December 12, 2013

Keeping the Eastern Partnership on track

What could emerge is a ‘two-tier’ Eastern Partnership, encompassing countries in favour of strong relations with the and countries that are not.

Since July 2013 Nicu Popescu is Senior Analyst at The European Union Institute for Security Studies. He previously worked as advisor on foreign policy and EU affairs for the prime minister of Moldova (2010, 2012-2013) where he dealt with a wide spectrum of foreign policy issues. He also dealt with domestic reforms such as the visa liberalisation process and Moldova’s accession to the European Common Aviation Area. Prior to this, he worked as head of programme and senior research fellow at the European Council on Foreign Relations in London (2007-2009, 2011-2012), and as a research fellow at the Centre for European Policy Studies in Brussels (2005-2007). He holds a PhD in International Relations from the Central European University in Budapest, Hungary.
Sir Humphrey Appleby, the suave civil servant in the British sitcom ‘Yes Minister’ known for his wise but cynical pessimism, once remarked that diplomacy is about surviving until the next century – while politics is about surviving until Friday afternoon. Such differences in time horizons apply also to the pace of European foreign policy when dealing with post-Soviet realities, as the EU and most of its Eastern partners enter the finishing line on
Association and Deep and Comprehensive Free-Trade Area agreements. For in the case of EU-Armenia relations, things have not survived intact until Friday afternoon. After having been engaged for years in the preparation and negotiation of an Association and Free-Trade agreement with the EU, Armenia has aborted the process just before its conclusion and announced its intention to join the Russian-led Customs Union.
This summer the EU and Moldova, Georgia and Armenia finalised talks on Association Agreements and Deep and Comprehensive Free-Trade Area provisions. The agreements – now with the exception of Armenia – are scheduled to be initialled at the Eastern Partnership (EaP) Vilnius summit in late November. Ukraine has also finalised such talks and initialled the agreement, although it has yet to sign it. The conclusion of talks on association and free trade brings to an end the most important project of the first decade of the European Neighbourhood Policy. It is a near historic achievement.
But it is too early to sit back and relax, the agreements will only have legal value (and be provisionally applied) once they are signed, not just initialled. For now only Ukraine is procedurally close to signature, since the agreement has been through the legal ‘scrubbing’ and translation process necessary for all the international agreements signed by the EU.
In the case of the other Eastern partners, the Vilnius summit will not produce new quasi-irreversible legal realities, but would only be an important political and symbolic step towards signature of the agreements some time towards the end of 2014, as it would take up to a year, after the November Vilnius summit, to fine-tune, legally screen and then translate the agreements into all 24 official EU languages.
Changing weather conditions in the East
Domestic politics are volatile throughout Europe. But in the EU’s Eastern neighbourhood domestic political volatility is accompanied by geopolitical volatility, with the countries’ strategic future – not just economic governability – being at stake. And a one-year limbo between initialling and signing the agreements puts the countries in a rather vulnerable position since, until the signature is in place, external opponents of this process have ample incentives and time to try a last-minute attempt to derail the process just before the finishing line.
For now, none of the bilateral dialogues between the EU and its Eastern partners are immune to the vagaries of post-Soviet politics. One danger is that the EU-Ukraine ‘who blinks first’ standoff on whether the Association Agreement can be signed without Yulia Timoshenko’s release will lead to non-signature in Vilnius. This could see EU-Ukraine relations deteriorating from the current state of wary partnership into much chillier territory – all made worse by the fact that Russia is stepping up economic pressures on Ukraine to make it think again on whether it needs the DCFTA rather than the Russia-led Customs Union.
The situation with Georgia is even more perilous, as the cautious EU-Georgia partnership risks turning into a ‘cold peace’ if the current government decides to arrest President Saakashvili after his term expires this autumn. Prime Minister Bidzina Ivanishvili, who is in a tense cohabitation with Mikheil Saakashvili, recently suggested such an arrest might be a distinct possibility. Irrespective of what one thinks of the Saakashvili-Ivanishvili conflict, further episodes of ‘prison politics’ would be catastrophic for EU-Georgia relations. If Georgia joins Ukraine on this path, its whole rapprochementwith the EU would be gravely jeopardised. To add even more ambiguity to the situation, Prime Minister Ivanishvili recently suggested that he might consider whether the Eurasian Union has anything interesting to offer for Georgia. This was quite a change of tone in the one Eastern Partnership country which, until recently, boasted the strongest pro-EU and pro-NATO consensus among both the elites and the public.
