EU pragmatism has rewarded Russia’s brazen trade bullying

A foot in the door. EPA/Olivier Hoslet

Few bilateral agreements have ever had such turbulent history and implications as the Association Agreement between the EU and Ukraine.

It was former president Viktor Yanukovych’s refusal to sign the agreement that triggered massive protests in Ukraine, resulting in his overthrow in February 2014. This in turn provoked Russia’s response: the annexation of Crimea and the fuelling of violent separatism in eastern Ukraine.

Asserting its independence, Ukraine signed the Association Agreement in June 2014. Russia’s opposition to it intensified over the summer, and succeeded in delaying the agreement’s ratification until after the September ceasefire was struck.

During the tense gap between signing and ratification, trilateral EU-Ukraine-Russia negotiations took place against the backdrop of military intervention in Ukraine and amid threats of a trade war.

During these negotiations, Russia tabled far-reaching demands, including a revision of the already signed agreement – in other words, it went so far as to draft amendments to the terms of somebody else’s already signed accord.

In particular, it succeeded in bringing a key part of the agreement to a standstill: the EU’s planned expansion of trade links.

Oh no you don’t

Crucially, the Association Agreement envisages the Deep and Comprehensive Free Trade Area (DCFTA). This section of the agreement entails tariff changes, but also provides for Ukraine’s integration into the EU single market.

Russia has long objected to both, protesting the potential damage to its economy. By that, it clearly means that it rejects the DCFTA’s ban on future Ukrainian membership of the Eurasian Economic Union – which Russia has long presented as a viable and preferable alternative to any Ukrainian integration with the EU.

In the end, the deadlock over the deal was resolved via a compromise. The agreement was ratified by the Ukrainian and European parliaments, but the implementation of the key sections on trade has been suspended until the end of 2015 due to “Russia’s concerns”.

And predictably, that compromise is already proving unstable, with Russia now firming up its demands for legal revisions and mirroring the EU’s approach by imposing tariffs with suspended application.

The thin end of the wedge

Who exactly mooted this compromise and why is still unclear. EU officials have claimed it was the initiative of the Ukrainians, who were concerned about the threat of Russian trade penalties. But there was also pressure from EU member states pressing for a “normalisation” of relations with Russia, and an end to the costly spiral of economic sanctions.

If anything, the EU’s response to Russia’s demand for a say in EU-Ukraine relations was presented as a success – on the grounds that ratification took place without “a single word changed”.

As Elmar Brok, a veteran member of the European Parliament put it:

… this process [negotiations] has been concluded. And the Russians are part of it. They were there for the negotiations. It’s all coming into force. It’s just being implemented incrementally, as is often the case with contracts. From the legal point of view, the whole contract will be enforced in all its details. It’s just that there are often transitional arrangements. That’s normal in business.

Since the start of the Ukrainian crisis, the EU has undeniably been in a bind, desperately trying to balance principles, economic interests and complex constraints. But by opting for this latest compromise it has ended up with the worst of both worlds: a U-turn with high and far-reaching potential costs, without a lasting resolution of the deep problems in the post-Soviet region.

Gatecrashing

Allowing Russia to dictate the dynamics of EU-Ukraine relations at short notice in a time of conflict is not compatible with a comprehensive, sustainable strategy. Whether born out of a pragmatic trade-off or a tactical retreat, this is a short-term fix based on a set of shaky assumptions – and its long-term implications are far-reaching indeed.

Most obviously, allowing Russia to gatecrash bilateral negotiations with another country sets a dangerous precedent. It is a reversal of the EU’s earlier position; it has created a minefield for international lawyers. And even more importantly, it has badly undermined the principle of dealing with Ukraine as an independent country.

By letting Russia into its business dealings, the EU has acknowledged Russia’s right to determine the essential terms and limits of its post-Soviet neighbours’ integration choices.

The potential implications of this precedent to Russia’s other European neighbours are obvious, but it will also have consequences for the EU’s own relations further afield – from potential members such as Turkey to vital trade partners such as China.

Double standards

The EU has also accepted one of Russia’s clearest double standards: while Putin was griping that nobody had talked to Russia about the potential consequences of the DCFTA, he conveniently omitted to mention that the Eurasian Customs Union was launched in 2010 with no consultation with the EU and no adequate transitional arrangements – resulting in significant damage to EU businesses.

In any case, Russia’s “trade concerns” are spurious on a number of levels. The problem of “flooding with EU goods”, for instance, can be addressed by the proper application of the WTO’s rules of origin requirements.

Taking such questionable concerns at face value and hoping to resolve them at a later stage is folly. The EU has already consulted with Russia on the subject for many months now, and 15 more months of negotiations will not help address the real problem: Russia’s fundamental objection to any EU influence over the post-Soviet space.

The EU’s response seems to rest on the assumption that a stable agreement can only be secured by reflecting and accommodating Russia’s preferences. Securing peace and saving human lives is obviously a noble objective, but the DCFTA compromise as struck will only legitimise and validate Russia’s “hybrid war” strategy.

False optimism

On balance, it is hard to avoid the conclusion that by agreeing to this pragmatic, principles-lite version of the deal, the EU has caved. There is no reason to assume that because of this gesture towards compromise, Russia’s attitude to its ex-Soviet neighbours will suddenly be based more on law and shared understanding than on geopolitical interest.

After years of caution towards the Eurasian Customs Union and Russia’s behaviour in its self-declared “sphere of influence”, the EU has suddenly accepted and legitimised Russia’s currently favoured way of conducting international relations – just as Russian actions vis-à-vis Ukraine have deeply shaken the international order.

The EU’s fawning pragmatism has not escaped the people of Ukraine, with the prevailing reaction in social media being “we’ve been abandoned”. To present it as “business as usual”, leaving a series of “landmines” for future interactions between the EU and Russia in the “contested neighbourhood”, is deeply concerning.

By accepting Russia’s concerns for the sake of uncertain gains, the EU has set itself up for years of trouble. Russia’s strongarm tactics need to be confronted, not passed off as “business as usual”.

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