Debate summaries

The plenary session: Successes, failures, the potential of 20 years of Ukraine’s independence.

The former president of Ukraine Leonid Kuchma stated that in 1991 Ukraine was in an extremely difficult situation. “We did not have a state core embedded in our political elites and, moreover, 20 years ago we did not have a strategy for development, and we made many decisions being aware of the immense risk. Our first Constitution was passed in the fifth year of our independence and we did not introduce our own currency until 1996,” says the former Ukrainian leader.

Talking about points of reference for the independent Ukraine, Leonid Kuchma reminded that in the 90’s the term “European repair” entered the political phrase book, i.e. a maximum resemblance between state institutions and economic solutions to those already proven in Western European countries.

The former Ukrainian leader reminded us of the crisis in relations between Ukraine and the European Union in the years 2000-2003 which, as he emphasized were connected with scandals in the Intelligence Agencies and the cassette-related scandals. “That crisis was especially painful for us, as at that time, Ukraine was the leader in terms of economic growth in Europe. Our troubled relations with the EU contributed to reversing those trends. According to the former president the post-Orange-Revolution-government, despite plenty of promises and declarations, did not manage to bring Ukraine closer to Western Europe. “The most serious mistake of that formation was deteriorating relations with Russia, which resulted in a senseless ideological war. Foreign policy ideologists did not understand the strategy of the European Union, which includes cooperation with Moscow,” Kuchma stated.

Evaluating today’s ruling elites, Kuchma said that the president Viktor Yanukovych managed to achieve political stability in society, which is of utmost importance for conducting independent foreign policy. The former Ukrainian leader pointed to a lack of consequence in political decisions. “Foreign partners often say that Ukraine, while maintaining external state attributes, starts building this state from scratch after each election, we have to think how we could achieve political continuity,” he emphasized. Speaking about current directions in the Ukrainian foreign policy Kuchma underlined that negotiations regarding EFTA agreement are tough as the European Union wants the Ukrainian market to open completely but refuses to do it by itself. Leonid Kuchma also pointed to the fact that Ukraine had been invited by Russia to join the Customs Union and, in his opinion, this invitation should be taken into consideration.

“The European Union has got increased requirements for Ukraine but Brussels cannot define the time for integration. Once again, in the EU vision, Ukraine gets to be the buffer zone between the European Union itself and Russia,” Kuchma said. 
Summarizing his speech, the former president said that he would like other countries to perceive absenteeism of Ukraine in the European structures in the same way as absenteeism of Switzerland or Norway. 

The former president of Croatia – Stjepan Mesic reminded that Ukraine had gone through the same process as most other countries from the socialist block – from an autocratic one-party system to a multiple-party democratic system. Mesic emphasized that the starting positions of Ukraine and Croatia were very much different as Ukraine was separated from the Soviet Union whereas Croatia originated from Yugoslavian socialism, which was totally different from the Russian system. Relating to the privatization problems the former leader of Croatia pointed out that before 1991 all the property in Ukraine belonged to the state whereas in Croatia there was a social model of ownership.

“Privatization was one of the toughest moments in the Croatian transitory period,” Mesic evaluated, while fighting corruption is the most serious challenge Croatia is facing now. “We have to deal with this challenge if we want to prove that we justifiably deserve to become an EU member state,” he said. In his opinion, good relations with neighboring countries, not affected by unsolved matters from the past are very important for development. “I am talking about it from the perspective of Croatia’s experience, where we have been fighting with demons of war stereotypes until now. We are involved in improving relations with everybody as the future cannot be a hostage of the past,” Stjepan Mesic pointed out. 

The former European Union Commissioner for Enlargement Günter Verheugen concentrated on the issue of EU relations with its neighboring countries in his speech. Relating to negotiations with Ukraine he talked about lack of understanding for the Ukrainian problems in Western Europe. “When I came to Brussels from Kiev and said that Ukraine was a European country and that it had the right to European integration, I was criticized and EU bureaucrats emphasized that Ukraine was too big and too poor,” Verheugen said. 

In his speech Günter Verheugen also criticized the lack of political courage in the present European Union. “Enlarging towards the East was never popular in the old European Union but it is the role of political leaders to create public opinion. Today we lack true leadership, we can see that the EU elites clearly do not have the courage. Enlargement is no longer a priority, I do not understand how the negotiations with Croatia are conducted as they have been going on for seven years now,” Günter Verheugen said.

In his opinion, in the European Union, Ukraine has always been perceived as a part of our relations with Russia and not as a value in itself. Ukraine may play a significant role in the European Union as a country which will help us better understand Russia.

Verheugen emphasized that Poland was perceived as the weakest candidate during the first enlargement round and many foreign politicians would say that Poland is not ready for membership. An important argument for the benefit of Poland was that it would help understand eastern countries. Today Poland is an example of how successful was the EU enlargement towards the East, it is considered to be a predictable country with a fast growing economy. I am convinced the same could happen to Ukraine if it is given such an opportunity,” Günter Verheugen summed up.


Discussion panel: Economic reforms and economy restructuring: directions of changes in Ukraine vs. EU experience

Discussion panel „Economic reforms and economy restructuring: directions of changes in Ukraine vs. EU experience” was an attempt at summarizing the changes which took place in Ukraine in 2010 and also pointed to the possibilities of cooperation with Russia and the European Union. 

