1. law, govt and politics
2. politics
3. elections

Center for European Policy Analysis
November 10, 2014
Europe and Ukraine: Adjusting to New
Realities
In this edition of
Central Europe Digest:
The Ukrainian Elections: A
Vote for a Western Path
Annabelle Chapman - 2
Donald Tusk as European
Council President – What
Implications for the EU’s
Future?
Roland Freudenstein - 4
Russia Sanctions: Hardening
Europe’s Economy
Edward Hunter Christie - 6
A
s the European Union’s (EU) new leaders assume office, they will
inherit responsibility for managing fallout from the Russia-Ukraine
war. Despite the landmark victory of pro-Western forces in Ukraine’s
recent parliamentary elections, the country is still divided. Separatist
elements in eastern Ukraine not only refused to participate in the vote,
they also cast their own ballots in an unsanctioned parallel election. In the
months ahead, Kyiv will have to manage a running conflict (both hot and
cold) with Russian, implement an EU Association Agreement in a country
that the Ukrainian government does not entirely control, and navigate a
fragile ceasefire with uncertain levels of support from the West. While a
return to business as usual with Moscow is unwanted in Brussels, some
EU leaders have yet to come to grips with the new strategic reality on their
border. Stabilizing Europe’s eastern reaches will be a thankless, difficult and
long-term undertaking. Is the new leadership in Brussels up to the task?
This month’s Central Europe Digest looks at the results of Ukraine’s historic
election, examines what the selection of Poland’s Donald Tusk as European
Council President might imply for priorities in EU Eastern policy in the years
ahead, and considers ways the EU can use its sanctions regime against
Russia more effectively while minimizing harm to its economy.
Central Europe Digest
Center for European Policy Analysis
November 10, 2014
The Ukrainian Elections: A Vote for a Western Path
By Annabelle Chapman
this would boost their results. Yet the narrow win
by the People’s Front, led by Prime Minister Arseniy
Yatsenyuk (22.14 percent, compared to 21.82
percent), means that the potentially dangerous
concentration of power by a single party is less
likely.
“Elections: there is hope!” declared the front page
of a local newspaper the day before Ukrainians
headed to the polls, with a photograph of smiling
protesters standing on Kyiv’s Independence Square
last winter. And indeed, despite the usual response
of doom and gloom, Ukraine’s parliamentary
elections on October 26th brought many positives.
At the same time, the broad victory of pro-Western
parties does not detract from the real challenges
ahead.
Assessing the Results
In total six parties made it into Ukraine’s parliament,
the Verkovna Rada, based on the result of the
party list vote (the other half are elected in singlemember districts). Some observers have bemoaned
the lack of “unity” in the result, but as Balázs
Jarábik has argued, perhaps it is time to appreciate
the diversity among
Ukraine’s pro-Western
the potentially dangerous
parties. Whether they
will be able to push
concentration of power by a
through tough reforms
single party is less likely.
going forward is another
matter.
With polls closed and
votes counted, three
notable factors became
immediately apparent.
First, the elections went
largely as they should
have. In its preliminary
statement after the
vote, the Organization for Security and Cooperation
in Europe (OSCE) said the elections “marked an
important step” for Ukrainian democracy despite
the situation in the country’s east. This declaration
left Moscow, which sent observers as part of the
OSCE mission as usual, with very little to add.
Third, October 26th was a bad day for radicals
and extremists of different hues. Oleh Lyashko’s
Radical Party – which has a pitchfork as its symbol
– garnered just 7.44 percent of the vote. Yulia
Tymoshenko’s Batkivshchyna (Fatherland) scraped it
into parliament with an embarrassing 5.68 percent,
further suggesting that the heroine of the 2004
Orange Revolution belongs to the past. Meanwhile,
the nationalist Svoboda (Freedom) party was just
below the threshold with 4.71 percent. Anton
Shekhovtsov, an expert on Ukraine’s far-right, sees
this as part of a wider trend of dwindling support
for the Svoboda party since it entered parliament in
2012 with 10.44 percent of the vote. Nonetheless,
Second, no single party dominated. Ahead
of the election, the Poroshenko Bloc – led by
President Petro Poroshenko who was elected in
May with 54.7 percent of the vote – was viewed
as the favorite. In the run-up to the vote, some
independent candidates even tried to pretend they
were affiliated with the President’s party, hoping
Annabelle Chapman is a Warsaw based journalist and a regular contributor to publications
including The Economist, Foreign Affairs, Newsweek and Foreign Policy.
