Keeping Europe’s Eastern Promise

For many years, the European Union’s eastward expansion seemed unstoppable. But with Russia’s invasion of Ukraine, President Vladimir Putin appears to have succeeded in ordering a halt to Europe’s efforts to extend democracy, the rule of law, and open markets throughout the continent.

The EU must not kowtow to his demands. Ukraine’s fate has become Europe’s fate. Indeed, Putin not only wants to stop European political, civic, and social norms from taking root within Ukraine; he wants to roll them back in the Baltics, the Balkans, and anywhere else in Europe made politically brittle by economic crisis and/or demagogic populism.

The EU Eastern Partnership summit in Riga must demonstrate Europe’s determination to defend its unity, security, and values in the face of Russian aggression. And it must do so in concrete ways, not simply with quickly forgotten official communiqués for which the Kremlin and its Ukrainian separatist proxies have only contempt.

Of paramount importance is to make the new policy a true partnership among peoples. The citizens of the partner countries must become the real beneficiaries if this partnership is to become more than the inert agreement that it has been. Generous EU commitments on mobility, aid to SMEs and entrepreneurs, and a vast increase in educational opportunities are among the key ingredients that could make such a partnership politically popular for a vast majority.

Ukraine should be the centrepiece of any effort to revive the Eastern Partnership as a way to attract the support of Europeans who remain outside the EU. Yes, the news from my country remains bad. Thousands of our citizens are dead. Hundreds of thousands are now refugees in their own homeland. The Minsk II cease-fire agreement has failed to restrain Russian/separatist forces.

Although Ukraine’s economy is no longer in free-fall, as it was last winter, GDP has declined by a quarter since Russian troops first invaded in February 2014. Official unemployment now stands at over 10%, compared to 7.3% before Russia’s occupation and annexation of Crimea. Our national debt is mounting by the day to levels that inspired The Economist to suggest that we may become the “Greece of the east.” Moreover, much of our economy remains in separatist hands, and they, no surprise, are running the stolen assets into the ground.

In the face of such calamitous conditions, Ukraine’s government is a bit like the proverbial Dutch boy who put his finger in a dike to stop the sea from leaking through. Despite herculean efforts, more leaks continue to appear. The simple truth that Europe must grasp is that we Ukrainians simply do not have enough fingers to plug all the leaks, and thus rebuild our economy, on our own.

Despite the depth of Ukraine’s plight, Europe cannot avoid taking up the challenge that Putin has set before it. After all, if Putin succeeds in turning Ukraine into a failed state with a frozen conflict embedded within it, he will seek the same outcome all along the EU’s borders, from Estonia to Greece.

Fortunately, the EU has a real partner in Ukraine, whose people’s devotion to Europe has been tested by snipers in the streets of Kyiv and now by the Russian army. Their courage, and their newfound political activism, has stiffened the government’s backbone in implementing needed reforms and made it impossible for any political actor in Ukraine to buck the pro-EU consensus. The EU can stiffen it even more by demanding much greater clarity in the fight against corruption.

Yet, given the war in the eastern Donbas region, the shattering of so much of our economy, and the precarious nature of our government’s finances, the International Monetary Fund and others are clearly asking too much of Ukrainians. The idea that Ukraine can embrace the economic “shock therapy” that Poland pursued a quarter-century ago is the type of cookie-cutter policymaking that resulted in the 2008 global financial crisis.

That is why a renewed Eastern Partnership must embrace bold new initiatives for Ukraine, and not try to reheat old policies designed for very different circumstances. A recent report from the Vienna Institute for International Economic Studies provides some guidance concerning what the EU should now try to do for Ukraine.

For starters, the EU should help us create a more stable exchange-rate regime to overcome the currency volatility that has wracked our economy since Russia’s invasion. And, although fiscal consolidation is necessary, given the state of our economy, Ukraine’s most vulnerable people are now enduring a hand-to-mouth existence. They have nothing more to sacrifice. On the contrary, they need relief, and Europe should insist that its programs, and those of the IMF, take their needs into account.

Perhaps most important for the long term, the EU must honour its commitment to the deep free-trade and association agreement that Ukraine’s previous government refused to sign in late 2013. After all, it was to secure that agreement that young Ukrainians braved former President Viktor Yanukovych’s snipers, and are now braving the might of the Russian army.

To follow through would do more to anchor Ukrainians’ confidence in their European future, and to convince the Kremlin that it cannot succeed in rolling back European values, than anything else the EU might do.

One clear way that Europe can demonstrate that its association agreement with Ukraine remains alive is to encourage investment in my country. Since Russia’s invasion, FDI into Ukraine has collapsed, which is precisely what Putin wants.

The EU can demonstrate its commitment to Ukraine’s economic renewal by having the European Investment Bank invest in a showcase infrastructure project, say improved rail links to the EU.

The EU faces a stark choice: a renewed Eastern Partnership or a renewed division of Europe. The decisions that it makes, beginning at the Riga summit, will determine Europe’s fate for decades to come.