By signing an economic part of the association agreement with the European Union on June 27, Ukraine’s President Petro Poroshenko finally completed a deal that triggered a revolution toppling his predecessor, Viktor Yanukovych, for backing out of the same agreement.
Poroshenko used the same pen to ink the document in Brussels that Yanukvoych was supposed to use during the Nov. 29 summit in Vilnius, but resisted despite hours of persuasion from European officials that night.
This time, European Union leaders Jose Manuel Barroso and Herman Van Rompuy did not have to persuade or cajole anybody. Poroshenko eagerly signed with leaders of bloc’s 28 countries. The political part of the association agreement was signed earlier, on March 21, during the post-revolutionary interim presidency of Oleksandr Turchynov.The economic part is focused on establishing free trade regime between Ukraine and the EU, country’s biggest trading partner with $51.4 billion in trade 2013. By comparison, trade with Russia reached $45 billion last year, while Ukraine’s dependence on Gazprom’s gas and providing gas transportation system for the needs of Russian gas monopolist inflate the figure.
Poroshenko called June 27 the second most important day in the nation’s modern history, taking a backseat only to the the nation’s independence in 1991 from the Soviet Union. “Over the last months Ukraine paid the highest possible price to make its European dreams come true,” he emphasized in his speech in Brussels. “But ultimately we came here today. All Ukraine and also Crimea.” The Ukrainian government aims at full membership in the EU. The Verkhovna Rada and parliaments of all EU countries are expected to ratify the deal.
Kyiv-based Institute for Economic Research and Policy Consulting foresees that closer economic cooperation with the EU could contribute 3-5 percentage points into the growth of Ukraine’s economy.
Moreover, think tank’s analyst Iryna Movchan expects the average salary in Ukraine to increase by 8.5-9 percent due to better conditions for doing joint business with Europe. However, up to 5 percent of the local employees will have to change the place of work as structure of economy will likely shift.
Analysts that Kyiv Post spoke to emphasize that all the sectors of Ukrainian economy will benefit from the newly-established free trade area. However, medium-size enterprises might benefit more, thinks Taras Kachka, vice president of American Chamber of Commerce in Ukraine.
Kachka, who was engaged in preparing the text of the association agreement, thinks the pessimism of Russian-oriented producers will be overwhelmed by the opportunities to find new markets for Ukrainian goods – and not only in the EU. Moreover, it will bring a long-awaited wave of modernization, since to be competitive on the global markets Ukrainian producers have a long list of to-do’s.
Economic agreement with the EU, which includes detailed energy market regulation policy, will not allow Russia to get the control over Ukraine’s gas transportation system, Kachka told the Kyiv Post. It creates reasonable conditions for the European partners to come and participate in managing the system, which is one of the key budget’s profit-makers.
Roman Shpek, head of Ukranie’s National Banking Association, foresees the decrease in trading volume with Russia in the nearest future. Part of mutual trade is still based on the production cycles that were created back in the Soviet times for the needs of communist-ruled economy.
Georgia and Moldova, two another former Soviet republics, also signed their association agreements on June 27 in Brussels, which is a substantial contribution to EU’s enlargement in the eastern direction, despite the raising popularity of so called eurosceptics that won more places in the European Parliament than they had before. And despite Russian president Vladimir Putin’s curses, of course.
His spokesperson Dmitriy Peskov in an interview with Russia 24 television station said that Ukraine did not consult with Russia on whether it should sign the association agreement with the EU. “Negotiations could really become meaningful and constructive, if all possible consequences of such a document were discussed in advance. Though after all is already done, we will see, what it’ll end up with,” he said.
Kyiv Post staff writer Iana Koretska can be reached at [email protected].