2
Center for European Policy Analysis
as I left Kyiv on October 30th, its activists were
gathering in front of the Central Electoral
Commission, keen to challenge the result.
could all change their minds, despite – or perhaps
because of – the dramatic events of the past year.
These Ukrainians need to be represented in the
new parliament too.
After the Vote: Ukraine’s Political Landscape
Going forward, one trend to watch will be the
The Poroshenko Bloc and People’s Front remain
salience of local interests and power struggles.
the two biggest players. But there is a new party
Under Ukraine’s mixed electoral system, 50 percent
on the scene, Samopomich (Self-Help), which
lawmakers are elected directly in single-member
came a strong third almost 11 percent of the
districts while the other half come from party lists
vote. As the results came in, this pro-reform party
(results discussed above). These contests, which
headed by Andriy
received next to no
Sadoviy, the mayor
attention outside
Going forward, one trend
of the western city of
Ukraine, tend to
Lviv, was immediately
to watch will be the salience
be fought between
heralded – especially
local strongmen (and
of local interests and power
abroad, admittedly – as
sometimes women).
struggles.
an ideas-based party
The OSCE’s preliminary
for the middle class.
report does not single
However, the first cracks
out transgressions
may already be beginning to appear for Sadoviy’s
here but it is clear that each constituency, with its
bloc. A group that had worked with the party in the
often eccentric list of candidates, raises interesting
run-up to the vote, the Volia party, has announced
questions of its own. And, with only one winner in
it would be splitting off. All the same, Samopomich
each constituency, the stakes are high.
looks set to have a say in Ukraine’s new government
with Poroshenko and Yatsenyuk’s parties. The
matter is currently under discussion in Kyiv. Already,
one of Samopomich’s top candidates has called for
a “pro-Ukrainian” rather than “pro-presidential”
coalition – a warning nod to Poroshenko.
There has been some concern about the 9.42
percent of the vote won by the Opposition Bloc,
viewed as the successor of former president Viktor
Yanukovych’s Party of Regions. “In a way, I’m
disappointed with how the results turned out,” said
one young woman who left Donetsk for Kyiv this
summer, referring to the party’s relative success
which would have been even higher had the rebeloccupied territories in the Donbas voted (they held
their own “elections” a week later on November
2nd). But it is hard to imagine how nearly 1.5 million
people who voted for the party (which came first
in the eastern region of Kharkiv, among others)
3
Center for European Policy Analysis
November 10, 2014
Donald Tusk as European Council President –
What Implications for the EU’s Future?
By Roland Freudenstein
D
group of countries has gradually lost some of its
coherence (also through very different trajectories
in the economic crisis post-2008), it remained a
recognizable group that was bound together by
more than just its communist past. Already after
the 2009 European Parliament elections, many had
expected one of the top EU posts to be filled with
someone from this group. The first half of the fiveFor Poland, the appointment is a recognition of
year term as president of the European Parliament
the refreshingly constructive role it has played,
for erstwhile Polish Premier Jerzy Buzek was not
under Tusk›s premiership, during the past seven
considered satisfactory, so for 2014, something
years. Virtually untouched by the economic crisis,
more
decisive was expected: one of the three truly
with a remarkable growth rate of 1.5 percent in
top jobs – Commission President (coordinating the
gross domestic product (GDP) in 2009 when every
main administrative
other economy tanked,
body), Council President
Poland has become a
The appointment of Tusk is also
(coordinating the
role model even among
an overdue success for the
governments) or High
some of the old member
Representative
for
states. In addition, it has
entire group of the 10 formerly
Foreign Policy.
sent excellent personnel
communist countries of Central
to Brussels and, even
Last but by no means
as a nonmember of
and Eastern Europe that joined
least, Donald Tusk›s
the eurozone, has
the
EU
in
2004
and
2007.
appointment
is a signal
actively pursued an
to Europe’s allies, to
institutionally stronger
Russia
and inside the
Union. Moreover, it has managed to leave its
EU itself that the Union does not intend to soften
mark on EU foreign policy, with the Eastern
its position on Russia’s neo-imperial claims and
Partnership initiative in 2007, the establishment of
aggression against Ukraine. Initially, Tusk had
the European Endowment for Democracy in 2013
reached out to Russia after taking over the Polish
and – disappointments notwithstanding – a clear
government in 2007 from the nationalist Jarosław
commitment to transatlantic relations as the core
Kaczyński.
