This weekend saw 50,000 people demonstrating in Kiev in an ongoing drama that involves the EU, Russia and the USA.  A drama that will not end well.

The latest demonstration was sparked by the police beating of former Interior Minister Yuriy Lutsenko, who was taken into intensive care on Friday following clashes with riot police that left 11 hospitalised.  This outburst of violence came soon after the United States announced that it was preparing a sanctions list against a number of prominent Ukrainian government officials, the cause of which can be laid firmly at the feet of the European Union.

The 2009 EU-Ukraine Association Agenda began to formalise relations between Europe and its neighbour, and the stated goal is:

An increasingly close relationship with Ukraine that goes beyond mere bilateral cooperation, encompassing gradual progress towards political association and economic integration.

The Vilnius Summit in November 2013 had been intended to formally begin EU membership for the Ukraine, and this appears to have been the tipping point.  In the months leading up to the Summit, Russian pressure on the Ukraine began to mount, and at almost the last minute President Viktor Yanukovych decided that the EU was not for him, and he announced his attention to direct the country’s economic interests towards the developing Russian Customs Union, a pact that incorporates Russia, Belarus, and Kazakhstan.  This decision was met with a series of pro-EU demonstrations on the streets of Kiev, and followed by pro-Russian rallies, invoking memories of the 2004 Orange revolution.

The Ukraine represents a sizeable goal for the EU, it boasts a population of around 45 million people, and would increase the size of the Union by between 8 and 9 percent.  The country, too, is mineral rich – it is home to the world’s eighth largest coal reserves, potentially boosting the EU’s production by around 15%, and is the world’s sixth largest producer of iron ore – and with a land mass of over 600,000 square kilometres offers extensive agricultural possibilities.  However, its proximity to Russia puts Ukraine right on the front line of their geo-political interests.

Russia provides almost 40% of the EU’s gas supplies.  In recent years the gas market in Europe has moved away from rigid take-or-pay contracts to more flexible spot-based ones.  These allow both the seller (Gazprom) the buyer (EU power companies) to use flexible price mechanisms to allow for periods of high demand created by prolonged cold spells or periods of low demand caused by reduced industrial demand.  The grids are balanced and the price curve smoothens as a result.  However, in order for this to work the supplies need to be dependable.

5 of Russia’s 12 gas pipelines to Europe are routed through the Ukraine.  The country enjoys transit fees from these, as well as discounted gas prices.  However, these pipelines are constantly at the centre of the push and pull politics between the two, and periodically Russia will threaten Ukraine over unpaid bills, and in the winter of 2005-6 the situation got so bad that supplies were cut off.  In this regard, the Ukraine is a client state of Russia, even though it is an essential route to market.  By incorporating Ukraine into a Russian sphere of influence export income becomes easier to control, while the EU sees that absorbing it as a method of controlling supplies.

Domestically, the attraction of the EU represents a freeing from the Russian yoke and the prospect of increasing and prolonged freedoms, a particularly pertinent point in the withdrawal of stabilising effect of the American military from the continent.  These desires must, of course, be supported, but there are practical issues to be considered here.  Russia is heavily dependent upon its energy exports to balance its budget, and looks increasingly likely to fall back into recession, and will so become more likely to throw its weight around in an act of self-preservation.  The EU must consider whether its expansionary ambitions are necessarily any better than that of Russia’s, and whether or not the wellbeing of the people of the Ukraine is a price worth paying.

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