Russia, EU in ‘bidding war’ for Ukraine’s loyalty: Rick MacInnes-Rae

In a surprising reversal, the European Union is mounting an aggressive new cash campaign to bring Ukraine into the western orbit. With Russia focused on hosting the Olympics, will this gambit work?

Russia worried that southern neighbour will fall into western orbit

Ukraine has seen weeks of anti-government protests, after President Viktor Yanukovych abandoned an agreement with the European Union in favour of a closer union with Russia. (REUTERS/David Mdzinarishvili)

A bidding war is better than civil war. Happily for Ukraine, that's what it's come to. Unhappily, it may not end there.

In a surprising reversal after weeks of sitting on its hands, the European Union is swallowing its pride and mounting an aggressive new cash campaign to bring the Russian satellite into the western orbit.

This, despite a highly public snubbing by Ukrainian President Viktor Yanukovych, who recently reneged on an association agreement with the EU when Moscow came calling with a much-needed $15-billion dollar cheque.

This is a turning point in Ukraine's future.- Fen Osler Hampson, Centre for International Governance Innovation

But what goes around comes around. 

Last week, Russian President Vladimir Putin suspended payments after delivering just $3 billion when it became clear the Yanukovych administration is unable to crush the pro-western protesters filling the streets of Kiev and some government buildings. Europe saw an opening.

"They're getting back into the diplomatic game, being more aggressive. This is a turning point in Ukraine's future," said Fen Osler Hampson, director of the Global Security and Politics program at the Centre for International Governance Innovation (CIGI) in Waterloo, Ont.

"What we're seeing now, I think, is the beginning of a bidding war, quite frankly, between the Russians and the Europeans, for Ukraine's loyalties and Ukraine's future," said Hampson.

However, that's not the crass coloration the European community wishes to put on it.

"We are not going to a bidding competition of who pays more for a signature from Ukraine, because we believe that this is the path that most Ukrainians prefer," José Manuel Barroso, president of the European Commission, recently told the New York Times.

Not just 'large dollops of money'

Nonetheless, what the EU is reportedly working up is an aid package of short- and long-term assistance comprised of loan guarantees, investment and currency stabilization to try and draw Ukraine back to the western fold.

After meeting yesterday with Ukraine's president, Catherine Ashton, the EU’s foreign policy chief, said it wasn't just about "large dollops of money."

Ukrainian President Viktor Yanukovych has to make a decision: draw his country into a closer relationship to Russia or enter into the western orbit with the European Union. Efrem Lukatsky/AP

"This is about the kind of economic support that includes expertise, technical ability, resources that can be given, the role of institutions internationally, the role of the European Union, member states, other countries.

"So it is about how do you pull together an economic package that would provide for the clear economic needs of the country in the context of the economic reform."

It's a daunting challenge. But Ukraine is highly motivated to make it work. The country is facing bankruptcy and default on some key loans. And Russia is putting on the squeeze.

Yesterday, Putin's spokesman, Dmitry Peskov, publicly mused about the clause in its contract to provide natural gas to Ukraine, which allows it to demand billions in payments – up front. It's a bill Ukraine could not hope to pay.

But in attempting to manipulate the situation by withholding its own cash package at the same time as the Winter Olympics, Russia misjudged the moment, and has only itself to blame for creating a window of opportunity for the EU, said Hampson.

But there isn't much time.

"The West has essentially a two-week window while Mr. Putin, who is clearly facing a number of challenges on the Olympic front, is trying to showcase Russia, trying to showcase Sochi.

"He wants to keep the attention on himself. He certainly doesn't want it focused on what's happening in Ukraine right now."

U.S. involvement

But the Europeans are not waging this bidding war alone. The United States is profoundly involved, with Vice President Joe Biden reported to be in almost daily contact with President Yanukovych.

The Americans stepped up their pressure on Thursday with the arrival in Kiev of Victoria Nuland, the assistant secretary of state for European and Eurasia affairs.

Supporters can only hope for the best, believing, as Yale history professor Timothy Snyder put it recently in the New York Times, "Ukraine is not Russia."

Regardless of the outcome, the street protests seem almost certain to continue.

Even if Ukraine winds up embracing Europe, there are still plenty of Ukrainians in the eastern part of the country with fierce loyalty and economic ties to Russia, and in the event, they can be expected to mount protests of their own.

Long before that scenario unfolds, though, Vladimir Putin will make his presence felt. He has no intention of allowing this huge buffer country on Russia's western flank to come under the influence of NATO.

Critics worry he has a massive security apparatus not far away in Sochi that will be available for other duties once the Olympics end on Feb. 23 or the Paralympics close on March 16.

Putin has plans of his own for Ukraine, as a key member of the "Eurasian Union," his self-styled alternative to the European Union, which will include the likes of Belarus and Kazakhstan when it convenes next January.

There appears to be no scenario in which Ukraine emerges uncontested.

Meanwhile, talks between Ukraine and the EU continue, though the Europeans will be mindful they're talking with a president that has already let them down once.

Even so, "to jaw-jaw is always better than to war-war," as Winston Churchill reportedly said in 1954 – talking is better than fighting. We'll find out soon enough if it still applies.

About the Author

Rick MacInnes-Rae

World Affairs

Until his retirement in July 2014, Rick MacInnes-Rae was the World Affairs Correspondent for CBC News. A former Europe Correspondent and host of Dispatches, his 37-year- career with the CBC has taken him across much of the globe.


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