Anatolij Aksakow from the Russian State Duma presented the latest trends in the Russian economy and macroeconomic data. In 2010, as the Russian deputy enumerated, the following decisions were made: regarding establishment of the world financial center in Moscow and the establishment of Rosnanno corporation (the aim of which is supporting development of an innovative economy) and also preparations for building a scientific-technological centre in Skolkov were started. 
According to Aksakov, Russian economic projects are of international character and they are a positive signal for Ukraine. The deputy also recorded a large potential for Russian-Ukrainian cooperation in the area of modern technologies, science and industry, where he mentioned the examples of nuclear energy and the aviation sector. 

Jelena V. Hoffmann from the Federal Association of German Businessmen in Ukraine talked about agriculture and the food industry. Focusing on the sugar industry, the German expert pointed out that EU policy led to closing down unprofitable and non-competitive enterprises in the countries of the old European Union. 


Jelena V. Hoffmann and Natalia Korolevska

The deputy Natalia Korolevska stated that in the current situation Ukraine does not have any choice, reforms are necessary but no mistakes can be made that would cause a shock reaction in society. The Ukrainian economist noticed that her country will have to pay more now than if the reforms had been conducted earlier on. According to her, over the last 20 years no structural reform has been brought to an end. As a result of such negligence some opportunities have been lost especially in the chemical and iron and steel works industry. The deputy of the Supreme Council of Ukraine emphasized the low level of foreign investment in Ukraine too.” In 2010 Ukraine was not offered much to improve its economy. Strengthening fiscal and administrative pressures does not facilitate development,” Korolevska said. According to her, the most important thing is that Ukraine still has an immense unused potential. “We have to promote ourselves among foreign investors and the best advertising is word of mouth passed by the businessmen who do business in Ukraine. Korolevska considers corruption to be the biggest ail of the economy. We must eradicate corruption and pull the economy out of the grey zone. These phenomena are connected with each other as corruption pressure keeps 40% of the economy in the grey zone,” the deputy said. The economist also talked about the need for an “investment revolution” – today we can welcome the biggest investment in our region. Twenty billion dollars can be invested in the agricultural market itself, which makes it the most interesting market in Europe. An important problem in Ukraine is also its tax code. “The reform conducted in 2010 is ineffective as you cannot implement changes in a structure that is completely corrupted,” Korolevska emphasized.

Martin Raiser from the World Bank pointed to the manner of implementing reforms. There is a need for more dialogue as the changes which Ukraine need are complicated. Also opposition and social partners have to get involved in the discussion. According to Raiser, from the point of view of the business circles, the country is in dire need of reforms in its regulatory policy, tax system, judiciary and customs services.

Raiser emphasized that the issue of the world food crisis may be a great opportunity for Ukraine. The world perceives Ukraine as a solution to this problem. However, activities undertaken by the Ukrainian government in the agricultural sector give no reason for optimism.


Panel: Investment possibilities in Ukraine: how to create a good climate?

Andrey Bespyatov, Head of Research at Dragon Capital, Ukraine said that the Ukrainian stock exchange is poorly developed and expects investment from foreign banks. In his opinion it is hard to expect a considerable growth in the area of privatisation of strategic enterprises as foreign business is still afraid of risk.

According to Rafał Baniak, Undersecretary of State in the Ministry of Economy, Ukraine is a natural place for investment for Poland. For this purpose plenty of barriers have to be eliminated: customs procedures, VAT return, contacts between business and administration. During the Polish presidency in the European Union Poland’s intention will be enlivening the Eastern Partnership so that there is less competition and more mutual support. Today Poland is considered by investors as a very attractive place and there is no reason not to say the same about Ukraine. Polish entrepreneurs dealt with the weaker economic situation caused by the global economic crisis best in Europe.


Igor Khotey, Daniel Bilak and Andrey Bespyatov

Daniel Bilak, Partner, Head of Real Estate and Construction in Kiev at CMS Cameron McKenna emphasised that it is easy to criticise processes taking place in Ukraine. In his opinion one should not accuse any particular government as each of them is trying to free itself from the imprint of the Soviet era. Ukrainian society is very open, free from xenophobia and the government should put more effort into convincing investors that changes are actually taking place. 

Igor Khotey, Deputy Head of the Fund from the State Property Fund of Ukraine said that privatisation is one of the main instruments for attracting investment. Today the law does not offer effective mechanisms for investment but the present government is sorting out the legal regulations regarding this sphere. 

According to Robert Neumeier, Partner at Gide Loyrette Nouel, the the government conveys incoherent messages and the created privatisation regulations rule out almost all the European investors as they are prepared for a particular investor. It causes investors who act honestly to find it hard to defend their rights. As a result the French do not perceive Ukraine as a location that would be safe enough for their investment. 

“The privatisation business has been one of the most important issues ever since the beginning of system changes,” said  Oleg Shamshur, Member of the Supervisory Board at Phoenix Capital, Ukraine. In his opinion the present government may make a huge step forward as it has got the support of the majority in the Parliament. For this reason it should fight corruption and bureaucracy, increase transparency, improve communication channels between investors and the governmental administration.


