this way for so long.

What should be done by Ukrainians and Europeans to achieve this goal is the subject of a longer, much-needed discussion.