It appears to be ‘business as usual’ in the EU’s dealings with Ukraine even after the Dutch ‘No’ vote in a referendum on Ukraine’s free trade and association deal on April 6. But the EU’s credibility as foreign policy player has been seriously dented, with the bloc’s already hesitant enlargement policy in the Balkans and Eastern Europe looking as though it will be the biggest victim of the vote.

Javier Solana, the EU’s first foreign policy chief appointed in 2001, tweeted that the Dutch vote was “a failure” and “a brake on Ukraine-EU relations… the confirmation of an overall trend”. The European Commission’s president, Jean-Claude Juncker, warned before the vote that a ‘No’ would trigger “a continental crisis” at a time of heightened tensions with Russia. Since the vote, Juncker has remained silent, with a Commission spokesperson describing his mood as “sad”.

Ukraine’s Association Agreement with the EU was at the heart of the crisis in the country that kicked off in late 2013. Former president Viktor Yanukovych’s decision not to sign it and instead do a behind-the-scenes deal with Russia triggered the street protests that led to his ouster in 2014 and Russia’s subsequent annexing of Crimea. The post-revolution regime in Ukraine signed the association deal in June 2014.

The deal covers large areas of policy ranging from human rights and rule of law to trade policy, competition law, industrial standards and intellectual property rights. The trade pillar of the agreement came into force on a provisional basis in the EU in January 2016. The deal is seen by its proponents as an instrument to help Ukraine reform its state and modernise its economy.

The Association Agreement is part of a wider web of relationships that Ukraine has with the EU. These involve a bargain: Ukraine gets greater access to the EU and aid money, in return for commitments to often difficult and unpopular policy reforms. Ukrainians are in the process of being granted the right to travel visa-free as tourists to the EU after a process of reform in its border control systems.

The EU has similar arrangements in place with Moldova and Georgia – parties to the EU’s so-called Eastern Partnership (EaP), which also includes Ukraine, Belarus, Armenia and Azerbaijan. The EU plans to sign a political and economic agreement with Azerbaijan and is re-engaging with Armenia, which pulled out of its Association Agreement talks with the EU in 2013. Though these agreements pick instruments from the policy toolbox used by the EU when it was preparing Central and Eastern Europe candidates to join the bloc in the 1990s and early 2000s, Brussels has not offered any real prospect for Ukraine – nor any other EaP partner – to join the EU so far.

The Association Agreement with Ukraine comes at an inauspicious time in the EU. Euroscepticism and populist movements rejecting foreigners, national elites and the EU are on the rise.

The Dutch vote is the result of a new law there that allows citizens to initiate consultative referendums. It was the Dutch Eurosceptic platform GeenPeil that put the system to the test with the Ukraine deal. It gathered 470,000 signatures – significantly more than the 300.000 required by law to initiate the referendum. To be valid, the vote needed a minimum 30% voter turnout. And it did, with an estimated 32% showing up at the polls; 64% of those who voted said ‘No’ to the association deal.

Even so, few believe the Dutch non-binding referendum will put Ukraine’s Association Agreement at risk. The referendum result is not legally binding on the government, and the deal has already been ratified by all EU institutions and the 27 other EU member states. For the moment, the EU’s executive body, the Commission, is going about its business as usual. “It is foremost to the government of the Netherlands to analyse the outcome and decide on the course of action,” Margaritis Schinas, the Commission’s spokesman, said. “The agreement is being provisionally applied by unanimous decision of the Council with the backing of all the 28 EU member states and there is no impact on this. The Commission remains strongly committed to the development of its relations with Ukraine.”

The Dutch government, run by a coalition of centrists and social democrats, will need to act somehow on the referendum, although Prime Minister Mark Rutte signalled it was not rushing to any judgement. Carsten Nickel, senior vice president at the consultancy Teneo Intelligence, explains that the Dutch government is preparing for general elections due by March 2017. With the populist leader Geert Wilders leading the polls at around 39%, Nickel says the centrist government of Prime Minister Mark Rutte can hardly afford to simply ignore the ‘No’ vote. Analysts believe some form of Dutch opt-out from some aspects of the Association Agreement with Ukraine could be one outcome of a political process that has only begun to unfold.

Enlargement fatigue

The prospect of more migrants arriving from Eastern Europe and of an already unlikely accession of Ukraine to the EU were key campaign arguments for the ‘No’ camp. Hence an immediate victim of the referendum could be the ongoing visa liberalisation process for Ukraine. Daniel Capparelli, an analyst with the consultancy Global Counsel in London, tells bne IntelliNews: “Rutte will likely push for additional assurances from Brussels that the agreement may not be interpreted as a step towards EU membership, and a renewed commitment from Kyiv to accelerate the implementation pace of its reform programme. This is essentially stating the obvious… while symbolically addressing the concerns of those who voted ‘No’.”

Rem Korteweg, senior research fellow at the Centre for European Reform, a think-tank in London, says that the EU membership perspective for neighbouring countries, be it Ukraine or Balkan countries, already unlikely, could become even more distant. “It is very likely that any enlargement decision will be subjected to a referendum, in the Netherlands or elsewhere, and rejected. The Dutch government will be very hesitant to agree to any enlargement in the current circumstances,” Korteweg explains.

Many have said the Dutch no vote is a win for Russia’s geopolitical game in Europe. “The outcome of the referendum will not immediately influence the EU’s relationship with Russia, but Russia will use the ‘No’ vote as part of its narrative and say that obviously the European people agree that Ukraine is run by corrupt criminals,” says Korteweg. “In so doing, it helps the Kremlin build support for its position in Europe.”

The Dutch referendum has exposed the flaws of the EU’s 2010 Lisbon Treaty, the fundamental rules setting out the functioning of the Union. The treaty gave for the first time the EU the requisite legal standing to sign international agreements. But its rules require that many of these agreements must be ratified not only by the Council (the 28 member state governments represented in Brussels) and the European Parliament, but also the 28 member states to ratify the deal separately, when these agreements are Association Agreements, about enlargement, or deal with topics in which the EU shares competence with member states such as single market rules governing energy and agriculture, or freedom of movement, security and justice. Because most EU agreements touch upon these matters, just about any current international EU agreement under negotiation or awaiting ratification in the EU could be jeopardised.

In the EU’s immediate neighbourhood, the Dutch referendum is not likely to affect existing agreements. But it could affect future deals in the EU’s eastern neighbourhood, such as the planned one with Azerbaijan. “It will make the EU somewhat more hesitant to strike political agreements,” Korteweg reckons.

No wonder Bruno Maçães, who was until recently Europe Minister of Portugal, tweeted that the Dutch referendum was “another nail in the EU’s foreign and trade policy coffin”.

“With what credibility can it negotiate international agreements in the future?” he asks. Not much, it would seem, after the Dutch vote.