Panel: Civic society and building a democratic country

Participants of the discussion panel entitled „Civic society and building a democratic country” voiced their fears in relation to the direction of the internal changes realized by the government of Viktor Yanukovych. In particular, they heavily criticized the policy towards independent media, the Constitutional Court and also the manner of organizing local elections.

Anatolij Hrycenko, deputy of the Supreme Council of Ukraine criticized the direction adopted by the Party of Regions in internal and economic policy. Hrycenko emphasized the unprecedented concentration of power in the hands of the president. “Yanukovych has such powers which even Leonid Kuchma could only dream about,” said the deputy. Hrycenko clearly criticized lack of legislative control over Intelligence Agencies and limiting the power of the Prime Minister, who, after the administrative reform, has lost even the right to dismiss incompetent ministers. According to the deputy from the opposition, due to activities of the Party of Regions and the presidential administration in 2010 the “counterbalance system”, which is an important safeguard of democracy, was liquidated.


Assim Mollazade and Hanne Severinsen

Asim Mollazade – Chairman of the Democratic Reforms Party in the Parliament of the Republic of Azerbaijan spoke about the role of young people who do not remember the Soviet times in transformation processes. He gave the example of the president of Georgia Mikheil Saakashvili, who brought a generation of managers educated at western universities with himself. They contributed to conducting a thorough educational, police and health care reform. “At present no Georgian police officer will take a bribe and corruption has been eradicated at Georgian universities,” Mollazade claims that only a powerful civic society and young mangers can guarantee that reforms are implemented. Free media are also necessary as it is impossible to imagine a contemporary democratic country without independent journalism.

Dietmar Stüdemann – Ministry of Foreign Affairs, former Ambassador of Germany in Ukraine, related to the statement of the deputy Anatolij Hrycenko, agreeing with the thesis that a democratic country must have a counterbalance system. “In a democratic country there must also be a functioning controlling mechanism which is guaranteed by the Ukrainian Constitution but which is dead law now. In his opinion Yanukovych knows what is democracy, rule of the law or an independent judiciary system but right now everything is subjected to consolidation of power and, what is necessary, is a social dialogue and an opposition with a different understanding of what the country needs. Stüdemann pointed out the gap dividing the political elite and society for the elimination of which there must be initiative from both directions.

Hanne Severinsen from the Danish Helsinki Committee pointed to the change in the electoral law before local elections, which ensured victory for the Party of Regions in the regions in which the opposition party had had a bigger support before. Severinsen emphasized that Ukraine should not be glad that it is a bit better assessed by international organizations than Russia. In her opinion a comeback to the Constitution from 1996 or pressure exerted upon the Constitutional Court prove that the ruling elite disrespect rules of democracy.

Hanna Herman, representative of the President’s Administration, appealed for an understanding over political divisions in the matter of European integration. She gave the example of Poland, in which for the sake of European integration an understanding was reached between the rightist Prime Minister Jerzy Buzek and President Aleksander Kwaśniewski.


European Union – Russia – Ukraine: in Search of Modus Vivendi

Grzegorz Napieralski, the Chairman of the Democratic Left Alliance, said that in Poland all the political powers were disposed positively towards joining the European Union, whereas in Ukraine this process is still on.  The Union needs the vision of its future in 10-15 years’ time, too. Mr Napieralski stated that his party would support Ukraine in reaching its European objectives. In his opinion the European and Russian directions do not exclude each other, although the relationships between Ukraine and the Russian Federation carry the burden of history and economy. The EU on the other hand means safety. Mr. Napieralski believes that we should ask the question of how to build the relationships. Despite historic and economic fear (Russia has got a huge energy potential), one should aim at reconciliation with Russia. A good example is served by the Polish-German reconciliation. The EU is a chance for Ukraine to join a family of fast-growing countries, but it is important that Europe sees a partner in Ukraine, too. During the accession process Poland benefited from the aid provided not only by the EU but also by the particular EU States. The Weimar Triangle was of great support. The same we owe to our neighbour.


Grzegorz Napieralski and Adrian Severin

Boris Guseletov, Head of the International Office of the Political Party “Spravedlivaya Rossiya” [A Just Russia], believes that within the last 20 years the situation has changed, and today we face new challenges including energy safety and the fight against global warming. In his opinion the basis of the future relationship is the question whether we will fight against the phantoms of the past or build the future. He referred to the gas wars and development of the North Stream gas pipeline as examples of such phantoms. Each party should be responsible for its own problems. The lack of democratic values is an origin of the mono-centric model of the state. The stability that we can enjoy in Ukraine today is costly, but in Russia observance of civil liberties is not more common. Mr Guseletov can see no major problems between Russia and Ukraine, however the Union is wrong in saying that Ukraine will join the Union ignoring Russia. 
    
Volodymyr Horbulin, a Member of the Presidium of the National Academy of the Science of Ukraine, stated that Europe lacks the mechanism of practical actions in conflict situations, e.g. in Georgia or Nagorno-Karabakh. Horbulin asked the following question: what will ensure the safety of Europe: NATO, international guarantees, or better safety standards in Europe? He believes that Ukraine should select the third of the above variants and focus on it. He emphasised that the process of ensuring safety should involve all countries. We should build Europe to being an area with no nuclear weapon, and as far as the missile defence is concerned the risk area should be determined first and then – the common defence system built. 
 
