Ukraine Marches Towards European Union Accession
Ukraine EU Accession - The Economic and Geopolitical Impact on Russia
Dear Subscribers,
“Barbershop Whispers….Russia” begins with “My Takeaways”on the main topic followed by the main topic discussion. The last two sections of “Barbershop Whispers…Russia” will be follow-ups from previous publications and emerging events.
In the previous issue, I discussed the Kremlin’s evolving policy towards the Gaza war. An evolving and perceived pro-Palestinian policy is being projected abroad and internalized at home, helping spur an anti-Israeli mob riot in the Dagestani airport.
In this week’s issue, I will discuss Ukraine’s EU accession invitation and the impact it has on Russia and the Russian-led Eurasian Economic Union. What are the geopolitical and economic consequences of Ukrainian EU membership.
My Takeaways:
TRADE LINKS: Ukraine-Russia trade links permanently destroyed by Putin’s war and billions in revenue now gone. Russia adapted quickly by pivoting to Eastern markets, albeit at great costs;
MARKET EXPANSION: As Ukraine progresses towards EU, it will become model for other former Soviet states as they exit the weakening Russian orbit. Ukraine poised to build an economic powerhouse within the 450M EU market;
GEOPOLITICAL INFLUENCE: Ukraine accession talks, and EU discussions with Moldova and Georgia, is a continuation of Russia's weakening regional and global economic and political status.
Background
Ukraine signed the European Union-Ukraine Association Agreement (AA) in June 2014, was granted EU candidate status in 2022, and last week the European Commission recommended formal EU membership accession talks with Ukraine. EU Commission President Ursula von der Leyen stated in Brussels on November 8:
“Ukraine has completed … well over 90 percent of the necessary steps that we set out last year in our report,”
The Commission also recommended formal EU accession discussions with Moldova and EU candidate status for the Republic of Georgia.
Since the collapse of the Soviet Union, Russia created several organizations designed to retain and deepen its economic and political influence over the newly independent Soviet states. Russia’s adoption of the “Near Abroad” foreign policy is discussed in BWR’s “Russia’s Near Abroad is in Play – Influence Competition”. The Commonwealth of Independent States, Collective Security Agreement (CSTO), the Shanghai Cooperation Agreement (SCO), and the Eurasia Economic Union are among the most prominent of these inter-government post-Soviet Eurasian agencies dominated by Russia. Membership and participation in these organizations by former Soviet states varies, and China’s growing participation reflects Russia and China’s partnership of convenience to weaken US influence in Central Asia, a region where they both have economic interests.
Ukraine’s path to the upcoming EU accession talks began in June 2014 with the signing of the European Union-Ukraine Association Agreement. This was a controversial event at the time and directly resulted in Russia’s invasion of Crimea by “little green men” from Russia and the Kremlin’s mobilization of local Russian proxies.
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Shortly after Ukrainian President Viktor Yanukovych indicated he would sign the EU Association agreement that was ratified by the Verkhovna Rada (Ukrainian parliament), Putin presented Yanukovych with an offer to join the Eurasian Customs Union (the predecessor to the EAEU), along with multiple billions in loans. Yanukovych delayed signing the EU agreement and this resulted in the popular civil unrest known as the Maidan Revolution and the ultimate removal of Yanukovych from office by the parliament, after he fled to Russia in the dark of night. The EU Association agreement was ultimately signed in June 2014 by newly elected president Petro Poroshenko.
The Impact on Russia
Ukraine was a major trading partner for Russia before Putin’s annexation of Crimea. The transit of Russian oil and gas through Ukraine generated billions in transit fees for Ukraine and billions in revenues for Russia. In Soviet times and up until the /Crimea invasion, Ukraine was also a major supplier of aerospace technology and parts — a legacy of the Soviet military industrial complex.
Ukrainian aerospace research laboratories and manufacturing units such as Paton Turbine Technologies were critical to the Soviet military and continued to be so after the Soviet collapse.
But all these trade links have been destroyed by Putin’s war on Ukraine. Billions of EUR in trade revenues are now gone. So, there will be no immediate economic impact on Russia resulting from Ukrainian EU accession, and the long-term economic impact on Russia is unclear. Russia has quickly adapted and pivoted to new markets for its crude oil and natural gas. Any renewal of trade between Russia and Ukraine will depend upon when and how Putin’s war comes to an end.
