The four horsemen circling the European Council summit

EU Council summit

The four horsemen circling the European Council summit

Written by Rem Korteweg, 24 June 2015

Simultaneous crises are the new normal. Europe’s leaders must confront a quartet of challenges if they want to prevent the European Union falling apart.

Four horsemen will be circling around this week’s European Council. They represent four crises that threaten the EU: ‘Grexit’; the Mediterranean migration crisis; Russian aggression; and Britain’s threat to leave if the club is not reformed. Any of these issues could dominate the European Council’s agenda: each could alter the fundamental character of the Union. While none of them is particularly new – Greece's economic and financial woes have troubled the EU for six years – they are circling together and affecting each other.

‘Grexit’ looms first. The risk of a Greek default and possible exit from the eurozone is the most acute of the four crises.  Over the past several months, Greece’s creditors and the government of Alexis Tsipras have played a dangerous game of chicken. As a deadline approaches for Greece to repay the IMF €1.6 billion, it seems Greece may give in. An emergency summit on Monday brought renewed hope for a deal, as Greece offered more cuts to pensions and higher taxes. Tsipras now faces an uphill battle in the European Council to convince sceptical creditors like Germany and Finland, or fellow debtors like Spain and Portugal. For a deal to stick, the Greek leader must persuade sceptical members of his own party that he is not caving in to demands from Brussels. But even if a deal is clinched, as CER’s Christian Odendahl recently pointed out, a lasting solution to Greece’s economic problems will remain elusive. And so, despite the brinkmanship of the past weeks, even if Europe’s leaders hammer out an accord with Greece they may simply buy more time rather than remove the risk of Grexit.

Russia hovers over the ‘Grexit’ talks too. Should Greece leave the eurozone, it will need to attract credit, loans and investment from elsewhere, and Russia has shown an interest. This has strengthened Tsipras’ hand in the negotiations with Brussels. On Friday June 19th, the day after the Eurogroup failed to reach a Greek bailout agreement, Tsipras flew to Saint Petersburg for a meeting with Russia’s president Vladimir Putin and Alexei Miller, the head of Gazprom. The Greek leader signed a preliminary agreement to build a $2 billion pipeline across Greece, as part of Gazprom’s ‘Turkish stream’ project. The agreement is non-binding, but pokes a finger at the Commission’s plans to reduce the EU’s dependence on Russian gas imports. Tsipras’ flirtation with Moscow, at a time of high stakes negotiations with Brussels, has raised eyebrows. An increasingly Russia-friendly Greece would make it more difficult for the EU to maintain a unified position against Russian assertive behaviour in Ukraine and Eastern Europe.

Meanwhile, people continue to die on a daily basis in Ukraine’s ongoing conflict, though at less alarming rates than before. The ‘Minsk-II’ ceasefire is flawed, but most European governments are unwilling to give up on it. They think Russian help is needed elsewhere, such as the Iran nuclear talks and the Syrian civil war. As long as the fighting does not escalate dramatically, European leaders will not step up pressure on Russia to change its behaviour. Some leaders worry about the impact of sanctions on business (though statistics show the effect is limited), and argue that the current lull warrants a thaw in relations with Moscow. While France has cancelled the controversial sale of the Mistral amphibious ships, three European oil and gas companies have recently struck new commercial deals in Russia.

For now, however, the EU remains politically unified: most of the sanctions have been extended until January 2016, while those specific sanctions linked to the annexation of Crimea have been rolled over for a year. That unity may not endure, however. Regardless of what happens in the Donbass, by the end of the year, investigators will have published their official findings into the shooting down of flight MH17, which killed 298 people. One potential finding of the report could point to Russian complicity, either in delivering the missile system, or in the chain of command that led to the missile’s firing. European leaders will then need to decide whether to punish this crime or do nothing. A push for new sanctions could strain today’s delicate unity on Russia, while inaction would be a sign of weakness and an insult to the victims. The creation of an international tribunal to persecute the culprits may offer a sensible, but unsatisfying, middle road.

The desire to avoid ruffling Russian feathers means that Ukraine will not figure prominently at the European Council meeting either. But that is a mistake. Ukraine needs money: earlier this year Kyiv said that it required some $40 billion over the next five years, to avoid economic collapse, but with the economy continuing to deteriorate that sum now looks inadequate. As Charles Grant and Ian Bond have highlighted, some of that money is coming from the IMF, and some may eventually come via debt restructuring, but most of the money will need to come from the EU and the US. If Ukraine’s economy collapses, the ensuing political chaos would threaten the pro-Western leadership in Kyiv, handing Vladimir Putin the victory he has not been able to achieve through military force.

The third horseman circling is the migration crisis in the Mediterranean. In the first six months of 2015, 1,868 migrants have died trying to cross from North Africa. According to the International Organisation for Migration (IOM), some 114,000 migrants have reached Europe, mostly landing in Greece and Italy. In summer the weather is calmest and crossings increase, so both numbers are likely to rise. In response, the EU is trying to look tough. On June 22nd, it launched an Italian-led mission to monitor the maritime movements of smugglers. A subsequent stage of the operation would see European navies board and seize migrant ships, including in Libyan waters. Diplomats in New York are currently drafting the necessary United Nations mandate. The EU also wants the permission to destroy ships used by traffickers, although this is not likely to get international or Libyan support.

None of these measures will solve the migration crisis. The EU should take a broad approach, in terms of geography and reach. It will not be enough to track smugglers’ movements at sea, although it is a start. Gathering accurate intelligence on smuggling networks requires a presence on land or a credible Libyan counterpart with which to co-operate. And a focus on Libya makes sense at first, but smugglers could soon exploit the route of least resistance by shifting their activities to other parts of the North African coast. Many migrants are Syrian refugees, but a solution to Syria’s civil war remains out of reach. The EU must also review its development and humanitarian policies in transit countries like Libya, and in source countries across the African continent. A humanitarian tragedy cannot be reduced to a mere security challenge.