Evaldas Ignatavicius, the Vice Minister of Foreign Affairs of Lithuania, said that Ukraine is the biggest country that due to its potential helps also Russia transform. In his opinion it is possible to create new values, but it is necessary to get rid of the burden of the past. The Ukraine that signs the agreement on the free trade area will open new economic and political relationships with Russia. Moreover, an agreement on energy safety in favour of both countries must be made as well. The Eastern Partnership means to Ukraine the introduction of any reforms; however Ukraine can also implement programmes aimed at improving its relationships with Russia. 

Mykoła Katerynchuk, Chief of the European Party of Ukraine, assessed well the consensus regarding the Euro integration observed on the Ukrainian political stage. In his opinion both Russia and the EU are afraid of the consequences of the Ukraine joining the Community today. The latest compromises towards Russia resulted in an economic gain to Ukraine, but they did not recover the political relationships between these countries. Mr Katerynchuk emphasised that within one year Ukraine as a country had moved back in terms of observance of the rules of democracy. However, the door to the EU should remain open to Ukraine, because otherwise it can turn to autocracy in which case society will not be able to defend itself against it without support from outside.


Evaldas Ignatavicius, Mykoła Katerynczyk and Anatoly Kozeradsky

Anatoly Kozeradsky, a Member of the State Duma of the Russian Federation, referred to the difficulties integrating with both the EU and the Commonwealth of Independent States. In post-Soviet reality, the difficulties consist in the economic diversity and distinctiveness of foreign policy objectives. To reach the modus vivendi, it is necessary to review the relationships. The relationships among the EU, Russia and Ukraine do not develop, because there are few efficient programmes. In spite of no rapprochement between the RF and EU in terms of declarations, one can notice pragmatic actions taken in economy and politics. In Mr Kozeradsky’s opinion Russia and Europe need the Atlantic safety. Cordial relations between the above entities are not however favourable to America. Mr Kozeradsky believes that Russia takes advantage of the EU experience in integration. This is manifested in the customs union and the Single Economic Area. He regrets that Ukraine shows its passiveness in the process of integration of the CIS and expects that it will be more active. He emphasised that after joining the EU Ukraine would be made not only to integrate but also to regionalise, which would not be easy at all. He believes that Ukraine does not have to choose between the EU and the RF, as it can benefit from the free trade area simultaneously with both partners. 

Adrian Severin, a Member of the European Parliament from Romania, believes that the better the relationship between Ukraine and the EU the better the relationship between Ukraine and Russia. The stability of Ukraine will be in favour of the stability of Russia. Ukraine is often perceived in the EU as a potential bridge connecting Europe and Russia. However Ukraine should be self-aware and ambitious. It should not be just an eternal partner but an equal member of the Union. Then, its relationships with Russia will improve, too.


Panel: "Ukraine in the Transatlantic Space: Problems and Solutions"

Gorgi Baramidze, the State Minister for European and Transatlantic Integration of Georgia, assured Georgia’s respect towards the decision of Ukraine regarding the out-of-block status. However it is crucial that Kiev maintains its good relationships with NATO, and the door to the organisation remains open. In the opinion of the Georgian minister, Ukraine plays an important stabilising role in Central and Eastern Europe. “We appreciate our relationships with Ukraine and its attitude towards the territorial integrity of Georgia. Anything that happens in Ukraine is of great importance to Georgia”, said Baramidze. Referring to the problems of South Ossetia and Abkhazia, Baramidze confirmed that Georgia intended to have a dialogue with Russia and solve the conflict in South Caucasus in peace. “We want Russia to accept our non-violence declaration that we made last year”, he said. The Georgian minister stated that the area of joint interest was extremely broad ranging from the fight against terrorism to economic issues.


Gorgi Baramidze, Tatiana Moskalkova and Iulian Chifu

Iulian Chifu, the Director of the Romanian Conflict Prevention and Early Warning Centre, said that the safety of the USA and Europe constitutes a joint safety. The expert emphasised that the North Atlantic Treaty Organisation succeeded in reinforcement of defence against the ballistic missiles in all NATO member countries. It is especially important in the context of the latest incidents in the Middle East and North Africa. Chifu stressed that he does not support the out-of-block status of Ukraine until it conforms to Ukraine’s safety. A change on the Ukrainian political stage could result in the return of the NATO issue to public debate. The Romanian expert also pointed out the alarming fact of selling weapons by NATO members, which was a reference to the sale of French ‘Mistrals’ to Russia. “What is the reason Russia buys such expensive weapons, if it cannot contend with terrorism or fires?”, asked Chifu who was concerned with the possible new arms race in the Black Sea Basin.

