Source: New Eastern Europe
The Eastern Partnership has had some quite remarkable results during tumultuous times, just think about the bloody EuroMaidan Revolution in Ukraine in 2014, the peaceful revolution in Armenia in 2018, peaceful political transitions in Georgia and soon in Ukraine. Elections remained democratic in Moldova and Ukraine despite vested interests. The dialogue with Belarus brought attitude change from the government towards dissent and the country braces for political transition (i.e. change of constitution) in a few years. This holds a reasonable chance to bring Belarus among the region’s democracies.
The ratification of the Association Agreements with Georgia, Moldova and Ukraine was a serious affirmation of the EU’s soft power. The policy attracted elites and mobilised societies despite the fact that it comes neither with the membership option nor with the kind of financial assistance that was given to the EU’s Central European member states. Visa-free regimes was a wild dream at the start of the EaP and it took nine years for Ukraine, five years for Georgia and four years for Moldova to reach this goal.The hope that the Association Agreements means integration via association compared to association instead of integration, the Eastern partners aligned their foreign policy with the EU, while not gaining access to actual EU policy-making. Not aiming to give the membership perspectives to eastern countries, Brussels often neglected its due diligence. Rather it has opted to do something similar to what George Soros wrote about as “market fundamentalists”, namely ignoring the costs and consequences but putting enough money towards public relations.
It could do so also because of Russia. Moscow has been estranged by what it sees as western encirclement of Russia – used twice to protect its interest with weapons, crossing borders, defying western hegemony and strengthening anti-Russia feelings among its immediate neighbours. The annexation of Crimea and the Donbas war – as Russia’s reaction to the EuroMaidan Revolution – meant that the EU lost Russia over Ukraine.
In the Eastern Partnership countriesthere is a growing realisation that the Deep and Comprehensive Free Trade Agreement (DCFTA), the most important and binding part of the Association Agreements, cannot trigger the necessary economic growth alone. The EU’s current economic offer is not going to help them in the short-term. Although exports to the EU have risen in all three associated countries, only in Moldova the volume of EU-bound exports – at 63 per cent – can somewhat compensate the loss of the Russian trade (Moscow imposed an embargo of Moldova’s key export products: wines and spirits, in September 2013).
Ukraine’s electoral campaign and the success of the actor-comedian Volodymyr Zelenskiy should serve as another wake-up call for the West to realise the need of changing the economic policy towards the region. Macroeconomic stabilisation has been necessary yet painful and most importantly has not brought investments. The trade deficit with the EU doubled in 2018; in goods it reached a whopping 10 billion US dollars.
Ukraine is now ranked as Europe’s poorest country, ahead of Moldova. An estimated four million Ukrainians working abroad are currently providing more external sources for the economy in the form of remittances than the IMF. While Russia poured $22 billion into Crimea since its annexation, western assistance in the form of grants and direct budget support to Ukraine since the EuroMaidan is up three billion dollars. At the same time Kyiv has to pay back $36 billion to foreign creditors (mostly Yanukovych-era loans) in 2019-2021.
At the ten-year anniversary self-reflection is overdue. Brussels should take more responsibility for the socio-economic foundation of the region it aims to stabilise. After all, these countries opened their markets without receiving any compensation to alleviate the consequences like what Central Europe received. Yet the EU has caught a special kind of a “Dutch disease”: after the 2016 Dutch referendum the EU and the Netherlands agreed that the association treaty with Ukraine does not guarantee any commitment to a potential EU membership, major financial assistance, the right to work in the EU, or military support.
Brussels’ achievements remain fragile. Reforms need more resources, not more rhetoric. Of course, the EU can’t foot the bill, but it should finally realise that the neoliberal consensus does not fit the poverty-stricken region. Ukraine or Moldova`s actual problems are tied up with the breakdown of a system based on (extreme) redistribution to the rich, a low level of investment and high capital flight, and private monopolies (led by oligarchs) keeping the state as weak as possible.
Instead of sticking to dogmas, reflection, due diligence and flexibility should be the guiding principles. Some immediate concessions for associated partners can be provided without significant costs, for example reviewing exporting quotas within the DCFTA. More flexibility within the financial support could foster economic modernisation. Informal interests continue to play important roles in these countries and have the potential to thwart reforms. In the absence of strong, de-politicised institutions, the EU should work to support political consolidation – the alternative is further polarisation and political fragility – while at the same time insisting on adherence to democratic standards and strengthened institutional checks and balances.
This article was originally published by New Eastern Europe.