The tough debate in the European Council will, however, be less about the military mission or the EU’s foreign policy response, and more about migration’s ramifications within the EU. In May, the European Commission proposed a quota system, which would alleviate the burden on countries such as Italy and Greece, and redistribute 40,000 asylum seekers across the EU. Many, including the Central and Eastern European countries, object to this mandatory system. Under quotas, they would receive many more migrants than would otherwise be expected to make their way to them. Northern member-states also object because they ultimately feel these asylum seekers should be processed in southern Europe. Italy feels abandoned by the rest of the EU and has threatened to give migrants temporary visas so they can travel to other member-states. France has retorted that this might trigger the re-imposition of French border controls. The Schengen border code allows temporary border controls in exceptional circumstances, such as in the event of a serious threat to the internal security of a member-state. But in this case its invocation would not be the result of an acute threat to internal security, but of the breakdown of European solidarity. All this could cause a serious Schengen crisis, and draw into question one of the foundations of the EU – the free movement of people.

That leads to the fourth issue, which although not a crisis (yet) will preoccupy European leaders for the coming year. Britain’s prime minister, David Cameron, will outline his EU reform agenda at the summit meeting. He hopes to get results before an in-out referendum on EU membership, which may well take place in autumn 2016.

Among other things, Cameron wants to cut EU migrants’ access to benefits (particularly those going to people in work), in the hope that this would deter people from coming to the UK. This puts him on a collision course with several member-states, including Germany and Poland, which point out that this would violate EU treaty articles banning discrimination on grounds of nationality. The other member-states are very reluctant to open up the treaties to accommodate British reforms. They fear that one or other member-state would grab the opportunity to make special demands themselves. In some countries, like France, Ireland and the Netherlands, treaty change would trigger risky referendums. Cameron’s dilemma, however, is that a lot of Conservative backbenchers will not support his effort to keep Britain in the EU unless he achieves radical change.

Other British ideas may go down better in Europe, such as strengthening the EU’s ‘competitiveness’ by trimming cumbersome regulation, negotiating free-trade agreements and deepening the single market. The forthcoming European Council gives Cameron a platform to launch his renegotiation campaign, though for now he will avoid going into the details of what he wants. The secretariat of the Council of Ministers will be tasked with taking forward the detailed work, together with British officials. Cameron will find it hard to convince his European colleagues that they need to change EU policies and institutions in order to help him. As Charles Grant wrote recently, member-states fear that Eurosceptic backbenchers will push Cameron into demanding reforms that are unobtainable. The fewer allies Cameron has in the Europe, the tougher the negotiations will be, and the more the ‘British question’ will become an irritant in European politics.

The EU’s leaders will find it hard to tame these four horsemen. No country can afford to pick and choose which of these issues to take seriously and which not. All four are dangerous, and they all require a coherent European response. The four horsemen threaten the EU precisely because they raise issues that can only be solved if governments prioritise a European solution over narrow national agendas. If a European answer cannot be found, the horsemen will continue to promote chaos, instability and mutual recrimination within the EU.

Rem Korteweg is a senior research fellow at the Centre for European Reform.

CER/demosEUROPA forum on 'A dangerous neighbourhood: Europe's foreign policy agenda'

CER/demosEUROPA forum 2015

CER/demosEUROPA forum on 'A dangerous neighbourhood: Europe's foreign policy agenda'

28 May 2015 - 29 May 2015

Location info


Event Gallery

Don't mention Beijing: The EU and Asia's maritime security

Don't mention Beijing: The EU and Asia's maritime security

Don't mention Beijing: The EU and Asia's maritime security

Written by Rem Korteweg, 27 May 2015

The security challenges facing EU member-states and south-east Asian countries are strikingly similar. Both regions have difficulties with their neighbours: assertive Chinese claims in the South China Sea are a less dramatic version of Russia's annexation of Crimea; refugees in boats and illegal migration are creating humanitarian and security challenges, and piracy threatens sea-borne commerce. More co-operation between the EU and ASEAN (the Association of South East Asian Nations) on maritime security could help both of them, but it could especially contribute to south-east Asian security.   

Mention maritime security at an ASEAN meeting and the conversation quickly turns to China and the South China Sea. Five of its six littoral states are members of ASEAN. But China claims 80 per cent of the South China Sea, including its islands, rocks and reefs and the natural resources it contains. That does not go down well in the region. The most recent spat arose when satellite photos showed China reclaiming land, erecting infrastructure and even building a runway on Mischief Reef and Fiery Cross Reef. These semi-submerged reefs are part of the Spratly island group, some or all of which is claimed by Vietnam, the Philippines, Taiwan, Malaysia, Brunei and China. In this tangled mess of maritime disputes, China’s construction work creates new brick-and-mortar facts and further weakens prospects for international dispute settlement. On April 28th, increasingly alarmed by Chinese moves, ASEAN's ten member-states adopted an uncharacteristically unified position, saying that the land reclamations "eroded trust and confidence and may undermine peace, security and stability in the South China Sea." South-east Asian officials next expect China to declare an air-defence zone over a major part of the South China Sea, in a further step to bring the sea under de facto Chinese control. Not surprisingly, all littoral states have been investing in submarines, ships or other capabilities as part of a naval arms race.

For Europe the main concern is that trade disruptions resulting from tensions in the South China Sea affect European companies and consumers. The EU is ASEAN's second largest trading partner; the largest source of foreign direct investment, and main development aid donor. The EU has concluded, or is negotiating, free-trade agreements with nearly all ASEAN members. Thus, Europe shares south-east Asia's interest in maritime security.

