Lord Risby is Chairman of the British Ukrainian Society, and Co-Chairman of the WEF Council on Ukraine.
A longstanding Russian citizen living in Ukraine told me that there is an essential difference between the two nations. Russians, he said, like a really strong leader, warts and all, whilst Ukrainians react very negatively to such a character. President Yanukovych failed to understand this, changed the constitution to increase presidential authority, unleashed his family into grotesque money-making activities, and then resorted to unconscionable violence.
Ahead of the proposed signing of the EU Association Agreement in Vilnius last November, which in effect incorporated a deep and comprehensive free-trade area accord, his many critics remained relatively quiescent. This is because this agreement would have involved clear conditionality and would have begun a process of institutional and economic reform.
For over a year, a comprehensive process was undertaken by the World Economic Forum to set out the alternatives facing Ukraine’s economy, and finalised to coincide with the Vilnius Agreement, and ironically even endorsed by President Yanukovych. It was meant to have been formally launched at Davos in January.
However, just prior to the signing date last November, he met President Putin at Sochi, and the rest is history. For it really was simply a case of his regime’s survival ahead of the scheduled presidential elections in the spring of 2015. Their Treasury was effectively bare, the Europeans were offering nothing financially, whilst the Russians offered cash and debt cancellation, and had for months introduced bans and delays at the border for a wide range of Ukrainian products, to frighten the President. It worked.
Following the uproar and demonstrations which surrounded the presidential change of tack, the government fell and a new administration is being formed. There will be fresh elections and undoubtedly the European track will be revisited. But bluntly, whilst officially their reserves stand at $15 billion, there are powerful indications that there is nothing left at all, and of course consumer confidence has collapsed.
Some half of Ukraine’s trade is with Russia, a country which effectively controls Ukraine’s heat and power. However appalling the prospect is, most Ukrainians believe that some sort of accommodation with Russian will be necessary. Once the new government is formed, it may be possible for the IMF, World Bank, and the EBRD to assist – but there must be conditions and real structural reforms, however painful. Ultimately, though, Ukraine simply cannot escape its geographical and commercial ties to Russia.
However expressed, Russia is furious. The loss of Ukraine from the Soviet Bloc was most keenly felt. Kyiv is the spiritual home of Russian Orthodoxy – there is real and genuine emotion in Moscow about the relationship. Despite regional differences, this is not at all widely reciprocated in Ukraine.
Skilled diplomacy will be required to marry any restarted European track with Russian ambitions. Their Foreign Minister, Sergei Lavrov, has called for Ukraine to join an ill-defined customs union with Russia, but also long-term to create a greater free-trade area between Europe and Russia and other members of their Eurasian Economic Union. However, relations between opposition leaders in Ukraine and leaders in Russia are extremely poor. It is the much criticised business groups which have the most need (and contacts) to try to regularise the relationship between the two countries.
Incredibly rich in resources, Ukraine was historically the breadbasket of the region. It has been appalling mismanaged since independence. A younger generation palpably yearns for something different. The only certainty is that the horrific events in the country in the last few weeks mark the last gasp of a political generation immersed in a Soviet type culture which has ultimately brought the country to its knees.