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Jun 27, 2014 | 09:29 GMT

7 mins read

EU Borderland Deals Will Not End Russia's Challenge

EU Agreements Will Not End Competition in Russia's Borderlands
(VANO SHLAMOV/AFP/Getty Images)
Summary

In the growing confrontation between Russia and the West over the former Soviet periphery, the signing of the EU free trade and association agreements by Ukraine, Moldova and Georgia at a June 27 summit represents a symbolic blow to Russia and a victory for the European Union. However, it is far from a definitive end to the competition over the states. Russia will probably enact trade restrictions against the countries in retaliation for the deals. The measures will be limited and will not devastate the countries' economies, but they will enable Moscow to pressure the governments while using other means to counter their efforts to move closer to the West in the long term.

The signing of the EU agreements by UkraineMoldova and Georgia formally establishes greater political and economic ties between the three former Soviet states and the European bloc. Under the agreements, and with Brussels' help, the governments will apply judicial reforms, work to strengthen the rule of law and adopt EU practices on free trade. The full-scale implementation of these provisions could take years, however, making the signing ceremony more of a symbolic than practical milestone. The greater impact will be on these countries' ties with Russia.

Ukraine

Its large size and strategic location have made Ukraine the most dramatic theater of the Russo-Western competition over the former Soviet periphery. This competition predates the Western-backed uprising in February against former Ukrainian President Viktor Yanukovich. Indeed, it was apparent in the 2005 Orange Revolution and the subsequent discrediting of the "Orangeists" that led to Yanukovich's election in 2010. Western-backed Ukrainian political parties and factions have long dueled with Russian-backed political groups, making for a dynamic and often unstable political environment in Ukraine.

The latest crisis began when Yanukovich's government showed interest in signing the EU free trade and association agreements before backing out at the last minute in favor of closer ties with Russia. The government's reversal spurred a wave of demonstrations that culminated in Yanukovich's ouster. What followed was the formation of a pro-EU interim government, backed by the West but not recognized by Russia, and then the election of pro-Western President Petro Poroshenko. The interim government signed the association agreement, and Poroshenko will complete the signing of the EU free trade agreement on June 27.

Given that Russia has long opposed Ukraine's alignment with the West, specifically the signing of these EU deals, Moscow can be expected to react negatively to the agreement. Russian officials have already said the agreement will increase trade barriers between Kiev and Moscow, and Russian First Deputy Prime Minister Igor Shuvalov said there is a "possibility of imposing customs-tariff measures at the level of the Russian government." These measures are likely to affect agricultural products that Russia imports from Ukraine, such as milk, cheese and chocolate, which Moscow could produce on its own. Less likely to be affected, at least in the immediate term, are exports of Ukrainian machinery and weapons parts, such as helicopter engines and rocket parts, that Russia has come to rely on and cannot easily or quickly replace.

The EU-Russian Competition

The EU-Russian Competition

The trade restrictions in question are unlikely to devastate the Ukrainian economy. Russia has already placed several formal and informal restrictions on Ukrainian goods in the past year. Bilateral trade has shrunk by nearly 25 percent since last year, and while trade is likely to continue declining, Ukraine has several buffers to shield it from economic collapse. Kiev has received financial assistance from the West, particularly the $17 billion International Monetary Fund loan agreed to earlier this year that has propped up Ukraine's struggling economy. In addition, the Europeans have become directly involved in Ukraine's natural gas negotiations with Russia. Although these talks have hit a snag, supply flows will not be disrupted before the consumption-heavy winter begins.

But Russia's response to Ukraine's move toward the European Union will not be limited to the economic realm. Russia will continue to pressure Kiev by indirectly supporting the armed separatists in eastern Ukraine and using its broader cultural and political influence in eastern and southern Ukraine. Given that Russia's ultimate goal in Ukraine is to ensure that the country is neutral, the extent to which Moscow increases or decreases the pressure will depend on how far the country goes in its efforts to integrate with the European Union and the West.

