UKRAINE - IMPACT OF BREXIT
Analysis & Commentary by Timothy Ash
London, UK, Friday, June 24, 2016
LONDON - I am getting lots of questions as to what Brexit means for Ukraine, so herein is my attempt to put it all in a Ukrainian perspective.
Well, the positive is that it likely means that Russia will remain on the side-lines in terms of direct intervention in Ukraine, waiting for further fall-out across the EU, to ultimately weaken the EU’s hand with respect to negotiations over the future of Ukraine.
I think this was also inevitable anyway as Putin await the outcome of the US elections – with the assumption that he will be able to negotiate “spheres of influence” with a future president Trump, whereby Ukraine will be clearly delineated as Russia’s “turf”.
I actually think that is a Russian miscalculation, as I think any future US president will have to work with a Congress which is pretty anti-Russian at this stage, and unlikely to agree to a reset with Russia.
But for Ukraine, this does mean that Russia will avoid re-escalation likely until the middle of 2017 that is unless Hilary wins in November.
I would add here that with the collapse of trade, transit, energy and banking/debt ties to Russia, its economic levers over Ukraine are much reduced, and the only card is the military/security angle to play out in Donbas. The latter comes with very big risks for Putin, especially heading into Duma elections in September this year, and presidential elections in March 2018.
So the above suggests that Moscow will give Ukraine a break for a period, time at which Ukraine can continue to rebuild the economy and it’s military.
But Brexit does mean the end of the whole EU enlargement process, at least in my view. The question is how damaging will this be to Ukraine – is/has this been a key anchor for reform thus far, i.e. the desire for eventual EU membership. And, if there is now zero chance of EU membership will that EU accession drive weaken?
On this account I would tend to argue not. I don’t really think Ukrainians have ever been that naïve to think that the EU will ever let them in that easily/soon – not after the disappointments after the Orange Revolution when the EU failed to give them a membership anchor (with hindsight that was a huge mistake, as Ukraine might be a different place today).
And the Euromaydan was not really about EU membership, it was about reforming Ukraine towards European values of democracy, respect for human rights, rule of law, free press, etc,.
Ukrainian’s want(ed) to live in a country which respected European values – so it is possible to reform towards these without assuming EU membership, and hopefully, even out of the EU, the UK will still respect these same European, or indeed Western, values.
And therein, I think Ukraine’s course is set, as opinion polls still clearly support (55-60%) the drive towards Europe, and not towards an eastern/Putin style of government (single digit support now for CIS CU/Eurasian Union membership).
And while Brexit may well have a significant negative hit to European markets, the EU + UK out, still presents a huge market for Ukraine, multiples of times that of Russia and the CIS CU space.
Hence Ukraine should still look to reform and focus on improving trade ties with the EU, and European economic space.
So the combination of Russia stepping back from the brink in Ukraine, solid progress made on the reform programme already in Ukraine, and continued focus on that reform agenda, should help Ukraine build durability for potential challenges ahead, e.g. another future Russian intervention.
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