But lacking an appropriate response, and
of the Union›s global posture.
with Russia’s increasing pressure on its neighbors,
the Polish government’s resolve to counter the
The appointment of Tusk is also an overdue success
threat from the east hardened. Tusk and his foreign
for the entire group of the 10 formerly communist
minister, Radosław Sikorski, were among the first
countries of Central and Eastern Europe that
to warn about Russian aggression against Ukraine
joined the EU in 2004 and 2007. Although this
onald Tusk’s appointment to preside over
the Council of the European Union for the
next five years is a major breakthrough for
Poland, for the ”new” member states and for a solid
stance on the part of the EU vis-à-vis Russian aggression.
Roland Freudenstein is Deputy Director and Head of Research at the Wilfried Martens Centre for
European Studies.
4
Center for European Policy Analysis
less and less with Poland’s European ambitions.
Nevertheless, Cameron’s and Merkel’s wariness
about the transfer of new competences from the
member states to Brussels is inherently shared by
Tusk. To keep Britain inside the EU will be one of
his priorities in the next five years – but not at the
price of the cohesion of the Union.
at the end of 2013. They also proposed an energy
union to make the EU less dependent on Russian
gas and were the driving force in the effort to
toughen EU sanctions as a consequence of Russia’s
war in Crimea and eastern Ukraine.
Now, Tusk knows very well that the Council
president’s job is to encourage compromise
On transatlantic relations, Tusk has shown the
between the member states, and also on Russia. So
same enlightened Atlanticism as Sikorski– that
he will have to take into account the more cautious
is, mindful of America’s indispensable role to
approach of some West European countries
safeguard security, but
such as France, Italy
worried
by the “pivot”
and Germany, or the
To
keep
Britain
inside
the
EU
will
and aware that not
southern tier of the
every U.S. government
be
one
of
his
priorities
in
the
next
Visegrád Group with
will see eye to eye
Czechs, Slovaks and
five years – but not at the price
even with its friends in
Hungarians, all of whom
of
the
cohesion
of
the
Union.
Europe. Nevertheless,
are keen to avoid
to create a maximum
confrontation with
of consensus vis-à-vis
Russia. Nevertheless,
the double threat of Russia and the Islamic State of
Tusk’s appointment is seen as a boost for the
Syria and Iraq (ISIS) will be of utmost importance
determined approach to eastern affairs. Next to
to him. To promote the Transatlantic Trade and
Russia, and equally important, that includes a firm
Investment
Partnership (TTIP) will be another
commitment to supporting the rule of law, human
priority. The EU has made an excellent choice with
rights and democracy among the countries of
his appointment. Expectations are high, and they
the Eastern Partnership. It also includes keeping
are unlikely to be disappointed.
the EU’s doors open to future accession by those
countries when the conditions for membership are
fulfilled.
Donald Tusk’s appointment would not have
happened without a conscious decision – and
some prodding – by Angela Merkel. One of Tusk’s
historic achievements as Polish prime minister
was to put a positive Polish-German relationship
back on track after the devastating years under
the Kaczynski brothers. He struck up a remarkably
constructive and trustful relationship with Merkel.
At the same time, and in tune with Sikorski, he
distanced himself from the knee-jerk pro-British
bias that Polish conservatives have had for a
long time. The Eurosceptic drift of the Tories fits
5
Center for European Policy Analysis
November 10, 2014
Russia Sanctions: Hardening Europe’s Economy
By Edward Hunter Christie
Background
he recent cycle of sanctions and counter-sanctions relating to Russia has focused government attention on the economic impact of
such policies. An analysis of which countries could
be hurt most by aggressive European Union (EU)
sanctions, and the ways to mitigate that impact, is
therefore valuable.
