December 27, 2013

Chimera of Eurasian Integration-2

When the European Course Is Being Replaced with the Russia's Wake.
Possible consequences of Ukraine's changing its political course.

Ukraine's refusal to sign an Association Agreement with the EU and signing a package of political and economic agreements with Russia instead has become an extremely resonant event, that seriously worried politicians and experts in the West and the East, who are giving different, sometimes opposing each other estimates of the event and are trying to predict its consequences.

Most political analysts believe that Ukraine's getting the “fraternal” loan with a simultaneous decrease in the price of Russian gas will allow the Ukrainian government somehow to cope with economic problems and stabilize the development of Ukrainian industrial production. Isn't it the lifebuoy for the current leadership of the Ukrainian state, which day and night is worrying about the upcoming presidential election of 2015? If so, why doubt the choice that has been made? Why analyze possible effects of other variants of the future? There are a lot of different questions, the answers to which for some reason only generate new questions and do not satisfy public opinion at all. Restlessness of the society always turns into chaos or at best — into a revolution.

And what do the rest of political scientists think — those who are not thrilled with “pro-European” demarche of the official Kyiv? They are searching the barrel of negative for a spoonful of positive. Thus, the rejection by the government of Ukraine of the Association Agreement with the EU has accelerated the process of uniting of patriotic strata of the Ukrainian society around the strategic goal — European integration. “Euromaydans” in Ukrainian cities and towns testify to this process. In this way, true Ukrainians are trying again to confirm their identity as a European nation — integral part of the Western world. This is firstly.

Secondly, events in Ukraine have strongly disproved the Kremlin's statement about the “desire of the majority of Ukrainian population to reunite with Russia within the building of the Customs and Eurasian Unions”. And disproving, they undermined at the post Soviet territories the whole ideological basis of Moscow's Eurasian integration initiatives, having confirmed the capability of national centric forces of the CIS countries to defend their goals and resist Russian neo-imperial policies. Therefore, we cannot despise the potential of these forces, which more than once or twice will have their say.

As for the further list of consequences of events in Ukraine, they are not too cheerful. Here comes the turn of the harsh prose of life. For example, most experts (including Russian ones) believe that Ukraine's actual giving up its European integration in favor of closer ties with Russia and its Eurasian structures will create a number of serious problems for our country. Of course, with relevant negative effects.

Experts point out that now is being created a situation in which Ukraine will lose its economic independence. It is beginning the process of Ukraine's getting the Russian financial loan without a real guarantee for its return to the lender. Later the Russian currency “rouble” will get in our country the so-called status of freely convertible currency. The Russians will rush to unite “Gazprom” and “Naftogaz of Ukraine”, calling the association “joint venture” and will remove all barriers before the Russian business, which has long tried to seize strategic sectors of the Ukrainian economy. This will be a prerequisite for virtual elimination of the economic independence of Ukraine, as it has happened in Belarus, Armenia and Kyrgyzstan, and is happening now in Kazakhstan.

If we continue the list of “brotherly achievements”, we should mention the loss by Ukraine of opportunities to lead independent economic policies in domestic and foreign spheres, the withdrawal of the leading enterprises of the national economy (in particular, defense, space, aircraft and shipbuilding, electronic) from under the control of Ukraine and its businesses, growth of Russian influence in the Ukrainian banking sector and strengthening of the positions of the ruble to the hryvnia (which will lead to a depreciation of the Ukrainian currency and difficulties in foreign trade activities), losing by Ukraine its opportunities to get alternative sources of energy carriers.

Having established its control over the Ukrainian economy, Russia will definitely get leverage for influencing foreign policy of Ukraine. Notice how the media of Russia allowed themselves to come up with explicit statements about the possibility of Ukraine's losing Russian credits if it signs an Association Agreement with the EU. But then they did not ask for the permission. Russian media feel the command “go” before their masters think of it. According to one Russian media man — “professionalism of the press, isn't it...”

In fact, between Russia and Ukraine legally establishes the coordination of their foreign policy. Taking into consideration Russia's having the above-mentioned leverage for influencing Ukraine (including through the mechanisms of monthly or quarterly adjustment of gas prices), this coordination will certainly demand from Kyiv to follow in the rear Moscow's foreign policy and, in view of its goals and priorities, this will make Ukraine not only forget about European integration course, but also help Russia in its opposition to the West.

With the Black Sea Fleet of the Russian federation based at its territory, actually not controlling the modernization of its ships, weapons and military equipment, Ukraine will continually feel the threat to its security. And it will undoubtedly grow, especially when Russia will be using the Black Sea Fleet for demonstration of force in the Black Sea and Mediterranean regions. As it was, for example, not long ago, when Russia was providing military and technical assistance to B. Assad's totalitarian regime in Syria during its war with its own people.