Track changes
Moldova, which is the best pupil in a problematic class, is on a firmer track to initial and sign the agreements with the EU. Yet it has just emerged from a five-month-long domestic political crisis that almost derailed the process. Significant reforms still need to be carried out, not least the reforming of law-enforcement agencies. And Russia is likely to start turning up the diplomatic heat. On a visit to Chisinau, Russian deputy-prime minister Dmitry Rogozin joked that he hopes Moldovans ‘won’t freeze in winter’ – a chilling reference to the country’s energy dependency on Moscow.
Russian authorities also threatened to apply ‘draconian measures’ to Moldovan exports. Moldova is likely to resist, but its resilience depends quite a lot on that of Ukraine.
The other two countries of the region, Belarus and Azerbaijan, are rather disinterested in the Eastern Partnership and have been mostly reluctant to sign up to what the Eastern Partnership had to offer. Azerbaijan has a strong energy partnership with the EU, but is rather uninterested in political reforms or non-energy related trade dialogue with the EU.
In Armenia, things were tricky from the very beginning. Erevan is a close military ally of Moscow, although it trades more with the EU than with Russia (27 percent vs. 21 percent of trade shares, respectively), and its exports to the EU are almost double its exports to Russia (at 35 percent vs. 18 percent). Thus Armenia argued it wanted ‘economic partnership’ with Europe and ‘military partnership’ with Russia.
But once Russia launched its own economic project – the Customs Union, designed eventually to lead to a Eurasian Union – Armenia found itself stymied in its attempt to run with the hares and hunt with the hounds. In September, Armenia stunned EU foreign policy watchers when it gave up on its association and free trade deal with the EU just a few weeks after negotiations had been finalised. The move followed Russian demands for Armenia to join the Russia-led Customs Union, thereby excluding the possibility of a free trade agreement with the EU.
But even if Armenia’s U-turn was the direct consequence of Russian pressure, it nevertheless touched a raw nerve in the EU. It is therefore useful to ask what Yerevan’s U-turn means for EU foreign policy in general, and for the Eastern Partnership (EaP) in particular.
The shape of things to come?
That a country of 3 million people and a nominal GDP of roughly €7.3 billion would turn its back on the world’s biggest market (with over half a billion people and a GDP of nearly €12 trillion) would have previously been virtually unthinkable. The EU, which has spent the last two decades managing a queue of almost two dozen countries vying to enter the club, is simply not used to being rejected by countries such as Armenia.
Armenia’s sudden change of direction seems to suggest that one of the most prized things the EU can offer (access to its market) can be countered by other powers – and offers. It was not Armenia’s decision per se that shook the EU foreign policy community, but a fear of the possible shape of things to come – and a feeling that a multipolar world is emerging not only at the expense of US power, but also of EU influence.
The Union is right to feel uneasy. Its influence in world affairs should not be taken for granted and it will become increasingly dependent on the ability of member states to stick together in economic, security, and foreign policy matters.
But Armenia’s abrupt choice is no cause for introspection or surprise. If anything, the real surprise was that Armenia managed to advance so far in its relations with the EU, openly defying Russian preferences in the process. The very fact that a country like Armenia attempted to move closer to the EU and reduce its reliance on Russia through a policy of so-called ‘complementarity’ is indeed cause for greater soul-searching in Moscow rather than Brussels.
A player, not a victim
European policy circles also reacted with outpourings of pity for Armenia. The prevailing view was that a small state had been bullied by a former imperial master into acting against its will and interests.
However, whilst these feelings of sympathy are partly justified, they should not be exaggerated. True, when the Russian and Armenian presidents jointly declared that Armenia was to join the Customs Union, the negative body language of both leaders did not suggest that their conversation had been pleasant, or that their announcement was a long-desired historical step. The reality, however, is that all international alliances are package deals with mutual benefits and obligations that often span political, economic and military fields. Thus, although Armenia may have been bullied, it is not unusual that Moscow did not like the idea of an à la carte partnership with Yerevan where the latter cherry-picks what it wants from the alliance whilst attempting to diversify its foreign policy.