That security is not only jeopardised by Chinese assertiveness; boatloads of migrants from Bangladesh and refugees from Myanmar pose a challenge to the Thai, Malaysian and Indonesian authorities. European states are also grappling with the migration issue. In April, the European Council held an emergency meeting after more than 800 migrants died when their boat capsized in the Mediterranean. The European Commission now wants to disrupt the smuggling networks. Some ASEAN governments, controversially, opt to turn the boats around, leaving the refugees to face uncertainty and peril. The symmetry of the threat posed by illegal migration, and the diversity of their responses, should convince the EU and ASEAN at least to share their experiences of approaches that work.

Piracy is another area where the two regions share interests. Since 2008 European navies have co-ordinated a multinational anti-piracy mission off the Horn of Africa, to which some Asian navies have contributed, including those of Singapore and Malaysia. In the Straits of Malacca, since 2004, four littoral states have organised a patrol with aircraft and naval vessels to increase security in the strategic waterway. Both operations have had success, as piracy rates have dropped, although the threat remains and the two organisations should share lessons learnt.

ASEAN's main geopolitical challenge, however, is the rise of China. The organisation is too divided and weak to balance China's growing influence. Individual states, such as Thailand, the Philippines and increasingly Vietnam, look to Washington for help. Simultaneously, these and other governments express concern at being caught in the middle of a Sino-American 'great power' clash. Stronger relations with the EU could offer a way for south-east Asian states to hedge; to avoid being overly dependent on either Washington or Beijing. In a region of intense geopolitical competition, the EU is welcomed as a non-threatening party that promotes multilateral, not zero-sum, solutions.  Meanwhile Europe, reluctant to play the part of America’s junior partner but increasingly aware of its economic and security interests in Asia, is slowly finding its voice.

In 2013, the EU and ASEAN set up a high-level dialogue focused on maritime security. This dialogue could eventually contribute to resolving South China Sea disputes by encouraging ASEAN to act coherently on maritime issues, although this is not its official objective. For now, the question of how to handle China is too controversial for ASEAN. And so, the EU and ASEAN talk about a response to China's actions, without actually mentioning the big neighbour: after all, many of the things ASEAN could do to counter piracy, illegal migration or smuggling would also improve the region's ability to monitor, respond to and possibly discourage Chinese moves in disputed areas of the South China Sea.

The EU should offer its support and expertise on maritime security – drawing on its own experiences. By focusing on issues like people smuggling or piracy, Europe's involvement in south-east Asian security affairs will increase; it will build trust between the two organisations, and, by making maritime security about more than just China, it will invite the involvement of all members of ASEAN, not just those who have problems with Beijing.

As part of its dialogue with ASEAN, the EU should launch practical and political initiatives. On the practical side, resolving technical issues related to data sharing and analysis between coast guards and other regional agencies would improve maritime awareness. The EU could also help ASEAN member-states identify shortfalls in their maritime assets and develop ways to resolve them. On the operational side, the EU and ASEAN should organise joint exercises and training, for instance in the field of search and rescue operations. European navies, coast guards and Frontex – the EU’s border agency – should share experiences (whether positive or negative) from Operation Triton, the EU’s border security mission in the Mediterranean. The EU could give advice on how to organise civil-military missions with a group of 28 diverse member-states. At the political level, the EU should help ASEAN develop common norms for policing its maritime zone. This could result in a code of conduct that respects international maritime law and the freedom of navigation. This would help countries in the region to defuse tensions and avoid misunderstandings.

These measures will not easily change the security dynamic in the region, but they would better equip south-east Asian nations to respond to maritime challenges. They may be designed to address non-traditional security issues like piracy or illegal migration, but a more coherent and capable ASEAN would also offer the best chance of deterring risky Chinese manoeuvres. Sometimes it is best to pretend that the elephant is not in the room.

Rem Korteweg is a senior research fellow at the Centre for European Reform.

Отношения России с Западом: движение есть, прорыва - нет


Отношения России с Западом: движение есть, прорыва - нет

By Ian Bond, 27 May 2015
From BBC

Link to press quote(s):

Judy Asks: Is the European neighbourhood policy doomed?

Judy Asks: Is the European neighbourhood policy doomed?

Judy Asks: Is the European neighbourhood policy doomed?

Written by Ian Bond, 20 May 2015
From Carnegie Europe

After a deal: How to keep Iran honest?

Iran deal

After a deal: How to keep Iran honest?

Written by Rem Korteweg, 22 May 2015

A nuclear deal with Iran may be concluded before the deadline of June 30th. But the deal could undermine stability in the region, not promote it, unless the US and Europe are willing to contain Iran and reassure its neighbours.

Western and Iranian negotiators say an agreement on Iran’s nuclear programme is within reach. A deal that puts a brake on Iran’s nuclear programme would be a momentous achievement, but only if it can be verified and enforced.  It may not be. The prospect that an agreement could bring Iran in from the cold – after lifting international sanctions and restoring trade and diplomatic relations –   yet still leave room for it to cheat, is making Tehran’s neighbours nervous. Without Western willingness to contain Iranian influence, a deal will make the region more volatile.

There are two reasons why a comprehensive deal might fall short. The negotiators on both sides still have hard work to do. On April 2nd, the United States, France, the UK, Germany, China and Russia (otherwise known as the EU3+3), and Iran announced that an accord had been reached on the political contours of a final, comprehensive deal. This political framework, however, has many loose ends. Iran says an agreement will expire after 10 years, but the US says some restrictions on its nuclear programme should apply for up to 25 years. Iran says research and development on advanced uranium centrifuges can continue under a deal. The US disagrees. Iran does not want to give inspectors access to military sites. The US, and the International Atomic Energy Agency (IAEA), the UN’s nuclear watchdog, insist it should. They also say that Tehran must be more transparent about the possible military dimensions of its nuclear programme. If these issues are not resolved, a deal would either have little value or collapse.