In the opinion of the German member of the Bundestag, Markus Meckel, Ukraine does not play an important role in the foreign policy of the United States any more. Meckel was critical about the external policy of the EU. “Our foreign policy and safety policy are weak. The Union does not catch up with the safety problems and therefore it is not a partner to the USA”, he said. He believes that the Union’s focus on the Eastern issues is insufficient. He emphasised that the visa facilities are of great importance, as they refer to people and not to governments themselves. Such facilities would enable the citizens of such countries as Ukraine to see how democratic countries operate and implement the observed rules in their own countries. Mr Meckel was also critical of the direction of the political changes in Ukraine. “I think that Ukraine has side tracked from the path to democracy, which means that its importance to Western leaders is diminishing”, said Meckel.

 

Zbigniew Romaszewski began his speech by referring to the recent visit of President Victor Yanucovych in Warsaw. “In our opinion this visit was a bit late, however we were impressed by Mr President’s declaration that Poland was a strategic partner to Ukraine”. Romaszewski stated that in Poland in spite of clear political differences the agreement as to the strategic partnership with Ukraine is indisputable. “This political consensus concerning Ukraine stems from the intellectual heritage of Gedroyc”, said Romaszewski. The Deputy Speaker of the Polish Senate emphasised that the alliance with Ukraine was not directed against Russia. “We have a common history with Russia and there are numerous similarities between Poland and Russia, however we are afraid of the imperial and non-democratic Russia. Evaluating the geographical and political changes in the transatlantic area, Romaszewski said that the United States had moved their businesses to Asia, and their interest in the problems of Central and Eastern Europe had diminished. In his opinion the most serious obstacle preventing Ukraine from integrating with NATO is that Russia still does not accept that Kiev can conduct its foreign policy totally independently.

Borys Tarasiuk

The former Minister of Foreign Affairs, Borys Tarasiuk, said that up to 2010, Ukraine carried out effective politics between NATO and the EU. However the current government wants to please Russia and have changed their strategy. In the opinion of Tarasiuk, the foreign policy of Viktor Yanucovych has put Ukraine back into the ‘gray zone of safety’. Criticising the out-of-block strategy, Tarasiuk stressed that Ukraine with such low expenditures on the military and defence, is unable to independently provide their own security. In conclusion, Tarasiuk expressed hope that with the return to power of democratic forces, Ukraine would be back on track to integration with NATO.

 

 


Panel: "Association Agreement: On the Way to European Integration"

Olena Zerkal, a representative of the Ukrainian Ministry of Justice, said that the Free Trade Agreement could negatively influence Ukrainian trade. Therefore, the Ukrainian government is doing its best to protect its interests. Ms Zerkal believes that the treaty on association will not assume increased financing, as such an assumption can only be included in the new EU budget. “The rumours coming from Brussels confirm that an increase in aid is impossible due to the consequences of the economic crisis”, said Zerkal.


Petr Poroshenko, Olena Zerkal and Andrey Popov

Aleksander Mirsky, a Member of the European Parliament from Latvia, confirmed that Ukraine has a lot to do before joining the European Union because it has to operate according to the same rules as the EU Member States. The European Parliament will make sure that all the conditions are fulfilled. “I have not found a particular unit or person in Ukraine in charge of co-ordination of the integration process. It is unacceptable that there is only a department created within the Ministry of Foreign Affairs, as the integration problems do not relate to the Minister of Foreign Affairs only”, stated Mirsky. The Latvian representative of the European Parliament stressed that neither the Ukrainian Ministry of Justice nor the Ministry of Finance function as in the EU. “What is needed is one person and a group of experts around that person to coordinate the process”, concluded Mirsky. He believes that cancellation of the visa requirement will lead to a mass migration of Ukrainians to the West. The problems regarding negotiations on expansion of the Free Trade area are primarily associated with corruption and suppression of western entrepreneurs. Mirsky gave an example of the Baltic States that created special-purpose anti-corruption offices when they prepared to integrate with the EU. Their actions enabled the imprisonment of some influential politicians of the 90’s who are there to this day.

Viorel Hrebenciuc, the Chairman of the Committee on European Affairs at the Romanian Parliament, confirmed that Russia could be a problem preventing Ukraine from integration. The Romanian member of parliament stressed that the presidency of Poland has the potential to make the integration process more dynamic. Poland has already done a lot to the countries of the East. If President Komorowski puts pressure on the other European capitals, it will be possible to achieve a lot.

The Deputy Speaker of the Parliament of Croatia and the former Minister of Integration, Neven Mimica, said that the Association Agreement was an extremely important stage of integration. “This negotiation process taught us that the EU means more than just trade or visa exemption”. Mimica emphasised that Croatia moved beyond the framework of the Association Agreement. It had no clear European perspective, which was especially difficult if we take into account confrontation with the Eurosceptics. “One should note however that the reforms implemented according to the recommendations of the European Union are even more important than the membership as such”, said Mimica. 

Andrey Popov, the Deputy Minister of Foreign Affairs of Moldova, said that the government of Kishinev was focused highly on transformation and internal reforms. 
Ukraine started the negotiations on the Association Agreement three years earlier than Moldova, however it has already made up for that time. It perceives the Free Trade Agreement as a part of the treaty. As far as the visa exemption is concerned, the action plan was received by Ukraine in November and by Moldova in January, so the negotiations are conducted simultaneously. Popov confirmed that his government was not afraid of the mass migration of Moldova citizens after the waiver of visas, as those who were determined have already moved to the EU and work there. He stressed that the European perspective is crucial to the reform dynamics in the Eastern countries.
“Unfortunately the EU does not guarantee the result of our negotiations, even if we fulfil all the conditions”, concluded Popov.