This undermines the credibility of Western countries and international organizations in Ukraine that will be taken as an unstable state with unpredictable foreign and domestic policy, which is unable to comply with international agreements and treaties. In fact, it can be considered a potential enemy of the USA and the EU, citing, for example, the anti-Western information campaign, which is set by domestic pro-government politicians and media in response to the attempts of the USA and the EU to mediate in the settlement of the situation in our country today. Distrust to the leadership of Ukraine has been expressed by influential U.S. Congressmen J. McCain and K. Murphy, the Prime Minister of Canada S. Harper, European Commissioner for Enlargement of the EU and European Neighbourhood Policy Štefan Füle and the new Foreign Minister of Germany F. Steinmeier.

Unfortunately, in some the situation is affected by the amorphous behavior of a part of the population of Ukraine, which, caring exclusively about mercantile matters do not care about the future of our country, its ideas of national revival. That is what the current leadership of the country counts on, giving priority to “solving economic problems of the country before political and ideological issues”.

As for the expectations for Russia's aid in solving economic problems in Ukraine, it is necessary only to recall the history of relations between Russia and Ukraine, as well as the relations of Russia with other countries of the former Soviet Union.

Thus, the loan of 15 billion US dollars has to be paid back, — no doubt about that, and with the rate of 5% per year. According to First Deputy Prime Minister I. Shuvalov, this loan is protected by the strictest legal standards. So Russia may demand to return it any time. Given the Ukraine's government's plans to use these loans exclusively for paying past debts (to avoid a default), to meet the so-called “social needs” as well as for increasing funding for law enforcement, but not for real reforms in the economy of the country, we can already conclude that Ukraine will not be able to pay back to Russia soon. Especially because over the last four years of “sustainable development of Ukraine”, its state debt has increased almost ten times and reached the astronomical sum — at least 70 billion US dollars (almost equal to that of the Russian Federation).

By the way, possible (but not always necessary) increase by means of the Russian loan of salaries and pensions during the year, will inevitably lead to the need to return the borrowed money from pockets of Ukrainian citizens. And in much larger sums. This problem would be a disaster in case of default of Ukraine due to excessive accumulation of foreign debts and openly robbing nature of the economic policy.

The same is true about “Russia's reducing the gas price for Ukraine”. In view of the overwhelming majority of experts, in fact will be applied traditional scheme of distribution of profits among oligarchic structures of Russia and other CIS countries, which in the Ukrainian version will mean selling by “Gazprom” of “blue fuel” to the joint venture of “Naftogaz” at a really reduced price of 270 US dollars per one thousand cubic meters, which in turn will resell it to its Ukrainian consumers at the price of at least 400 US dollars.

It is this scheme that is used in Armenia after the decision of the country's government not to sign an Association Agreement with the EU and joining the Customs Union. This perspective is confirmed by the statements of the Government of Ukraine about its having no plans to reduce the cost of utility services for the Ukrainian population (due to the decrease in gas prices), because, you see, the government intends to “direct current grants for other purposes.”

By the way, signing of agreements and arrangements with Russia does not mean that this way is guaranteed economic preferences for Ukraine. Thus, Russia has not lifted the restrictions on the access of Ukrainian goods to its market, explaining that “their quality being not up to the standards of the Russian Federation”. Russia is even considering the issue of introduction of new sanctions against Ukrainian products, in particular, to the frozen beef. It is characteristic that such sanctions relate to products of the western regions of Ukraine (meat and dairy enterprises in Lviv and Ivano-Frankivsk regions) and Ukrainian businesses (company “Roshen”), which support the course of European integration.

Frankly speaking, it is useless to hope for Russia as a reliable rescuer. The economic situation in the Russian Federation itself is also incredibly aggravated due to lowering of global demand for Russian energy carriers, which are the basis of Russian exports. Experts estimate that in the coming years this trend will increase. After all, the main Russian partners are moving to alternative energy sources. The government of Russia has even reduced spending on the country's development and implementation of social programs, and thinks about cutting the aid to its allies. This, by the way, explains why the loan for Ukraine was taken from the reserve fund for supporting the National Welfare of the Russian Federation, which is designed entirely for absolutely different purposes.

We must admit that Russia's economic problems automatically complicate the economic situation in other countries with which it established strong trade and economic relations. Now this, as we have mentioned above, is felt not only by Belarus, but also by Ukraine and, at this, even sharper than during the peak of the global crisis of 2008-2009. And if at that time Ukraine was able to get loans from the IMF and the financial support from the EU somehow rescued its economy, today it has deprived itself of this opportunity. A change in the attitude of the United States and the European Union to Ukraine reduces foreign investors' credibility in it. So eventually the country loses both, Western investments and a chance to use the world's modern technologies.

So even if they manage to temporarily stabilize the socio-economic situation in the country with the help of loans and lowering gas prices, we will soon get the “package” of much more complex economic issues for solving which much more cost and effort will be needed. We dared to pave the way which before us had been paved by Belarus which in exchange for political concessions to Moscow and the subordination to it of the country's economy hoped to resolve its social and economic problems, and as a result, not only failed to solve them, but lost its statehood.

We all, without exception, should realize and having realized, should remember forever that Ukraine's sovereignty and its European choice can never be achieved with the help of Russian money.