Політика 2019-05-22 06:49 Крамар Олександр
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Traps everywhere

Why the Zelenskiy's team needs to be careful not to torpedo the processes of economic and political emancipation from Russia

Right after exit polls began to publish numbers that confirmed a victory for Volodymyr Zelenskiy, pro-Russian politicians and experts from the Medvedchuk pool and the so-called OPZZ or Opposition Platform of Za Zhyttiabegan to triumphantly celebrate. They saw the upcoming transfer of power mainly as a chance for their own comeback, a reversal of the country’s foreign policy course, and a return of Kyiv to Moscow’s control. Lately, the geopolitical course has been more important for them than socio-economic or anti-corruption populism, which now clearly plays a secondary role. OPZZ is betting on the Verkhovna Rada election although it is the president who carries out foreign policy in Ukraine. And so it will depend on the policies of the new Administration whether the process of Ukraine’s full emancipation from Russia, both economically and informationally, will continue or be slowly rolled back. As inconsistent as they may have been, there have been considerable positive shifts in this area in the last few years.

Although foreign policy is a key sphere that the president is responsible for, Zelenskiy’s electoral platform paid very little attention to it. His own comments and those of members of his team regarding this were also few and far between, which leaves him plenty of room to maneouvre in this area. Statements along the lines of “betraying national interests and territory is non-negotiable” are in a form that can be given any content that suits. One of Zelenskiy’s main spokespersons, Dmytro Razumkov, is confident that worries about protecting the European vector are misplaced, saying “With the development line it’s pretty clear that it’s the path to Europe for the country and he Ukraine has made its final decision.”

Stay on course

Despite assurances from Zelenskiy himself and his team that they have no intention of adjusting the foreign policy course, the risk that something like this might happen remains unusually high. After all, Viktor Yanukovych himself also promise to keep the course towards Eurointegration when he was elected in 2010, and spent the next few years persuading Ukrainians that he was preparing to sign the Association Agreement with the EU. Despite a slew of reservations about the details of Ukraine’s western integration and what mutually beneficial cooperation with different organizations should look like, its role as a prevention against returning to Russia’s orbit was and remains indisputable. Fortunately, preventive measures were wisely incorporated into the Constitution to make a geopolitical comeback impossible since the Basic Law was amended this past winter to enshrine Ukraine’s intentions to join the EU and NATO.

The “irreversible European and Euroatlantic course of Ukraine” is established in the preanble and presented in greater detail in articles governing the activities of all the main government actors in the country: the Verkhovna Rada in Art. 85, the President in Art. 102, which states that the “President of Ukraine is the guarantor that the country’s strategic course to gain Ukraine’s full-fledged membership in the European Union and the North Atlantic Treaty Organization is carried out,” and the Cabinet in Art. 116. Enshrined in the Constitution, the course towards NATO and the EU is not subject to reconsideration. The country is supposed to continue move in this direction and any other variation is the sign of a comeback of anti forces.

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The mood in Ukrainian society made it impossible for a politician or political force that openly favors a return to Moscow’s orbit to come to power. This is also true of Zelenskiy’s supporters. A poll by KIIS just before the first round of the election showed that among his electorate 53.3% were in favor of eurointegration and 39.7% were against, while 45.4% said they would vote in favor of NATO membership in a referendum, whereas only 32.6% were against, one way or the other. Still, that doesn’t mean that lulled by the right kind of rhetoric, it might not turn out that way. The risk is not so much that the course towards the EU and NATO will be obviously reversed, but that it will be simply sabotaged. After all, when the country is not ready to insist on achieving accession to the EU, its relations with the Union slip into a phase of declarative and ritualistic dances instead of specific steps that would actually make the process of integration with European structures irreversible.

In this way, everything will depend on the capacity of active forces in Ukrainian society to resist any initiatives by the new president that might be aimed at the least deviation from the policy of separation from Russia in all spheres, and the movement to European and Euroatlantic communities instead.