Alexander Chaly, Viorel Hrebenciuc, Neven Mimica and Alexanedr Mirsky

The panel chairman, ambassador Oleksandr Chalyi, said that he shared the Ukrainian government position assuming ending the negotiations on the Association Agreement even with no clear European perspective. 
 
Petro Poroshenko, the Head of the Council of the National Bank of Ukraine, the former Minister of Foreign Affairs and an entrepreneur operating in the sugar and motor vehicle industries within the whole area of the Commonwealth of Independent States, said that the optimism related to signing the Association Agreement and the Treaty on expanded Free Trade could be shown too early, as the Ukrainian authorities did nothing in this respect; they just made political declarations. Poroshenko referred to the European Parliament policy that began to draw attention to the rights of citizens and the freedom of media. “Ukraine is not a priority to the European Union. How do the authorities intend to receive macroeconomic aid from the EU, if they cancel the public procurement act? Do today’s Ukrainian elite think European politicians will sponsor Ukrainian corruption?”, asked Poroshenko. “We should not focus on dates, rather we need to consider in more detail the Ukrainian law and negotiations”, he concluded.

 


Energy panel: European Energy Security: Mutual Dependence – Threats and Opportunities

Myhailo Gonczar, Director of the Energy Program, NOMOS Center in Ukraine – moderator of the panel starting the debate, directed attention to the fact that Ukraine plays a key role as a country supplying gas to the European Union. The necessity of diversifying gas supplies is an undeniable fact, however, as he put it “the more pipes the higher level of security”. In reality, however, as Gonczar summarized “all the pipes start in Russia”.

The first speaker of the panel was Viaczeslav Kniaznicki, plenipotentiary for energy safety in the Ministry of Foreign Affairs in Ukraine. He admitted that political changes in Ukraine do not affect the energy co-operation strategy between Ukraine and the EU. In his opinion one of the most serious problems is lack of a uniform energy market in the EU. Kniaznicky pointed to a few challenges Ukraine is facing in the area of energy policy. How to most effectively transfer energetic raw materials? How to regulate relations between the countries through which gas pipelines go? A challenge for Ukraine is creating an effective competition system but also implementation of technology to acquire renewable energy sources.  

The next panel speaker, deputy of the Supreme Council of Ukraine - Aleksandr Hudyma stated that Ukraine lacks a long-term energy strategy – rotating politicians have different ideas and criteria but there is no continuation. Hudyma also pointed to the fact that consumption of energetic raw materials in Ukraine is growing and, contrary to trends throughout Europe, the Ukrainian economy is consuming ever more energy. According to Hudyma it is in the interest of oligarch groups to increase the amount of bought petroleum and gas. In his speech he also warned against the ever more important role of Gazprom in EU.


Hannes Swoboda, Urban Rusnak and Anita Orban

Urban Rusnak, Head of Energy Security Project at Ministry of Foreign Affairs of Slovakia, referring to earlier speeches of Ukrainian spokespersons stressed the need to standardize the gas market and unfair differences in prices for energetic raw materials for Central European countries in comparison with other EU countries. He drew attention to the bilateral relations between Slovakia and Ukraine – using a metaphor that both countries “are sitting on one pipe” and that this situation is unlikely to change in the future. However, there are no formal documents or bilateral agreements between the two countries which would regulate the issues connected with Gazprom and Transneft, which is now present in Slovakia. “Ukraine has no mutual obligations towards Slovakia and all the changes are discussed directly in Russia,” Rusnak stressed that such a situation cannot be considered as normal.

Dariusz Szymczycha, Senior Consultant at Pressdor spoke in a similar tone. He directed attention to a few paradoxes in the Russian energy policy. Countries of the Old Europe do not understand the sensitivity of countries from the area which used to be under the influence of the Soviet Union. Gas should be an ordinary product subject to free market regulations. In case of gas trade with Russia, trade agreements are signed on the governmental level, which shows that this particular good is subject to political influence. Polish secret weapon in the form of shale gas is not as yet an alternative to traditional energy sources and it is solid gas contracts which now guarantee Poland a sense of energy safety. In Poland gas amounts to around 12% in the energy mix and coal has the highest share in energy economics, which, despite the enormous output, also imports. Besides slogans about energy solidarity, strategic plans should be effectively realised, energy effectiveness should be increased and the economy should be reformed.

Anita Orban, special envoy for energy security of the Ministry of Foreign Affairs of Hungary, represented the stance of Hungary as the country leader of the European Union this term. She stressed that such a uniform regulatory system should be created in the EU so that no country is left out. Orban also directed attention to the fact that there should be a bigger diversification of energy supplies and that the presently used transfer system should be connected. One of the main tasks of the Hungarian presidency is strengthening development of the southern gas corridor. Another point in the Hungarian presidency agenda is the Danube Strategy, which unites 8 EU member countries and 8 non-member countries. Besides economic co-operation and aid for poorer countries from the Danube delta, one of the goals of this strategy is including countries from outside the European Union into EU energy projects, thanks to which energy safety outside EU boundaries can be increased.

