COMMENT: Ukraine government ignores certain EU demands

By bne IntelliNews February 20, 2013

Concorde Capital -

Ukraine's Cabinet of Ministers posted on its website on February 15 its euro-integration plan (approved two days earlier), which reportedly differs from the recommendations that had been suggested a week earlier by Stefan Fule, the European Commissioner for Enlargement. He submitted to Ukraine's Foreign Ministry a list of 19 indicators that the EU leadership would be using to judge Ukraine's readiness to sign the Association Agreement. Fule didn't make them public.

The government's plan adopts 10 of the 19 indicators, reported the Kommersant-Ukrayina newspaper on Feb. 18. They include cooperation with Brussels and the opposition, as well as some of the demands to conduct structural reforms, including preparations for the Ukrainian economy to join the Free Trade Area. The plan overlooks demands to improve the police force, conduct constitutional reforms, free opposition leaders, adopt an Election Code and measures to improve the investment climate, the newspaper reported. State officials said many of these matters aren't within the Cabinet's authority. While the EU requested weekly updates on progress, the Cabinet plan calls for monthly reports.

Zenon Zawada of Concorde Capital said in a note: "We're witnessing an old Ukrainian strategy that was the trademark of former President Leonid Kuchma, who played the Russian Federation against the West in his geopolitical strategy. In its own version of that game, the administration of President Viktor Yanukovych is aiming to gain the maximum benefit by playing the two sides against each other."

"Ignoring close to half of the EU benchmarks, as reported by Kommersant, is a standard tactic for the Yanukovych administration, which uses bazaar-style bargaining as a tool with everyone it deals with - its opposition forces, Russia and the West. In theory, these maneuvers could go on endlessly, except that both the Russian and EU governments have grown tired of the games. The EU wants an Association Agreement by November, while Russia wants full Customs Union membership by 2015."

"It's apparent that the Yanukovych administration will try to pull off an Association Agreement by giving the EU the minimum concessions without sacrificing its monopoly on power. It's also clear that the EU's patience will be stretched to the maximum should its leadership decide to sign the Association Agreement. It's possible, however, that this patience will snap altogether."

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