Another reason for pessimism is that the deal may be skewed in Iran’s favour. The political framework agreed on April 2nd says Iran will freeze – not dismantle – its enrichment capability and reduce – not remove – its uranium stockpile. In return the UN, US and Europe will cancel most sanctions (except some proliferation-related sanctions and those linked to its missile programme and sponsorship of terrorism).

The problem is that those sanctions worked; they brought Iran to the negotiating table. But once sanctions are lifted US and European leverage will vanish. Any Iranian violation of the agreement will be difficult to detect, and even more difficult to respond to through a concerted international effort. US officials are overconfident when they suggest that it will be possible to create a reliable system to ensure that sanctions could reactivate, or ‘snap back’, automatically. The negotiators will have trouble devising a procedure that is immune to a Chinese or Russian veto in the United Nations Security Council – a necessary condition to put the sanctions back in place. The Security Council is more divided than five years ago as relations between Russia and the West have soured. The Russian ambassador to the UN, Vitaly Churkin, said on May 13th that there could be "no automaticity, none whatsoever" about re-imposing sanctions. In short, the West will have to compromise at the UN to get a deal.

The West could still re-impose its own sanctions, but once a nuclear deal has been reached, it may also be difficult to maintain transatlantic unity. Iran has the fourth-largest oil reserves and the second-largest reserves of natural gas in the world. It is actively promoting a bright economic future – fuelled by its ample hydrocarbon reserves – that European firms can be a part of. And a future pipeline connecting Iran’s gas fields to Turkey’s trans-Anatolian pipeline would contribute to the EU’s energy security. As more European firms enter the Iranian market, and in the absence of blatant Iranian violations of the nuclear agreement, European governments might favour protecting their commercial and energy interests over a unified transatlantic response to an ambiguous violation of the deal.

Ultimately, however, the US and Europe hope that their concessions during the negotiations will encourage Tehran to help stabilise the Middle East. The EU’s foreign policy chief, Federica Mogherini, said on April 28th that she was convinced a deal could “open the way to a different role of Iran in the region”. The West hopes a nuclear deal turns Iran into a helpful partner – but hope is not a strategy.

The US and Europe are right that Iran is needed to fight the Islamic State terror group, reach a solution in Yemen, and bring Syria’s civil war to an end. But it is risky to assume that Iran will suddenly change its colours after a nuclear agreement and become more helpful on all regional security issues. Why would it? Despite years of tough sanctions and economic stagnation, Iran is now a rising power in the Middle East. Its population is young, well-educated and large; second only to Egypt in the region. It has a strong sense of national identity and culture; huge hydrocarbon reserves, and a regional network of allies and militant groups, such as Hezbollah. Iran’s influence in the region has increased since the fall of Saddam Hussein. With a hand in Lebanon, Syria, Iraq, and Yemen, its reach stretches from the Eastern Mediterranean to the southern entrance of the Red Sea and the Straits of Hormuz. Riyadh, highly insecure and deeply suspicious of Iranian intent, feels encircled. Even in the Persian Gulf, a vital international waterway, Iran is flexing its muscles: on April 28th the Iranian navy forced a Danish container ship to divert its course and two weeks later it fired warning shots at a Singaporean cargo ship. The Sunni Arab world and Israel are rightly concerned about Iran unshackled from its sanctions; it will make Iranian assertiveness in the region more likely.

Viewed from the region, the nuclear deal is another sign of US withdrawal from the Middle East. Just as in Syria, where the West pushed to rid Syria of chemical weapons but did little to end the civil war, Sunni Arab states – including Saudi Arabia, the UAE and Kuwait – think that the West is negotiating with Iran about weapons, while doing little to challenge Tehran’s ambitions. Over the past two years, countries around the world have sought assurances from Washington. In areas of intensive geopolitical competition from East Asia to Eastern Europe, countries like Japan and Poland have asked questions about US commitment to their security, and received some reassuring answers from the US. Now it should be the turn of America's allies in the Middle East. At a Camp David summit on May 14th, President Obama made his case for an Iran nuclear deal to several Gulf leaders. The success of his efforts remains uncertain.

Paradoxically, an agreement that was meant to avoid another war in the Middle East may add to the region’s turbulence, unless a balance of power can be maintained. The Gulf countries and Israel primarily look to the United States to deter Iran. Washington will most likely give them some security assurances and sell them more sophisticated military equipment. But Europe has a role to play too.

European countries should help make sure Iran keeps its end of a nuclear deal by taking a tough line on sanctions; providing enough resources to spy on Iranian nuclear facilities, and improving the ability of Gulf countries to stand up to Iran. The EU should insist on gradually phasing out the sanctions, not removing them instantaneously. Measures such as those that blocked Iranian shipping companies from accessing the European reinsurance market and underwriters have been central to the sanctions’ overall success. The EU should only remove these measures if Iran meets clear commitments; for instance on reducing its uranium stockpile or disabling its enrichment cycle. Importantly, if needed, the EU should be willing to reactivate the sanctions unilaterally (or with the US), even without a UN resolution.

Paris, London and Berlin will actively promote their defence exports, seeking to persuade countries in the Middle East that stronger forces are necessary to keep Iran at bay. In May, France announced the sale of fighter jets to Qatar, and negotiations on a similar military package continue with the UAE. Germany has sold four advanced submarines to Israel. Saudi Arabia is the UK’s largest defence technology export market. But alongside selling more kit, Europe should help improve the ability of Arab militaries to counter threats from Iran by improving their professionalism and skills.

The UK, in co-operation with allies, should continue to use its intelligence capacities to monitor Iran’s nuclear supply chain. This would help to verify Iranian nuclear commitments. If the West is to keep Iran honest, Tehran has to know that its activities will be very closely scrutinised. The UK and other European governments should also direct more intelligence resources to disrupt Hezbollah’s military wing; that organisation has been on the EU’s list of terrorist organisations since 2013.