“Just business” doesn’t work

However, continuing the course towards emancipation from Russia is not limited to maintaining the course towards membership in the EU and NATO, and a lack of efforts to sabotage or halt the process. According to a KIIS poll of those who voted for Zelenskiy, aside from the 32-39% who expect things that are simply not realistic and not part of the president’s remit – “reducing utility rates,” “removing immunity,” and “investigating corruption crimes” – the next item is “begin negotiating with Russia,” which 23.3% of those polled expect, and this is largely those who form Zelenskiy’s electorate.

This means that the threat of a Kharkiv Accords 2.0 in one form or another remains quite real. The variations are endless, from carrying out Russia’s vision of the Minsk Accords to “renewing cooperation in the economic sphere,” among others, by Ukraine capitulating in the gas war under the pretext of avoiding the threat of losing transit gas or getting some temporary, ephemeral reduction in exchange for direct supplies and returning Ukraine to the monopoly of Gazprom. The appeal is enormous, as would supposedly give Zelenskiy the opportunity to demonstrate his readiness to justify the expectations of his electorate that utility rates would go down.

Directly before the second round, Moscow laid out its latest series of trumps in the form of blackmail in the supply of petroleum, petroleum products and even heating coal. From now on, Russian supplies to Ukraine are either prohibited or restricted by the requirement for special permits. Who will receive them now is fairly obvious: possibly only entities that have passed the loyalty test, firstly out of the pool of Viktor Medvedchuk and his OPZZ allies. In this fashion, Moscow will be able to both restrict the delivery of fuels and to raise prices for the Ukrainian market, which will force the new Ukrainian leadership to be more willing to compromise in order to avoid the next crisis on various segments of the energy market. 

Aside from this, the point would be to establish the necessary financial resources to support pro-Russian forces through monopolist profits from licensed deliveries to Ukraine and prolong the political and informational war in Ukraine. As The Ukrainian Week warned in the past, as of April 23 the export of gasoline and diesel fuels to Ukraine were stopped by the supposedly main “alternative” to Russia as a source for these fuels in recent years – its satellite Belarus. The reason was supposedly problems with delivery and the quality of Russian petroleum. Replacing these volumes quickly and painlessly will be difficult: as of the end of QI 2019, Belarusian diesel fuel covered 34.5% of the Ukrainian market.

Myth-busting 101

Over the last few years, the media have been actively promoting the notion that the war with Russia and the curtailing of trade with this neighbor have led to the sharply worse socio-economic situation in Ukraine. The panacea that is offered is to turn the clock back and “return to traditional markets.” The key element of this propagandist vision is concentrating attention on the “worsening socio-economic indicators in Ukraine” without comparing them to what’s been happening in Vladimir Putin’s Russia at the same time.

Yet such a comparison quickly dispels the myth about “collapse because of the break with Russia,” and reveals that Russia’s economy in recent years has demonstrated an even worse – sometimes considerably so – dynamic than Ukraine’s. Economically, Russia is a very poor and unpromising model, while the proposed renewal of ties with it can in no wise ensure the promised positive effect. When looking at such key indicators as change in GDP, industrial and agricultural production, investments in basic capital or real household incomes, Russia turns out to have a far worse track record on all these accounts than Ukraine.

The long-standing realities of Russo-Ukrainian relations show that the classic logic of mutually beneficial economic cooperation in the “business as usual” vein can’t work for long – at least, not as long as Moscow figures that it will absorb Ukrainian and sees economic interactions as a lever for political control. Under these conditions, any justification of well-intended initiatives to “improve relations with Russia” will simply mean a roll-back in the process of emancipating Ukraine from Russian influence, a process finally went into full swing in recent years.

While this may have little economic sense, activating economic cooperation will inevitably turn into political dependence and compromises with the Kremlin, both in the subjugation of key areas of Ukraine’s economy and in the political sphere. Yet, the level of emancipation of Ukraine’s economy from Russia’s has moved far enough that the response to any attempts by Moscow to use economic issues to pressure Kyiv can be a complete withdrawal from any form of cooperation.

Since the beginning of 2019, Russia has constituted less than 6.2% of Ukraine’s export, based on current figures from the State Fiscal Service for QI, while the total hard currency value of deliveries to the Russian market was US $760.0 million of the US $12.3 billion going all over the world over this same period. Deliveries to those countries that involve transit through Russia – Central Asia and, to a lesser extent, Mongolia – constituted only 1.29% of Ukrainian exports in QI. Either way, we’re talking about no more than 8% of all of Ukraine’s exports, which is actually less than the average pace of growth of exports of Ukrainian goods.

