This is the year that the newly formed geopolitical EU should turn its long-established influence in trade policy into a tool of global strategic power. Not so good.

In the first two weeks of January, the EU appeared very weak in its response to direct test cases, China bullies LithuaniaThe EU’s recent disagreement over helping Ukraine resist Vladimir Putin’s threats is a stark reminder of its previous attempts to use trade as political leverage — with rather unfortunate results.

The immediate cause of Putin’s 2014 annexation of Crimea and his proxy invasion of the Donbass in eastern Ukraine was the Kiev Independence Square demonstrations that began in November 2013. The protests forced the resignation of Moscow-aligned President Viktor Yanukovych, the Kremlin’s man in Kiev. The backdrop is the EU’s attempt, if not really, to turn Ukraine into an accession country and then pull it into the Brussels orbit through a “deep and comprehensive free trade area”.DCFTA) embedded in broader political association agreements.

The DCFTA came into effect provisionally in 2016 and is a good deal for Ukraine economically.Some optimistic people even refer to it as possible model The relationship between the UK and the EU after Brexit. It provides privileged access to the EU single market but does not require the direct jurisdiction of the European Court of Justice. Crucially, it is also full of political and administrative conditions designed to attract its signatories to the EU governance model. (That said, Hungary’s Viktor Orban and Poland’s Law and Justice Party have apparently begun to discredit its previous model.) The idea is that market access and soft power combine to create a friendly and prosperous neighbor.

But the idea that the DCFTA’s conditions and related information would enable Ukraine to gain a foothold in the EU and Russia’s economic camp is almost nil.the latter is Eurasian Economic UnionMoscow seeks to lure or bully the Armenian, Belarusian, Kazakhstan and Kyrgyz bloc, behaving more like a protection racket rather than trade agreements.Putin occasionally suggests tripartite talks Enabling the EU, Ukraine and Russia to cooperate on trade, but Brussels – unquestionably right – sees this as a dishonest tactic of delay and distraction.

Using a politicized trade deal to turn Ukraine’s sights firmly on the West is proving to be a dangerous game for the EU. It also inevitably raised Moscow’s concerns about Ukraine’s desire to join NATO.

Putin, despite bringing Russia into the World Trade Organization in 2012, showed his commitment to international governance norms, turn around in public Against Ukraine’s DCFTA and Yanukovych in 2013 obeyed the voice of his master.

Brussels negotiators were taken aback. Karel De Gucht, who was the EU trade commissioner at the time, said: “In fact, we are surprised that they are suddenly so opposed to it.” He added: “I don’t know how exactly this idea played out in the Kremlin. developed within the circle.”

If this alarmed trade negotiators, they would have been misadvised by the EU foreign minister. This is not an issue that should be left to trade policy. Like the US during the Cold War, the EU has also sought to use soft power (and market access) to expand its influence eastward. Unlike the United States during the Cold War, it does not have hundreds of thousands of troops lined up along its eastern border to support it.

Trade secrets

The Trade Secrets Newsletter is the FT’s must-read email on the changing face of international trade and globalisation. Written by FT trade expert Alan Beattie, delivered to your inbox every Monday. register here

DCFTA has also not produced impressive results.More than five years after preferential access began, Ukraine is still only for sale more than one third Its merchandise exports to the EU.This contrasts unfavorably with neighbouring Moldova, which has a similar DCFTA to the EU and sends more than two-thirds exit there.

Ukraine is a dysfunctional economy with a dire business environment that doesn’t prepare itself to take full advantage. The EU has also failed to provide enough aid or crisis loans to rescue it from its balance of payments problems and help it grow.The EU basically leaves it to International Monetary Fund Provide emergency external financing, EU technical assistance has been fall short expectations. The EU-oriented Ukrainian elite remains firmly committed to looking west, but it must be acknowledged that so far the benefits of doing so have not had much demonstrative effect.

We are now in a place where the EU (as a collective entity, not its individual member states) helped spark Putin’s aggression and isn’t even considered a geopolitical player worthy of an invitation Climb to the top to defuse it. Trade and soft power can be part of an effective strategic policy.But the recent history of the EU and Ukraine shows that they are not a substitute Big guns and cold cash.

[email protected]


Source link