France, more than any other European country, has stood up for Arab interests during the Iran talks. It has also gained Arab credit for showing its resolve against Islamist terrorists in places like the Sahel. On May 5th, President Francois Hollande became the first foreign head of state to attend the summit of the Gulf Co-operation Council (GCC), a political and economic forum for Arab Gulf countries. Paris should use that diplomatic credit to persuade Arab Gulf countries not to over-react to a nuclear deal, and to make clear that they should end support for Sunni militant and terrorist groups: the prospects for stability in the Middle East will not be helped by continuing sectarian violence.

The EU’s high representative, Federica Mogherini, has an important role to play too. She chaired the nuclear talks and her shuttle diplomacy was essential to agreeing the political framework in April. But her triumph will only last as long as an agreement holds. Her diplomatic access with the Iranians should allow her to push Tehran to stick to a deal. But perhaps her biggest challenge is that she should convince Iran to play a constructive role in places like Syria, Iraq and Yemen.

An ugly consequence of a nuclear deal is that it may encourage Arab countries to seek the same nuclear technology that Iran has. A nuclear agreement will most probably legitimise Tehran’s right to uranium enrichment, so Saudi Arabia has said it wants a nuclear fuel cycle too. This poses a serious problem to the West: an agreement meant to avoid the spread of nuclear technologies, may do just that. Riyadh could get the technology from Pakistan, which is widely believed to have developed nuclear weapons with Saudi financial assistance, and has a poor record on nuclear non-proliferation. But Laurent Fabius, the French foreign minister, also discussed nuclear power projects when he visited Riyadh in April. So the West faces a choice: it could decline Saudi requests and push Riyadh towards Islamabad, or it could help Saudi Arabia develop civilian nuclear technology and keep an eye on its nuclear programme. The latter option is preferable.

A nuclear deal may still collapse. But if a deal is reached, Europe should engage with Iran, but be willing to contain it too.

Rem Korteweg is a senior research fellow at the Centre for European Reform.

UK election reminds Asia that it needs a strong Europe

UK election reminds Asia that it needs a strong Europe

UK election reminds Asia that it needs a strong Europe

By Ian Bond, 01 May 2015
From Asian review

Link to press quote(s):

Two cheers for Ukraine

Two cheers for Ukraine

Two cheers for Ukraine

Written by Charles Grant, Ian Bond, 30 April 2015

Despite recent progress, Ukraine remains militarily, politically and economically fragile. The EU needs to do more to help.

There are plenty of reasons for those in Kyiv to be optimistic. The government, more competent and less corrupt than any since independence in 1991, is undertaking serious reform. But Ukraine’s success is far from assured: the political class is fractious, Russia may be preparing for more fighting in the Donbass and the economy is shrinking. Without sustained Western attention, the country’s attempt to become a Western-orientated democracy may once again fail, as happened after the ‘orange revolution’ of 2004.

President Petro Poroshenko claims there is now a committed majority for pro-EU policies throughout Ukrainian politics. Some impressive foreigners have taken Ukrainian citizenship in order to become ministers, including the Ukrainian-American finance minister, Natalie Jaresko, and the economy minister Aivaras Abromavičius, originally from Lithuania. Many of those recently elected to the Verkhovna Rada (parliament) are young, bright and not beholden to oligarchs. Vigorous NGOs monitor the government’s actions and make a fuss when standards slip.

Reform-minded officials report that serious efforts are being made to tackle corruption. A new prosecutor-general, appointed in February, has made a start on going after corrupt officials (his deputy is a Georgian who overhauled the prosecutor’s office in Georgia) and almost 500 anti-corruption cases are underway. So that ordinary people can see the benefits of the crackdown, the government has made a priority of police reform. And after a four-month delay, it has appointed a head to the new Anti-Corruption Bureau.

There is much talk in Kyiv of ‘de-oligarchisation’. The government has started to take back control of state-owned enterprises (SOEs) which the oligarchs have – till now – de facto controlled through minority shareholdings. In March, Poroshenko fired Ihor Kolomoisky, from his job as governor of Dnipropetrovsk: Kolomoisky had deployed a private militia to defend his business interests in a state-owned oil company against the state. Prosecutors are investigating the affairs of Rinat Akhmetov, Ukraine’s richest man. The Rada has passed several laws that hurt the business interests of one or other oligarch. But business and politics are still unhealthily mixed: Poroshenko himself has not yet fulfilled his promise to sell his own corporate assets, including media interests.

Both Poroshenko and Prime Minister Arseniy Yatsenyuk have links to rival camps of oligarchs. Though tensions between them are serious, they are under Western pressure to maintain a united front. Yatsenyuk may want to be president but is currently less popular than Poroshenko, not least because he gets much of the blame for the country’s economic woes.

Both men have flirted with Ukrainian nationalists in an effort to court popularity. Poroshenko appointed Dmytro Yarosh, the leader of the far-right ‘Praviy Sektor’ group, as an adviser to the chief of the general staff. Meanwhile the Rada passed a law making it a criminal offence to criticise the role of the extreme nationalist organisations which operated in Ukraine from the 1920s to the 1950s, even though some carried out atrocities against Poles and Jews (at the time of writing, Poroshenko has yet to sign this law). The Rada should not waste its time on laws which do nothing to modernise Ukraine but help to sustain the Russian narrative that fascists run Kyiv.

Ever since the birth of the Maidan movement in November 2013 – when the then president, Viktor Yanukovych, rejected the EU’s Deep and Comprehensive Free Trade Agreement (DCFTA) – Ukraine’s politicians have had to look over their shoulders. When things are going badly on the battlefield or in the economy, there are mutterings about 'another Maidan'. But Ukraine needs a period of stability, rather than more unrest, in order to build its strength.