Hannes Swoboda, a representative of the European Parliament, stressed that the EU suffers from a lack of executive power in the enforcement of documents and declarations, the best example of which is the energy policy. The gap between reality and formal assumptions of this policy is huge. He stressed the need to strengthen the diversification of gas transmission, and the need to seek other partners as an alternative to Russia. For the time being, the only partner is Norway, but that’s not enough. Diversification of sources, building an integrated transfer network, a competitive market and increasing energy effectiveness – these are the goals which, according to Swoboda should determine the policy of Ukrainian politicians and politicians from EU member states.

Heinz Kopetz, Member of the Board, World Bio-energy Association from Austria, pointed out that it is necessary to increase the share of energy from renewable sources, which would allow a dependency reduction of the given country on traditional energy supplies. Efficiency of fossil energy is incomparably small in relation to renewable sources. Kopetz stressed that strengthening of the renewable energy sector, besides the real material benefits, another advantage will lead, of course, to reduction of environmental pollution and counteracting the effects of global warming.
   

Frank Umbach, and expert on international energy security of the Centre for European Security Strategies (CESS) in Germany, presented the global context of the problem of energy interdependence and competition in the global energy market from the side of China and India. Russia is independent in terms of energy sources, can survive for up to two years without investment flowing from the EU, whereas the EU will not survive even three months without Russian gas. The EU has devised a strategic 20-20-20 plan, which means that the EU is putting much effort to decrease its dependency on Russia. So, there is no risk that one day we will have Russia dictate the terms of the development of energy policy

 

 

 


Ukrainian Transit Capacity: Opportunities for Development

The participants of the panel entitled Ukrainian Transit Capacity: Opportunities for Development concluded that Ukraine still plays a strategic role in the transport of natural resources to Europe.

The editor-in-chief of the weekly supplement to Nezavisimaya Gazeta entitled NG-Energy, Oleg Nikiforov, stated that the development of the Nord Stream and the South Stream is of crucial importance to Russia. He believes that Gazprom is aiming at monopolising gas transit from Azerbaijan. “The actions of the Russian concern are based on economic values, however it is the political grounds that prevail,” said Nikiforov. In his opinion the Russian and Ukrainian gas crisis played an important role in the rebuilding of transport routes.

Paweł Poncyljusz, a member of the Polish Parliament, asked why Ukraine is to play a less important role in future gas transit. In his opinion Ukraine has not developed a uniform strategy as to the construction of the Nord Stream and the South Stream. “The balance between the Russian and Ukrainian businesses extends beyond the scope of the current debates,” said Poncyljusz. 

Urban Rusnak, Ambassador for External Energy Security at the Ministry of Foreign Affairs of the Republic of Slovakia, stressed that there is no country in Europe as interested in the stable supply of gas by Ukraine as Slovakia. 

Marc-Antoine Eyl-Mazzega, Research Fellow at the Center for International Studies and Research (CERI), focused on the issue of the credibility of Ukraine as an economic partner. He is certain that Ukraine has not developed any strategy related to energy policy in the last five years. In his view, as a consequence of the above omission, investments in energy in Russia were greater than those in Ukraine. 

In the opinion of Tamara Guzenkova, a representative of the Russian Institute for Strategic Studies, the economic development of Ukraine is distinguished by certain specific features. “This is a huge but poorly consolidated country. Not always can the business of Ukraine and the business of its neighbours coincide,” said Guzenkova.

Aleksiej Chajtun, a representative of the Institute of Europe at the Russian Academy of Sciences, concentrated on whether transit via Ukraine is advantageous. “The Nord Stream is exceptionally costly, and the raw material resources for the South Stream are not secured,” said Chajtun. The Russian expert remarked that the political situation in many Near Eastern countries that are rich in deposits of crude oil and gas is unstable, which makes Russia a more important gas supplier and Ukraine, and a more important transit country.


Panel: „Ukraine in the European Security System”

Ukraine can guarantee its security only by “creating a common European House”, says former Secretary of the National Security and Defense Council of Ukraine, Vladimir Gorbulin. In his view, another important aspect for Kiev is the fact already signaled by the European Union, that the construction of a European security system will be impossible without Ukraine. As Gorbulin pointed out, searching for its place in the security structure has become a particularly up-to-date topic for Kiev ever since it revised its stance and decided to integrate with the NATO structures.

During the discussion a few ways of ensuring security for Ukraine were suggested. Firstly, it was suggested that Ukraine should join one of the existing military alliances. Secondly, European security system should be created. “To be honest the second possibility is closer to us, especially in the context of our tough negotiations with NATO,” Gorbulin said.

Teodor Melescanu, Vice–Speaker of the Senate in the Parliament of Romania stressed, on the other hand, that today it is becoming ever more obvious that Ukraine is on the right way to ensuring its security and building positive relations with all its neighbors. “It is equally important for Ukraine itself as well as for all European countries,” pointed out the Romanian parliamentarian.

