Still Outside

Economic News

22 Jul 2010
Text size +-
Despite the political hurdles following the March parliamentary elections and the now largely pro-Moscow mix of deputies, Ukraine has been making reforms designed to gain membership to NATO. However following a Ukraine-NATO Commission meeting on September 14, the efforts have drawn questions as it was announced that the country would not seek membership in the alliance.

The new prime minister and head of the Party of the Regions, Viktor Yanukovych has called for cooperation with NATO, rather than membership. "We should pursue a policy which will not be a dead end for Russia's development of its relations with the EU and NATO...Ukraine should construct a solid bridge for these relations," he said. Russia is uncomfortable with the idea that the bases of its Cold War rival could be set up so close to its south-western borders with Ukraine.

But with the momentum built up by the previous government on this initiative, and European as well as the American interest in seeing distance between Kiev and Moscow, in terms of economic, energy and security matters, eventual accession could yet occur.

This will certainly not happen fast, particularly in light of Yanukovych's September 14th statement. Ukraine still has a boatload of reforms to carry out, and with NATO, this does not mean reform in terms of national security and personnel training alone. It also requires entry to the World Trade Organisation (WTO) - which has now been delayed - along with energy and economic growth and stability.

Additionally, in early June, it was widely reported that US marine reservists who had arrived in the Crimea to make preparations for routine joint NATO-Ukraine exercises left without completing their mission due to strong protests from local residents. One ship carrying supplies for the marines' activities was not allowed to unload its cargo.

The majority of Ukrainians remain opposed to NATO membership, with estimates of those supporting it between only 12 and 25% of the population.

Yet other joint military exercises have gone ahead as planned, including one naval exercise with NATO member states on the Black Sea.

According to Ukrainian news reports, Defence Minister Anatoliy Hrytsenko announced on September 12 that it is up to Ukraine to apply to Brussels for NATO membership as most member states welcome the entry of Ukraine. However, the paperwork for membership must be presented by Yanukovych, who has now publicly undermined the initiative.

Meanwhile, he has confirmed Ukraine's ambition of eventual EU membership.

"We have the firm intention to have excellent relations with the EU and a stable relationship, which will bring us in the long term to accession of the EU," he said to reporters after a morning meeting with EU External Relations Commissioner Benita Ferrero-Waldner.

Ferrero-Waldner on the other hand said, "At this moment there is clearly no membership perspective."

Ahead of this meeting, on September 13, the European Commission announced that it hopes to begin negotiations for a free trade agreement (FTA) with Ukraine in early 2007 to replace the existing Partnership and Cooperation Agreement between the two entities.

Ferrero-Waldner said, "The new agreement will bring us closer together by stepping up our cooperation in a wide range of areas, including vital topics like energy, justice and security issues, transport and the environment."

This could be a move designed to accelerate reforms in the former-Soviet country necessary for WTO accession. According to the NATO-Ukraine Annual Target Plan for 2006, the country had planned to join the WTO by April 2006, though now the government says it will happen towards the end of the year. The President has also set up a task force to reach this goal.

The delay may be due to the months of talks before the composition of a majority coalition in parliament could be formed. One of the compromises Yanukovych was forced to make in order for President Viktor Yushchenko to confirm his candidacy for prime minister was a promise to gain Ukraine's WTO accession by the end of the year.

On August 11, however, the premier told reporters on a visit to the Crimea that talks on accession might be delayed to ensure that the conditions for membership are met. He said "Certainly, we have a huge interest, and [want] to join the WTO as soon as possible. But the main issue for us is the conditions for joining. If we manage to do it in 2006, then it will be in 2006. But our task is to resolve this issue in a clear way and within national interests." He went on to say "It would be wrong if we conceded on positions which would damage our market and our manufacturers."

But Europe and the US seem to be going to great lengths to help Ukraine along the path to membership in both bodies. The US has awarded grants to fight corruption and promote better business practices. Earlier this month, the EU agreed to buy more steel products and gave 1.9m euros ($2.41m) to the government for reforms in public administration and is now beginning to implement twinning operations in the country, which comprises direct cooperation between the public bodies of EU member states and Ukraine. The Organisation for Security and Cooperation in Europe (OSCE) signed a cooperation agreement with Ukraine's central election committee to improve public awareness and organisation in elections.

The country has been working towards WTO membership for 13 years. It has signed some 48 bilateral protocols in preparation for joining the body, and as of the end of August, parliament still needed to pass between 17 and 19 bills in order ensure accession. If the government remains relatively stable, accession could be just around the corner.

Questions over the country's eventual NATO membership notwithstanding, its economic stability, tighter border controls to curtail migrants and the illegal movement of weapons and, perhaps most vital of all, energy security are of significant importance to Europe.

After the September 14 meetings, NATO Secretary General Jaap de Hoop Scheffer told reporters that active NATO-Ukrainian partnership will develop further, and he is satisfied with Ukraine's support of NATO's peacekeeping missions.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart

Read Next:

In Ukraine

Inflation Crescendo

Ukraine's inflation continues to spiral out of control, becoming Ukraine's most urgent economic worry.


Nigeria targets agro-processing as a future growth driver

As Nigeria looks to restructure its economy to be more diversified and sustainable, agro-processing is emerging as a key tool to improve agricultural value added while also bolstering the sector’s...