In short, the situation on the world market is more significant for Ukraine’s economy than the Russian market, or even countries that depend on transit through Russia for deliveries. With the world market situation positive, annual growth of Ukraine’s exports is considerably higher than deliveries to Russia. This means that, even if Kyiv were to decide to completely stop deliveries, this would only slow down the pace of the total export of goods from Ukraine – hardly a catastrophe. Conversely, even if Ukraine’s deliveries to Russia were to double or triple over a few years, it would not represent any panacea for the domestic economy.

Go where the going is good

Incidentally, the situation with deliveries to western markets, such as NATO and EU countries, couldn’t be more different, with fully 50.5% of all domestic exports going there in QI 2019. This means that any serious turbulence with deliveries to these countries, including de to a shift in geopolitical orientation, that could lead to a reduction in the export of domestic goods there of even just 15-20% of the current levels will be far more damaging to Ukraine’s economy, not to mention dangerous for the stability in the forex and budget spheres. Even a complete halt to trade with Russia and those countries whose imports have to transit through Russia would not cause comparable pain.

On the other hand, Russian imports remain at over 13% of all imports brought into Ukraine and, as The Ukrainian Week has taken pains to point out more than once, this represents a serious economic and energy security threat in a slew of positions. Indeed, Ukraine remains critically over-dependent on supplies of certain groups of goods. That Moscow intends to take advantage of any such dependence was illustrated for the umpteenth time by its announcement of restrictions on the delivery of petroleum and petroproducts as of June 1. This is only the latest signal that confirms that what trade with Russia needs is not “normalization” but termination in all areas where it might become a tool for political blackmail against Kyiv.

Zelenskiy will have to demonstrate pretty quickly, basically during his first few weeks in office, which of these two paths he chooses.

The resolution of this problem is fairly obvious. With all strategic energy sources and industrial raw materials, where any sudden politically-motivated disruption of monopolist Russian deliveries could be a serious threat to Ukraine’s national security, paralyzing or disrupting the stable provision of power and gas to households or industry, or lead to a shutdown of heavy industry, restrictions need to be instituted to keep the share of imports of those kinds of products from the Russian Federation at no more than 25-30%.

Sovereignty is more important than just territory

In the end, the imperative will be, for the next while, to very carefully monitor the situation so that the sacred cow of “territorial integrity” and the medvedchukian formula of “returning the Donbas to Ukraine and Ukraine to the Donbas” are not used to install some variation of the doctrine of “limited sovereignty.” Any attempt to graft onto Ukraine the territories currently under Russian occupation without the real ability to control the situation there is completely impermissible.

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Nor is their return to Ukraine if it comes with any limitations on Ukraine’s ability to independently develop and carry out its domestic and foreign policy without having to keep an eye to the Kremlin or to its puppets on the occupied territories. Otherwise, de jureindependent Ukraine could well find itself de factocompletely under Russia’s sway – even without a direct large-scale war.

One idea that has been broadly popularized more recently is the idea of “finlandization” or “switzerlanding” Ukraine as a way to normalize relations with Russia and negotiate with its proxies in ORDiLO is completely unviable because it does not match the interests of any of the sides. First, this is because such variations will not satisfy Moscow for long. The motives of Russia’s current elite are largely irrational, dominated as they are by the conviction that “Ukrainians and Russians are, for all intents and purposes, one people” and Ukraine is “not even a country.”

Moreover, the “bone in the craw” is the misunderstanding that led to the “break-up of states” and “an artificial project of geopolitical enemies.” This is why Ukraine can never be a buffer or a neutral territory for today’s political elite in Russia. For Moscow, finlandization and other intermediate options could be of interest only on a temporary basis, until it’s able to “solve the Ukrainian question” once and for all. The Kremlin is only interested in those scenarios that will weaken Ukraine over time and make it easier to absorb the country at a later date. This state of affairs will be accepted for as long as they see that it’s working to discredit Ukraine as a failed state or brings it closer to the comeback by a pro-Russian puppet regime

 

Translated by Lidia Wolanskyj

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