The real impact on Russia will continue to be political, at home and abroad. As Ukraine continues its path towards EU membership, customs regulations and product standards will be harmonized and Ukrainian businesses will see new economic opportunities with a bloc of 550M people. Ukraine will have to continue to address corruption, an endemic problem in nearly all post-Soviet states. Ukrainian President Zelensky is clearly taking steps to address corruption, as evidenced by the September dismissal of Defense Minister Oleksii Reznikov. The fight against corruption is being pursued not only for the purpose of EU accession, but also under pressure from allies, as a condition for continuing wartime financial aid to Ukraine.
As Ukraine changes its governance practices and improves its standard of living, the Russian population will take note and again question their own challenges with corrupt bureaucrats.
The impact Ukrainian accession talks will have on Russia’s near abroad is equally significant. It will again bring into question the value proposition of Russian-led organizations, particularly given that nearly 80% of the economic bloc’s trade is centered on Russia.
Ukraine’s path to membership will not be easy. The next step is for EU leaders to back the Commission’s plan at a summit in Brussels on 14 and 15 December. All 27 EU members must agree on formally launching Ukrainian accession discussions. Hungarian Prime Minister Viktor Orbán has already expressed his position in an interview this week saying:
“Ukraine is in no way prepared to begin membership talks with the EU…..Ukraine is as far from EU membership as Makó is from Jerusalem,”
Conclusion:
Ukraine’s EU accession talks reflects Russia’s weakening influence over its near abroad and with Europe, a process that has only accelerated since the second invasion of Ukraine. In Putin’s 23 years in power, he has sought to maintain and deepen the Kremlin’s influence over the former Soviet states through Russian-centric organizations like the EAEU and CSTO — without success.
Ukraine’s political and economic alignment with Western interests will motivate other former Soviet states to try to strengthen ties with the EU as well, reducing Russia's dominance in the region. Additionally, as Ukraine implements EU-mandated economic and governmental reforms, it may become a model for improved governance that makes Russia's autocratic and repressive system look increasingly unfavorable in comparison. Ukraine’s EU candidate process is already weakening Russia's economic, political and military leverage in the near abroad as well as Europe. Türkiye is gaining influence in the Caucasus and on the global stage at Russia’s expense.
Follow-ups & Quick Bites:
Follow-Ups:
Russia and the Gaza War (Dagestani Makhachkala Airport Riot)
The Kremlin is not happy with the Dagestani authorities’ inaction over the anti-Israeli riots at the Makhachkala International Airport last week. TASS Russian news agency reported the home and office of Dagestani Deputy Interior Minister Rufat Ismailov was searched by the Federal Security Service (FSB).
per RIA Novisti, Ismalilov and the police chief's deputy Dalgat Abdulgapurov were arrested on bribery charges and flown to Moscow for “discussions”. I am shocked, shocked that there is bribery in this establishment!
The kompromat file on Ismalilov and Abdulgapurov has now been opened and is being selectively applied as in Soviet days. Most likely, it’s a move by Sergei Melikov, Putin’s appointed Head of the Dagestan Republic, to clean house.
Quick Bites:
Putin Hosts Chinese General Youxia in the Kremlin
Putin hosted Zhang Youxia, a Chinese general and vice chairman of Beijing's Central Military Commission in the Kremlin this week. In televised Russian broadcasts, Putin stated:
"Our contacts in the military and military-technology spheres are becoming increasingly important"
Prior to the meeting with Putin, Russian Defense Minister Sergei Shoigu treated Zhang and the Chinese military delegation to a red-carpet ceremony in Moscow.
Beijing has become Russia's key political and economic ally, but overt military support has been elusive, as the Kremlin is more isolated from Western-led global economic and political system.
This continues to be a relationship of connivence for Putin and Xi, as they push back on US-led Western dominance over the global and economy and political world order.
Foreign Minister Lavrov Accuses the West of Forcing Green Energy on the World
Russian Foreign Minister Sergei Lavrov accused the West of creating a crisis in the global oil and gas market by pressuring a switch to green energy onto the global economy.
"In fact, the reasons for the negative phenomena in the energy sector were the irresponsible actions of the collective West, when it decided to force ... the green transition for itself and impose the same green transition on other countries that were simply not economically ready for it,"
He went on to say that Western boycotts of Russian energy
"dealt a serious blow to global energy security. These steps led to the rupture of historical value chains, costly redistribution of global energy flows and rising transaction and logistics costs."
Vol 1, No 19 - BWR 12.11.2023
Thank you for reading “Barbershop Whispers....Russia” written by Adam A Blanco! “Barbershop Whispers…Russia” is a product of e8Q Technologies, a consultancy with insights on all things Eurasia. Subscribe for free to receive new posts.