Moldova

While overshadowed by the larger and more volatile Ukraine, Moldova has also faced rising pressure over its move toward the European Union. The government in Chisinau has tried to strengthen integration with the European Union ever since the pro-Western Alliance for European Integration coalition government came to power in 2009. Rather than derail Moldova's EU integration efforts, the crisis in Ukraine has inspired a greater commitment from Chisinau to establish closer ties with the bloc.

However, Russia has a number of tools to counter Moldova's efforts. Like Ukraine, Moldova has already been subject to trade restrictions from Russia on goods such as wine and agricultural products. These restrictions can be expected to increase following the signing. Moldova is also dependent on Russian energy, and there are indications that Moscow could jeopardize natural gas supply flows to the country. To this end, Moldova has been building a natural gas link to Romania and has requested access to stored natural gas in Ukraine in the event of an "unexpected termination" of flows from Russia.

But Russia's primary avenue of responding to Moldova's alignment with the West could come from within Moldova itself. Russia has significant leverage in Moldova, primarily through the breakaway territory of Transdniestria, which hosts a Russian military presence and is politically aligned with Moscow. Russia has already beefed up its security presence there, and Transdniestria has appealed to Russia to annex the territory, or at least admit it to Moscow's Customs Union, a rival bloc to the European Union.

Perhaps just as important as Transdniestria is the autonomous territory of Gagauzia. Like Transdniestria, Gagauzia has opposed the signing of the EU free trade and association agreements and even held a referendum in which more than 98 percent of its residents reportedly voted to join Russia's Customs Union rather than integrate with the European Union. Officials from Gagauzia have said they would seek greater autonomy as a result of the agreements and could establish independence altogether if Moldova loses its sovereignty. Unconfirmed reports indicate that pro-Russian elements — possibly armed — could be preparing for riots. Such a scenario could significantly compromise Moldova's Western integration efforts, potentially even its territorial integrity, and could greatly serve Moscow's purposes. Moldova is also scheduled to hold parliamentary elections in November, and the pro-Russian Communists could organize protests after the signing and ahead of the elections, meaning that Moldova could experience substantial unrest following the signing of the EU agreements.

Georgia

Georgia has long been pro-Western, but the crisis in Ukraine has given Tbilisi's integration prospects with the European Union greater impetus. Georgia went through a significant political transition with the emergence of the Georgian Dream movement, which initially showed a greater propensity toward increasing cooperation with Russia. That did not stymie the broader goal of Western integration, which, for Georgia, means seeking both EU and NATO membership. Russia's annexation of Crimea and the current pro-Russian separatist movement in eastern Ukraine have both served to fortify the European Union's desire and willingness to expand ties with Georgia.

As with Ukraine and Moldova, Russia has been staunchly opposed to Georgia's Western integration drive. Kiev and Chisinau, however, are in many ways more threatened by Russian retaliation than is Tbilisi. Georgia felt the full brunt of Russian pressure during the Russo-Georgian war of August 2008, a conflict that was ultimately driven by Georgia's efforts to join NATO. The war cut off all trade and diplomatic ties between Russia and Georgia for several years. Those have been revived to a limited extent since the Georgian Dream came to power, but Georgia has become used to trade barriers from Moscow and would not be significantly hurt by greater restrictions; it has, for example, diversified its market for wine exports beyond Russia to Europe and other areas. With fewer ethnic Russians and pro-Russian parties in Georgia, Russia also does not have the kind of cultural or political influence there that it has in Moldova and Ukraine.

Russia could, however, increase support for the breakaway territories of Abkhazia and South Ossetia, which have received substantial numbers of Russian troops since the 2008 war. Russia could also try to stir up protests within Georgia, especially within the autonomous territories of Adjara and Samtskhe-Javakheti. Protests have occurred in Tbilisi, but so far they have been limited. Finally, Russia could bolster its presence around Georgia as part of a containment strategy, whether through Russian ally Armenia or swing state Azerbaijan. Ultimately, Moscow will continue to maintain pressure on Tbilisi in hopes that Georgia's goals of joining the European Union and NATO remain elusive.

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