Vladimir Kolesnikov, Chairman of the Russian Security Office of the State Duma, concluded that the largest threat to the world is the global economy, which is creating structures over nation states, bringing them to a role of subservient institutions. According to the Russian politician a strong nation state is a counterbalance for globalization. To his mind “corporations” have taken the place of aristocracy now. A corporation does not bear any responsibility in front of its voters,” said Kolesnikov. According to him Ukraine and Russia constitute a common cultural and religious space.

 


Panel: Regional Cooperation: Black Sea, Euroregions, Cross-Border Cooperation

Gerd Harms, Adviser to the Board of Enertrag AG, acting as the discussion moderator, stated that there are two levels of regional cooperation, namely micro cooperation (e.g. between cities) and macro cooperation (between whole regions).

Janusz Sepioł, a Polish senator, enumerated the following four conditions of efficient regional cooperation: financial independence, political independence, proper human resources, and holding sufficient funds. In his opinion there are four cooperation models that have developed best to this day, i.e. the bilateral model, the multilateral model (prevailing in the Union member states), the trilateral model (e.g. the Lviv Region, the Małopolskie Province, and the Frankfurt Region), and the group alliance (e.g. the Visegrad Group, 1991). He concluded that each cooperation model is efficient if the economic objectives are shared by all its parties.


Janusz Sepioł, Igor Chernyshenko, David Chico Zamanillo, Gerd Harms

Peter Szegvári, an expert on regional politics, representing the Committee of the Regions, stressed the role of the Committee of the Regions in the European Parliament. He believes that it would be much better if more institutions supporting regional policy co-ordination were established. 
 
Igor Chernyshenko, Deputy-Chairman of the Far East Committee of the Russian State Duma, said that Russia is especially cautious about regional cooperation with Ukraine and Belarus. In his opinion most of the post-Soviet countries care a lot about good relationships with Ukraine and efficient cooperation within the Black Sea region, and in the ‘90s Turkey offered itself as a partner in economic cooperation in this region. Mr Chernyshenko hopes that several platforms of regional cooperation will be built there. Moreover, he stressed that Russia would do its best to ensure the stability of regional cooperation.

David Chico Zamanillo, an adviser to the Spanish Prime Minister’s Office, confirmed that the Spanish experiences resemble those of Eastern Europe. In Spain there are three main programmes of cross-border cooperation, i.e. cooperation with Andorra, Portugal and all the neighbouring countries. There are also numerous interregional cooperation programmes. 
 
Marat Teterov, Chairman of the Geopolitical Forum, demonstrated his pessimistic attitude towards the concept of regional cooperation, especially the European Neighbourhood Policy – the Eastern Partnership, the Black Sea Synergy and the Barcelona Process. In his opinion the EU institutions should facilitate cooperation between particular countries. 

Vasyl Filipchuk, Director General of the EU Department at the Ukrainian Ministry of Foreign Affairs, promised that new projects related to the Black Sea Synergy programme should be executed in Ukraine. He gave a positive assessment of the projects offered within the framework of the European Neighbourhood Policy, however he regretted that Ukraine could not take advantage of the funds.


Panel: International Economic Cooperation: Perspectives and Challenges

All the participants of the panel on the international economic co-operation concluded that common corruption and excessive regulations are the most serious problems preventing development of foreign investments in Ukraine.  

Jan Fischer, the Vice-President of the European Bank for Reconstruction and Development, stated that the EBRD would maintain co-operation with Ukraine related to infrastructure, municipal projects, support to small and medium companies and financial institutions. “As to the economic results of Ukraine, we are cautiously optimistic; we have noticed a gradual growth, but we cannot forget about the poor results of the year 2009”, said Fischer. He referred to the Ukrainian banking market saying that it survived the crisis, but it needs a lot of corrective actions. “The key action will be the creation of the local currency market in order to improve the efficiency of the Ukrainian financial institutions. We are ready to support a range of projects regarding the financial sector development”, said Fischer. He believes that the deregulation policy is a key component of the anti-corruption actions, as excessive regulations create a perfect basis for corruption.

The panel chairman, Oleksiy Plotnikov, a member of the Supreme Council of Ukraine, made reference to the speech of the representative of the European Bank for Reconstruction and Development by stressing that deregulation is crucial not only in the context of the fight against corruption but also to improve the investment climate. 

Philippe Pegorier, a representative of Alstom in Russia and Ukraine, spoke about his concern’s quick development in the Russian machine-building industry. He explained that the reason for his company’s increased investments in Russia is the modernisation policy of President Dmitry Medvedev and the state support provided to investors. Speaking about the business environment being not in favour of investors in Ukraine, Pegorier mentioned the problems of Mittal Steel concern. The Ukrainian oligarchy, having connections with authorities and hindering expansion of western investors in the market, are a serious obstacle to investment. “Our company follows very strict anti-corruption standards; we do not and will not bribe. Therefore, in countries known for common corruption we cannot invest”, said Pegorier.

Krzysztof Walenczak, the Under-secretary of State of the Polish Ministry of Treasury, remarked that Ukrainian companies have started to look for capital on the Warsaw Stock Exchange. He believes that Ukrainian entrepreneurs, having great potential, can easily receive funds from western investors. Walenczak stated that big investment funds that cannot invest in Ukraine directly are willing to invest their money in the shares of Ukrainian companies on western stock exchanges.