The ceasefire agreed in February, as part of the ‘Minsk 2’ agreement, is fraying, with soldiers being killed nearly every day. Russian troops remain in the Donbass, training and equipping separatist forces. On April 23rd, NATO’s secretary-general, Jens Stoltenberg, reported a substantial Russian build-up along the border with Ukraine and also inside the country. Ukrainian forces are finally getting some Western training, from the US, the UK and Canada, and some non-lethal military equipment. But Kyiv’s politicians also want defensive weapons: they believe that the Russian president, Vladimir Putin, plans more territorial conquest. If Russia does grab more land, Western governments should step up military assistance and consider giving Ukraine the means to defend itself. Ukraine’s politicians also want NATO membership (though they know it is not on offer for now); opinion polls show that just over half the people agree, up from a small percentage before the war began.

Poroshenko wants UN peacekeepers on the border between Russia and Ukraine to prevent further aggression, but Russia rejects that as contrary to the Minsk 2 agreement. Ukraine's problem is that this text (analysed in a recent CER insight) is ambiguous and impossible to implement. It says "a dialogue is to start on modalities of conducting local elections in accordance with Ukrainian legislation", including an interim law on "special status" – meaning greater decentralisation of power than in the rest of Ukraine – for the conflict areas; it does not specify with whom the dialogue should be conducted. It also calls for Ukraine to enact constitutional change, decentralisation and a permanent law on special status, all by the end of 2015, but is unclear on the sequencing of all these requirements.

The Ukrainians say that there must be free and fair elections in the conflict areas first, so that they have interlocutors with democratic legitimacy to deal with; the Russians say that the Ukrainians should negotiate the constitutional changes with the de facto authorities of the so-called Donetsk and Luhansk People's Republics and then hold elections later. Diplomats from Germany and some other EU countries think the Russian interpretation of the Minsk 2 agreement is correct, but US diplomats take Kyiv’s side.

Whatever the text was intended to mean, the reality on the ground is that elections cannot be held unless the Russians and their allies agree; and they will not agree until they have the autonomy they want. But if Ukraine accepts elections on Russian terms, and the current separatist leaders are confirmed in office, all hope of free and fair elections and the possibility of changing the region’s leadership in future elections will be lost; the Minsk agreement says that once elections have been held, the Kyiv government cannot sack the local authorities.

Somehow, the constitutional changes and the elections need to be synchronised. One possibility would be for the Ukrainian government to accept the separatist leaders as provisional interlocutors and negotiate a deal with them on special status for their territory. A referendum on the special status and local elections could be held simultaneously, according to Ukrainian law and subject to OSCE monitoring; and the separatist leaders would become legitimate if voters chose them and approved the new status.

But even if the timetable can be fixed, Ukraine and Russia disagree on the nature of decentralisation. Poroshenko emphasises that most Ukrainians do not want a federal constitution with broad regional autonomy. Russia wants the Donbass to have an effective veto over Ukraine's membership of the EU and NATO (as Republika Srpska has over Bosnia's big decisions). There is no obvious way of preserving the unitary state wanted by most Ukrainians while giving the rebel entities the blocking power desired by Russia. The West should avoid endorsing any arrangement likely to produce Bosnia-style paralysis.

The biggest reason for worrying about Ukraine, however, is neither the politics nor the military situation, but the economy. In the first quarter of this year, Ukraine’s GDP was 15 per cent lower than a year earlier, and it is still shrinking. Foreign currency reserves are only $10 billion, and that is after a recent $5 billion IMF disbursement. Putin's game may be to wait until Ukraine defaults, and economic woes push impoverished people onto the streets – and then offer assistance in return for the installation of a new, more Russia-friendly regime.

Senior officials in Kyiv claim that Ukraine will not undergo a disorderly default, even though at least $40 billion is needed over the next five years to balance the budget. They reckon it will come from the IMF ($17.5 billion) and the restructuring of debts ($15.3 billion), with the balance provided by friendly governments and the EU.

But the Ukrainian authorities know they need still more cash to stabilise the economy and then to generate growth. Speaking at the Lennart Meri conference in Tallinn, on April 26th, Anders Aslund of the Peterson Institute urged European central banks to make $10 billion in currency swap credits available to Ukraine, to strengthen its foreign currency reserves (and thus make a speculative attack on the hryvnia less likely). They could do so with policy conditions attached, thereby reducing the likelihood that the reserves would need to be used.

The government needs to create an environment that is attractive to foreign investors. Improving the rule of law is crucial. The government has plans for bringing more of the grey economy into the legitimate sector so that it pays tax. The measures demanded by the IMF, such as cutting pensions and phasing out energy subsidies (to reduce wastage of energy), are essential – but will be painful and unpopular.

The Rada took a crucial step on April 9th when it passed a law to break up the state gas company, Naftohaz, into transit, storage, supply and production businesses. This should bring Ukraine's gas market into line with the 'unbundling' prescribed by the EU's 'third energy package' (which Ukraine’s agreements with the EU oblige it to implement). Ukraine has managed to reduce its dependence on Russian gas, thanks to 'reverse flow' arrangements with EU neighbours.

Reformers in Kyiv want the EU to increase its role in Ukraine. If Russia will not allow UN peacekeepers, many Ukrainian politicians would like an EU police mission on the Russian border; and they would like more support for police reform. Poroshenko wants the EU to do more to fight Russian propaganda and to help broadcasters compete with Russia's output. One idea mooted is for the EU to help establish a Russian-language news agency that could operate throughout former Soviet countries.

Poroshenko also hopes that at the forthcoming Eastern Partnership summit in Riga, the EU will offer visa free travel to Ukrainians, as it has done for Moldovans. Though Ukraine has made some progress on meeting EU standards for border control, there are still technical obstacles to lifting visa requirements, so he is likely to be disappointed. The Union will have to reassure Ukrainians that the delay on visa waivers is not a political signal that Ukraine should be kept at arm's length.

