An Agenda for Business and Civil Society in Ukraine

IMGXYZ2755IMGZYXWhen he took office in March, Ukrainian President Victor Yankukovich promised to adopt a “multi-vector” foreign policy, aimed at both improving Ukraine’s relationship with Russia and integrating Ukraine into Europe. Carnegie hosted Oleh Rybachuk, director of the Ukrainian nongovernmental organization Center UA, former Member of the Verkhovna Rada (Parliament), and former chief of staff to President Viktor Yuschenko.  He was joined by Svitlana Zalishchuk of New Citizens Public Campaign. They discussed challenges and prospects for Ukraine’s economy, civil society, and partnership with the post-Soviet region and the broader Euro-Atlantic community. Carnegie’s Matthew Rojansky moderated.

Economic Integration

Maintaining the balance between Russia and Europe in Ukrainian foreign policy has become increasingly challenging, argued Rybachuk. He explained that contradictory pressures from Moscow and the European Union have led to frequent fluctuations in Kyiv’s economic policy. Moscow has urged Kyiv to integrate its economy with Russia’s and join the Russian-led customs union. Meanwhile, the EU is encouraging Ukraine to focus on domestic reforms and leave the question of integration for a future discussion, reflecting European concerns on Ukraine’s readiness to embrace the EU’s economic and political standards.

Three Precedents for Integration

Rybachuk suggested that Ukraine can learn from three precedents established by other former Soviet Republics attempting economic integration with an outside power.

• Belarus: Belarus closely cooperated with Russia economically, with Moscow acting as the center of decision-making. Internal public reforms stalled; the state took actions to neutralize political opposition and blatantly violated the rule of law. Economic benefits from the union were significant, but not outstanding, Rybachuk said.
   
• Georgia: Georgia rejected any form of economic integration with Russia. Its independent economic existence serves as a source of tension between the two countries, which played a role in the armed conflict between Russia and Georgia in the summer of 2008.
   
• Kazakhstan: Kazakhstan pursued a third course, focusing on regional integration by joining the customs union and participating in other Russian-led economic initiatives. Implementation of this model enabled Kazakhstan to conduct economic reforms, while pursuing independent domestic and regional foreign policies.

Customs Union

Rybachuk discussed the potential consequences of Ukraine’s participation in the Russian-led customs union.

• Russian Interests: Ukraine’s participation in the customs union would give Russia several economic advantages, including some control over the Ukrainian gas transport system, access to abundant natural resources, and a stake in Ukraine’s most profitable firms. Additionally, Ukraine’s membership in the customs union would bolster Russia’s cultural hegemony in the Post-Soviet region by popularizing Russian as a second official language in Ukraine and allowing the Orthodox Church under the Moscow patriarchate to exert a stronger influence on the Ukrainian Orthodox Church under the Kyev patriarchate, Rybachuk argued.
   
• Consequences for Ukraine: Traditionally, participation in a customs union offers the following advantages: no customs duties or quotas, a single tariff, and a common foreign policy. However, participating in the customs union with Russia would give Ukraine only limited benefits, Rybachuk contended. The Russian-led customs union hampers free trade by establishing customs controls and non-tariff trade barriers, as well as introducing hundreds of exceptions that impede the free flow of goods and services across borders. Aside from few economic benefits, Ukraine’s political influence in the union would be minor as well, since Russia monopolizes the lion’s share of votes in the union.

Possible Scenarios for Ukraine’s Integration

Regional integration will precede Ukraine’s economic integration into Europe, argued Rybachuk. This means that, ultimately, Ukraine must in some way integrate with its powerful regional neighbor, Russia. He suggested two ways this process could take place.

• Passive integration: Euro-Atlantic integration would occur under “Russia’s wing,” with Ukraine implementing only those reforms approved by Moscow. But a lack of major reforms and a decline in Ukraine’s political power would instigate social unrest and destabilize an already fragile situation in the country, cautioned Rybachuk.
   
• Active integration: In this scenario, regional integration would precede integration into Europe and would be based on European principles. Kyiv remains the chief locus of decision-making for Ukraine. Russia supports the revival of Ukrainian language and culture and avoids imposing its own political and cultural doctrine. In Rybachuk’s view, “pro-active integration” is the best solution for Ukraine’s existing political realities.

Civil society

Civil society has the potential to play a pivotal role in determining how Ukraine will integrate with the region and Europe, but only if it can overcome several challenges, argued Zalischuk.

• Disillusionment: Ukrainian society is largely disillusioned after the tumultuous political experience following the Orange Revolution in 2004. Society is splintered and no institutionalized space for civil activism exists. State activity is threatening to undermine civil society, Zalishchuk added, citing recent intimidation and even violence by the state against civil activists.
   
• Technology: According to Zalishchuk, only 30 percent of the population has internet access. Access is particularly rare in the remote regions of the country, causing a communication gap between civic activists based in the capital and the rural population.

Despite these challenges, Ukrainian civil society is not stagnant. The New Citizens Campaign is a recent and unparalleled nationwide civil society initiative, according to Zalishchuk. The project, described as a “nonpartisan, politically non-biased civil initiative,” aims to serve as a forum for civic activists to express themselves and help coordinate a system to monitor the delivery of promises made by Ukrainian state officials. Zalishchuk argued that modern media resources and the use of technology will help revive the spirit of civic activism, especially among the Ukrainian youth. In her view, initiatives such as the New Citizens Campaign are especially important to raise governmental accountability and ensure the survival of the Ukrainian civil society.