Central Europe Leaps to Support Ukraine's Continued Relationship with the West
Summary:
* The Council of Europe and the International Monetary Fund have recently criticized Ukraine's efforts at economic and political restructuring, and appear prepared to write the former Soviet republic off. Central European countries, with a foot in the door of the West but facing a growing threat from Russia, do not wish to see Ukraine let go so easy. Candidate NATO members Hungary and Poland, as well as Romania, are trying desperately to keep Ukraine's options open and to keep the West engaged with Kiev -- a noble effort which may unfortunately be doomed from the outset.
Analysis:
In a report published on January 19, the Council of Europe threatened to withhold Ukraine's membership due to Kiev's failure to comply with the commitments it assumed when it joined the Council in 1995. According to the report, Ukraine has failed to abolish the death penalty, implement legal and judicial reform, and enact a new civil code and laws on political parties. Moreover, the report criticized Ukraine for not respecting the rights of prisoners and for allowing only limited freedom of the press. The report blamed Ukrainian Parliament members and other officials for failing, as of the end of 1998, to meet the country's commitments to the European parliamentary assembly. On January 27, the Council of Europe will put Kiev on notice: Should Ukraine fail to comply with its various commitments by the June session of the Council, the Ukrainian delegation's powers will be suspended.
In addition to being condemned by the Council for its delay in implementing these measures, Ukraine has been strongly criticized for its lackluster economic performance. According to Mohammed Shadman-Valavi, the head of the IMF mission currently evaluating the country's economic results, "the government's inefficient policies in recent years have virtually deprived it of an opportunity to borrow abroad, and the country has to take difficult and unpopular decisions to stay afloat." By January 26, the IMF mission to Ukraine should announce whether the Fund will resume its financing program, which was suspended in November 1998. The IMF requires that the Ukranian government demonstrate that its expected 1999 revenues are realistic before the loan can be renewed. In short, Kiev has to develop and implement a plan for covering the expected budget deficit of 1 percent of the GDP. According to Roman Shpek, the Chairman of Ukraine's National Agency for Development and European Integration, Western creditors could declare Ukraine bankrupt in 1999, provided the IMF does not resume its financial support for payment of interest on foreign debts. What is certain is that Ukraine's hard currency reserves are extremely low. Given this and Ukraine's current political circumstances and the economic decline, the latter having been caused to no small extent by the economic crisis in Russia, the primary commercial partner of the Ukraine, Ukraine's prospects for speedy improvement of its image in the West are dim.
While Western Europe and the IMF appear ready to write off Ukraine, Ukraine's post-communist neighbors -- Poland, Hungary, and Romania in particular -- have leapt to shape their actions to reflect the geostrategic importance of Ukraine. During Ukrainian President Leonid Kuchma's recent visit to Warsaw, Polish President Alexander Kwasniewski promised that Poland would back Ukrainian efforts in dealing with international institutions such as the European Union, the IMF, and the World Bank. Kuchma pledged, in turn, that his country would model its attempt to obtain integration with European economic and defense organizations on Poland's experience. During the talks, Kwasniewski stressed that "the year 1999, the year of presidential election in Ukraine, is a very important, if not the most important, period for the strengthening of the Ukrainian sovereignty."
In a further effort to maintain contact with Ukraine, Hungary and Romania plan to establish a joint unit of military engineers by the end of this year. The new unit will be devoted to conducting peacekeeping missions and fighting national disasters. During a recent meeting of Romanian, Ukrainian, and Hungarian Ministers of Defense in Ukrainian city of Uzhgorod, an agreement was signed to establish "fraternal" relationships between Romanian and Ukrainian military units stationed along their common border. Central European countries, which will feel the greatest impact of Ukraine's final position in Europe, understand the strategic importance of including Ukraine in the Western military sphere, especially at a time when Russia has started restoring its former empire by founding the Russia-Belarus Federation. Hungary and Poland, already well on their way into NATO and with their feet in the door of other Western European institutions, are using what influence they can muster toward the West to force a reconsideration of the future of Ukraine.
Although Ukraine is at the brink of financial collapse, it is still making an effort to gain integration into the West and continues to shun a deeper relationship with Russia. On January 14, the Ukrainian Parliament rejected for the third time a bill on joining an inter-parliamentary assembly of the Commonwealth of Independent States. Clearly, Ukraine does not intend to voluntarily return to the Russian fold, if it only has another option. The West now has a momentous geopolitical choice. On the one hand, it could refuse to help the Ukraine by insisting that its reformist efforts do not measure up, and demand that the country implement draconian economic measures that would likely generate political instability and, ultimately, force Ukraine's return to Russia. On the other, the West could -- despite the high economic costs involved -- attempt to thwart Russian strategic ambitions by not leaving the Ukraine economically or politically exposed. Despite the strategic imperative, those costs may be just too high.
___________________________________________________
To receive free daily Global Intelligence Updates, sign up on the web at http://www.stratfor.com/mail/,