The DCFTA between Ukraine and the EU is important for the country’s future, providing a roadmap for creating a more competitive economy. But although the EU has unilaterally opened its markets to Ukraine, in line with the agreement, Kyiv announced in September 2014 that it was postponing the implementation of its side of the DCFTA. This was mainly because of Russian pressure (though some Ukrainian oligarchs were happy to maintain protection from EU competition). Moscow claimed that the DCFTA would damage its economic interests, and called for trilateral discussions with the European Commission and Ukraine over how the agreement was applied. These technical talks started last autumn. The Commission reckons that none of Russia’s complaints stand up but Germany has chided Brussels for not doing more to reassure the Russians.

Poroshenko now says he hopes for implementation by the start of next year. The sooner the better: once Ukraine meets EU standards, its industries will be able to export more easily not only to the Union but also to anywhere else that recognises EU standards. That way, if Russia responds to DCFTA implementation by blocking Ukrainian exports, as it threatens, Kyiv will have other options. The EU should do all it can through technical assistance and twinning arrangements to ensure that Ukraine’s administration has the capacity to make the DCFTA work.

European unity over the sanctions regime against Russia has been, so far, impressive. But EU leaders have not yet shown a similar determination to support the government in Kyiv. At an EU-Ukraine summit and related donors’ conference, on April 27th and 28th, EU leaders failed to come up with any fresh money. The EU should unlock its vaults, while making further money conditional on the continuation of reform.The government in Kyiv is doing enough of the right things to deserve support.

Charles Grant is director of the CER, and was recently in Kyiv on an ECFR study trip. Ian Bond is director of foreign policy at the CER.


Added on 07 May 2015 at 13:49 by Anonymous

Whether you like it or not but Ukraine is already lost its war. Investments are returning to Russia and oil price has stabilized.

I do not want to protect aggressive actions against Ukraine. But your article is an example of irresponsible approach. The West should facilitate Ukrainian cooperation with Russia rather than vice versa. Without Russian market, Ukraine would not survive.

Added on 03 May 2015 at 11:33 by Wim Roffel

There is far-going censorship in Ukraine and candidates have repeatedly been harassed or beaten up. So free elections are at least as unlikely in the Kiev controlled part of Ukraine as in the rebel held part. Have a look in "pro-Russian" areas like Odessa and Kharkov to see what Ukrainian "democracy" really means.

The new laws that make it punishable to speak badly of Ukrainian nazi's fit in a pattern. Even immediately after the "revolution" Ukraine's were more interested in polarizing measures like forbidding the Russian language than in economic reform.

Dead in the water: Fixing the EU’s failed approach to Mediterranean migrants

EU migrants

Dead in the water: Fixing the EU’s failed approach to Mediterranean migrants

Written by Camino Mortera-Martinez, Rem Korteweg, 23 April 2015

Europe can no longer ignore the humanitarian crisis in the Mediterranean. If it wants to avoid the death of more refugees, it should fix its asylum policy, increase its naval presence, and play a stronger role in Libya.

There is something deeply wrong with Europe’s approach to irregular migrants. After the Mediterranean boat tragedy, which left more than 700 migrants dead, the European Commission has unveiled a ten-point action plan on migration. It has several good points, but it can only be the beginning.

On migration and asylum policy, a north-south divide runs through the EU. Under the Schengen treaty (to which the UK and Ireland are not parties), all members are responsible for securing the external borders of the Union. The premise is simple: in an area of free movement without borders, the migration problems of one member-state are the problems of the Union as a whole. But the EU has not had a common migration policy for twenty years.

Europe’s asylum system, known as the 'Dublin system', has caused friction within the Union. Under it, the EU member-state where a migrant first arrives is primarily responsible for processing an asylum application. This places an unreasonable burden on countries bordering conflict zones, such as Italy, Greece or Malta. These countries, overloaded with applications, turn down the overwhelming majority of them. So asylum seekers travel to other countries, such as Germany or Sweden. Here they have better chances of a successful application; but locals resent them as an increasing burden on social services. The system has created two different zones in Europe with two different interests: Northern member-states want an asylum policy that keeps migrants in the South but treats them humanely, while Southern member-states want the North to share the burden by accepting more migrants. The Mediterranean refugee crisis shows that this system is unsustainable.

When popular uprisings in Libya and Syria turned into bloody conflicts, tens of thousands of people started risking their lives on leaky boats to cross the Mediterranean rather than face an uncertain fate at home. Problems were compounded as smuggling networks exploited Libya’s lawlessness to create a new, lucrative path by which they could bring African migrants to the EU. The rickety smuggling ships often got into problems on the high seas, whether by accident or by design.

In October 2013, three years after the Arab uprisings started, the Italian government of then-prime minister Enrico Letta decided to launch a search-and-rescue operation called ‘Mare Nostrum’. With a budget of 9 million euros per month, the Italian authorities patrolled both Italian and Libyan waters. Between October 2013 and October 2014 (when the operation was replaced by the EU-led ‘Triton’ mission), ‘Mare Nostrum’ helped save an estimated 150,000 lives and detained 351 smugglers. Still, the flow of migrants continued and scenes of overcrowded boats reaching Lampedusa became a symbol of Europe’s failed migration policies. According to the International Organisation for Migration, more than 170,000 migrants reached Italy by sea in 2014.

In October 2014, the Italian government appealed for EU support. The Italian demand to strengthen ‘Mare Nostrum’ was met with criticism from Northern member-states, including the UK, Germany and the Netherlands. They argued that Italy had created a ‘pull effect’ by establishing a search-and-rescue operation. In their view, the prospect of being rescued at sea needlessly encouraged more migrants to attempt the crossing. Germany, France, Sweden and the UK are the top destinations for asylum seekers, and their governments face increasing domestic pressure to cut back on the numbers. The compromise that emerged from this north-south disagreement was operation ‘Triton’. This is an EU-led operation, with a more restricted mandate, budget and area of operations than ‘Mare Nostrum’. It has no mandate to proactively search and rescue boats in danger; it has a monthly budget of 2.9 million euros with a limited fleet of two aircraft, one helicopter, and six patrol vessels, and it only patrols Italian waters.