T
ce, timing and signaling of actions are essential to
determining effectiveness and outcomes. While
some scholars insist on measuring success only in
terms of outright victory, namely whether one side
has successfully imposed its will on the other, the
reality is gradated. At the basic level, the goal of
an economic attack is to harm the other side economically, so by that metric most sanctions almost
always work, particularly in the short run. Political
The Russian Federation
signaling effects also
has (re)developed a full
matter: regardless of
range of instruments
Imposing trade sanctions
outcomes, imposing
of aggression. Ukraine
trade sanctions signifies
signifies disapproval to the
has been the victim of
disapproval to the tartarget country and helps to
a broad-spectrum camget country and helps
paign that has included
mobilize opinion and resources. to mobilize opinion and
the infiltration and subresources in the sending
version of state bodies;
country.
economic warfare, notably in the field of energy;
Attacking moves
hostile propaganda in both traditional and online
The Russian Federation is a highly experienced ecomedia; the deployment of state-sponsored combanomic warrior. Typical attacks involve the following
tants, ranging from unarmed violent mobs to a mix
operational procedure. First, the economy of the
of mercenaries, special forces and regular troops;
target country is analyzed to identify vulnerabilities,
and a credible threat of a large-scale military invasie.g., dependence on Russian oil or gas supplies;
on. EU and NATO countries need to enhance their
dependence on Russia as an export market for
capabilities to deter threats in all of these areas.
certain goods. This identifies the general area of
One important area for further development is ecoattack. Second, more detailed parameters are refinomic coercion.
ned for the planned attack to be more damaging,
At an abstract level, economic coercion is essentially
e.g., cutting off gas supplies in winter rather than in
not different from other forms of conflict. There are
summer. Third, in some cases, an additional triggeoffensive, counteroffensive and defensive moves.
ring attack is prepared with the purpose of creating
Governments can invest in target hardening, i.e.,
an economic pincer movement, i.e., the target is
raising the resilience of their economic systems to
to be maneuvered into having only two choices:
outside attack. They can also invest in the developeither endure the triggering attack, or run into the
ment of offensive means. The magnitude, sequen-
Edward Hunter Christie is Research Partner at the Pan-European Institute.
6
Center for European Policy Analysis
main attack. This particular approach was used by
Putin in his January 2006 and January 2009 attacks
against Ukraine in the area of gas supplies. The triggering attack was to impose unacceptably abrupt
price increases, while the main attack was to cut off
supplies. A fourth aspect is the communication accompanying the attacks, which is beyond the scope
of this article.
sectors are not strategically important for Russia
– for example, in terms of its military buildup or
its domestic energy sector – so within this limited
example Russia also benefits from economic escalation dominance.
Russia’s recent import restrictions against the European Union are another interesting case. For the
EU, the four sectors that are most exposed in terms
of their share of exports to the Russian market are
not high-technology manufacturing sectors but fruits and nuts (32.4 percent of EU exports in 2013),
edible vegetables (25.3 percent), trees and plants
(22.8 percent) and meat (19.8 percent).1 This explains why the Kremlin chose to impose sanctions
on food and food products: it was looking to cause
maximum relative damage, as it is high relative damage that has the best chances of causing business
bankruptcies and political pressure in the target
countries, in this case the EU. Furthermore, these
Target hardening
Exports to Russia are close to negligible for large
Western European countries such as the UK, France
or Spain. Contrary to popular perception, even Germany is not especially exposed, with just 3.4 percent of its total goods exports going to Russia. For
the EU as a whole, the share of exports to Russia is
6.8 percent (excluding intra-EU trade), representing
a value of just 1.2 percent of EU gross domestic
product (GDP). This figure is much higher than any
plausible worst-case scenario: to experience that
level as an actual GDP loss one would have to have
a full shutdown of all exports to Russia while also
assuming zero redirection of trade. In sum, the impact of comprehensive trade sanctions – let alone
of those sanctions already in place – should not be
exaggerated.
