When the Ukrainian president, Viktor Yanukovich, was a young hoodlum on the make in late 1960s Soviet Donetsk – or so the story goes – he made his first money through the following ruse: he would lurk in a cubicle in a public toilet in winter. When a man came into the cubicle next door, he would wait for the opportune moment, then lean over, grab the man’s expensive fur hat and make a run for it: the victim, caught with his pants down, mid-crap, was in no state to give chase.
Whether the story’s entirely true or not – Yanukovich was definitely a hoodlum and served two terms in prison, for robbery and assault, in 1967 and 1970 – it captures something of his operating methods. Yesterday Yanukovich surprised and dismayed many in Ukraine and Europe when he pulled out of signing an Association Agreement with the EU. The deal had been in the works for years, European integration is a pillar of the major political parties’ doctrines, and the agreement was meant to signify Ukraine’s ‘civilisational choice’ to leave Russia’s orbit and change the geopolitical map of Europe for ever.
The immediate winner of the about-turn is Vladimir Putin: just a few months ago, pundits were saying that the Association Agreement was a done deal and would be a disaster for him. Putin reinstated Vladislav Surkov, the grand vizier of Russian politics who appeared to have fallen from grace, to deal with Ukraine. There was plenty of hard coercion: Ukraine faced the very real risk of trade embargoes, gas cut-offs and immigration hassles if it signed the Association Agreement. But there were almost certainly positive financial incentives too. Yanukovich essentially arranged a last-minute bidding war between the EU and Moscow: the one side offering IMF loans, the other something more. According to Arseniy Yatsenyuk, the parliamentary leader of Batkivshchyna, the main opposition party, Yanukovich has forced $20 billion out of the Kremlin, some of which will fund his election campaign in 2015. The president has grabbed as many fur hats as possible.
But I suspect Surkov also offered the Ukrainians what they wanted the most: which was to make no decision. Stall. This has been the dominant pattern of Ukrainian policy since independence. On the one hand, Ukrainian elites are cautious about being too close to Russia and its new ‘Eurasian Union’: Russian oligarchs would gobble up their Ukrainian rivals. EU association was a mechanism to hold the Russians off rather than a virtue in itself. And EU association is onerous: it would mean cutting back on corruption, reforming the judiciary, releasing political prisoners. Few powerful Ukrainians actually want that.
And despite EU pronouncements that they desire a greater Europe which includes Kiev, there is little actual motivation for the key EU powers to bring Ukraine in: the incorporation of Bulgaria and Romania is more than enough to be dealing with. The Ukraine situation may have been billed as a heavyweight clash between the EU and Russia, but the EU doesn’t want any real confrontation. The Council of Ministers has balked at the idea of a US-style Magnitsky Law to name corrupt Russian officials and human rights abusers and prevent them from investing and travelling in the EU. The EU’s most trumpeted ‘standing up to Russia’ initiative is the anti-monopoly investigation into Gazprom, which threatens the way the Russian energy leviathan sells gas to Western Europe and, supposedly, undermines the Kremlin’s plan to keep the EU in an energy stranglehold. The investigation does undermine Gazprom, but it also plays into the hands of other, oligarch-owned gas companies, just as close if not even closer to Putin, who want to move in on Gazprom’s sales. Igor Sechin’s Rosneft (allied with BP) and Gennady Timchenko’s Novatek (allied with France’s Total) both stand to win from Gazprom’s problems.