During the first three months of operation ‘Triton’ (end of October to end of December 2014), Frontex, the EU’s border agency, observed an increase in migrants of 160 per cent, compared with the same period of 2013, when the Italian rescue operation was still in place. Meanwhile, deaths in the Mediterranean have soared: more than 1,750 migrants have perished since the beginning of 2015, in comparison with 56 reported deaths in the same period of 2014. Since ‘Triton’ was established, more migrants have attempted to reach European soil, and many more have died trying. This suggests that other factors besides the ‘pull effect’ are leading migrants to board the ships.

These factors are mostly linked to foreign, not migration, policy. Since October 2014, the conflict in Libya has worsened; the country has fallen apart and the Islamic State terrorist group has joined the fight. Refugees en route to Europe have to run a lethal gauntlet in Libya: they are harassed, mistreated and sometimes killed by the warring factions. Yet the country’s chaos and its proximity to Europe make it a smuggler’s dream. The Boko Haram terrorist group in Nigeria, repression in Eritrea, and continued violence in Somalia create a steady flow of refugees from further afield. The flood of refugees from Syria’s civil war continues unabated, and many of them now reach Europe through Libya. Not all irregular migrants are refugees. Some are merely economic migrants. But Europe’s inability to manage these crises has prompted an increase in the number of irregular migrants. The possibility of potential terrorists hiding among legitimate refugees is another reason for the EU to take a serious, end-to-end view of the migration issue.

The Commission’s ten-point action plan is a step in the right direction. The Commission is right to push for an increase in Triton’s resources. European leaders should agree to a substantial increase not only of the operation’s budget but also its logistical resources. The mounting death toll shows that the available fleet and manpower are not enough. More helicopters, ships and surveillance assets are needed. Since there is no meaningful Libyan coast guard or navy, European governments should agree to expand the mandate of the operation and to allow it to patrol Libyan waters, as ‘Mare Nostrum’ did.  Beyond increasing Triton’s capabilities, its mandate should be broadened to include assisting boats in trouble. This cannot be done within the existing mandate of Frontex, as the Commission suggests, since this is purely a border control agency. Reluctant governments should realise that over-emphasising the ‘pull effect’ is not only factually incorrect, but also morally indefensible.

The Commission has proposed capturing and destroying smuggling vessels, taking its cue from the EU’s counter-piracy mission Atalanta, which operates off the Horn of Africa and in the Gulf of Aden. But migrant flows will not stop if the EU starts sinking old fishing boats. Such action will only increase the price a migrant has to pay to a smuggler for his passage to Europe.

Smugglers and pirates are not the same and cannot be defeated in the same way. While a military show of force may deter pirates, the prospect of special forces abseiling onto, or firing warning shots at, boats filled with desperate civilians is not one we should welcome. Part of the success of operation Atalanta was a result of attacking pirate hideouts on shore in Somalia. Smuggling networks, by contrast, are dispersed; those in charge may be in an internet-café in Bamako, Benghazi or Bari. Shutting them down requires effective intelligence and law-enforcement operations, not military intimidation.

The EU has suggested destroying boats before they are used for smuggling. This sounds tough, but how can one differentiate between a smuggling vessel and a legitimate trawler or merchant ship? Not every Libyan fisherman doubles as a people smuggler. And many smuggling boats embark from Turkey, Egypt, Tunisia or elsewhere; the EU cannot sink them all. The EU should certainly pre-empt imminent acts of smuggling – for instance, when it is clear that people are being loaded onto a boat – but getting the information in real time to enable such an operation would present a tremendous intelligence challenge.

There is a market for people smuggling, and European leaders must appreciate the dynamics of supply and demand. Europe should focus on the demand-side problems onshore; those factors that lead people to risk their lives on rusty boats in the first place. This means Europe should address Libya’s lawlessness and Syria’s civil war. In the absence of a functioning central government in Libya, the EU should establish a civil-military mission on the ground and create a safe zone where migrants could be processed. It should be set up initially in an area controlled by Libya’s internationally-recognised government, currently in exile in the east of the country. The Mediterranean crisis should force Europe to take more responsibility for preventing Libya's collapse.

The Commission’s action plan offers some timid ideas for the unsolved question of better burden- sharing in the EU’s asylum system: the Commission promises to “consider options for an emergency relocation mechanism”. This measure shows that the EU is slowly considering how to tackle the flaws in the Dublin system. Its latest reform, termed ‘Dublin-III’, has clearly not gone far enough. Europe’s leaders should be bolder. They should rethink the rule of first entry and ensure the effective implementation of all existing EU directives on asylum seekers. This would contribute to harmonising national asylum standards and distributing refugees more evenly across the EU.

Finally, the Commission’s action plan promises to “establish a new return programme for rapid return of irregular migrants”. This sounds good, but such a programme will not work without a functioning Libyan government that can negotiate the conditions of the return of migrants.

As the conflicts in Europe’s backyard continue, or intensify, more and more people will risk their lives to flee their countries. Turning a blind eye to the EU’s obligation to help those in need would neither be moral, nor coherent with the EU’s foreign policy interests. The domestic politics of migration are difficult for many member states, including the UK. Migration is a unifying issue for Europe's right-wing populist parties. But the current system, which creates problems and tension in many countries, does nothing to reduce the level of anti-migrant sentiment. As the EU’s migration commissioner, Dimitris Avramopolous, puts it “if Europe does not present a united front to stop tragedies like this from happening, there will only be one winner: the populists.”

Camino Mortera-Martinez is a research fellow and Rem Korteweg is a senior research fellow at the Centre for European Reform.

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