This dominance ceases to hold if one looks at other
commodity groups, however. The EU’s exports of
machinery or vehicles are not especially exposed
to the Russian market, while Russia has significant
Of course, the attacking country typically incurs
import dependence levels for many such goods.
economic losses as well, e.g., lost revenue from
Therefore an effective action from the EU perspectienergy sales or costs relating to import or export
ve could be to impose
substitution. But when
export restrictions on maRussia attacks Ukraine
Contrary to popular
nufactured goods. The efusing its energy supplies, it
perception,
even
Germany
is
fects, while slightly painful,
benefits from – to borrow
should be quite managenot especially exposed.
one more term from the
able and rather disruptive
military lexicon – economic
for Russia – especially if
escalation dominance. In
a common approach could be reached between
response, Ukraine can unilaterally withhold paythe EU, the United States, Japan and South Korea,
ments, but it will suffer proportionately more than
among others.
Russia under any escalation scenario.
1 The sources for the data appearing in this article are Eurostat, European Commission, http://epp.eurostat.ec.europa.
eu/portal/page/portal/eurostat/home/, and UN Comtrade,
United Nations Commodity Trade Statistics Database, http://
comtrade.un.org/db/mr/daPubNoteDetail.aspx?r=97
7
Center for European Policy Analysis
to “grow apart” from a country that has chosen the
path of aggression.
What is true for most EU countries is, however, not
true for all. In the case of Russian retaliatory measures to sanctions, the most exposed EU countries
are Lithuania (19.8 percent of total goods exports in
2013), Latvia (16.2 percent), Estonia (11.4 percent)
and Finland (9.6 percent). However, the next-most-exposed EU country is Poland, with just 5.3 percent. In sum, the EU’s vulnerability is concentrated
in just a few countries. The distribution of vulnerabilities as compared to the overall EU vulnerability
suggests that an EU solidarity mechanism would be
both very effective and of limited total cost for the
Union. To this end, an EU Solidarity Fund could help
to share the cost of EU sanctions (or of third-party
sanctions against the EU), thus increasing the ability
of EU governments to support strong collective measures when necessary.
This type of instrument could also be applied to
energy products. This would de facto act as a “diversification tax.”3 Faced with the price wedge created
by such a tax, e.g. 20 percent on all energy imports
from Russia, EU companies and consumers would
be incentivized to find substitutes for Russian energy. The proceeds of the tax could be used to cofinance a more rapid diversification of energy sources
and source countries – and to finance any other
solidarity measures or resilience measures that may
be necessary.
3 Jonas Graetz and Edward Hunter Christie, “Wie Kante
Zeigen,” Die Politische Meinung, No. 528, Konrad Adenauer
Stiftung, September/October 2014. The article can be found
at: http://www.kas.de/wf/de/33.39176/.
Building on a proposal by Center for European Policy Studies (CEPS) Director Daniel Gros, the idea
would be to have a special fund at the EU level to
disburse solidarity payments among strongly affected businesses.2 The payment eligibility criteria
should be not only based on the minimum proportion of business volume that is affected, but also how
fast and to what extent a reorientation toward new
markets can occur. Compensation payments should
be time-limited to provide clear incentives for EU
companies to reorient their sales or purchasing patterns. Also, precautions should be built in to avoid
abusive claims for compensation.
Central Europe Digest is a publication of the
Center for European Policy Analysis (CEPA),
a Washington, DC-based research institute
devoted to the study of Central and Eastern
Europe. Material published in the Digest is
original, exclusive to CEPA and not reproduced
from outside sources.
The views expressed are those of the author and
do not necessarily reflect the opinions of CEPA.
One further idea to generate financial resources for
this new Solidarity Fund would be to impose unilateral import tariffs (and possibly export taxes) on
EU-Russia trade. This would not shut down EU-Russia trade but would give a signal that one is ready
Center for European Policy Analysis
1225 19th Street NW, Suite 450
Washington, DC 20036
www.cepa.org
© 2014 by the Center for European Policy
Analysis, Washington, D.C. All rights reserved.
2 Daniel Gros, “A European sanctions compensation fund?,”
Centre for European Policy Studies (CEPS), August 12, 2014.
The article can be found at http://goo.gl/gL76Fy.
8