The contradictory reactions reflect the complexity underpinning the events taking place in what is now known as the Euromaidan. Initially, the demonstrations were triggered by Yanukovych’s refusal to sign an association agreement with the EU. However, soon, the demonstrations become much more about the removal of the ruling party, including Yanukovych, whose presidency has become associated with intensified cronyism, corruption and economic decline. Then demonstrations took on an added impetus when it emerged that, after not signing the association agreement, Yanukhovych met Russian President Vladimir Putin in Sochi, where an agreement was reached for Ukraine to receive financing from Russia along with lower gas prices, in return for Ukraine joining the Russian-led Customs Union at some stage in the future.
Why has this come to a head now? While Ukraine painstakingly negotiated details of the association agreement with the EU over several years, Russia was resolutely and quite rapidly putting together the Eurasian Customs Union, a regional integration body consisting of Russia, Kazakhstan and Belarus, modeled on the EU. As the deadline for signing the agreement approached, greater pressure was exerted by Russia on Ukraine to not sign the agreement: Sticks and carrots were deployed with abandon. At the same time, although it introduced tough democratic conditionality, the EU was very keen for Ukraine to sign, as the agreement was the central pillar of its much-vaunted Eastern Partnership. But the EU did too little and too late in financial terms to make it a sufficiently attractive offer for the current Ukrainian government. Ukraine’s economic dependence on Russian trade, allied to the EU’s failure to fully grasp the impact the loss of this trade, would have meant that Ukraine was exquisitely vulnerable to the aforementioned sticks: higher gas prices, higher tariffs, “trade wars” etc. In the context of a declining economy, rapidly depleting financial reserves and the likelihood of being unable to meet the looming debt repayment schedule, all brought on by his poor stewardship of the economy, Yanukhovych succumbed to Russian inducements.
This was a highly significant decision. Ukraine’s foreign policy has, since independence in 1991, been characterized by a single central feature: a reluctance to commit to one side or the other (see this book by Roman Wolczuk). However, the global pressures are such that the luxury of a multivectored policy is no longer available to Ukraine. And the choice is simple: Association with the EU or joining the Russia-led Customs Union are, as things stand, mutually exclusive. Turning to Russia meant the exclusion of the European option – hence the fury in Kyiv.
The above dichotomy camouflages the fact that there are costs and benefits associated with both options. In the short to medium term, Ukraine would incur significant economic costs by signing the agreement, as Ukraine’s uncompetitive economy would be subject to a degree of competition for which it is wholly unprepared. Yet in the longer term, improved investment flows would lead to greater competitiveness and more rapid growth, with estimates pointing to an increased growth of GDP of about 4 to 6 percent per year, but only if and when Ukraine introduced necessary reforms. Conversely, in the short to medium term, there are noteworthy benefits associated with signing the Customs Union such as lower tariffs and the elimination of quotas. Perhaps most importantly, Russia’s painful punitive measures (border closures, selective embargoes, etc.) would be avoided. So turning away from Russia will incur economic costs in the short to medium term. However, in the longer term, joining the Eurasian Customs Union is likely to lead to the greater ossification of the Ukrainian economy through trade diversion rather than trade creation. There is no doubt that association with the EU would give Ukraine the kind of opportunity for institutional transform, i.e. quality of governance, that is simply not available with the Eurasian Customs Union.
However, there are the less tangible, yet arguably more fundamental “civilizational” arguments. A new generation has grown up in independent Ukraine, which has been exposed to life in the West and has come to see the extent of the cronyism that characterizes life in Ukraine and Russia. The price of more expensive gas from Russia is increasingly seen as a price worth paying for changing the political system. This was captured on one of the slogans on Euromaidan: ‘We won’t sell our freedom for cheaper gas’. Deposing the current political regime is seen in Ukraine is an indispensable step toward Europe. Hence, the current protests have been referred to as a “revolution of dignity.”
The people on Euromaidan have expressed their preference. There are reasons to suppose that these views are gaining traction in the traditionally pro-Russian Eastern Ukraine. Indeed, there are even unprecedented expressions of pro-European sentiment in Yanukovych’s heartlands, something which doesn’t augur well for him even if he survives the current crisis. But his political survival would entail a heavy price for the people on the streets.