Armenia’s reliance on Russia has its roots in the battlefields of Nagorno-Karabakh and its open conflict with Azerbaijan over the region. As part of the Russian-led security alliance, the Collective Security Treaty Organisation, Armenia is shielded by Russia’s implicit military guarantees and is granted access to Russian-made weaponry at reduced rates. Moreover,
Armenia’s most coveted economic assets are to a large extent in Russian hands. This situation is at least partly because the Armenian economy remains unattractive for foreign investors due to high degrees of corruption and the vested interests of oligarchs.
In the broader context, Armenia is not simply a victim of Azerbaijani or Russian policies, but rather a player in its own right. Armenia has itself also contributed to the region’s difficulties. It certainly has not gone out of its way to solve the Nagorno-Karabakh conflict: it still has troops stationed not only in Armenian-inhabited Nagorno-Karabakh, but in much wider swathes of Azerbaijani territory, well beyond the settlements of its ethnic kin. Furthermore, in negotiations over conflict settlement, it has been as inflexible as Azerbaijan.
Although this is regrettable, states and political elites have to live with the consequences of their actions and unlike most other post-Soviet states, Armenia has placed itself in a situation where it cannot say no to Moscow.
A two-tier eastern partnership?
There are several lessons to be drawn from Armenia’s U-turn. The first is to understand that the EU does not have a monopoly on attractiveness. Increased multipolarity will mean that other powers (be it China, Russia or Gulf petro-states) can also make equally attractive offers regarding trade access, investment, assistance and security cooperation – offers that may sometimes be difficult to refuse. This, in turn, means developing competitive packages in order to effectively operate in the marketplace of international relations.
The second lesson is the need to deliver effectively on the benefits of Association Agreements for those countries still waiting in line. Russia’s diplomatic blitz is unlikely to be repeated as easily with Moldova, Georgia or Ukraine. However, a sustained offensive in the form of trade restrictions or energy-related pressures could still derail the association process.
Thus, faster moves to open EU markets, even before formal free trade agreements are in place (in the case of Moldova and Georgia),is one way forward.
Another important issue is to proceed with visa liberalisation. Finally, in the case of Armenia, it may be in the EU’s interest to pursue a calibrated response. On one hand, the relationship as it was conceived, planned and designed over the past few years is almost in tatters: without the free trade component, an Association Agreement is but an empty shell. The Union has little interest in giving ‘more for less’, and Association Agreements are designed for states that wish to enter into serious and substantial political and trade deals with the EU.
Armenia is now not one of them by choice.
On the other hand, the relationship should not be allowed to grind to a halt: the EU has relations with many states without comprehensive free trade agreements. As an alternative, the EU and Armenia may pursue a scaled-down relationship, perhaps based on a new category of agreements – such as ‘neighbourly cooperation agreements’ – to be signed with countries that do not wish for (or cannot afford) the creation of free trade areas.
In the end, what could emerge is a ‘two-tier’ Eastern Partnership, encompassing countries in favour of strong relations with the EU (Ukraine, Moldova and Georgia) and countries that are not. The top layer should include Association Agreements, free trade areas and dialogues on visa-free travel. The second layer (destined by default rather than design, for Armenia, Azerbaijan and Belarus), would be much more modest in scope. This ‘two-tier’ Eastern
Partnership may well provide the sole way forward, at least so long as these countries do not want ‘more’ from their relations with the EU.
Given the overall situation, Sir Humphrey would probably say that if one wants to survive until the next century, one has first to survive until Friday afternoon. And that even though the Union’s most important projects of the last decade in the Eastern neighbourhood are nearing completion, things might still get side-tracked. Only signing the agreements will create a legal reality and lock the states in question into binding trade arrangements with the EU. Thus the sooner the EU signs the agreements with Ukraine, Moldova and Georgia, the stronger the insurance will be against the vagaries of the East European political weather.
The article is based on the texts previously published on the web page of The European Union Institute for Security Studies (www.iss.europa.eu ).

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