WIIW The Vienna Institute for International Economic Studies - Wiener Institut für Internationale Wirtschaftsvergleiche

By Artem Kochnev
Photo credit: European Union, 2020

• No big surprises emerged from the summit: the topics for discussion look similar to those of last year’s meeting, despite the COVID crisis.
• The new Ukrainian leadership convinced the EU of its commitment to implement reforms even though most of them were implemented before the COVID crisis.
• One reason for optimism is that the ceasefire in Donbas has held since July.
• However, as a recent wiiw study on Donbas shows, a ceasefire is only the first step towards recovery in the region.
• We will probably have to wait until the next Normandy summit for any more decisive steps to be taken.
• A lot of effort lies ahead, but for now it is of the utmost importance that the EU and Ukraine stay in touch at these forums.

The 22nd EU-Ukraine summit on 6 October did not bring big news: the content was known, the joint statements were aligned in advance and no black swans appeared shortly before the event. This may sound surprising, given the global pandemic. Yet a glance at the pre-summit briefing reveals that the COVID pandemic occupied only a minor – indeed rather symbolic – place on the agenda.

This was hardly unexpected, as most of the urgent needs of Ukraine’s government were addressed before the summit: the EU has agreed to provide a two packages: one for macro-financial assistance and the other one to fight the pandemic; similarly, the IMF has finished its regular review and has consented to support the Ukrainian government’s finances with a new stand-by arrangement to address its balance of payments problems. With both facilities having been agreed – and the first instalments disbursed – this summer, it was unlikely that any request for additional finance would be made during the talks.

Other than that, the issues on the table looked very similar – fine details apart – to those of last year. The agenda regarding economic integration appears to have brought no major breakthroughs: the two sides praised the advances achieved in implementing existing agreements and outlined plans for sectoral integration (e.g. joining Agreement on Conformity Assessment and Acceptance of Industrial Products, the common aviation area, EU energy market and the single digital market) but no more than that. The confirmation of the EU leaders to maintain the visa-free regime era was definitely a good news for Ukraine and helped to avoid recent concerns regarding it’s re-establishment in the post-COVID. The announcement of the EU to launch three new programs to support the green economy, civil society and resilience to hybrid threats was a nice bonus to the mix. Yet none of those achievement are comparable in its impact to the previous integration steps like a visa-free regime introduced with Ukraine in 2017.

On the reform side, the glass was half full: the EU – as usual – extolled the reform progress made in recent years despite recent concerns surrounding the independence of the National Bank, anti-corruption policies, and judiciary refom.

A fragile breakthrough

The war in Ukraine also featured in the discussions, with Brussels unequivocally holding Russia responsible for fuelling the conflict and violating Minsk agreements. The EU recently renewed its economic sanctions on Russia, whose duration remains clearly linked to the full implementation of the Minsk agreements. The recent news from Donbas, contrary to expectations, provide grounds for optimism. The latest ceasefire – agreed between separatists and the Ukrainian government on 27 July – appears to be holding: the number of ceasefire violations remains at a historical low, with 20-30 events per day, compared to a daily average of 800 a year ago. It is clear, though, that the equilibrium achieved is fragile. As the recent escalation in Nagorny Karabakh shows, low-intensity conflicts can turn into full-scale war virtually overnight. Therefore, however encouraging the early ceasefire results, one must be careful in designing and implementing the reintegration policies. As a recent wiiw study argues, the state will require a large-scale financing programme and a careful political agreement to restore local markets, rebuild infrastructure and re-establish state capacity. With a war of words continuing among the senior officials and diplomats in the trilateral working groups, there is unlikely to be any major advance (beyond the demining of the territories and greater humanitarian assistance) before the next Normandy summit.

Conclusion

All in all, this summit did not bring any big decisions. But that is not necessarily bad news. The reason is not lack of commitment, but rather the nature of the bilateral relationships that the parties reached several years ago. The time for big statements is long gone: what lies ahead is much tedious work to push forward the changes required to increase the transparency of the government, boost market competition and implement inclusive policies. Such things do not happen overnight at summits, and therefore it would be naïve to expect a political meeting to change anything in this respect. So does that mean the summit is pointless? Probably not. So long as it keeps the EU and Ukraine in touch and makes them feel committed to the declared objectives, it still serves a purpose.